The process by which personal property becomes part of the real estate, as when a sink is installed as a permanent plumbing fixture.

Another name for personal property: a movable item that has not become part of the real estate.

Cultivated annual crops. The doctrine lets a qualifying tenant return to harvest them when a tenancy of uncertain duration ends unexpectedly without the tenant's fault.

An item that began as personal property but became part of the real estate by being attached or adapted to it, such as a built-in cabinet. It normally transfers with the property.

In fixture analysis, whether an item was meant to be permanent, judged from objective circumstances rather than an owner's private wish.

A memory aid for the fixture factors: method of attachment, adaptation, relationship of the parties, intent, and agreement.

Movable property that has not become part of the real estate, such as an ordinary sofa. Also called chattel.

Land, everything permanently attached to it, and the ownership rights that go with it.

The process by which something attached to the real estate is detached and becomes personal property again.

A business item a tenant installs, such as a removable salon station. Under the general rule, the tenant may remove it within the permitted time and must repair removal damage.

The conversion of personal property into real property by installing it as a permanent part of land or a building. Also called annexation.

A document that records the transfer of ownership of personal property, such as a seller's freestanding dining table. It does not convey land.

The document that conveys ownership of real estate, as opposed to a bill of sale, which transfers personal property.

The economic characteristic describing the market's preference for a particular location, which can change while the land stays in place. Also called situs.

The physical characteristic that a parcel of land cannot be moved to another location. Moving a building does not move the land under it.

Human-made additions or changes to land, such as buildings, roads and utility systems. Their cost is not necessarily what they add to market value.

The physical characteristic that land endures, unlike a building that can wear out or burn. Land can still be damaged or lose value.

Another name for uniqueness: no two parcels of land are exactly alike.

Permanence of investment

The economic characteristic that capital put into real estate improvements is a long-lasting commitment that is hard to recover by moving the improvement.

The economic characteristic of limited supply relative to demand. Scarcity alone does not mean a high price; buyers must want the property.

Another name for area preference: the market's preference for a particular location.

The physical characteristic that no two parcels are exactly alike, if only because each occupies a different location. Also called nonhomogeneity.

An east-west reference line in the rectangular survey system; township designations locate land north or south of it.

Professional measurement that relates a legal description to the land itself and may show improvements, easements and possible encroachments.

An improvement or structure that extends across a boundary onto another property, which a survey may reveal.

A description that identifies the exact land in a transaction, more reliably than a street address or tax parcel number.

A legal description method that identifies a lot and block in a named subdivision by reference to its recorded plat.

A legal description method that traces boundary distances, directions and reference points from a point of beginning back to that point.

A natural or artificial object, such as a tree, stream or survey pin, used as a reference point in a boundary description.

A recorded map of a subdivision showing its lots and blocks, which lot-and-block descriptions refer to.

The starting point of a metes-and-bounds boundary, to which the description must return to close.

Point of commencement

A reference point used to reach the point of beginning; it is not itself part of the parcel boundary.

A north-south reference line in the rectangular survey system; range designations locate land east or west of it.

In the rectangular survey system, a designation that locates land east or west of a principal meridian.

Rectangular government survey system

A legal description method that locates land using principal meridians, base lines, townships, ranges and sections.

In the rectangular survey system, a standard area of one square mile, or 640 acres. A township contains 36 sections.

In the rectangular survey system, a standard square six miles on each side containing 36 sections.

Based on value. Ad valorem property taxes are computed from a property's taxable value and the tax rate.

The legal process by which government exercises eminent domain to take private property.

Government's power to acquire private property for public use, provided it pays just compensation.

The passing of property to the state when an owner dies without a valid will and with no legal heirs.

Having died without a valid will.

The payment owed to an owner when government takes property by eminent domain.

A memory aid for the four government powers over private property: police power, eminent domain, taxation and escheat.

Government's power to regulate property use to protect public health, safety, morals and general welfare, through zoning, building codes and similar rules.

A claim against property for unpaid property taxes, which can ultimately lead to tax foreclosure through required procedures.

Rules that set construction safety standards, separate from zoning's regulation of use.

A community's long-range development framework, which the enforceable zoning ordinance implements.

A use the zoning ordinance allows only when stated criteria and required approval are met. Also called a special exception; it is not a hardship waiver.

A private limit on property use created in a deed, separate from government zoning and enforceable alongside it.

The intensity of development, often measured in dwelling units per acre.

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Texas Real Estate Sales Agent License exam terms flashcards

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805 terms from the Texas exam outline, sorted by exam module. Flip a card for its definition and the lessons that teach it.

