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Real Estate Legal Terms: Definitions and Explanations, Exams of Real Estate Management

DeVry University - WashingtonReal Estate Management

A comprehensive glossary of real estate legal terms, offering definitions and explanations for key concepts related to property ownership, transactions, and legal aspects. It covers a wide range of terms, from basic concepts like 'evidence of title' and 'exchange' to more complex topics like 'acceleration clause' and 'foreclosure'. Valuable for students and professionals seeking to understand the legal framework surrounding real estate.

Typology: Exams

2024/2025

Available from 01/23/2025

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Washington State Real Estate Legal
Term Exam Final with 100% Correct
Answers.
1. Evidence of Title - Correct: ✅A proof of ownership of property,
which is commonly a certificate of title, a title insurance policy, an
abstract of title with lawyer's opinion, or a Torrens registration
certificate.
2. Exchange - Correct: ✅A transaction in which all or part of the
consideration for the purchase of real property is the transfer of like-
kind property (that is, real estate for real estate).
3. Exclusive-Agency Buyer Agency Agreement - Correct: ✅A buyer
brokerage agreement wherein the broker is entitled to a payment
only if the broker locates the property the buyer purchases. The
buyer can find property without the services of the agent.
4. Exclusive-Agency Listing - Correct: ✅A listing contract under which
the owner appoints a real estate broker as an exclusive agent for a
designated period of time to sell the property on the owner's stated
terms for a commission. However, the owner reserves the right to
sell without paying anyone a commission by selling to a prospect
who has not been introduced or claimed by the broker.
5. Exclusive Buyer Agency Agreement - Correct: ✅An exclusive-agency
agreement wherein the buyer is legally bound to compensate the
agent whenever the buyer purchases a property of the type
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Washington State Real Estate Legal

Term Exam Final with 100% Correct

Answers.

  1. Evidence of Title - Correct: ✅A proof of ownership of property, which is commonly a certificate of title, a title insurance policy, an abstract of title with lawyer's opinion, or a Torrens registration certificate.
  2. Exchange - Correct: ✅A transaction in which all or part of the consideration for the purchase of real property is the transfer of like- kind property (that is, real estate for real estate).
  3. Exclusive-Agency Buyer Agency Agreement - Correct: ✅A buyer brokerage agreement wherein the broker is entitled to a payment only if the broker locates the property the buyer purchases. The buyer can find property without the services of the agent.
  4. Exclusive-Agency Listing - Correct: ✅A listing contract under which the owner appoints a real estate broker as an exclusive agent for a designated period of time to sell the property on the owner's stated terms for a commission. However, the owner reserves the right to sell without paying anyone a commission by selling to a prospect who has not been introduced or claimed by the broker.
  5. Exclusive Buyer Agency Agreement - Correct: ✅An exclusive-agency agreement wherein the buyer is legally bound to compensate the agent whenever the buyer purchases a property of the type

described in the contract. This is true even if the buyer finds the property.

  1. Exclusive-Right-to-Sell Listing - Correct: ✅A listing contract under which the owner appoints a real estate broker as the owner's exclusive agent for a designated period of time to sell the property on the owner's stated terms and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner, or another broker.
  2. Exculpatory Clause - Correct: ✅A hold harmless clause that may be found in contracts excusing a party for injuries to another.
  3. Executed Contract - Correct: ✅A contract in which all parties have fulfilled their promises and thus performed the contract.
  4. Execution - Correct: ✅The singing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.
  5. Executor - Correct: ✅The male designated in a will to handle the estate of the deceased.
  6. Executory Contract - Correct: ✅A contract under which something remains to be done by one or more of the parties.
  1. Federal Home Loan Mortgage Corporation - Correct: ✅A member of the secondary mortgage market that primarily buys conventional loans.
  2. Federal Housing Administration (FHA) - Correct: ✅A federal administrative body created by the National Housing Act in 1934 to encourage improvement in housing standards and conditions to provide an adequate home financing system through the insurance of housing mortgages and credit, and to exert a stabilizing influence on the mortgage market.
  3. Federal Income Tax - Correct: ✅An annual tax based on the income, including monies derived from the lease, use, or operation of real estate.
  4. Federal National Mortgage Association (FNMA) - Correct:

✅Fannie Mae is the popular name for this federal agency that creates a secondary market for existing mortgages. FNMA does not loan money directly, but rather buys VA, FHA, and conventional loans.

