Our Top KEYWORDS AND CONCEPTS For the Real Estate Exam.

Updated: Nov 6, 2018

These keywords apply to both National and State Real Estate Exam . However, every state has certain keyword topics that repeat themselves over and over again every year. If you are looking for Top Keywords for your state as well , then we suggest you become a member of AgentExambank.com continue your research.


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Top Keywords in Alphabetical Order


Abatement - a reduction in property taxes; must file taxes before requesting

Abstract of Title - a condensed history of legal title, summarizing all instruments in chain of ownership; provided by lender's

attorney and paid by borrower

Abutting - neighboring land with a common boundary

Acceleration Clause – a clause in note protecting lender; upon default, balance of debt becomes due immediately instead of

maturity date; prelude to foreclosure

Acceptance - indication by signature of offeree that he is willing to be bound by terms of offer from offeror

Accretion – increase of property by gradual natural additions, as of land by alluvion


Acknowledgement - an act of executing a legal instrument such as a deed, mortgage or discharge before a lawyer or other officer

of state such as a notary public; this act declares signing to be free and voluntary; this is necessary before recording at registry

Acre - 43,560 square feet



Ad Valorem - tax assessment based on actual value

Adverse possession: occupant's right to acquire legal title to private property held by title holder by deed if occupant holds land

openly, notoriously, adversely and without permission for 20 years; also known as squatter's rights.


Air rights - ownership or lease of air space over a specific parcel of realty, such as a building over a turnpike

Alluvion – increasing of land area along a shore by deposited alluvium or by the recession of water

Alluvium – clay, silt, sand, gravel, or similar detrital material deposited by running water

Amenities - features of property making it desirable and thus adding value, such as scenic views, convenient shopping, etc.

Amortization - paying indebtedness by equal and periodic payments; each payment is equal but ratio of principal and interest

changes with an increasingly larger portion credited to reducing debt

Appraisal - an estimate of value

Appreciation - increase in value resulting from market forces such as demand stronger than supply


Appurtenance - a right belonging to and passing with a property such as having a right of way through adjoining property


Assets - all real and personal property one owns; assets minus liabilities such as mortgages, equal net worth (equity) transfer of

title or interest in writing; assignor gives and assignee receives


Associate broker - a broker who chooses to work as a salesperson for another broker (the employing broker)


released and in event of foreclosure and deficiency, mortgagee can look to either original mortgagor or new grantee or both

Attachment - a writ issued, beginning or during a legal action commanding sheriff to attach (“seize”) property, rights and effects of

defendant to satisfy possible credit demands of plaintiff if judgment comes out in plaintiff’s favor


Balloon mortgage - principal loan amount paid off in lump sum at end of term as opposed to amortized direct reduction method

Benchmark - mark on stone or cement permanently fixed to ground; used as measuring point by surveyors


Betterments - improvements adding to value of realty, done by local government and paid for by gainers of value; sidewalks,

streets, etc. Results in a special assessment

Bilateral contract - one person’s promise in exchange for another person’s promise such as purchase and sale agreement

Bill of sale - a written instrument that is the evidence of transfer of one person’s right in personal property to another

Binder - deposit or earnest money given as evidence of good faith by buyer to secure property until sale is consummated; it can

also refer to a temporary memorandum outline a real estate deal, similar to a letter of intent.


Blanket mortgage - a single mortgage instrument securing more than one parcel of property as security for the loan

Blockbusting - employing fear tactics to induce panic selling or panic peddling in a neighborhood: illegal


Bona fide - in good faith and without fraud

Bond - guarantee by third party that it will make good any loss, up to a certain amount, incurred by a party dealing with a broker

not acting in good faith; bonding company is Surety and obligor and State is oblige. Broker bond is made payable to State


Bundle of rights - all rights that go with ownership of realty


Capital expenditures - investments of cash for improvements to remain competitive in a business

Capitalization - process of computing current value from expected future income by dividing annual net income by selected rate of

return desired for that type of property; the cap rate

Capitalization rate - Profit expressed as a percentage that an investor expects from an investment on a yearly basis. A rate of

return.


Cash flow - profit after principal and interest are deducted from net operating income (NOI)


Certificate of title - a written opinion by an attorney or title company that certifies condition of title.

Chain of title -history of conveyances and encumbrances affecting a title

Chattel - an article of personal property

Clear title - title free of encumbrances

Client - principal who hires an agent; CUSTOMER is the unrepresented party.

Closing costs - costs of seller and buyer at conveyance of realty.


Cloud on title - outstanding claim or encumbrance which if proved to be valid, would impair title and marketability of property.