All 805 terms

Annexation: The process by which personal property becomes part of the real estate, as when a sink is installed as a permanent plumbing fixture. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements, Attachment, severance, and the bill of sale
Chattel: Another name for personal property: a movable item that has not become part of the real estate. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements
Emblements: Cultivated annual crops. The doctrine lets a qualifying tenant return to harvest them when a tenancy of uncertain duration ends unexpectedly without the tenant's fault. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements
Fixture: An item that began as personal property but became part of the real estate by being attached or adapted to it, such as a built-in cabinet. It normally transfers with the property. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements, Attachment, severance, and the bill of sale
Intent: In fixture analysis, whether an item was meant to be permanent, judged from objective circumstances rather than an owner's private wish. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements
MARIA: A memory aid for the fixture factors: method of attachment, adaptation, relationship of the parties, intent, and agreement. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements
Personal property: Movable property that has not become part of the real estate, such as an ordinary sofa. Also called chattel. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements, Attachment, severance, and the bill of sale
Real property: Land, everything permanently attached to it, and the ownership rights that go with it. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements, Attachment, severance, and the bill of sale
Severance: The process by which something attached to the real estate is detached and becomes personal property again. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements, Attachment, severance, and the bill of sale
Trade fixture: A business item a tenant installs, such as a removable salon station. Under the general rule, the tenant may remove it within the permitted time and must repair removal damage. — Real property characteristics, legal descriptions, and property use · Taught in Real versus personal property: fixtures, trade fixtures, and emblements
Attachment: The conversion of personal property into real property by installing it as a permanent part of land or a building. Also called annexation. — Real property characteristics, legal descriptions, and property use · Taught in Attachment, severance, and the bill of sale
Bill of sale: A document that records the transfer of ownership of personal property, such as a seller's freestanding dining table. It does not convey land. — Real property characteristics, legal descriptions, and property use · Taught in Attachment, severance, and the bill of sale
Deed: The document that conveys ownership of real estate, as opposed to a bill of sale, which transfers personal property. — Real property characteristics, legal descriptions, and property use · Taught in Attachment, severance, and the bill of sale, Deeds: elements of a valid deed and types of deeds, Settlement and closing the transaction
Area preference: The economic characteristic describing the market's preference for a particular location, which can change while the land stays in place. Also called situs. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Immobility: The physical characteristic that a parcel of land cannot be moved to another location. Moving a building does not move the land under it. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Improvements: Human-made additions or changes to land, such as buildings, roads and utility systems. Their cost is not necessarily what they add to market value. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Indestructibility: The physical characteristic that land endures, unlike a building that can wear out or burn. Land can still be damaged or lose value. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Nonhomogeneity: Another name for uniqueness: no two parcels of land are exactly alike. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Permanence of investment: The economic characteristic that capital put into real estate improvements is a long-lasting commitment that is hard to recover by moving the improvement. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Scarcity: The economic characteristic of limited supply relative to demand. Scarcity alone does not mean a high price; buyers must want the property. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property, Market value, market price, and the characteristics of value
Situs: Another name for area preference: the market's preference for a particular location. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Uniqueness: The physical characteristic that no two parcels are exactly alike, if only because each occupies a different location. Also called nonhomogeneity. — Real property characteristics, legal descriptions, and property use · Taught in Economic and physical characteristics of real property
Base line: An east-west reference line in the rectangular survey system; township designations locate land north or south of it. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Boundary survey: Professional measurement that relates a legal description to the land itself and may show improvements, easements and possible encroachments. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Encroachment: An improvement or structure that extends across a boundary onto another property, which a survey may reveal. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys, Easements, licenses, and encroachments
Legal description: A description that identifies the exact land in a transaction, more reliably than a street address or tax parcel number. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Lot and block: A legal description method that identifies a lot and block in a named subdivision by reference to its recorded plat. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Metes and bounds: A legal description method that traces boundary distances, directions and reference points from a point of beginning back to that point. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Monument: A natural or artificial object, such as a tree, stream or survey pin, used as a reference point in a boundary description. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Plat: A recorded map of a subdivision showing its lots and blocks, which lot-and-block descriptions refer to. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Point of beginning: The starting point of a metes-and-bounds boundary, to which the description must return to close. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Point of commencement: A reference point used to reach the point of beginning; it is not itself part of the parcel boundary. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Principal meridian: A north-south reference line in the rectangular survey system; range designations locate land east or west of it. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Range: In the rectangular survey system, a designation that locates land east or west of a principal meridian. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Rectangular government survey system: A legal description method that locates land using principal meridians, base lines, townships, ranges and sections. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Section: In the rectangular survey system, a standard area of one square mile, or 640 acres. A township contains 36 sections. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Township: In the rectangular survey system, a standard square six miles on each side containing 36 sections. — Real property characteristics, legal descriptions, and property use · Taught in Legal descriptions and surveys
Ad valorem: Based on value. Ad valorem property taxes are computed from a property's taxable value and the tax rate. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat, Assessed value and property tax
Condemnation: The legal process by which government exercises eminent domain to take private property. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat, Transfer of title: voluntary and involuntary alienation
Eminent domain: Government's power to acquire private property for public use, provided it pays just compensation. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat, Transfer of title: voluntary and involuntary alienation
Escheat: The passing of property to the state when an owner dies without a valid will and with no legal heirs. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat, Transfer of title: voluntary and involuntary alienation
Intestate: Having died without a valid will. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat
Just compensation: The payment owed to an owner when government takes property by eminent domain. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat
PETE: A memory aid for the four government powers over private property: police power, eminent domain, taxation and escheat. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat
Police power: Government's power to regulate property use to protect public health, safety, morals and general welfare, through zoning, building codes and similar rules. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat
Tax lien: A claim against property for unpaid property taxes, which can ultimately lead to tax foreclosure through required procedures. — Real property characteristics, legal descriptions, and property use · Taught in Government powers: police power, eminent domain, taxation, and escheat
Building code: Rules that set construction safety standards, separate from zoning's regulation of use. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Comprehensive plan: A community's long-range development framework, which the enforceable zoning ordinance implements. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Conditional use: A use the zoning ordinance allows only when stated criteria and required approval are met. Also called a special exception; it is not a hardship waiver. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Deed restriction: A private limit on property use created in a deed, separate from government zoning and enforceable alongside it. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation, Private land-use controls: deed restrictions, CC&Rs, and HOAs
Density: The intensity of development, often measured in dwelling units per acre. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Nonconforming use: A use that was lawful when established but no longer conforms after a zoning change. Its status alone does not authorize expansion. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Permitted use: A use that fits the zoning district's requirements without special approval. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Rezoning: A change to a property's zoning classification or to the zoning rules that govern it. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Setback: The required distance between a structure and a specified boundary, such as a property line. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Subdivision regulations: Rules that govern dividing land into lots and the improvements required with it. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Variance: Specific relief from a zoning requirement, commonly a dimensional one such as a setback, granted when hardship standards are met. Wanting more profit is not enough. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation
Zoning: Public land-use control, exercised under the police power, that divides land into districts and regulates permitted uses and development such as height and density. — Real property characteristics, legal descriptions, and property use · Taught in Zoning ordinances and land-use regulation, Private land-use controls: deed restrictions, CC&Rs, and HOAs
CC&Rs: Covenants, conditions and restrictions: a recorded declaration of private rules governing a development, such as use, setbacks, appearance and architectural approval. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs
Covenant: A private promise in a recorded instrument that limits or requires something about property use and may bind later owners. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs
Homeowners association: An organization that commonly administers a development's private restrictions and maintains common property, often with mandatory membership and assessments. Abbreviated HOA. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs
Injunction: A court order directing a party to stop doing something, such as continuing a violation of a restriction. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs
Lien: A claim against property that secures payment of an obligation, such as unpaid association assessments. It does not by itself transfer ownership. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs, Liens and lien priority, Option contracts and installment sales contracts
Run with the land: Describes a restriction that binds not only the original owner but also later owners of the property. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs
Special assessment: A charge levied by an association to cover an expense outside its regular assessment. — Real property characteristics, legal descriptions, and property use · Taught in Private land-use controls: deed restrictions, CC&Rs, and HOAs
Abandonment: The ending of an easement through intent and conduct showing it is given up. Mere nonuse ordinarily is not enough. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Adverse possession: A doctrine under which qualifying possession can establish ownership of land, as opposed to prescription, which establishes only a use right. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments, Transfer of title: voluntary and involuntary alienation
Dominant estate: The parcel that benefits from an easement appurtenant. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Easement: A nonpossessory right to use another person's land for a specified purpose, such as access or utilities. The landowner keeps ownership. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Easement appurtenant: An easement that benefits one parcel (the dominant estate) and burdens another (the servient estate). The benefit generally passes with the dominant land. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Easement by necessity: An easement that can arise when dividing commonly owned land leaves a parcel without legally sufficient access. It ends when the necessity ends. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Easement in gross: An easement that benefits a person or entity rather than a parcel, such as a utility company's right to maintain lines. Commercial ones may be transferable. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Express easement: An easement created by a written grant or reservation. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Implied easement: An easement that may arise when commonly owned land is divided and an existing, apparent, continuous use meets the legal requirements. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
License: Permission to use another's land, generally personal and revocable, such as permission to park for a weekend. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Merger: The ending of an easement when the dominant and servient parcels come under the same ownership. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Prescriptive easement: A use right that arises from open, notorious, adverse and continuous use for the required period. Permission defeats it while the permission continues. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Servient estate: The parcel burdened by an easement, across which the use is exercised. — Real property characteristics, legal descriptions, and property use · Taught in Easements, licenses, and encroachments
Beneficiary: In a trust, a person who holds the beneficial interest in property whose legal title the trustee holds. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Community property: In Texas, property acquired during marriage, unless it is separate property. Community status and survivorship are separate questions. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Concurrent ownership: Ownership in which multiple owners hold interests in the same property at the same time. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Four unities: The traditional requirements of joint tenancy: time, title, interest and possession. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Joint tenancy: Co-ownership with equal interests and a right of survivorship, traditionally requiring the four unities of time, title, interest and possession. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Partition: A legal process that ends shared ownership by physically dividing the property or selling it and dividing the proceeds. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Right of survivorship: The right of a surviving co-owner to take a deceased co-owner's interest automatically, rather than under the deceased owner's will. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Separate property: In Texas, property a spouse owned before marriage or acquired by gift or inheritance. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Severalty: Ownership by one title holder, who can be an individual or a legal entity such as a corporation. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Survivorship agreement: A written agreement creating a right of survivorship. Texas law does not infer one merely from joint ownership. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Tenancy by the entirety: Where recognized, a form of ownership by spouses that includes survivorship and restricts one spouse from transferring alone. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Tenants in common: Co-owners holding undivided interests, possibly unequal, each with a right to possess the whole. A share passes through the owner's estate at death, not by survivorship. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Trustee: The person or entity that holds legal title to trust property and administers it for the beneficiaries. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Undivided interest: A fractional ownership share in the whole property, not title to a particular physical portion of it. — Forms of ownership, transfer, and recording of title · Taught in Forms of ownership: severalty, concurrent ownership, and ownership by entities
Bundle of rights: The rights of ownership: possession, control, enjoyment, exclusion and disposition. They can be divided, as when a lease transfers possession. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Executory limitation: A provision under which a specified event shifts ownership to a named third party rather than back to the grantor. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Fee simple absolute: The broadest estate: potentially perpetual, transferable during life and able to pass at death, though still subject to taxes, zoning and valid restrictions. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Fee simple defeasible: An estate that can last indefinitely but may end upon a specified event. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Fee simple determinable: A defeasible fee that ends automatically when its stated limitation occurs, as with land conveyed so long as it is used as a park. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Fee simple subject to a condition subsequent: A defeasible fee in which breach of a condition gives the grantor a right to end the estate; termination is not automatic. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Freehold estate: An ownership interest with no definite lease term, such as a fee simple or a life estate. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Life estate: An estate that lasts for the life of a measuring person and ends at that person's death, even if the life estate has been transferred. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Life tenant: The holder of a life estate, who may possess and use the property and collect rent but must avoid waste. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Possibility of reverter: The future interest a grantor keeps in a fee simple determinable: ownership returns automatically if the limitation occurs. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Pur autre vie: Describes a life estate measured by the life of someone other than its holder. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Remainder: A future interest under which possession passes to a designated third party when a prior estate ends. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Reversion: A future interest under which possession returns to the grantor when an estate ends. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights, Leasehold estates and types of leases
Right of entry: The grantor's power to end a fee simple subject to a condition subsequent after a breach. Also called a power of termination. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Waste: Use or neglect by a life tenant that injures the property and the future interests in it. — Forms of ownership, transfer, and recording of title · Taught in Freehold estates: fee simple, defeasible fees, life estates, and the bundle of rights
Assignment: The transfer of a tenant's entire remaining leasehold interest. It does not by itself release the original tenant. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Estate at sufferance: The status of a tenant who entered lawfully but stays after the right to possession ends without the landlord's consent. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Estate at will: A leasehold that continues with both parties' permission, without a definite term or recurring rental period. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Estate for years: A leasehold with a definite beginning and end, of any length; the name does not require a full year. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Graduated lease: A lease that sets predetermined rent changes over its term. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Gross lease: A lease under which the landlord generally pays the property's operating expenses and the tenant pays agreed rent. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Ground lease: A lease of land, commonly allowing the tenant to build improvements; ownership of the improvements depends on its terms. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Index lease: A lease that adjusts rent according to a named index. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Lease: An agreement giving a tenant (lessee) the right to possess and use property while the landlord (lessor) keeps ownership. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases, Property management agreements: funds, maintenance, leasing, rents, and deposits
Leasehold: A tenant's nonfreehold estate: the right to possess and use property under a lease, as opposed to ownership. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Lessee: The tenant under a lease. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Lessor: The landlord under a lease, who keeps ownership and a reversion. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Net lease: A lease that shifts specified property expenses to the tenant in addition to rent. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Percentage lease: A lease that ties some rent to the tenant's business sales, often a percentage added to base rent. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Periodic tenancy: A leasehold that continues for successive periods, such as month to month, until properly terminated. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Sublease: A transfer of less than the tenant's entire leasehold interest, leaving the original tenant an interest as sublessor. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Triple net lease: A net lease under which the tenant typically pays property taxes, insurance and maintenance expenses in addition to rent. — Forms of ownership, transfer, and recording of title · Taught in Leasehold estates and types of leases
Deed of trust: A security instrument that, like a mortgage, creates a voluntary lien securing a loan. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority, Option contracts and installment sales contracts, Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses, Settlement and closing the transaction
Encumbrance: Any claim or right that burdens property, such as a lien securing a debt or an easement authorizing a use. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority, Earnest money, equitable title, and contingencies