  1. Federal Reserve Banks - Correct: ✅The government controls banks located in each of the 12 Federal Reserve districts, established by the Federal Reserve Act of 1913.
  2. Fee Simple Absolute - Correct: ✅The highest form of ownership recognized by law.
  3. AKA: Fee Simple or Ownership in Fee.
  1. Fee Simple Subject to a Condition Subsequent - Correct: ✅A defeasible fee estate in which the grantor reserves right of reentry to the property when the condition of ownership is violated.
  2. FHA Appraisal - Correct: ✅A Federal Housing Administration (FHA) evaluation of a property as security for a loan. Includes study of the physical characteristics of the property and surroundings; the location of the property; the prospective borrower's ability and willingness to repay a loan; and the mortgage amount and monthly payments.
  3. FHA Loan - Correct: ✅A loan insured by the FHA and made by an approved lender in accordance with the FHA's regulations
  4. Fiduciary Relationship - Correct: ✅A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, and principal and agent.
  5. First Mortgage - Correct: ✅A mortgage that creates a superior voluntary lien on the property mortgaged relative to other charges or encumbrances against same.
  6. Fixture - Correct: ✅An article that was once personal property, but has been so affixed to real estate that is has become real property.
  1. Fraud - Correct: ✅A misstatement of a material fact made with intent to deceive or made with reckless disregard of the truth that actually does deceive.
  2. Freehold Estate - Correct: ✅An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
  3. Abandonment - Correct: ✅The voluntary and permanent cessation of use or enjoyment with no intention to resume or reclaim one's possession or interest. May pertain to an easement or a property.
  4. Abrogation - Correct: ✅Tenants cannot sign away their rights in advance of signing the lease.
  5. Abstract of Title - Correct: ✅A condensed version of the history of title to a particular parcel of real estate as recorded in the county clerk's records; consists of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property.
  6. Abutting - Correct: ✅The joining, reaching, or touching of adjoining land. Abutting parcels of land have a common boundary.
  7. Accelerated Depreciation - Correct: ✅A method of calculating for tax purposes the depreciation of income property at a faster rat than would be achieved using the straight-line method. Note** any depreciation taken in excess of that which would be claimed using

the straight-line rate is subject to recapture as ordinary income to the extent of gain resulting from the sale.

  1. Acceleration Clause - Correct: ✅A provision in a written mortgage, note, bond, or conditional sales contract that, in the event of a default, the whole amount of principal and interest may be declared to be due an payable at once.
  2. Accretion - Correct: ✅An increase or addition to land by the deposit of sand or soil washed up naturally from a river lake or sea.
  3. Accrued Depreciation - Correct: ✅The actual depreciation that has occurred to a property at any given date; the difference between the cost of replacement new (as of the date of appraisal) and the present appraised value.
  4. Acknowledgment - Correct: ✅A declaration made by a person to a notary public, or other public official authorized to take acknowledgments that an instrument was executed by that person as a free and voluntary act.
  5. Actual Eviction - Correct: ✅The result of legal action originated by a lessor, whereby a defaulted tenant is physically ousted from the rented property pursuant to a court order.
  6. Actual Notice - Correct: ✅Express information or fact; that which is know; actual knowledge.
  1. Agreement of sale - Correct: ✅A written agreement whereby the purchaser agrees to buy certain real estate and the seller agrees to sell, upon terms and conditions set forth in the agreement.
  2. Air Lot - Correct: ✅A designated airspace over a piece of land. Air lots, like surgace property, may be transferred.
  3. Air Rights - Correct: ✅The right to use the open space above a property, generally allowing the surface to be used for another purpose.
  4. Alienation - Correct: ✅The act of transferring property to another. Alienation may be voluntary, such as by gift or sale; or involuntary, such as through eminent domain or adverse possession.
  5. Alienation Clause - Correct: ✅The clause in a mortgage or deed of trst that states that the balance of the secured debt becomes immediately due and payable at the mortgagee's option if the property is sold by the mortgagor. In effect, this clause prevents the mortgagor from assigning the debt without the mortgagee's approval.
  6. Alluvion - Correct: ✅New deposits of soil as the result of accretion.
  7. Amenitites - Correct: ✅The tangible and intangible features that increase the value or desirability of real estate.
  1. Americans with Disabilities Act (ADA) - Correct: ✅A federal law that became effective in 1992. It is designed to eliminate the discrimination against individuals with disabilities by mandating equal access to jobs, public accommodations, public transportation, telecommunications and government services.
  2. Amortization - Correct: ✅The liquidation of a financial burden by installment payments.
  3. Amortized Loan - Correct: ✅A loan in which the principal, as well as the interest, is payable in monthly or other periodic installments over the term of the loan.
  4. Antitrust Laws - Correct: ✅The laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Violations of antitrust laws in the real estate business generally involve either price fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).
  5. Appraisal - Correct: ✅An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report setting forth the process of estimation and conclusion of value.

existing note secured by a mortgage agaisnt the property. Should the mortgage b foreclosed and the property sold for a lesser amount than that due, the grantee-purchaser who has assumed and agreed to pay the debt secured by the mortgage is personally liable for the deficiency. Before a seller may be relieved of liability under the existing mortgage, the lender must accept the transfer of liability for payment of the note.