Collateral - a security, such as a mortgage, given to protect debt

Collusion - agreement between parties to defraud another


Condominium - multi-unit structure made up of individually-owned units with separate deeds and shared ownership of common

areas


Covenant - a promise or guarantee usually found in a deed


Covert - hidden or concealed defect in the title

Cubage or cubic content - length x width x height of interior


Curtesy - rights of husband to share in wife’s realty upon her death only. Dower is rights of wife to share in husband’s realty upon

his death; both these rights are life interests only



Deed of trust (trust deed) - in some states used instead of a mortgage deed

Deed restriction - provision in deed controlling use of land


Depreciation - decrease in value for various reasons

Devise - a gift of realty by will; deceased is devisor


Domicile - place where one has permanent residence, no matter where one is currently living


Duress - unlawfully forcing someone to do something against their will

Earnest money - deposit given with Agreement to Buy

Easement - a right which one person has in lands of another

Easement in gross - a personal right to use another’s land.


Emblements - crops growing which require annual or semi-annual planting and cultivation; normally personal and belonging to

tenant

Eminent domain - right of government to take private property against owner’s wishes for public use with fair compensation

Encroachment - physical trespass of a property on that of another such as overhang; the discovery is by survey

Encumbrance - anything that burdens (limits) the fee title to property, such as a lien, easement or restriction of any kind

Equity - value or interest an owner of realty has above any debt on property; difference between value and mortgage debt


Erosion – The process by which the surface of the earth is worn away by the action of water, wind, etc.

Escheat - power of state to take property if no will and no heirs

Escrow - the holding of something of value (e.g. a deposit on a home) by a person (escrowee or escrow agent) for the benefit of

other parties


Eviction - the depriving of a person’s possession of realty


External obsolescence - loss in value due to outside forces, such as neighborhood deterioration; not curable; a/k/a economic

obsolescence

Federal Home Loan Mortgage Corp. (FHLMC) - known as “Freddie Mac,” it is a secondary market operation that buys

conventional mortgages from lenders to keep market for mortgages fluid

Federal Housing Administration (FHA) - part of U.S. Dept of Housing and Urban Development (HUD) which insures mortgage

loans originated by qualified and approved lenders with the home buyer paying loan insurance premium

Federal National Mortgage Association (FNMA) - known as “Fannie Mae,” it is a secondary market loan buyer

Federal Reserve Board - U.S. central bank composed of Governors with Chairperson; establishes and regulates monetary policy

Fee simple - largest possible estate or interest person can have in a parcel of realty; least limited estate

Fee simple defeasible - granting of title (Fee Simple Subject to a Condition Subsequent) or duration of title (Fee Simple

Determinable) is dependent on a specific condition named in the title

Fiduciary - a position of trust (e.g. broker to principal)


Fixture - article that was personalty, but is now realty because it is permanently attached

Forcible entry - legal action to recover possession of premises unlawfully held

Foreclosure - legal remedy whereby collateral is sold to pay debt because Note terms, such as non-payment, were not met

Forfeiture - loss of money or anything of value due to failure to perform according to terms of contract

Fraud - intentional deception in which an injured party has loss

Freehold - an interest in realty of not less than a life estate

Front foot - number of feet of frontage on street side

Functional obsolescence - loss in value due to out-of-date, poorly designed or old-fashioned fixtures or equipment; may be

curable

General lien - a lien on any and all property of debtor such as: judgment, decedent’s debts, inheritance taxes, state tax liens, IRS

liens

Government National Mortgage Assoc. (GNMA) - known as “Ginnie Mae,” this is a secondary market government sponsored

enterprise, that buys federally-backed mortgages to help fluidity, and encourage low-cost housing


Grantor - one who transfers title to real estate to the Grantee

Gross lease - owner receives rent and pays out expenses such as in apartment leasing, as opposed to net lease where the owner

receives rent and tenant also pays out expenses normally paid by owner such as taxes, etc.



Homestead laws - laws designed to protect homeowner from forced sale of home to satisfy certain debts


Interim financing - development loan such as construction money used during creation of realty investment

Intestate - no will or a defective will by the deceased


Junior mortgage - any mortgage after a previous mortgage

Laches - unreasonable delay in asserting one’s rights causing the loss of such rights


Leaseback - the purchase of improved property and the leasing of it back to seller; creates capital and favored tax treatment for

seller

Leasehold - the interest that a lessee has in realty

Lien - a debt; claim against property for payment of some debt

Life estate - estate or interest held during a certain person’s life; non-inheritable; lowest of freehold estates


Lis pendens - notice filed in a registry of deeds warning all persons that title to certain property is in litigation

Litigation - a contest in court of law between two parties to determine who is in the right

Littoral - shoreline of large body of water



Master deed - basic title document in creation of condominium; it defines individual fee units and common interests

Mechanic’s lien - a statutory lien on a specific property for labor and material contributed to a work of improvement of realty


Metes and bounds - boundaries of land described in directions and distances

Mile – 5,280 feet


Mortgage - a legal instrument conveying conditional title to lender in order to secure the repayment of the debt described in the

note


Mortgage broker - a party who, for a fee, brings together an investor and borrower

Mortgagee - the lender


Mortgagor - the borrower

Municipal lien certificate - a document from municipality to ascertain status of taxes, water, sewerage, betterments etc.; a

required document at closing of title


Net listing - a fixed, specified price below which owner will not sell and at which broker receives no commission; broker receives everything over fixed price; illegal in some states like Massachusetts.