General lien: A lien that reaches the debtor's property generally, within its legal scope. It does not make exempt property available to creditors. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Involuntary lien: A lien that arises through law, such as a property tax lien, a mechanic's lien or a judgment lien. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Judgment lien: A lien arising from a court judgment that can reach the debtor's property within its legally defined scope; the usual example of a general lien. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority, Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Mechanic's lien: A lien on improved property for qualifying unpaid construction work or materials, once properly perfected. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Priority: The order in which competing liens are paid from available proceeds, usually first in time but subject to statutory priority and agreements. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Release: A document that removes a lien, rather than changing its position. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Specific lien: A lien that burdens only identified property, such as a mortgage or a property tax lien on a parcel. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Subordination agreement: An agreement by which a lienholder moves its lien behind another claim without releasing the debt. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Voluntary lien: A lien created by agreement, such as a mortgage or deed of trust securing a loan. — Forms of ownership, transfer, and recording of title · Taught in Liens and lien priority
Accretion: The gradual addition of land through deposits of soil by water. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Air rights: Rights to the space above a parcel, which may be conveyed or leased separately for development but do not override height limits or navigable airspace. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Avulsion: A sudden change in land caused by water, such as an abrupt river shift. It generally leaves the legal boundary where it was. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Erosion: The gradual wearing away of land by water or other natural forces. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Groundwater: Water lying below the ground surface, as distinct from surface water above it. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights, Groundwater contamination, underground storage tanks, waste sites, and brownfields
Littoral rights: Rights attached to land beside lakes, seas or oceans. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Mineral rights: Rights to minerals below the surface, which can be severed from surface ownership so that a later surface buyer does not acquire them. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Prior appropriation: A water allocation doctrine that prioritizes established rights to beneficial use: first in time, first in right. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Reasonable use: A riparian doctrine under which an owner's water use must account for the needs of other riparian owners. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Reliction: The gradual exposure of land as water recedes. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Riparian rights: Rights traditionally attached to land beside rivers or streams. They do not mean ownership of the whole water body. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Royalty interest: A right to a share of mineral production or its proceeds, which is not the same as full mineral ownership. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Subsurface rights: Rights to what lies below a parcel's surface, including minerals. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Surface rights: The rights to use the ground level of a parcel, such as occupying a home or farming, subject to zoning, easements and restrictions. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Water rights: Legally permitted rights to access and use water. — Forms of ownership, transfer, and recording of title · Taught in Air, surface, subsurface, and water rights
Acknowledgment: A formal declaration before an authorized officer that authenticates a deed's signing for recording purposes. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Bargain and sale deed: A deed that implies the grantor owns the property but, without express covenants, does not promise to defend title. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Covenant against encumbrances: A deed promise that there are no undisclosed burdens on the title. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Covenant of quiet enjoyment: A deed promise that the grantee will not be disturbed by a lawful superior claim to title. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Delivery: Transfer of a deed with intent that it take effect now, completed by the grantee's acceptance. Signing and keeping a deed is not delivery. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Further assurances: A deed promise that the grantor will perform additional acts needed to perfect the grantee's title. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
General warranty deed: A deed with the broadest customary title covenants, covering defects arising before or during the grantor's ownership. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Grantee: The party who receives a real property interest by deed. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Granting clause: The part of a deed containing the words of conveyance. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Grantor: The party who conveys a real property interest by deed. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Habendum clause: The part of a deed that describes the estate being conveyed. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Quitclaim deed: A deed that releases whatever interest the grantor has, if any, without title warranties. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Recording: Placing a document in the public records, which gives public notice and helps protect against competing claims. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds, Recording, notice, chain of title, and title insurance, Settlement and closing the transaction
Seisin: A deed promise that the grantor owns the interest being conveyed. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Special warranty deed: A deed whose warranty covers only claims arising by, through or under the grantor. Special means narrower, not stronger. — Forms of ownership, transfer, and recording of title · Taught in Deeds: elements of a valid deed and types of deeds
Alienation: A transfer of ownership of real property, either voluntary, by the owner's choice, or involuntary, by operation of law. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Deed in lieu of foreclosure: A borrower's voluntary conveyance of the property to the lender in place of foreclosure. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Devise: A gift of real property made in a will. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Devisee: The person who receives real property under a will. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Foreclosure: The legal process of enforcing a lien by selling or taking the property. Default alone does not transfer title. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Hostile: Possession that asserts a right inconsistent with the owner's rights and without permission; it has nothing to do with anger. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Intestate succession: The passing of a deceased owner's property to heirs under the law of descent and distribution when there is no valid will. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Involuntary alienation: A transfer of ownership by operation of law, such as foreclosure, condemnation, escheat or adverse possession. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Voluntary alienation: A transfer of ownership by the owner's choice, such as a sale, gift or devise. — Forms of ownership, transfer, and recording of title · Taught in Transfer of title: voluntary and involuntary alienation
Abstract: A summary of the relevant recorded documents affecting a property's title. It is not insurance. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Actual notice: Direct knowledge of a fact, such as an unrecorded claim. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Chain of title: The sequence of ownership transfers leading to the current owner. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Cloud on title: A missing link or unresolved adverse claim that casts doubt on ownership. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Constructive notice: Knowledge the law attributes to a person, commonly from proper recording in the chain of title, whether or not the person looked. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Exceptions: In title insurance, particular matters listed as not insured, such as a recorded easement. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Exclusions: In title insurance, broad categories of matters the policy does not cover. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Inquiry notice: Notice arising from facts that call for reasonable investigation, such as someone other than the seller occupying the property. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Lender's policy: A title insurance policy that protects the lender's security interest; it does not replace owner coverage. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Marketable title: Title reasonably free from doubt and litigation risk, though not necessarily free of permitted restrictions. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Owner's policy: A title insurance policy that protects the insured owner's interest. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Title commitment: A title insurer's conditional promise to issue a policy once its requirements are satisfied. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Title insurance: Insurance against covered title losses, usually from events before the policy date, paid for with a one-time premium. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance, RESPA, ECOA, mortgage fraud, and predatory lending, Settlement and closing the transaction
Title opinion: An attorney's evaluation of the legal effect of the recorded documents affecting title. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Title search: A review of the public records that follows the chain of title and checks for mortgages, easements, judgments and releases. — Forms of ownership, transfer, and recording of title · Taught in Recording, notice, chain of title, and title insurance
Arm's length sale: A sale between independent parties each pursuing their own interests, which can be strong evidence of value. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value, The sales comparison approach
Asking price: The price a seller requests for a property. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value, The sales comparison approach
Cost: The amount spent to acquire or produce something. An improvement's cost does not establish what it adds to value. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value
DUST: A memory aid for the four characteristics of value: demand, utility, scarcity and transferability. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value
Effective demand: Desire for property backed by the purchasing power to buy it. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value
Market price: The amount actually paid for a property, which need not equal market value. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value
Market value: An opinion of the most probable price a property should bring in a competitive, open market under normal sale conditions as of a specified date. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value, The sales comparison approach, Assessed value and property tax
Transferability: The ability to convey ownership rights; a title problem can impair it. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value
Utility: A property's capacity to satisfy a need, such as a useful floor plan. — Property value and appraisal · Taught in Market value, market price, and the characteristics of value
Anticipation: Present value reflects the future benefits a property is expected to provide, such as rent, enjoyment or resale proceeds. — Property value and appraisal · Taught in Principles of value, The income approach and gross rent and gross income multipliers
Balance: Value is greatest with a productive combination of land, labor, capital and management; an oversized building on a cramped site lacks it. — Property value and appraisal · Taught in Principles of value
Competition: Excess profits attract competitors, which can reduce those profits. — Property value and appraisal · Taught in Principles of value
Conformity: Value tends to be supported when a property is compatible with neighborhood uses and market expectations, not necessarily identical in design. — Property value and appraisal · Taught in Principles of value
Externalities: Influences on value from outside a property's boundaries, such as nearby amenities or nuisances. — Property value and appraisal · Taught in Principles of value
Highest and best use: The reasonably probable use that is legally permissible, physically possible, financially feasible and maximally productive. — Property value and appraisal · Taught in Principles of value, The cost approach: reproduction and replacement cost and depreciation
Increasing and diminishing returns: Successive spending on a property can first produce larger benefits and later smaller added benefits. — Property value and appraisal · Taught in Principles of value
Principle of contribution: An improvement is worth the value it adds to the whole property, not what it cost. — Property value and appraisal · Taught in Principles of value
Progression: The upward influence on a lesser property's value from superior surrounding properties. — Property value and appraisal · Taught in Principles of value
Regression: The downward influence on a superior property's value from inferior surrounding properties. — Property value and appraisal · Taught in Principles of value
Substitution: A buyer generally will not pay more for a property than the cost of an equally desirable substitute available without undue delay. — Property value and appraisal · Taught in Principles of value, The sales comparison approach, The cost approach: reproduction and replacement cost and depreciation
Supply and demand: The principle that prices respond to supply relative to demand; more demand against a fixed supply tends to raise prices. — Property value and appraisal · Taught in Principles of value
Appraisal: An opinion of value for a defined property interest as of an effective date, supported by analysis. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal, Comparative market analyses and broker price opinions, Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Appraisal Foundation: A private nonprofit organization whose boards develop appraisal standards (USPAP) and minimum appraiser qualification criteria. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Appraisal management company: A company that coordinates appraisal assignments and related services but does not replace the appraiser's independent judgment. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Appraisal Subcommittee: The body within the Federal Financial Institutions Examination Council that monitors state appraiser regulatory programs. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Effective date: The date as of which an appraisal's value opinion applies, which need not be the report date. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Federally related transaction: A transaction with a qualifying federal regulatory connection that requires an appraiser's services under FIRREA. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act, whose Title Eleven requires written appraisals, uniform standards, competency and supervision for federally related transactions. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Reconciliation: Weighing the indications from the valuation approaches by their reliability and relevance to reach a conclusion, rather than averaging them. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal, The sales comparison approach
Sales comparison: A valuation approach that estimates value by analyzing comparable sales. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Scope of work: The type and extent of research and analysis needed for an appraisal to produce credible results. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
USPAP: The Uniform Standards of Professional Appraisal Practice, developed by the Appraisal Foundation's Appraisal Standards Board. — Property value and appraisal · Taught in The appraisal process and federal oversight of appraisal
Adjusted indication: A comparable's sale price after adjustments, read as evidence of the subject's value. It does not change what the comparable actually sold for. — Property value and appraisal · Taught in The sales comparison approach, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Adjustment: A dollar or percentage change made to a comparable's sale price for a difference from the subject: subtract for a superior feature, add for an inferior one. — Property value and appraisal · Taught in The sales comparison approach
Comparable: A recently sold or listed property similar to the subject, used as evidence of the subject's value. Often called a comp. — Property value and appraisal · Taught in The sales comparison approach
Market conditions adjustment: An adjustment for price changes between a comparable's sale date and the valuation date: upward if prices have risen since the sale, downward if they have fallen. — Property value and appraisal · Taught in The sales comparison approach
Market contribution: The amount a feature actually adds to price in the market, which supports an adjustment and need not equal what the feature cost to install. — Property value and appraisal · Taught in The sales comparison approach, Comparative market analyses and broker price opinions
Net adjustment: The sum of a comparable's positive and negative adjustments. Large adjustments in opposite directions can cancel to a small net figure. — Property value and appraisal · Taught in The sales comparison approach
Paired sales analysis: Comparing otherwise similar sales that differ in one feature to estimate that feature's market contribution. — Property value and appraisal · Taught in The sales comparison approach
Seller concessions: Costs or benefits a seller provides to the buyer, such as paying the buyer's closing costs, which can inflate a sale price and must be verified before relying on it. — Property value and appraisal · Taught in The sales comparison approach
Subject property: The property being valued or priced. Comparables are adjusted toward it; the subject itself is held still. — Property value and appraisal · Taught in The sales comparison approach, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Total absolute adjustment: The sum of a comparable's adjustments ignoring their direction, which measures how different it is from the subject even when the net adjustment is small. — Property value and appraisal · Taught in The sales comparison approach
Valuation date: The date as of which the value estimate applies; comparable prices are adjusted to market conditions on that date. — Property value and appraisal · Taught in The sales comparison approach
Accrued depreciation: The total loss in value of the improvements from all causes, compared with their cost new. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Age-life method: A depreciation estimate that divides effective age by total economic life and multiplies the result by improvement cost new. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Cost approach: A valuation approach that adds land value to the current cost new of the improvements minus accrued depreciation. It is most useful for new or special-purpose buildings. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Cost new: The current cost to construct the improvements as new, measured as reproduction or replacement cost, not the owner's historical spending. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Curable: Describes a defect whose correction would add at least as much value as it costs. Being technically repairable is not enough. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Depreciation: Loss in value from any cause in appraisal, or a tax cost-recovery deduction for a building or improvement. A tax deduction is not a cash outflow or proof of declining market value. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation, Investment and property management math: return, appreciation, depreciation, and rents
Direct costs: Construction costs for labor and materials that go into building the improvements. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Economic life: The period over which improvements contribute value to the property. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Effective age: A building's age as indicated by its condition and utility, which may be more or less than its actual age since construction. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Entrepreneurial incentive: The amount a developer expects to earn for coordinating a project, included as a component of complete improvement cost new. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
External obsolescence: Loss in value from causes outside the property, such as neighboring industrial noise or reduced local demand. Also called economic obsolescence; generally incurable by the owner. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Functional obsolescence: Loss in value from a problem within the property itself, such as an awkward layout or an expensive feature buyers do not value. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Incurable: Describes a defect whose correction would cost more than the value it adds, or that the owner cannot correct, such as external obsolescence. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Indirect costs: Construction costs other than labor and materials, such as design, permits and fees. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Physical deterioration: Loss in value from wear, decay or damage to the improvements, such as a leaking roof or worn flooring. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Remaining economic life: The part of a building's economic life still ahead of it. Effective age plus remaining economic life equals total economic life. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Replacement cost: The current cost to build a building with equivalent utility using modern materials, standards and design. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Reproduction cost: The current cost to build an exact duplicate of a building with the same design and materials, including outdated features. — Property value and appraisal · Taught in The cost approach: reproduction and replacement cost and depreciation
Accounting depreciation: A bookkeeping or tax deduction for the cost of a building, which is not an operating expense when calculating NOI. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Capital improvement: A substantial addition or upgrade to a property, such as a new rental wing, which is separated from routine operating expenses. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Property management agreements: funds, maintenance, leasing, rents, and deposits
Capitalization rate: The rate used to convert annual net operating income into value: value equals NOI divided by the rate. A higher rate gives a lower value. Also called a cap rate; it is not a mortgage interest rate. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax, Investment and property management math: return, appreciation, depreciation, and rents
Debt service: Mortgage principal and interest payments. They are not operating expenses, so financing does not change NOI. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax, Investment and property management math: return, appreciation, depreciation, and rents
Direct capitalization: Estimating value by dividing one year's net operating income by a capitalization rate expressed as a decimal. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Effective gross income: Potential gross income minus vacancy and collection losses, plus other income. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax, Investment and property management math: return, appreciation, depreciation, and rents