  1. Attachment - Correct: ✅The method by which a debtor's property is placed in the custody of the law and held as security pending outcome of a creditor's suit.
  2. Attorney-in-fact - Correct: ✅The holder of a power of attorney.
  3. Attorney's Opinion of Title - Correct: ✅An instrument written and signed by the attorney who examines the title, stating the attorney's opinion as to whether a seller may convey good title.
  4. Automatic Extension - Correct: ✅A clause in a listing agreement that states that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited.
  5. Avulsion - Correct: ✅The sudden removal of land by natural forces, such as an earthquake.
  1. Balloon payment - Correct: ✅the final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
  2. Bargain and Sale Deed - Correct: ✅A deed that carries with it no warranties against liens or other encumbrances, but that does imply that the grantor has the right to convey title. Note that the grantor may add warranties to the deed at his or her discretion.
  3. Base Line - Correct: ✅One of a set of imaginary lines running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular survey system (or government survey method) of property description.
  4. Bench Mark - Correct: ✅A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
  5. Benficiary - Correct: ✅The person for who a trust operates, or in whose behalf the income from a trust estate is drawn. Also refers to a lender who lends money on real estate and takes back a note and deed of trust from the borrower.
  6. Bequest - Correct: ✅A provision in a will providing for the distribution of personal property.

estate broker working on behalf of the broker operating the principal office.

  1. Breach of Contract - Correct: ✅The failure, without legal excuse, of one of the parties to a contract to perform according to the contract.
  2. Broker - Correct: ✅One who buys and sells for another for a commission.
  3. Budget Loan or Budget Mortgage - Correct: ✅A loan in which the monthly payments made by the borrower cover not only interest and a payment on the principal , but also one-twelfth of such expenses as taxes, insurance, assessments, and similar charges. The monthly payment is called a PITI payment.
  4. Buffer Zone - Correct: ✅A zone or space between two different use districts. An example of a buffer zone would be a park between a residential district and a commercial district.
  5. Building Code - Correct: ✅An ordinance specifying the minimum standards of construction of buildings for the protection of public safety and health.
  6. Building Line - Correct: ✅A line fixed at a certain distance from the front and/or sides of a lot beyond which no structure can project; a setback line used to ensure a degree of uniformity in the appearance of buildings and unobstructed light, air, and view.
  1. Building Restrictions - Correct: ✅The limitations on the size or type of property improvements established by zoning acts or by deed or lease restrictions.
  2. Bulk Zoning - Correct: ✅Bulk zoning controls the density of the development on land to avoid overcrowding.
  3. Bundle of Legal Rights - Correct: ✅The theory that land ownership involves ownership of all legal rights to the land such as: Possession, control within the law, and enjoyment, rather than ownership of the land itself.
  4. Buydown Mortgage - Correct: ✅A mortgage in which the interest rate is reduced by paying interest in advance. A temporary buydown is for the initial years of the loan. A permanent buydown is for the life of the loan.
  5. Capacity of Parties - Correct: ✅The legal ability of ability of persons to enter into a valid contract. Most persons have full capacity to contract, and are said to be competent parties.
  6. Capital Gains - Correct: ✅A tax on the profits realized from the sale of a capital asset.
  7. Capital Improvement - Correct: ✅Any improvement that is made to extend the useful life of a property or add to its value.
  1. Caveat Venditor - Correct: ✅A Latin phrase meaning "Let the seller beware"
  2. Certificate of Eligibility - Correct: ✅A certificate given by the federal government to qualified veterans to show their remaining eligibility for a VA guaranteed loan.
  3. Certificate of Occupancy - Correct: ✅A certificate of occupancy is issued after the building is inspected to make sure it complies with building codes.
  4. Certificate of Reasonable Value - Correct: ✅A certificate issued by the Veterans Ad ministration certifying the value, as determined by an approved VA appraiser, of property secured by a VA mortgage.
  5. Certificate of Reduction - Correct: ✅A document issued by the lender to verify the loan balance.
  6. Certificate of Sale - Correct: ✅The document generally given to a purchaser at a tax foreclosure sale. A certificate of sale does not convey title; generally, it is an instrument certifying that the holder received title to the property after the redemption period had passed and that the holder paid the property taxes for that interim period.
  1. Certificate of Title - Correct: ✅A statement of opinion on the status of the title ot a parcel of real property based on an examination of specified public records.
  2. Cession Deed - Correct: ✅The type of deed used when land is donated to the government.
  3. Chain of TItle - Correct: ✅The succession of conveyances from some accepted starting point whereby the present holder of real property derives a title.
  4. Codicil - Correct: ✅An addition to a will that alters, explains, adds to, or confirms the will, but does not revoke it.
  5. Coinsurance Clause - Correct: ✅A clause in insurance policies covering real property that requires the policy holder to maintain fire insurance; coverage is generally equal to at least 80 percent of the property's actual replacement cost.
  6. Collateral - Correct: ✅Something of value given or pledged to a lender as security for a debt or obligation.
  7. Commercial Property - Correct: ✅A classification of real estate that includes income-producing properties.
  8. Commingled Property - Correct: ✅That property of married couple that is so mixed or commingled that it is difficult to determine