Key terms
| Term | Definition |
|---|---|
Appurtenance | A right or improvement that passes with the land, such as an easement appurtenant. |
Assessed value | The value a taxing authority assigns for property tax purposes. |
Balloon payment | A final loan payment larger than the regular payments, left when a loan is only partially amortized. |
Bundle of rights | The owner's rights to possess, use, enjoy, exclude and dispose of property. |
Capitalization rate | NOI divided by value; the return an investor expects from a property's income. |
Chain of title | The recorded history of ownership transfers for a property. |
Commingling | Mixing client or trust funds with a broker's own money - prohibited. |
Consideration | Something of value exchanged that makes a contract binding. |
Constructive notice | Legal notice presumed from public records, such as a recorded deed. |
Conversion | Using trust funds for personal purposes - a serious violation. |
Easement in gross | A right to use another's land that benefits a person or company, not a neighboring parcel. |
Eminent domain | Government power to take private property for public use with just compensation. |
Encroachment | An improvement that extends onto a neighbor's land. |
Escheat | Reversion of property to the state when an owner dies without a will or heirs. |
Fee simple absolute | The most complete form of ownership, with no conditions. |
Fiduciary | A person in a position of trust owing duties such as loyalty and confidentiality to a client. |
Fixture | Personal property attached to real property so that it becomes part of the real estate. |
Functional obsolescence | Loss in value from outdated design or layout. |
Joint tenancy | Co-ownership with the right of survivorship. |
Lien | A claim against property as security for a debt. |
Life estate | Ownership that lasts for the life of a named person. |
Loan-to-value (LTV) | The loan amount divided by the lesser of price or appraised value. |
Mill | One-tenth of a cent; property tax rates are often quoted in mills per dollar of assessed value. |
Net operating income (NOI) | Effective gross income minus operating expenses, before debt service. |
Novation | Replacing an existing contract or party with a new one, releasing the original obligation. |
Police power | Government power to regulate land use for public health, safety and welfare (e.g., zoning). |
Procuring cause | The broker whose efforts started an unbroken chain of events leading to the sale. |
Quitclaim deed | A deed that transfers whatever interest the grantor has, with no warranties. |
RESPA | Federal law governing settlement procedures; prohibits kickbacks for settlement-service referrals. |
Steering | Illegally channeling buyers toward or away from areas based on a protected class. |
Tenancy in common | Co-ownership without survivorship; shares can be unequal and pass by will. |
Trade fixture | Equipment a tenant installs for business; remains the tenant's personal property. |
Transaction broker | A licensee who assists a party without full fiduciary duties (Florida presumes this relationship). |
Voidable contract | A valid contract one party may cancel, such as one signed by a minor. |
Pairs the exam loves to swap
- Easement appurtenant vs easement in gross
- Fixture vs trade fixture
- Joint tenancy vs tenancy in common
- Void vs voidable vs unenforceable
- Commingling vs conversion
- Eminent domain vs condemnation vs escheat
- FHA-insured vs VA-guaranteed
Educational definitions, not legal advice. State law may define terms differently.
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