Gross income multiplier: A comparable's sale price divided by its gross income, usually annual and including other income. Abbreviated GIM; it must use the same income definition as the subject. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Gross rent multiplier: A comparable's sale price divided by its gross rent for a stated period, usually monthly. Abbreviated GRM; multiplying the subject's rent for the same period by it estimates value. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Income approach: A valuation approach that estimates value from a property's expected earning power, used especially for income-producing property such as apartment buildings. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Market rent: The rent a property would likely command in the current market, supported by evidence rather than an owner's hopes. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Net operating income: Effective gross income minus operating expenses, before debt service. Abbreviated NOI; it is the income capitalized into value. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax, Investment and property management math: return, appreciation, depreciation, and rents
Operating expenses: Recurring costs of running a property, such as property taxes, insurance, management and routine maintenance. Mortgage payments, income taxes and accounting depreciation are excluded. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax, Investment and property management math: return, appreciation, depreciation, and rents
Other income: Income a property earns besides rent, such as parking or laundry revenue. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Potential gross income: A property's income at full occupancy, before vacancy and collection losses. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Replacement reserves: Money set aside for periodically replacing building components; treatment in an income calculation follows the problem's stated rule. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers
Vacancy and collection losses: Income lost to unoccupied units and to rent tenants owe but do not pay, subtracted from potential gross income. — Property value and appraisal · Taught in The income approach and gross rent and gross income multipliers, Investment and property management math: return, appreciation, depreciation, and rents
Active listing: A property currently offered for sale, which shows competing asking prices but not completed sale prices. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Broker price opinion: An estimate of a property's likely selling price for a specified business purpose, such as marketing lender-owned property. Abbreviated BPO; it is not an appraisal. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Closed sale: A completed transaction, which supplies evidence of an actual sale price. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Comparative market analysis: A license holder's analysis of comparable sales and listings to help a seller set an asking price or a buyer decide on an offer. Abbreviated CMA; it is not an appraisal. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Expired listing: A listing that ended without a sale, which may suggest unsuccessful pricing or marketing, though failure to sell can have other causes. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Licensed appraiser: A person licensed or certified to develop appraisals under the Uniform Standards of Professional Appraisal Practice. Preparing CMAs does not confer that authority. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Pending listing: A listed property under contract but not yet closed, which may suggest market direction before its final price is known. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Sales agent: A Texas license holder who acts under a sponsoring broker rather than independently. Work such as a BPO is submitted in the broker's name, and trust money and compensation pass through the broker. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions, Property management agreements: funds, maintenance, leasing, rents, and deposits, Ending brokerage agreements; services, fees, and compensation, Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers, The Texas licensing process: requirements, fitness, education, examination, and denial
Sponsoring broker: The broker who sponsors a sales agent's license and is responsible for the agent's brokerage activity. Work such as a BPO goes out in this broker's name, and trust money and compensation pass through this broker. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions, Property management agreements: funds, maintenance, leasing, rents, and deposits, Ending brokerage agreements; services, fees, and compensation, Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance, Texas complaint handling: investigations, hearings, and appeals, Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers, Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Withdrawn listing: A listing taken off the market before it sold or expired, which documents an unsuccessful offering rather than a sale. — Property value and appraisal · Taught in Comparative market analyses and broker price opinions
Appraisal limitation: A limit on how much a valuation measure may rise, which does not by itself cap the tax bill. — Property value and appraisal · Taught in Assessed value and property tax
Assessed value: The value assigned to property for tax purposes, which can differ from market value and sale price. — Property value and appraisal · Taught in Assessed value and property tax, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Assessment ratio: A stated percentage of market value used to find assessed value, applied before exemptions are subtracted. — Property value and appraisal · Taught in Assessed value and property tax
Assessment review: The process an owner uses to challenge an excessive official valuation of property for taxation. — Property value and appraisal · Taught in Assessed value and property tax
Exemption: An amount subtracted from assessed value to find taxable value. It saves the exemption times the tax rate, not the exemption's full dollar amount. — Property value and appraisal · Taught in Assessed value and property tax, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Mill: One dollar of tax per $1,000 of taxable value, or 0.001. Fifteen mills equals 1.5 percent, or $1.50 per $100. — Property value and appraisal · Taught in Assessed value and property tax, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Special assessment (local improvement): A charge local government levies on particular parcels for a local improvement that benefits them, such as a street project. It is separate from general ad valorem property tax and is not assessed value. — Property value and appraisal · Taught in Assessed value and property tax
Tax ceiling: A limit on the amount of tax itself, as distinct from a limit on valuation. — Property value and appraisal · Taught in Assessed value and property tax
Tax credit: An amount subtracted directly from the tax owed, unlike an exemption, which reduces the taxable base. — Property value and appraisal · Taught in Assessed value and property tax
Tax rate: The rate a taxing authority adopts and applies to taxable value, expressed as a percentage, in mills or in dollars per $100. — Property value and appraisal · Taught in Assessed value and property tax
Taxable value: Assessed value minus applicable exemptions; the base to which the tax rate is applied. — Property value and appraisal · Taught in Assessed value and property tax, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Taxing unit: A government body, such as a county, city or school district, that levies its own tax on property. Several can tax the same parcel. — Property value and appraisal · Taught in Assessed value and property tax
Bilateral contract: A contract that exchanges a promise for a promise, such as a seller's promise to convey for a buyer's promise to pay. Obligations arise before either performs. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Enforceability: Whether a court will enforce an agreement, a separate question from how it is classified; real estate transactions may require a writing. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Express contract: A contract whose terms are stated in spoken or written words. Express does not mean written; an oral exchange of promises is express. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Implied in fact contract: An actual agreement inferred from the parties' conduct and circumstances showing mutual assent, such as an established paid arrangement repeated without restating the terms. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Implied in law obligation: An obligation a court imposes to prevent unjust enrichment, without finding an actual agreement. Also called quasi contract. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Mutual assent: Agreement by the parties to the same terms, shown objectively through words or conduct such as offer and acceptance rather than by secret intentions. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral, Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable
Purchase agreement: A contract for the sale of real estate, typically bilateral: the seller promises to convey and the buyer promises to pay, subject to its terms. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Quasi contract: Another name for an implied in law obligation: a remedy against unjust enrichment, not an agreement inferred from conduct. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Unilateral offer: An offer that requests performance, rather than a return promise, in exchange for the offeror's promise, such as a reward for returning lost keys. Performing the act accepts it. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Unjust enrichment: A benefit one party unfairly keeps at another's expense, which a court may remedy through an implied in law obligation. — Real estate contracts and agency · Taught in Types of contracts: express and implied, unilateral and bilateral
Capacity: Legal ability to enter a contract. An adult who understands the transaction generally has it; a poor bargain alone does not show incapacity. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Consideration: A bargained-for exchange of legal value, such as a seller's promise to convey for a buyer's promise to pay. Immediate cash and equal value are not required. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable, Earnest money, equitable title, and contingencies, Option contracts and installment sales contracts
Counteroffer: A reply that changes a material term of an offer. It is not an acceptance and rejects the original offer. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Offer, counteroffer, and acceptance
Definite terms: Essential terms, such as the property and price, stated clearly enough to identify what was promised. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Duress: Wrongful pressure that forces a party's assent, which can make a contract voidable by that party. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Earnest money: A buyer's deposit made under a purchase contract. It is distinct from the mutual promises that supply consideration and is not required for a contract to exist. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable, Breach of contract, remedies, rescission, and termination, Earnest money, equitable title, and contingencies, Settlement and closing the transaction, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Executory: Describes a contract that still has promised performance outstanding. An executory contract, such as one awaiting closing, can be fully valid. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable
Fraud: Deliberate deception, such as a knowingly false statement of material fact or a promise made with no intent to perform, that induces another's reliance. Fraud inducing assent can make a contract voidable. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable, Duties to customers and third parties: honesty, disclosure, and misrepresentation, Antitrust, fraud, and misrepresentation
Lawful purpose: The requirement that a contract's object be legal. Signatures and payment do not cure an illegal bargain. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Memorandum: A written record of an agreement's terms that can satisfy the statute of frauds if it is signed by the person to be charged or an authorized signer. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable, The statute of frauds, electronic signatures, and time is of the essence
Minor: A person below the age of legal adulthood, whose contract is generally voidable by the minor rather than automatically void. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Offer and acceptance: The process that creates mutual assent: one party proposes definite terms and the other agrees to those same terms without change. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Person to be charged: Under the statute of frauds, the party against whom enforcement is sought, whose signature, or an authorized signer's, the writing must bear. — Real estate contracts and agency · Taught in Essential elements of a valid contract
Statute of frauds: A law, found in every state, requiring certain contracts, including contracts for the sale of real property and most leases longer than one year, to be in a signed writing to be enforceable. — Real estate contracts and agency · Taught in Essential elements of a valid contract, The statute of frauds, electronic signatures, and time is of the essence
Unenforceable: Describes an agreement that may otherwise satisfy formation requirements but that a court will not enforce because of a legal barrier, such as a missing required writing. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable, The statute of frauds, electronic signatures, and time is of the essence
Valid contract: A contract that meets the formation requirements: competent parties, mutual assent, consideration, a lawful purpose and sufficiently definite terms. Valid does not mean completed. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable
Void: Describes an agreement that has no legal effect as a contract from the outset, such as one whose purpose is illegal. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable
Voidable: Describes a contract that is binding unless a protected party, such as a minor or a victim of fraud or duress, chooses to avoid it. The other party has no equal right to escape. — Real estate contracts and agency · Taught in Essential elements of a valid contract, Contract status: executed and executory, valid, void, voidable, and unenforceable
Breach: A party's failure to perform a contractual duty without a legal excuse. A refusal to perform is a possible breach, not proof that the contract was void. — Real estate contracts and agency · Taught in Contract status: executed and executory, valid, void, voidable, and unenforceable, Breach of contract, remedies, rescission, and termination
Disaffirmance: A protected party's exercise of the right to avoid a voidable contract, rejecting its obligations. — Real estate contracts and agency · Taught in Contract status: executed and executory, valid, void, voidable, and unenforceable
Executed: In the performance sense, describes a contract fully performed by all parties. Executing a document can also mean signing it, so read the context. — Real estate contracts and agency · Taught in Contract status: executed and executory, valid, void, voidable, and unenforceable
Ratification: Adopting, with knowledge of the material facts, something one could otherwise reject, such as a voidable contract or an agent's unauthorized act. An illegal, void bargain cannot be ratified. — Real estate contracts and agency · Taught in Contract status: executed and executory, valid, void, voidable, and unenforceable, Creation and termination of agency
Accrued claim: A right to relief that arose before a contract ended, such as a damages claim, which may survive termination if preserved. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Anticipatory repudiation: A clear, unequivocal refusal to perform made before performance is due. A request to negotiate a change is not repudiation. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Compensatory damages: Money awarded to make up for proven loss caused by a breach, not to punish the breaching party. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Default: A party's failure to perform as the contract requires, which can trigger the other party's contractual remedies. Check duties, deadlines, conditions and notice before calling a failed closing a default. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, Earnest money, equitable title, and contingencies
Equitable remedy: Relief a court grants in its discretion, such as specific performance, rather than an award of money damages. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Escrow: The holding of funds, such as earnest money, by a neutral party until release conditions and procedures are satisfied. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, Earnest money, equitable title, and contingencies
Escrow agent: The neutral party holding earnest money. Under the TREC resale contract it is not a party to the sale and releases funds only under the contract's procedures. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Liquidated damages: An amount or measure of damages the parties agree to in advance for a specified breach. It is enforceable only if it compensates rather than operating as a penalty. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, Earnest money, equitable title, and contingencies
Material breach: A breach that substantially defeats the bargain and can excuse the other party's remaining performance. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Minor breach: A breach that does not substantially defeat the bargain. It may justify damages but does not excuse all remaining performance. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Mitigation: The injured party's duty to take reasonable steps to limit loss after a breach. Loss that could reasonably have been avoided generally is not recoverable. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Option fee: Money a buyer pays for an option, such as the right to buy a property later or to terminate a purchase contract within a set period. The seller generally keeps it if the buyer uses the option to walk away or lets it lapse, and it is often credited toward the price if the purchase closes, while earnest money is refunded or forfeited under the contract's own terms. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, Earnest money, equitable title, and contingencies
Option period: The stated time during which an option may be exercised, such as a Texas buyer's termination option, whose notice is due by 5 p.m. property-local time on the final day. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, The statute of frauds, electronic signatures, and time is of the essence, Option contracts and installment sales contracts
Penalty: A payment designed to punish a breach rather than compensate for loss. Calling it liquidated damages does not make it enforceable. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Rescission: Unwinding a contract and generally restoring the benefits each party received, either by mutual agreement or on a legal ground such as fraud. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Specific performance: A discretionary equitable remedy in which a court orders a party to perform as promised, such as conveying land. Land's uniqueness can support it, but it is not guaranteed. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Termination: Ending a contract or relationship, such as an agency, by agreement, an applicable right or another recognized event. Proper exercise of a termination right is not breach, and accrued claims and some duties may survive. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, Creation and termination of agency
Termination option: A Texas buyer's paid right, under paragraph 5 of the TREC resale contract, to end an existing purchase contract by timely notice during the option period. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination, Offer, counteroffer, and acceptance, Earnest money, equitable title, and contingencies, Option contracts and installment sales contracts
TREC resale contract: The Texas Real Estate Commission's standard contract form for resale residential transactions, whose numbered paragraphs govern matters such as default, the termination option and escrow. — Real estate contracts and agency · Taught in Breach of contract, remedies, rescission, and termination
Authorized representative: A person with lawful authority to sign for a party. A representative's signature can satisfy the statute of frauds for the party represented. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Consumer disclosure: Information the law requires to be provided to a consumer in writing. Electronic delivery requires the consumer's consent and does not change its required content or timing. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
E-SIGN Act: A federal law, 15 U.S.C. section 7001, providing that a covered transaction cannot be denied legal effect solely because its record or signature is electronic. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Electronic record: A contract or other record created and kept in electronic form. Where law requires a writing, it must be retainable and accurately reproducible by those entitled to it. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Electronic signature: A signature in electronic form adopted with intent to authenticate a record. It does not supply missing assent, terms or signing authority. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Intent to authenticate: The purpose of adopting a mark or typed name as one's signature, which distinguishes an electronic signature from merely mentioning a name. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Legal holiday: An officially recognized holiday. Under paragraph 5 of the TREC resale contract, specified payment deadlines falling on one extend to the next day that is not a weekend or legal holiday. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Option termination notice: A Texas buyer's notice ending the contract under the paragraph 5 termination option. It is due by 5 p.m. property-local time on the final option day and is not extended for weekends. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Party to be charged: The person against whom enforcement of an agreement is sought, whose signature, or an authorized representative's, the required writing must bear. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Strict compliance: Performing exactly by the stated deadline and terms, as a time-is-of-the-essence provision requires. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Time is of the essence: Contract language making timely performance material, so the deadlines it covers require strict compliance. It applies only to the duties it actually covers. — Real estate contracts and agency · Taught in The statute of frauds, electronic signatures, and time is of the essence
Acceptance: Unequivocal agreement to the offer's exact terms, given in the manner and time the offer requires. Silence or a private decision generally is not acceptance. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Amendment: A change to an already formed contract, which requires both parties' agreement and does not erase the existing contract. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Contingency: A contract term making a party's obligation depend on a condition, such as an inspection or financing. Adding one to a response is a counteroffer. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance, Earnest money, equitable title, and contingencies, Practicing within the scope of expertise and the unauthorized practice of law
Expiration: The end of an offer or agreement when its stated deadline or term passes, such as an offer's acceptance deadline or a representation agreement's end date. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance, Creation and termination of agency, Ending brokerage agreements; services, fees, and compensation
Inquiry: A question about possible different terms, such as a later closing, that keeps the offer under consideration and need not reject it. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Listing price: The price at which a property is advertised for sale. It generally invites offers and does not bind the seller to accept a matching bid. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Offer: A definite proposal to contract on stated terms. A listing price generally invites offers rather than being an offer itself. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Offeree: The party who receives an offer and has the power to accept it. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Offeror: The party who makes an offer. A counteroffer makes the original offeree the new offeror. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Purchase option: A right to buy specified property on agreed terms during a stated period, supported by consideration, so the owner cannot revoke the opportunity before it ends. Also called an option to purchase. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance, Option contracts and installment sales contracts