Nonconforming use - a legal use that was in existence prior to current zoning, which may continue to exist


Novation - substitution of old obligation for a new one

Obsolescence - loss of value from any source other than wear and tear

Offer - statement of intent by offeror; Acceptance is the statement of intent to accept offer by offeree


Open listing - any hired broker can sell property for a commission but if owner sells, no commission payable


Open mortgage - a mortgage that has matured or is overdue and subject to foreclosure


Ordinance - law by local government body

Overt - openly known

Ownership - title; an estate in realty to the exclusion of others


Partition - a legal action (e.g. lawsuit) to divide co-owned realty


Percentage lease - a lease contract in which rental is based on a percentage of gross sales; usually with a fixed minimum



Point of beginning (P.O.B.) - the starting point in a metes and bound description of property, either from a monument or a reference point on the street; the description begins and ends at the P.O.B.


Police power - right of government to enact laws (e.g. building codes, zoning bylaws, license laws) in the public interest or for the

public welfare

Power of attorney - written instrument authorizing another to act in his/her place; person given power is attorney-in-fact


Prescription - a method of obtaining an easement by adverse use for a period of years (20), hostile to owner’s wishes

Primary mortgage market - market where loans are made directly to borrowers



Private restriction - a restriction placed on realty by grantor (seller) at time of sale imposed on immediate and subsequent

owners


Prime rate - lowest interest rate charged by commercial banks to most credit-worthy customers; the discount rate is rate

charged to these banks by Federal Reserve, and the fed funds rate is the rate at which banks borrow from each other


Procuring cause - the effort of broker who produced a ready willing and able buyer


Prorate - term used to describe proportional adjustment of monies between seller and buyer at closing such as fuel, rents, etc.


Public restriction - government law or regulation restricting the use of real estate.

Puffing – an exaggeration made by a salesperson or found in an advertisement that concerns the quality of goods offered for sale

Purchase money mortgage (PMM) - aka seller financing. As part payment of purchase price, the buyer (grantee) gives a Note

and mortgage Deed back to seller

Quiet enjoyment - right of owner or tenant to possession without interference

Quieting title - court action to establish true owner and title

Quitclaim deed - written instrument releasing interest of grantor

Reality of consent - agreement to a contract must be real and free from fraud, duress, undue influence, misrepresentation and

error

Reciprocity - mutual exchange of privileges


REO – Real Estate Owned; a bank owned property


Reliction – an increase of the land by the sudden retreat of the sea or a river

RESPA (Real Estate Settlement Procedures Act) - a law requiring full disclosure of closing costs to buyer and seller.

Restrictive covenant - clause in deed limiting certain realty use


Right of first refusal – Effectively “dibs” on a property; provides the person holding the right to match a future offer and buy the

property in lieu of the offeror

Right of way - right of one person to pass over estate of another; a form of easement

Riparian - belonging to or relating to banks of a body of water


Secondary financing - junior mortgages, not to be confused with secondary mortgage market.

Secondary mortgage market - marketplace for the sale and purchase of existing mortgages which originated in primary market

Pre-Licensing Course Study Guide


Seisin – possession of realty with a freehold claim in it. Also can be spelled seizin.


Severalty - sole ownership; owned by one person only


Short Sale – a settlement with the lender where the lender accepts a payment of less

Specific lien - a lien on a particular property such as: mortgage, municipal taxes, mechanic’s lien, attachment, special assessment,

condominium association fees


Square feet – length x width

Square mile – 640 acres or 27,878,400 feet


Statute of Frauds - law requiring all realty contracts to be in writing in order to be enforceable in court of law


Subdivision - act of land legally divided into lots for residential construction; recorded in plat book


Surety - one who guarantees performance of another

Survey - act of establishing legal description of property


Syndication – a corporation formed for the investment in a piece or pieces of real estate

Tax rate – municipal tax rate multiplied by assessment to produce annual tax. It is given as a millage rate (usually per $1000)

Tax sale - sale of property by public auction to satisfy delinquent taxes

Tax title - title or ownership acquired at tax sale

Tenancy at sufferance - a tenancy arising when tenant remains in possession after lease expires and without owner’s permission

Pre-Licensing Course Study Guide


Tenancy at will - a tenancy which is subject to termination at will of either landlord or tenant (“month to month”)

Tenancy by the entireties - joint tenancy of married couple only

Tenancy in common - holding of title by different persons, under different titles, each

Title insurance - insurance against loss resulting from defect in title to particular parcel of realty


Torrens system - procedure of registering titles in land

Trade fixtures - personal articles used in business and affixed to realty; necessary for trade and are removable


Usury - charging higher rate of interest than law allows