Rejection: The offeree's refusal of an offer, which ends it. A rejected offer cannot later be accepted unless it is renewed. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance
Revocation: The withdrawal of something previously given, such as an offeror's withdrawal of an offer before acceptance or a principal's withdrawal of an agent's authority. — Real estate contracts and agency · Taught in Offer, counteroffer, and acceptance, Creation and termination of agency, Ending brokerage agreements; services, fees, and compensation
Appraisal contingency: A contingency that protects a buyer if the property appraises below an agreed value. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
As Is: A contract term under which the buyer accepts the property in its present condition. It does not by itself cancel inspection or termination rights the contract grants, and it generally does not protect a seller or licensee who conceals or misrepresents a known defect. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
Automatic termination: A contingency outcome in which the contract ends by its own terms when a condition fails, without either party having to give notice. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
Down payment: The buyer's cash paid toward the purchase price at closing. Earnest money is commonly credited toward it but is not the whole down payment. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies, Loan math: interest, LTV, points, amortization, and PITI
Equitable conversion: The doctrine under which a buyer under an enforceable purchase contract acquires an equitable interest in the property while the seller keeps legal title until conveyance. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
Equitable title: A beneficial interest in property with the right to obtain legal title, such as a contract buyer's interest before conveyance or a title-theory borrower's while the lender holds legal title as security. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies, Option contracts and installment sales contracts, Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Financing contingency: A contingency that lets a buyer terminate if the specified loan cannot be obtained after the required efforts and notice. It does not require a lender to approve the loan. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
Inspection contingency: A contingency allowing termination for specified inspection results with timely notice. A mere right to inspect does not create a cancellation right. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
Legal title: Formal ownership of property, passed by conveyance of a deed. Under a purchase contract or contract for deed, the seller keeps it until the agreed performance. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies, Option contracts and installment sales contracts
Prequalification: A lender's preliminary indication that a buyer may qualify for a loan. It is not a financing or appraisal contingency. — Real estate contracts and agency · Taught in Earnest money, equitable title, and contingencies
Contract for deed: Another name for an installment land contract: the seller retains legal title, and delivers a deed only after the buyer completes the agreed payments and performance. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts, Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Exercise: The optionee's act of using an option in the manner and time its terms require. Proper exercise creates a purchase obligation but does not itself deliver a deed. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Forfeiture: Loss of a party's payments or rights as a consequence of default. Under a contract for deed, it depends on the contract and applicable law, not one missed payment alone. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Installment land contract: A seller-financed sale in which the buyer pays over time, usually with possession and equitable title, while the seller keeps legal title until the agreed performance is completed. Also called a contract for deed. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Lease option: A lease combined with an option to purchase. The tenant may choose not to buy, and rent counts toward the price only if the agreement provides rent credits. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Lease purchase: An arrangement combining a lease with a commitment to buy, rather than just a choice to buy. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Optionee: The holder of an option, usually the prospective buyer, who may choose to buy but has no obligation to do so before exercise. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Optionor: The party, usually the owner, who grants an option and is bound to keep the purchase opportunity open. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Purchase-money mortgage: A mortgage the buyer gives to secure financing of the purchase price, such as a seller's note. With it, the buyer receives legal title at closing. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Rent credit: A portion of rent that the agreement credits toward the purchase price if an option is exercised. It exists only if agreed. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Right of first refusal: A right to buy on matching terms if the owner decides to sell. Unlike a purchase option, it gives no power to initiate a purchase. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts
Seller financing: A sale in which the seller extends credit to the buyer instead of a third-party lender, either through a contract for deed or a deed with a purchase-money mortgage. — Real estate contracts and agency · Taught in Option contracts and installment sales contracts, Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Accounting: The fiduciary duty to safeguard money and property entrusted by a client and keep accurate records of them. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Creation and termination of agency, Fiduciary duties owed to a client, Property management agreements: funds, maintenance, leasing, rents, and deposits
Agent: A person authorized to act on behalf of a principal within the scope of authority the principal grants. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Creation and termination of agency
Brokerage-services disclosure: A notice explaining the types of brokerage relationships. Receiving it does not by itself create a representation agreement. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Client: The party an agent represents and owes fiduciary duties to, as distinct from a customer. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client, Duties to customers and third parties: honesty, disclosure, and misrepresentation
Confidentiality: The fiduciary duty to protect a client's confidential information, such as a bargaining limit, unless disclosure is authorized or required. It generally survives the end of the agency. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Creation and termination of agency, Fiduciary duties owed to a client, Duties to customers and third parties: honesty, disclosure, and misrepresentation, Buyer representation agreements, Ending brokerage agreements; services, fees, and compensation
Cooperating broker: A broker from another brokerage who works with the listing broker on a transaction. Cooperation alone does not make the broker a subagent. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Customer: A party the agent does not represent. Customers are still owed honest treatment and required disclosures, but not fiduciary loyalty. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client, Duties to customers and third parties: honesty, disclosure, and misrepresentation
Designated agency: A model in which a brokerage assigns different affiliated agents to different clients in the same transaction. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Dual agency: Representation of both the buyer and the seller in the same transaction by one licensee or brokerage. States treat it differently: some permit it with the informed written consent of both parties, some use an intermediary or transaction-broker arrangement instead, and some prohibit it. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Express agency: An agency created by an explicit agreement between principal and agent. It describes formation, not the scope of authority. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Creation and termination of agency
Fiduciary: Describes the relationship of trust in which an agent owes a client duties of loyalty, confidentiality, accounting, reasonable care, disclosure and obedience. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client
General agent: An agent authorized to handle a continuing range of activities in a business or property operation, such as a property manager running rentals within an agreed scope. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Implied agency: An agency inferred from the parties' conduct rather than an explicit agreement. Conduct cannot replace a legally required writing. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Creation and termination of agency
Intermediary: In Texas, a broker who works with both parties to the same transaction under the Texas intermediary framework, which Texas uses instead of the traditional dual-agency model. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client
Listing broker: The broker who represents the seller under a listing agreement to market the property. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Loyalty: The fiduciary duty to put the client's interests above the agent's own, such as a larger fee. It never permits deceiving a customer. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client, Duties to customers and third parties: honesty, disclosure, and misrepresentation, Buyer representation agreements
Obedience: The fiduciary duty to follow the client's lawful instructions within the agency. It does not extend to unlawful instructions such as lying. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client
Power of attorney: A document granting another person authority to act for the principal, limited to the powers its text specifies; it is not necessarily universal. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Principal: The person who authorizes an agent to act on the principal's behalf. Also called the client. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Creation and termination of agency, Fiduciary duties owed to a client, Practicing within the scope of expertise and the unauthorized practice of law
Reasonable care: The fiduciary duty to perform the client's work with professional competence and diligence, such as checking information and tracking deadlines. It does not guarantee investment success. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships, Fiduciary duties owed to a client
Single agency: A model in which the brokerage represents only one side of a transaction, such as the seller or the tenant. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Special agent: An agent authorized for a particular transaction or limited assignment, such as a broker hired to market one home without power to sign the sale contract. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Subagency: An arrangement in which another agent acts for the principal through the original agent. A seller's subagent represents the seller even while working with a buyer. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Transaction broker: A licensee who assists with a transaction without representing either party as a fiduciary agent. Also called a nonagent facilitator. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Universal agent: An agent with exceptionally broad authority over the principal's affairs. — Real estate contracts and agency · Taught in Types of agency and licensee-client relationships
Apparent authority: Authority a third party reasonably believes an agent has because of manifestations attributable to the principal. An agent's own unsupported claim does not create it. — Real estate contracts and agency · Taught in Creation and termination of agency
Buyer representation agreement: A service contract in which a buyer engages a broker for representation, stating scope, services, compensation, exclusivity and duration. It creates express agency and is separate from the purchase contract. — Real estate contracts and agency · Taught in Creation and termination of agency, Buyer representation agreements
Completion: The end of an agency because all of its promised services or its purpose has been fully accomplished. Acceptance of an offer is not necessarily completion. — Real estate contracts and agency · Taught in Creation and termination of agency, Ending brokerage agreements; services, fees, and compensation
Detrimental reliance: Reasonable reliance on another's conduct or representation that causes the relying person a loss, central to agency by estoppel. — Real estate contracts and agency · Taught in Creation and termination of agency
Estoppel: A doctrine that can prevent a person from denying agency when that person's conduct caused another's reasonable, detrimental reliance on the appearance of agency. — Real estate contracts and agency · Taught in Creation and termination of agency
Listing agreement: An agreement in which an owner employs a broker to market property, setting exclusivity, commission terms and duration. It creates express agency and is separate from the purchase contract. — Real estate contracts and agency · Taught in Creation and termination of agency, Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Operation of law: Termination that happens by legal effect rather than the parties' choice, such as the death or incapacity of an individual principal or agent, destruction of the subject property, or a change making performance unlawful. — Real estate contracts and agency · Taught in Creation and termination of agency
Renunciation: The agent's act of withdrawing from an agency. Like revocation, it can end authority but may still breach the agency contract. — Real estate contracts and agency · Taught in Creation and termination of agency, Ending brokerage agreements; services, fees, and compensation
Commingling: Mixing a client's entrusted funds with the agent's personal or business funds, even if the money is not spent. — Real estate contracts and agency · Taught in Fiduciary duties owed to a client, Property management agreements: funds, maintenance, leasing, rents, and deposits
Conversion: Using a client's entrusted funds or property for an unauthorized purpose, such as paying the agent's own expenses. — Real estate contracts and agency · Taught in Fiduciary duties owed to a client, Property management agreements: funds, maintenance, leasing, rents, and deposits
Disclosure: The fiduciary duty to communicate information material to the client's decisions, including presenting offers, while leaving the decisions to the client. — Real estate contracts and agency · Taught in Fiduciary duties owed to a client
Fidelity rule: A Texas rule requiring a license holder to put the client's interests above the license holder's own and to make the representation clear to other parties, while treating all parties honestly. — Real estate contracts and agency · Taught in Fiduciary duties owed to a client
Hidden defect: A significant property defect that is not readily observable, also called a latent defect. A licensee who knows of one generally must disclose it, and a buyer's planned inspection does not excuse the disclosure. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Honest and fair dealing: The duty an agent owes everyone in a transaction, including people the agent does not represent, to treat them truthfully and without deception. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Integrity rule: A Texas rule requiring license holders to use prudence and caution to avoid misrepresentation by acts or omissions. Lack of intent to deceive does not satisfy it. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Material fact: A fact that could affect a reasonable person's transaction decision or the property's value or desirability, such as known recurring foundation problems or leaks. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation, Antitrust, fraud, and misrepresentation, Property and environmental disclosure obligations and liability
Misrepresentation: A false or misleading communication of fact, whether by a false statement or by withholding information that must be disclosed. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Misrepresentation by commission: Making a false statement, such as saying a basement never flooded despite known flooding. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Misrepresentation by omission: Withholding information where disclosure is required, including a misleading partial account such as praising new finishes while concealing known flooding. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Negligent misrepresentation: False factual information given carelessly, without intent to deceive, such as a misread floor-area figure. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation, Antitrust, fraud, and misrepresentation, Property and environmental disclosure obligations and liability
Puffing: Subjective praise, such as calling a garden beautiful, that a reasonable person would not take as a verifiable fact. A measurable claim like acreage is not puffing. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation, Antitrust, fraud, and misrepresentation
Third parties: People in a transaction other than the agent and the agent's client. An agent owes them honest and fair dealing, not advocacy. — Real estate contracts and agency · Taught in Duties to customers and third parties: honesty, disclosure, and misrepresentation
Competence: Having the knowledge, judgment and skill an assignment requires, including the local market and property type. A license alone does not establish it. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
Competency rule: A Texas rule requiring license holders to know local market conditions, industry developments and the property type, and to use judgment and skill in brokerage activities. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
Informational blank: A space in an authorized form for factual information, such as the agreed price, which a license holder may complete. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
Legal advice: A judgment about legal rights, such as whether a contract is enforceable or title is valid. License holders refer such questions to the principal's attorney. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
Special provisions: A space in a Texas contract form for additional terms. It does not permit a license holder to draft or recommend language defining parties' rights, obligations or remedies. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
TREC contract form: A contract form promulgated by the Texas Real Estate Commission that Texas license holders generally must use, subject to specified exceptions. An exception does not authorize practicing law. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
Unauthorized practice of law: Performing legal work, such as drafting language that defines parties' rights or giving legal opinions, without being a licensed attorney. A real estate license does not authorize it. — Real estate practice · Taught in Practicing within the scope of expertise and the unauthorized practice of law
Commission: The broker's compensation for brokerage services, earned as the brokerage agreement provides, often as a percentage of the price. Rates are negotiable. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings, Ending brokerage agreements; services, fees, and compensation, Antitrust, fraud, and misrepresentation, Commission and compensation calculations
Conflict of interest: A situation in which the broker's interest may diverge from the client's, as when extra net-listing proceeds go to the broker rather than the owner. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Exclusive agency: An exclusive engagement of one brokerage that preserves the client's right to sell or acquire property independently, without any broker's help, without owing that brokerage's fee. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings, Buyer representation agreements
Exclusive listing: A listing in which one brokerage alone holds the listing, as with exclusive right to sell and exclusive agency. It still permits cooperation with other brokers. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Exclusive right to sell: A listing giving one brokerage the exclusive listing and its commission on any covered sale during the term, whoever finds the buyer, including the owner. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Maximum commission: The cap on the broker's commission that a Texas net listing must specify, along with assuring the principal at least the desired price. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Net listing: A compensation method in which the broker keeps the sale proceeds above the owner's desired net amount. It does not decide exclusivity. Many states restrict or prohibit it because it sets the broker's interest against the seller's. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Open listing: A nonexclusive listing that lets the owner engage several brokers and sell independently. Only the broker who is the procuring cause of the sale earns the commission. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Procuring cause: The broker whose uninterrupted chain of efforts brings about the completed sale, not merely the first to advertise or mention the buyer. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Protection period: A period after an agreement expires during which the broker can still earn a fee for specified later transactions, if the agreement's conditions are met. — Real estate practice · Taught in Listing agreements: exclusive right to sell, exclusive agency, open, and net listings, Buyer representation agreements, Ending brokerage agreements; services, fees, and compensation
Agency disclosure notice: A notice explaining brokerage relationships, such as Texas's Information About Brokerage Services. It is not a substitute for a representation agreement. — Real estate practice · Taught in Buyer representation agreements
Exclusive right to represent: A buyer agreement committing the buyer to one brokerage and commonly providing a fee on any covered acquisition during the term, whoever finds the property. — Real estate practice · Taught in Buyer representation agreements
Flat fee: A fixed dollar amount of brokerage compensation, as opposed to a percentage of the price. — Real estate practice · Taught in Buyer representation agreements, Ending brokerage agreements; services, fees, and compensation, Commission and compensation calculations
Information About Brokerage Services: The Texas notice explaining the types of brokerage relationships. Giving it does not create representation or satisfy the written buyer agreement requirement. — Real estate practice · Taught in Buyer representation agreements
Limited showing agreement: A Texas written agreement solely to show property without buyer representation. It must be nonexclusive and last no more than 14 days, and further services need a separate agreement. — Real estate practice · Taught in Buyer representation agreements
Mutual written release: A written agreement by both parties that ends their contract and settles remaining duties, such as future fee claims. — Real estate practice · Taught in Buyer representation agreements
Nonexclusive agreement: A representation agreement that permits the client to have other brokerage relationships, subject to its terms. — Real estate practice · Taught in Buyer representation agreements
Protection clause: A provision preserving the broker's fee for specified acquisitions or sales after the agreement expires, such as listed properties the broker showed, if its conditions are met. — Real estate practice · Taught in Buyer representation agreements, Ending brokerage agreements; services, fees, and compensation
Concession: A benefit given to a tenant to secure a lease, such as a free month's rent. A manager may grant one only with the authority the agreement provides. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Corrective maintenance: Repair of something that has already failed, such as a faucet that stopped working. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Delinquency: Rent that is due but unpaid, which triggers follow-up and any enforcement the agreement authorizes. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Net proceeds: The amount remaining for an owner after deductions, such as a seller's price less payoffs, charges and adjustments, or a manager's collected rents less authorized expenses and fees. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits, Settlement and closing the transaction
Operating reserve: Owner money kept on hand to pay authorized property expenses. It is not an additional management fee. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Preventive maintenance: Scheduled work done before problems develop, such as replacing air filters. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Property management agreement: The contract between an owner and a manager that defines the manager's authority, duties, compensation, reporting, term and termination. The lease separately governs the landlord-tenant relationship. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Remittance: The manager's payment of the owner's net proceeds to the owner, as the agreement directs. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Security deposit: Money a tenant pays to secure lease obligations. It is not rent income and must be recorded separately, with deductions limited to lawful ones. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Tenant ledger: The record of an individual tenant's rent charges, payments and unpaid balance. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Trust money: Money a licensee holds for others, such as earnest money, rents, and security deposits. State law requires it to be delivered or deposited promptly, usually into the broker's trust or escrow account, kept separate from the broker's own funds, and fully accounted for. — Real estate practice · Taught in Property management agreements: funds, maintenance, leasing, rents, and deposits
Full service: Brokerage covering the full range of services, such as pricing, marketing, showings, negotiation and transaction coordination. — Real estate practice · Taught in Ending brokerage agreements; services, fees, and compensation
Limited service: Brokerage providing only an identified subset of services, with the client handling the rest. — Real estate practice · Taught in Ending brokerage agreements; services, fees, and compensation
Ready, willing, and able buyer: A buyer prepared to buy on the seller's required terms and with the funds or financing to do so. Producing one may earn a fee if the agreement says so. — Real estate practice · Taught in Ending brokerage agreements; services, fees, and compensation
Success fee: A fee earned only if a specified result, such as a closed transaction, occurs. — Real estate practice · Taught in Ending brokerage agreements; services, fees, and compensation
Blockbusting: Seeking profit by inducing owners to sell or rent through representations that members of a protected group are entering the neighborhood. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws, Fair housing violations, advertising, enforcement, and the ADA
Civil Rights Act of 1866: A federal law (42 U.S.C. 1982) that protects citizens' equal rights in real and personal property against racial discrimination; Fair Housing Act owner exemptions do not remove it. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws
Disability: Under fair housing law, a substantially limiting impairment, a record of one, or being regarded as having one. Current illegal controlled-substance use is excluded. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws
Dwelling: Under fair housing law, a residential structure or vacant land offered for residential construction. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws
Exemptions: Narrow fair housing exceptions for certain owner transactions, older-person housing, religious housing and private clubs. Older-person housing is exempt only from familial-status rules. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws
Fair Housing Act: The federal law that prohibits housing discrimination based on race, color, religion, sex, national origin, familial status and disability. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws, Fair housing violations, advertising, enforcement, and the ADA
Familial status: A protected class that generally covers children under 18 living with a parent, legal custodian or authorized designee, plus pregnancy and people securing legal custody. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws, Fair housing violations, advertising, enforcement, and the ADA
Reasonable accommodation: A change to a rule, policy or service needed for a person with a disability, such as an assistance-animal exception to a no-pets policy. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws, Fair housing violations, advertising, enforcement, and the ADA
Reasonable modification: A physical change to premises needed for a person with a disability, such as grab bars, generally at that person's expense under the Fair Housing Act. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws
Redlining: Restricting lending or related services in a neighborhood because of its residents' protected characteristics. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws, Fair housing violations, advertising, enforcement, and the ADA
Steering: Directing someone's housing choices based on a protected characteristic, such as showing homes only in certain neighborhoods. — Real estate practice · Taught in Fair housing: protected classes and the federal fair housing laws, Fair housing violations, advertising, enforcement, and the ADA
Americans with Disabilities Act: The federal law, abbreviated ADA, requiring equal access, reasonable policy modifications and auxiliary aids at public accommodations such as a brokerage office open to clients. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Architectural barrier: A physical feature of an existing facility that blocks access for people with disabilities, which must be removed when readily achievable. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Auxiliary aids: Services or devices that provide effective communication with people with disabilities, such as interpreters or accessible formats. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Conciliation: A voluntary process HUD uses during an investigation to try to resolve a fair housing complaint by agreement. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Department of Justice: The federal department that shares a fair housing enforcement role, including bringing cases in court. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
HUD: The U.S. Department of Housing and Urban Development, which receives and investigates administrative fair housing complaints, generally filed within one year. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Multiple listing service: A system through which brokers share listings. It must not discriminate in membership or participation terms. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Physical modification: A necessary change to the premises for a resident with a disability, such as grab bars, which a housing provider must permit, generally at the resident's expense. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Private civil action: A fair housing lawsuit brought by the injured person, generally within two years, excluding time during an administrative proceeding. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Protected characteristic: A trait on which housing decisions may not lawfully be based. The federal Fair Housing Act protects race, color, religion, sex, national origin, familial status and disability. States can add more: New York also protects, for example, creed, marital status, lawful source of income and citizenship or immigration status. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Public accommodation: A business open to the public, such as a brokerage or leasing office, covered by the ADA. An ordinary private dwelling interior is not one. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Readily achievable: Easily accomplishable without much difficulty or expense, the ADA standard for removing existing barriers. If removal is not readily achievable, alternative methods must be considered. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Retaliation: Threats, coercion or interference against people who assert fair housing rights or help others assert them, which the law prohibits. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Tolling: Pausing a filing deadline; time during an administrative fair housing proceeding is excluded from the two-year civil action period. — Real estate practice · Taught in Fair housing violations, advertising, enforcement, and the ADA
Broker responsibility rule: A Texas rule making the sponsoring broker responsible for supervising sponsored agents, with written notice of authorized activities. It applies whether or not the agents are employees. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Claims-made policy: An insurance policy that covers claims made and reported during the policy period, so claim timing, reporting requirements and the retroactive date affect coverage. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Deductible: The amount the insured must pay toward a covered claim before the insurer pays. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance, Flood plains, flood zones, and flood insurance
Direct liability: Responsibility for one's own conduct, such as a broker's own negligent supervision. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Do-not-call: Restrictions on telephone solicitations to people who have registered or asked not to be called, which must be checked before prospecting. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Errors and omissions insurance: Insurance, abbreviated E&O, covering claims of professional negligence such as careless misstatements. Intentional fraud is generally excluded. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance, Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
General liability: Insurance commonly covering bodily injury and property damage claims, such as a visitor slipping in the office. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Negligent supervision: A broker's own failure to supervise reasonably, such as ignoring repeated warnings about an agent's careless work, which can create direct liability. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Opt-out request: A person's request to stop receiving marketing contact, which must be honored and recorded. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Prerecorded message: An automated recorded marketing call, which has its own permission requirements distinct from email or live calls. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Retroactive date: The date before which professional services are not covered by a claims-made policy, even if the claim arrives during the policy period. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Risk management: Combining supervision, privacy safeguards, lawful marketing and insurance to prevent harm, document sound practice and prepare for claims. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Suppression record: A firm's list of people who asked not to receive marketing contact, used to keep them out of future campaigns and imports. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Vicarious liability: Responsibility for another person's conduct based on the legal relationship and the conduct's connection to it, such as a brokerage's liability for its agent. — Real estate practice · Taught in Risk management: supervision, privacy and do-not-contact rules, vicarious liability, and E&O insurance
Antitrust law: Law that protects competition by prohibiting agreements that unlawfully restrain trade, such as competitors agreeing on commissions. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Concealment: Hiding a known material defect, such as covering signs of an active leak, which can create liability like a false statement. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Group boycott: Competitors coordinating a refusal to deal with someone, such as a discount brokerage, to suppress competition. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Intentional misrepresentation: A knowingly false or reckless statement of material fact intended to induce reliance, on which the other party justifiably relies to its harm. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Justified reliance: Reasonable reliance on a representation in making a decision, an element of misrepresentation. A buyer who knew the truth before deciding did not rely. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Market allocation: Competitors dividing territories or customers among themselves instead of competing. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Price fixing: Competitors agreeing on commissions, minimum fees or other price terms. Similar prices set independently are not price fixing. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Sherman Act: The federal law, 15 U.S.C. section 1, prohibiting agreements that unlawfully restrain interstate or foreign trade. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Tying: Conditioning one service on the purchase of another. It can raise antitrust concerns, but an optional service package is not necessarily an unlawful tie. — Real estate practice · Taught in Antitrust, fraud, and misrepresentation
Lead hazard evaluation report: An available report about lead-based paint or hazards in the specific property, which the seller or landlord must supply even if not asked. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule, Property and environmental disclosure obligations and liability
Lead hazard pamphlet: The approved federal pamphlet about lead hazards that must be given to buyers and tenants of target housing before they become obligated. It is general information, not a property report. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule, Property and environmental disclosure obligations and liability
Lead inspection: A professional examination for lead-based paint, which a purchaser may obtain during the default 10-day opportunity unless the parties agree otherwise or the purchaser waives it. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule
Lead risk assessment: A professional evaluation of lead hazards in a property. A purchaser gets a default 10-day opportunity to obtain one or an inspection before becoming obligated. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule, Property and environmental disclosure obligations and liability
Lead Warning Statement: Required warning language about lead hazards that must appear in a contract to sell target housing, along with signed buyer acknowledgments. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule, Property and environmental disclosure obligations and liability
Lead-based paint: Paint containing lead, common in housing built before 1978, which can seriously harm young children and poses particular risks during pregnancy. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule
Lead-based paint disclosure rule: The federal rule requiring sellers and landlords of most pre-1978 housing to give the lead pamphlet, known lead information and available reports before the buyer or tenant is obligated. It does not require testing or removal. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule
Remediation: Work that addresses an environmental hazard or exposure, such as removal, encapsulation or cleanup, as distinct from disclosure or investigation. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule, Asbestos, radon, and mold, Groundwater contamination, underground storage tanks, waste sites, and brownfields, Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Target housing: Housing covered by the federal lead disclosure rule: most residential housing built before 1978, other than exempt housing. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule, Property and environmental disclosure obligations and liability
Treble damages: Damages of three times the injured party's actual damages, available to purchasers and tenants for knowing violations of the lead disclosure statute. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule
Written waiver: A purchaser's signed decision to give up the lead inspection opportunity. It does not waive the owner's disclosure duties. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule
Zero-bedroom dwelling: A dwelling with no separate bedroom, such as a studio, which is a standard exemption from the federal lead disclosure rule. — Property disclosures and environmental issues · Taught in Lead-based paint and the federal disclosure rule
Asbestos: Mineral fibers historically used in products such as pipe insulation, floor tiles and textured coatings. The concern is inhaling fibers released when material is damaged or disturbed. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Encapsulation: Sealing asbestos-containing material with a coating to keep fibers from being released, one management option besides removal. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Enclosure: Surrounding asbestos-containing material with an airtight barrier so fibers cannot escape, one management option besides removal. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Friable: Describes asbestos-containing material that can be crumbled under hand pressure when dry, which makes fiber release more likely. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Mold: Fungal growth supported by moisture and suitable material. Response requires correcting the moisture source and appropriately cleaning or removing affected material. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Radon: A radioactive gas from natural uranium decay in soil and rock that can enter through ground-contact openings and accumulate indoors. It cannot be seen or smelled, so each home must be tested. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Radon mitigation: Reducing indoor radon, commonly by drawing soil gas from beneath the building and venting it outside, followed by testing to confirm the reduction. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold
Seller's Disclosure Notice: The Texas form on which a seller reports awareness of property conditions, including asbestos and radon. It describes the seller's knowledge and is not a warranty or a substitute for inspection. — Property disclosures and environmental issues · Taught in Asbestos, radon, and mold, Property and environmental disclosure obligations and liability
Brownfield: Property whose expansion, redevelopment or reuse may be complicated by actual or potential contamination. It need not be a confirmed hazardous waste site. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
CERCLA: The federal Comprehensive Environmental Response, Compensation, and Liability Act, or Superfund, which addresses hazardous substance releases and can impose strict, retroactive cleanup liability on responsible parties, including owners and operators. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields, Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Contaminant plume: The area of contamination spreading from a source through groundwater, which may extend beyond the source parcel. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Corrective action: Response work required to address a release from an underground storage tank. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Financial responsibility: Required evidence that a regulated tank owner can pay for corrective action and covered third-party damage. It does not certify a leak-free tank. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Landfill gas: Gas generated within a waste site, a concern separate from leachate. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Leachate: Liquid that passes through waste and picks up contaminants, which can reach soil and groundwater. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Phase I environmental site assessment: A review of historical uses, records, site conditions and interviews to identify potential environmental concerns. It ordinarily does not include soil or groundwater sampling. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields, Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Phase II assessment: Targeted sampling and testing performed when a Phase I or other information warrants further environmental investigation. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Release detection: Required monitoring of a regulated underground storage tank to discover leaks. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Source-pathway-receptor: A way to evaluate contamination risk by tracing a source, such as a leaking tank, through a pathway, such as groundwater, to a receptor, such as a drinking water well. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Tank closure: Properly taking an underground storage tank out of service, documented in closure records. Closure does not by itself show that past contamination was addressed. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Underground storage tank: A tank, such as for fuel, buried below the surface. Releases can contaminate soil and groundwater, and taking a tank out of service does not remove past contamination. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
Use restriction: A limit on how land or groundwater may be used after cleanup, such as a ban on drinking water wells, which may make a site unsuitable for unrestricted housing. — Property disclosures and environmental issues · Taught in Groundwater contamination, underground storage tanks, waste sites, and brownfields
A zone: A flood zone beginning with A, such as Zone AE, generally identifying a special flood hazard area with high-risk inland flooding. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Base flood: A flood with a 1% chance of being equaled or exceeded in any given year, also called the 100-year flood. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
FEMA: The Federal Emergency Management Agency, which publishes Flood Insurance Rate Maps showing federally mapped flood hazard zones. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Flood insurance: Insurance covering flood damage, required for covered loans in special flood hazard areas and available through the NFIP or private policies. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Flood Insurance Rate Map: A FEMA map, abbreviated FIRM, showing a property's federally mapped flood hazard zone. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Floodplain: Land susceptible to inundation by floodwater. The regulatory floodway is only part of it. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Floodway: The channel and adjacent land reserved to carry the base flood without raising water levels beyond the permitted amount. It is part of the floodplain, not the whole floodplain. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Homeowners insurance: A standard property policy for a home, which generally excludes flood damage unless separate flood protection is arranged. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
National Flood Insurance Program: The federal flood insurance program, abbreviated NFIP. Private companies may sell NFIP policies as well as their own private flood policies. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Private flood insurance: Flood coverage written by a private insurer under its own policy terms, which can satisfy the federal requirement if it meets the applicable standards. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Regulated lender: A federally regulated lending institution that generally must require flood insurance when making, increasing, extending or renewing covered loans on buildings in SFHAs. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Shaded Zone X: A flood zone generally identifying moderate flood hazard, including the 0.2% annual chance floodplain. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Special flood hazard area: An area with a 1% annual chance of flooding, generally shown as zones beginning with A or V. Abbreviated SFHA; covered loans there generally require flood insurance. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Unshaded Zone X: A flood zone generally identifying areas outside the mapped 0.2% annual chance floodplain. Lower risk does not mean no risk. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
V zone: A flood zone beginning with V, such as Zone VE, identifying a coastal high-hazard special flood hazard area with wave action. — Property disclosures and environmental issues · Taught in Flood plains, flood zones, and flood insurance
Army Corps of Engineers: The federal agency, acting through the Secretary of the Army, that administers the Section 404 permit program with EPA oversight. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Clean Air Act: The federal law protecting air quality and public health through pollution prevention and control, with federal, state and local roles. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Clean Water Act: The federal law addressing water pollution, including the Section 404 permit program for dredged or fill material. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Contribution claim: A liable party's claim against other responsible parties to recover their share of costs it paid. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Dredged or fill material: Soil, sand or other material dug from or placed into waters or wetlands, whose discharge into federally regulated waters requires Section 404 authorization. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Environmental due diligence: Appropriate environmental inquiry before acquisition, which can support certain landowner protections but is not blanket immunity. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
EPA: The federal Environmental Protection Agency, which administers and enforces major federal environmental programs, often with state agencies. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Joint and several liability: Liability under which each responsible party can be held for the entire recoverable amount, leaving it to seek contribution from the others. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water, Property and environmental disclosure obligations and liability
Pollution prevention: Reducing pollutants at their source before they are released, as distinct from remediation, which cleans up contamination afterward. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Potentially responsible parties: Those CERCLA can hold liable for cleanup: current owners and operators, owners and operators at the time of disposal, arrangers of disposal and certain transporters. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
SARA: The Superfund Amendments and Reauthorization Act, which strengthened and reauthorized CERCLA. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
SARA Title III: The part of SARA establishing emergency planning and community right-to-know requirements for hazardous chemicals. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Section 404: The Clean Water Act provision regulating discharges of dredged or fill material into federally regulated waters, including covered wetlands. Zoning approval does not replace its permit. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Strict liability: Liability without proof of fault or negligence, as under CERCLA. Not causing the contamination does not by itself protect an owner. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
Wetlands: Areas saturated with water that may be federally regulated waters under the Clean Water Act. Wet ground alone does not establish federal jurisdiction. — Property disclosures and environmental issues · Taught in Federal environmental law: EPA, CERCLA, SARA, site assessments, wetlands, and clean air and water
As-is agreement: An agreement allocating condition and repair risks to the buyer. It does not permit the seller to misrepresent or conceal known facts. — Property disclosures and environmental issues · Taught in Property and environmental disclosure obligations and liability
Fraudulent concealment: Intentionally hiding material information, such as painting over water stains to conceal known flooding. — Property disclosures and environmental issues · Taught in Property and environmental disclosure obligations and liability
Latent defect: A defect hidden from ordinary observation, such as concealed structural damage. — Property disclosures and environmental issues · Taught in Property and environmental disclosure obligations and liability
Patent defect: A defect apparent on ordinary observation, such as a plainly visible cracked pane of glass. — Property disclosures and environmental issues · Taught in Property and environmental disclosure obligations and liability
Warranty: A promise about a property's condition or performance, as distinct from a disclosure of existing knowledge. — Property disclosures and environmental issues · Taught in Property and environmental disclosure obligations and liability
Adjustable-rate loan: A loan whose interest rate changes under its terms, typically an index plus a margin, subject to any caps. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Assumption: A buyer's agreement to take on personal liability for the seller's existing loan. Buying subject to the loan does not by itself create that liability. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Conforming loan: A loan that meets applicable Fannie Mae or Freddie Mac purchase standards. Conforming and conventional describe different features. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Conventional loan: A mortgage loan that is not federally insured or guaranteed. It may be conforming or nonconforming and can have less than 20% down. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses, Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Due-on-sale clause: A loan provision letting the lender demand full payment when the property is transferred, which can limit assumptions and other existing-loan transfers. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Fannie Mae: A secondary-market company that, like Freddie Mac, purchases eligible mortgages and supports securitization. Their standards define conforming loans. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
FHA: The Federal Housing Administration, which insures qualifying mortgages made by approved lenders rather than lending directly. Borrowers pay mortgage insurance premiums. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Fixed-rate loan: A loan whose stated interest rate stays the same for its term. Taxes and insurance can still change the total monthly payment. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Ginnie Mae: A federal entity that guarantees payments on eligible mortgage-backed securities. It does not originate home loans. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Mortgage banker: A firm that originates and funds loans and may sell them to investors. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Mortgage broker: A party who arranges financing by matching borrowers with lenders and submitting applications, without funding the loans. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Mortgage-backed securities: Investments backed by pools of mortgage loans, traded in the secondary mortgage market. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Mortgagee: The lender who receives a mortgage as security for a loan. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Mortgagor: The borrower who gives a mortgage on property to secure a loan. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Portfolio lender: A lender that keeps loans it originates as investments instead of selling them. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Primary mortgage market: The market in which borrowers obtain new loans from originating lenders. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Promissory note: The document stating the borrower's debt and promise to repay. A mortgage or deed of trust separately secures it with the property. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses, Settlement and closing the transaction
Secondary mortgage market: The market in which existing loans and mortgage-backed securities are bought and sold, replenishing originators' funds for new lending. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Seller carryback: Seller financing in which the seller accepts the buyer's secured note for part or all of the unpaid price, often alongside an institutional first loan. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Servicing: Collecting loan payments and administering the account. Loan ownership and servicing can be separated, and a loan sale does not change the note's terms. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
VA: The Department of Veterans Affairs, which generally guarantees part of a qualifying lender's loan to eligible veterans, service members and certain surviving spouses. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets, Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Wraparound: A financing arrangement whose new obligation includes an existing loan; the buyer pays the wrap lender, who remains responsible for paying the underlying loan. — Financing and settlement · Taught in Methods and sources of financing: mortgage and seller financing, primary and secondary markets
Acceleration: A clause letting the lender demand the entire remaining debt after a specified trigger, commonly default. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Blanket mortgage: A single mortgage covering multiple parcels, often with partial releases as parcels are sold. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Defeasance: A clause providing that the security interest ends when the debt is fully satisfied. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Fully amortized: Describes a loan whose scheduled payments pay off all principal by maturity. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Hypothecation: Pledging property as security for a loan while keeping possession of it. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Index: A published rate to which an adjustable-rate loan's margin is added to set the new interest rate. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Interest-only loan: A loan whose payments cover only interest during the interest-only period, so principal does not decline. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Intermediate theory: The view that a mortgage is a lien until default, when legal title shifts to the lender. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Lien theory: The view that a borrower keeps title to mortgaged property while the lender holds only a lien. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Margin: The fixed percentage an adjustable-rate loan adds to its index to determine the interest rate. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Negative amortization: An increase in principal when unpaid interest is added to the loan balance. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses, Loan math: interest, LTV, points, amortization, and PITI
Package mortgage: A mortgage covering real estate together with specified personal property, such as listed furniture. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Partial release: A provision freeing one parcel from a blanket lien under agreed conditions while the rest remains collateral. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Partially amortized: Describes a loan whose payments reduce some principal but leave a balloon balance due at maturity. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Power of sale: A provision authorizing the sale of collateral after default through the foreclosure procedure the law permits. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Prepayment: Paying a loan off early; a prepayment provision addresses whether a charge applies. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Subordination: A change in lien priority, as when a lienholder agrees that another lien will rank ahead of its own. The debt itself remains. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Title theory: The view that legal title is conveyed to the lender as security while the borrower keeps equitable title. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Trustor: The borrower under a deed of trust, who conveys the security interest to a trustee for the lender's benefit. — Financing and settlement · Taught in Mortgages and deeds of trust: lien and title theory, loan types, and mortgage clauses
Appraised value: The appraiser's opinion of the property's value, which can limit the loan even when the borrower qualifies financially. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Entitlement: The amount of VA guaranty available to an eligible borrower. Eligibility and entitlement do not replace financial qualification. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Equity: Current property value minus the outstanding debt secured by it. It is not the same as net sale proceeds, and a higher LTV means less equity. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance, Valuation math: CMA, net operating income, capitalization rate, equity, and property tax
Funding fee: A fee charged on VA loans unless the borrower is exempt. VA loans have no monthly mortgage insurance. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Guarantee fee: A fee charged on USDA guaranteed loans, which is not conventional PMI. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Homeowners Protection Act: The federal law governing cancellation and automatic termination of covered borrower-paid PMI on conventional loans. FHA insurance follows different rules. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Jumbo loan: A loan too large to meet conforming standards. It can be conventional but nonconforming. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Loan to value: The loan amount divided by the lender's value basis, times 100; abbreviated LTV. On a purchase the basis is generally the lower of price and appraised value. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance, Loan math: interest, LTV, points, amortization, and PITI
Mortgage insurance: Insurance protecting the lender against covered default losses, even when the borrower pays for it. It does not cover property damage. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance, Loan math: interest, LTV, points, amortization, and PITI
Private mortgage insurance: Mortgage insurance on a conventional loan, abbreviated PMI, commonly used with less than 20% down. Covered borrower-paid PMI can be cancelled at 80% of original value and generally ends at 78%. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Underwriting: A lender's evaluation of the borrower's income, debts, credit and assets and of the property's value and condition. Program eligibility is not loan approval. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
USDA: The U.S. Department of Agriculture, which offers direct and guaranteed rural housing loans based on location and household income. The home need not be a farm. — Financing and settlement · Taught in Lender requirements: conventional, FHA, VA, and USDA loans, LTV, and mortgage insurance
Amount financed: The credit provided to or for the consumer after applicable adjustments, such as subtracting prepaid finance charges. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Annual percentage rate: The cost of credit expressed as a yearly rate, abbreviated APR. It includes interest and certain charges, so it can exceed the note rate, but it does not capture every closing expense. — Financing and settlement · Taught in Truth in Lending and Regulation Z, TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Business day: For TRID timing, either a day the creditor's offices are open for substantially all business functions (initial Loan Estimate deadline) or every day except Sundays and federal legal public holidays (waiting periods and rescission). — Financing and settlement · Taught in Truth in Lending and Regulation Z, TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Closed-end credit: Credit repaid over a set number of payments, such as a typical mortgage, as opposed to a revolving credit line. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Closing Disclosure: The final mortgage disclosure of loan terms and costs, which the consumer must receive at least three business days before consummation. — Financing and settlement · Taught in Truth in Lending and Regulation Z, TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure, Settlement and closing the transaction
Consummation: The time the consumer becomes contractually obligated on the credit transaction under state law, which anchors the disclosure waiting periods. It is not necessarily funding or recording. — Financing and settlement · Taught in Truth in Lending and Regulation Z, TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure, Settlement and closing the transaction
Finance charge: The dollar cost of credit, including interest and certain other credit charges. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Home equity loan: A loan secured by a borrower's existing home, which can carry a Truth in Lending rescission right when the home is the principal dwelling. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Loan Estimate: The early mortgage disclosure of estimated loan terms, payments, closing costs and cash to close, delivered or mailed within three business days after application and at least seven business days before consummation. It is not loan approval. — Financing and settlement · Taught in Truth in Lending and Regulation Z, TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Note rate: The contractual interest rate stated in the promissory note, which can be lower than the APR. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Prepaid finance charge: A finance charge paid at or before closing, which is subtracted in figuring the amount financed. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Prepayment penalty: A charge for paying a loan off early. Adding one after the Closing Disclosure is received starts a new three-business-day wait. — Financing and settlement · Taught in Truth in Lending and Regulation Z, TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Principal dwelling: The consumer's main home. Rescission rights apply only to qualifying credit secured by it, not, for example, a vacation cottage. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Regulation Z: The federal regulation implementing Truth in Lending, including mortgage disclosure timing, advertising and rescission rules. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Rescission right: A consumer's right under Truth in Lending to cancel certain credit secured by a principal dwelling until midnight of the third business day after the latest of consummation, notice and material disclosures. Purchase financing is exempt. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Total of payments: The amount financed plus the finance charge: everything the consumer will have paid when all scheduled payments are made. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Triggering term: An advertised credit term, such as a down payment, number or period of payments, payment amount or finance charge amount, that requires added disclosures of down payment, repayment terms and APR. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Truth in Lending: The federal law promoting meaningful disclosure of consumer credit costs, implemented by Regulation Z. Disclosure does not guarantee affordability or the lowest rate. — Financing and settlement · Taught in Truth in Lending and Regulation Z
Application: For the Loan Estimate trigger, receipt of six items: name, income, Social Security number, property address, estimated property value and loan amount sought. Supporting documents are not required. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Cash to close: The amount the buyer must bring to closing: closing costs plus items such as the down payment, minus the deposit and credits. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Closing costs: Charges for obtaining the loan and completing the transaction, such as fees, taxes and prepaid items. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Origination charge: A creditor's own charge for making the loan, a zero-tolerance item that cannot rise merely because the creditor underestimated it. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Prepaid interest: Interest paid at closing for the period before the first regular payment, a charge that may change without a numerical tolerance cap but must be estimated in good faith. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Recording fee: A government fee for recording documents, in the ten-percent aggregate tolerance category. An ordinary correction does not restart the Closing Disclosure wait. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Revised estimate: An updated Loan Estimate, which resets the baseline only when a permitted reason exists. It does not by itself cure an underestimated fee. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Seller credit: An amount the seller contributes toward the buyer's costs, which reduces the buyer's cash to close. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure, Settlement and closing the transaction, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Ten-percent aggregate tolerance: The TRID category, including recording fees and certain unaffiliated services chosen from the creditor's written provider list, whose total may not exceed the estimate by more than 10 percent. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Transfer tax: A tax on transferring property, a zero-tolerance item on the Loan Estimate. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
TRID: The TILA-RESPA Integrated Disclosure system, which combines mortgage credit and settlement-cost information into the Loan Estimate and Closing Disclosure. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Written provider list: The creditor's list of settlement service providers. Unaffiliated providers the consumer selects from it fall in the ten-percent aggregate tolerance category. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Zero tolerance: The TRID category of charges, such as creditor origination charges and transfer taxes, that cannot increase from the Loan Estimate without a valid basis for revision. — Financing and settlement · Taught in TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure
Adverse action: A creditor's denial or other unfavorable action on a credit application, which entitles the applicant to specific reasons, supplied directly or on request. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Affiliated business arrangement: A settlement provider in which the referring party has an ownership interest. It requires disclosure, a charge estimate, no required use, and benefits generally limited to an ownership return. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Appraisal inflation: Collusively overstating a property's value, as by inventing comparable sales, to support a loan. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Balloon payment: A large final loan payment. Its presence alone does not establish predatory lending. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Bona fide compensation: Genuine payment for services or goods actually provided, which RESPA distinguishes from a disguised referral payment. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Cooperative brokerage: Referral and fee-sharing arrangements between real estate agents and brokers, which RESPA expressly permits. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Creditworthiness: An applicant's ability and likelihood to repay, which a creditor may evaluate objectively under consistently applied standards. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
ECOA: The federal Equal Credit Opportunity Act, which prohibits creditor discrimination on prohibited bases in any aspect of a credit transaction while permitting objective creditworthiness evaluation. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Federally related mortgage loan: A mortgage loan with the federal connection that brings a transaction under RESPA's settlement rules. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Kickback: A thing of value given or accepted under an agreement or understanding, written or not, to refer settlement business. Disclosure does not make it lawful. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Mortgage fraud: Intentional material deception in obtaining or funding a mortgage, such as inflated income, fabricated employment or a false owner-occupancy statement. An honest mistake is not fraud. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Predatory lending: Abusive lending practices that exploit borrowers, such as deceptive pricing, repeated fee-generating refinancing without benefit, or unaffordable loans that strip equity. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Prohibited basis: A characteristic ECOA bars from credit decisions: race, color, religion, national origin, sex, marital status, age if able to contract, public-assistance income, or exercising credit rights in good faith. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Public-assistance income: Income from a public assistance program. A creditor may evaluate its amount and probable continuance but may not reject it merely because it is public assistance. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
RESPA: The federal Real Estate Settlement Procedures Act, which regulates settlement-service referrals and charges, prohibiting kickbacks and unearned splits on federally related mortgage loans. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Settlement service: A service provided in connection with a real estate settlement, such as title insurance, appraisal or closing services. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Unearned split: Sharing a settlement charge with a party that performed no services for it, which RESPA prohibits. — Financing and settlement · Taught in RESPA, ECOA, mortgage fraud, and predatory lending
Closing: The completion of a transaction, settling financial obligations and completing documents and title transfer. Signing, funding, recording and possession are separate milestones. — Financing and settlement · Taught in Settlement and closing the transaction
Closing agent: The party who conducts settlement, holds funds, disburses them once conditions are met and arranges recording. — Financing and settlement · Taught in Settlement and closing the transaction
Credit: A settlement entry recognizing funds or an adjustment in a party's favor, such as loan proceeds or earnest money credited to the buyer. — Financing and settlement · Taught in Settlement and closing the transaction, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Day-count convention: The rule for counting days in a proration, such as a 360-day year of 30-day months or a 365-day year, along with who owns the closing day. — Financing and settlement · Taught in Settlement and closing the transaction, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Debit: A settlement entry charging a party, such as the price charged to the buyer or the seller's share of unpaid taxes. — Financing and settlement · Taught in Settlement and closing the transaction, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Final walk-through: The buyer's inspection shortly before closing to check condition and agreed repairs. It does not establish title or loan approval. — Financing and settlement · Taught in Settlement and closing the transaction
Funding: The lender's authorization and disbursement of loan proceeds, a milestone separate from signing. — Financing and settlement · Taught in Settlement and closing the transaction
Mortgage escrow account: An account a servicer maintains from part of each monthly payment to pay future property taxes and insurance. — Financing and settlement · Taught in Settlement and closing the transaction
Payoff statement: A lender's quote of the amount needed to satisfy a loan on a specified date, which can include accrued interest and charges beyond principal. — Financing and settlement · Taught in Settlement and closing the transaction
Proration: Allocating income or expenses, such as taxes or dues, between seller and buyer by their ownership periods. Unpaid taxes give a seller debit and buyer credit. — Financing and settlement · Taught in Settlement and closing the transaction, Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Settlement disclosure: A statement itemizing borrower and seller charges and credits, including whom a title insurance premium covers. It does not convey title. — Financing and settlement · Taught in Settlement and closing the transaction
Settlement escrow: Funds held by the closing agent until closing conditions are met, then disbursed. — Financing and settlement · Taught in Settlement and closing the transaction
Acre: A unit of land area equal to 43,560 square feet. It measures area and does not prescribe a shape. — Real estate math · Taught in Area calculations: square footage and acreage
Area: The surface inside a boundary, measured in square units such as square feet or acres. — Real estate math · Taught in Area calculations: square footage and acreage
Perimeter: The distance around a boundary, measured in linear units such as feet. — Real estate math · Taught in Area calculations: square footage and acreage
Perpendicular height: The height measured at a right angle to the base, used in triangle and trapezoid area. A sloping side is not necessarily this height. — Real estate math · Taught in Area calculations: square footage and acreage
Square mile: A unit of area equal to 5,280 feet squared, or 27,878,400 square feet, which is 640 acres. — Real estate math · Taught in Area calculations: square footage and acreage
Square yard: A unit of area equal to 3 feet by 3 feet, or 9 square feet. — Real estate math · Taught in Area calculations: square footage and acreage
Trapezoid: A four-sided shape with two parallel sides; its area is the average of the parallel sides times the perpendicular height. — Real estate math · Taught in Area calculations: square footage and acreage
Triangle: A three-sided shape whose area is base times perpendicular height divided by two. — Real estate math · Taught in Area calculations: square footage and acreage
Agent split: The share of a brokerage's commission paid to its sales agent. It applies to the brokerage's share, not directly to the sale price. — Real estate math · Taught in Commission and compensation calculations
Brokerage split: The agreed division of a total commission between brokerages, such as 60% to the listing brokerage and 40% to the cooperating brokerage. — Real estate math · Taught in Commission and compensation calculations
Commission rate: The agreed percentage applied to the stated price base to compute commission. Commission divided by price gives the rate. — Real estate math · Taught in Commission and compensation calculations
Effective commission rate: An agent's compensation as a percentage of the sale price or total commission, found by multiplying the successive splits. — Real estate math · Taught in Commission and compensation calculations
Referral fee: A fee paid out of a commission to a party who referred the business, deducted in the order the agreement specifies. — Real estate math · Taught in Commission and compensation calculations
Target net: The amount a seller wants after commission and deductions. Required price equals target net plus fixed deductions, divided by one minus the commission rate. — Real estate math · Taught in Commission and compensation calculations
Tiered fee: A commission schedule charging different rates on different price bands, calculated separately for each band and then added. — Real estate math · Taught in Commission and compensation calculations
Transaction charge: A fixed charge deducted either from the commission pool before the agent split or from the agent's share afterward, as the agreement specifies. — Real estate math · Taught in Commission and compensation calculations
Amortizing: Describes a loan whose payments are split between interest on the outstanding balance and principal reduction, so the balance falls over time. — Real estate math · Taught in Loan math: interest, LTV, points, amortization, and PITI
Break-even: The number of months needed to recover an extra upfront cost through monthly savings: the cost divided by the monthly savings. — Real estate math · Taught in Loan math: interest, LTV, points, amortization, and PITI
Discount points: Upfront charges based on the loan amount; one point equals 1% of the loan. A point does not guarantee a one-percentage-point rate reduction. — Real estate math · Taught in Loan math: interest, LTV, points, amortization, and PITI
Interest-only: A payment that covers only interest and leaves the principal balance unchanged. — Real estate math · Taught in Loan math: interest, LTV, points, amortization, and PITI
PITI: Principal, interest, taxes and insurance: the four parts of a typical monthly housing payment. — Real estate math · Taught in Loan math: interest, LTV, points, amortization, and PITI
Simple interest: Interest computed as principal times annual rate times years. — Real estate math · Taught in Loan math: interest, LTV, points, amortization, and PITI
Discount point: A loan charge equal to one percent of the loan amount, not of the price. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Escrow fee: The closing agent's charge for handling the escrow, allocated between the parties as the contract provides, such as one-half each under the TREC resale contract. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Escrow reserves: Initial deposits into a mortgage escrow account to fund future tax and insurance bills, as distinct from a prepaid premium that buys coverage. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Loan proceeds: The buyer's new loan funds applied at closing, which reduce the buyer's cash requirement. They are not the seller's payoff. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Mortgage payoff: The amount needed to satisfy the seller's existing loan, which reduces seller proceeds and is unrelated to the buyer's new loan. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Prepaids: Buyer charges paid at closing in advance for future periods, such as hazard insurance premiums. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Seller net: Sale price plus seller credits, minus mortgage payoff, brokerage compensation and other seller charges. It is cash proceeds, not taxable profit. — Real estate math · Taught in Settlement math: prorations, debits and credits, net to seller, cost to buyer, and closing fees
Appreciation: An increase in property value, often expressed as a percentage of the starting value. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Before-tax cash flow: Net operating income minus debt service, assuming no other cash adjustments. Tax depreciation is not subtracted. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Cash-on-cash return: Annual before-tax cash flow divided by the initial cash invested. Unrealized appreciation is not added to it. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Compound growth: Growth in which each period's rate applies to the updated value, so two 10% increases exceed 20%. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Management fee: A property manager's compensation, computed on the base the agreement specifies, such as rents actually collected. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Potential gross rent: Annual rent assuming full occupancy and collection, before vacancy and collection losses. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Residual value: The value expected to remain at the end of an asset's useful life, subtracted from cost in straight-line depreciation. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Straight-line: A depreciation method dividing the depreciable amount, cost minus any residual value, equally over the useful life. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Tax depreciation: An income-tax cost-recovery deduction for buildings and improvements, but not land. It does not reduce NOI or cash flow. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Useful life: The assumed period over which an asset is depreciated. — Real estate math · Taught in Investment and property management math: return, appreciation, depreciation, and rents
Broker Responsibility Advisory Committee: A TREC advisory committee of nine experienced active Texas brokers that examines broker responsibility, related rules and possible legislative changes. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Broker-Lawyer Committee: A committee that drafts and revises standardized contract forms with safeguards to protect the transaction's principals. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Education Standards Advisory Committee: A TREC advisory committee of twelve members that reviews curriculum standards, course content and instructor qualifications for qualifying and continuing education. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Public members: Commission or committee members who are not license holders; TREC has three public members alongside six brokers. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Quorum: The minimum number of members who must be present for a body to act, such as seven for the Education Standards Advisory Committee. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Real Estate License Act: The Texas law (Occupations Code Chapter 1101) that TREC administers and under which it adopts and enforces rules. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees, Texas complaint handling: investigations, hearings, and appeals
Staggered: Describes terms of office that expire in different years so not all members are replaced at once; TREC members serve staggered six-year terms. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Texas Real Estate Commission: The state agency (TREC) that administers the Real Estate License Act and regulates licensing and professional conduct to protect the public. It has nine members: six brokers and three public members. — Texas Real Estate Commission duties and powers · Taught in TREC's composition, duties, and powers, and its advisory committees
Administrative law judge: The official who hears disputed evidence in a contested case and ordinarily issues a proposal for decision. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Agreed order: A complaint outcome in which TREC and the respondent resolve a violation by agreement. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Anonymous complaint: A complaint whose author is not identified, which cannot be the basis for initiating action against a Texas license holder. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Complainant: The person who files a complaint. TREC protects the complainant's identity to the extent possible, and withdrawal requires TREC's consent. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Dismissal: Closing a complaint that is outside TREC's jurisdiction, without merit, shows no violation or lacks enough evidence to prove a hearing case, with notice within 14 days. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Educational advisory letter: A complaint outcome that warns a license holder and explains proper conduct to deter future problems. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Field investigation: An investigation using on-site work rather than documents alone, which must be completed within six months after opening, absent good cause. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Final agency order: TREC's final decision in a contested case, issued after the administrative law judge's proposal for decision. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Good cause: A legitimate reason, such as temporarily inaccessible records, that can justify an extension or delay of a complaint-processing deadline. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Judicial review: A court's review of a final agency decision after required administrative procedures are followed. It does not replace the investigation. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals, Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Proposal for decision: An administrative law judge's recommended ruling after a hearing. It is not a final agency order or a court judgment. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Reasonable cause: A sufficient basis in a signed, written complaint that requires TREC to investigate a license holder. Filing alone does not establish a violation. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Request for information: TREC's request for records or a response during an investigation, normally due within 14 days after receipt, with extensions for good cause on written request. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Respondent: The license holder a complaint is against, who must respond to TREC information requests and may receive investigation materials. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
SOAH: The State Office of Administrative Hearings, where a contested Texas complaint not otherwise resolved must be set for hearing within one year after filing, absent good cause. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Status notice: A periodic written update on a pending complaint, sent at least every 120 days unless it would jeopardize an authorized undercover investigation. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
TREC: The Texas Real Estate Commission, which enforces the Real Estate License Act, investigates complaints against license holders and promulgates standard contract forms. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals, Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Undercover investigation: An authorized covert investigation of a license holder, during which status notices that would jeopardize it may be withheld. — Texas Real Estate Commission duties and powers · Taught in Texas complaint handling: investigations, hearings, and appeals
Actual damages: The real losses a claimant suffered, which the recovery account pays first when valid claims exceed its limits. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Administrative penalty: A monetary penalty TREC may impose, capped at $5,000 per violation, with each day potentially a separate violation. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Designated broker: The licensed broker who qualifies a business entity for its brokerage license and is responsible for it. For recovery account limits, the entity and its designated broker count as one license holder. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account, Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Final judgment: A court's conclusive decision on a claim, ordinarily required before a recovery account claim. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Nulla bona: A return on a writ of execution stating that no property was found to satisfy the judgment. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Probate: Of a revocation order: to suspend its enforcement, subject to conditions, instead of carrying it out immediately. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Real Estate Recovery Trust Account: A Texas account that reimburses qualifying actual damages caused by covered acts of license or certificate holders, subject to per-transaction and per-holder limits. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Revoke: To cancel a license. TREC may revoke with or instead of a monetary penalty, and must revoke if a holder fails to repay a recovery account payment. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
State Office of Administrative Hearings: The Texas agency whose judges conduct requested hearings on TREC enforcement matters and propose decisions for TREC's order. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Unlicensed activity: Performing acts that require a real estate license without holding one, which can bring administrative, civil or criminal consequences. — Texas Real Estate Commission duties and powers · Taught in Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account
Auctioneer exemption: The Texas exemption letting a licensed auctioneer auction real estate without a real estate license. It does not cover showing, preparing offers or negotiating contracts. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Broker price-analysis exception: The Texas rule letting a broker or sponsored sales agent give an ordinary-course written price estimate for an acquisition, disposition, encumbrance or management, if it is not called an appraisal. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Brokerage entity: A business entity conducting brokerage, which needs its own broker license and a designated broker with managing authority. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Clerical staff: Identified office employees who may confirm advertised property information, such as size, price and terms, without a license. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Inspector: A person licensed under Texas's separate inspection framework to perform professional real estate inspections. A sales agent license does not itself authorize inspection. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Registered compensation entity: A Texas LLC or S corporation registered with TREC, at least 51% owned by a license holder, that may receive that holder's brokerage compensation but perform no other broker acts. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Showing: A brokerage act that includes unlocking property for a prospective buyer or tenant and hosting an open house, which requires a license unless exempt. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Texas Appraiser Licensing and Certification Board: The board, an independent subdivision of TREC, that oversees Texas appraisers. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Tradesperson exception: The inspection-law exception for a tradesperson checking work during repairs who does not publicly hold out as being in the inspection business. — Texas licensing · Taught in Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Brokerage course: A 30-hour course a new Texas sales agent must complete as part of 90 additional qualifying hours by the initial license expiration date. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Disabilities of minority: The legal limits on a person under 18. Having them removed by a court does not waive Texas's minimum license age of 18. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Examination portion: Either the national or the state part of the Texas sales agent examination. Each must be passed with at least 70 percent, and a pass stays valid for one year from its own date. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Fingerprinting: The required submission of fingerprints for a criminal history check. An application can terminate if fingerprints remain incomplete one year after filing. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Fitness determination: A Commission assessment of a person's honesty, trustworthiness and integrity for licensing, which can be requested before applying. A supplemental review covers only the period after the original request. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Inactive license: A license that is current but not authorized for practice, such as a sales agent's license without an active Texas broker sponsor. It is not expired. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial, Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Probationary license: A license granted subject to conditions stated in the Commission's order, such as practice restrictions and reports. It is not unconditional approval. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Qualifying education: The 180 hours of coursework required before a Texas sales agent examination: 60 in Principles of Real Estate and 30 each in agency, contracts, promulgated contract forms and finance. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Testing service: The company that administers the licensing examination, arranges disability accommodations and requires adequate official photo identification. — Texas licensing · Taught in The Texas licensing process: requirements, fitness, education, examination, and denial
Alternate name: An individual license holder's name other than the licensed name, such as a maiden name, which must be registered with TREC before advertising. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Assumed business name: A broker's business name other than the licensed name. Before advertising, the broker registers it with TREC and supplies evidence of legal authority to use it in Texas. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Broker responsibility course: A 6-hour Texas CE course required of specified license holders, including delegated supervisors and brokers who sponsored sales agents during the license period. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Common derivative: A familiar short form of a licensed name, such as Bill for William, which counts as the licensed name rather than an alternate name. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Continuing education: Coursework a real estate licensee must complete to renew an active license, abbreviated CE. Each state sets the required hours and topics, which usually include law updates and ethics or agency. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Delegated supervisor: A license holder to whom a broker has delegated supervision of other license holders, who must take the broker responsibility course. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
First renewal: A sales agent's first license renewal, which requires the additional post-licensing education before filing rather than the ordinary CE checklist. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Legal update: The required Texas CE courses Legal Update I and Legal Update II, 4 hours each, covering current law and rules. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Reactivation: Returning an inactive license to active status by documenting CE, certifying no licensed activity while inactive, establishing sponsorship through TREC's process and paying the fee. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Sponsorship: A broker's TREC-recorded relationship with a sales agent. Ending it requires immediate written notice and TREC's process, and it makes the agent inactive. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names
Team name: A name identifying one or more license holders under the same broker, ending in team or group and not implying independent brokerage. The broker registers it before advertising. — Texas licensing · Taught in Keeping a Texas license: continuing education, sponsorship changes, inactive status, and assumed names

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