Free Real Estate National Exam Flashcards

The highest form of property ownership with complete rights to use, possess, and dispose of property. Ownership is indefinite and can be inherited.

Ownership interest in property limited to the lifetime of a specified person (life tenant). Upon death, property passes to remainderman or reverts to grantor.

Co-ownership with right of survivorship. Four unities required: time, title, interest, and possession. Upon death, share passes automatically to surviving joint tenants.

Co-ownership without right of survivorship. Owners may have unequal shares and can sell or will their interest independently.

Co-ownership between married couples with right of survivorship. Neither spouse can convey their interest without the other's consent.

Government regulation controlling land use within designated areas. Includes residential, commercial, industrial, and agricultural classifications.

Permission to deviate from current zoning requirements due to unique property circumstances that create hardship. Does not change the zoning itself.

A property use that was legal when established but no longer conforms to current zoning. Generally allowed to continue (grandfathered) but cannot be expanded.

Government's right to take private property for public use upon payment of just compensation, as guaranteed by the Fifth Amendment.

Private limitations on property use recorded in the deed or by a homeowners association. Covenants, conditions, and restrictions that run with the land.

The most probable price a property would bring in a competitive open market under fair sale conditions, with buyer and seller acting prudently and knowledgeably.

Appraisal method comparing the subject property to similar recently sold properties (comparables), adjusting for differences to estimate value.

Appraisal method calculating value as land value plus cost to reproduce or replace improvements minus depreciation. Best for unique or new properties.

Appraisal method valuing property based on the income it generates. Uses capitalization rate to convert net operating income to value.

The rate of return on a real estate investment based on expected income. Calculated as Net Operating Income divided by property value or price.

A security instrument that pledges property as collateral for a loan. Creates a lien on the property until the debt is repaid.

A security instrument involving three parties: borrower (trustor), lender (beneficiary), and neutral third party (trustee) who holds legal title as security.

The ratio of the mortgage amount to the appraised value or purchase price of the property, whichever is less. Higher LTV = higher lender risk.

Insurance protecting the lender against borrower default, typically required when LTV exceeds 80%. Paid by the borrower.

The process of paying off a loan through regular payments that include both principal and interest, gradually reducing the balance to zero.

A fiduciary relationship where one person (agent) is authorized to represent another (principal) in dealings with third parties.

Agent's duties to principal: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care.

When one agent or broker represents both buyer and seller in the same transaction. Requires informed written consent from both parties.

When a broker designates separate agents within the brokerage to represent the buyer and seller in the same transaction.

A broker who facilitates a transaction without representing either party. Provides limited services and has no fiduciary duties.

A legally binding agreement with all essential elements: competent parties, mutual consent, legal purpose, and consideration.

Law requiring certain contracts to be in writing to be enforceable, including contracts for the sale of real property.

A good-faith deposit made by a buyer to demonstrate serious intent to purchase. Not required but shows commitment.

A condition in a contract that must be met before the contract becomes binding. Common examples: financing, inspection, appraisal.

A legal remedy requiring a party to fulfill their contractual obligations rather than pay damages. Common in real estate due to property's unique nature.

Federal law prohibiting discrimination in housing based on race, color, religion, national origin, sex, familial status, and disability.

Illegal practice of directing buyers toward or away from certain neighborhoods based on protected characteristics.

Illegal practice of inducing owners to sell by suggesting that minorities are moving into the neighborhood, causing property values to decline.

Illegal practice of refusing to provide services or charging more in certain geographic areas based on the racial or ethnic composition of those areas.

A change in rules, policies, or services that allows a person with a disability to have equal opportunity to use and enjoy housing.

A written document that transfers ownership of real property from grantor to grantee. Must be delivered and accepted to be effective.

Deed providing the greatest protection, with covenants guaranteeing title against all defects, including those from prior owners.

Deed that conveys only the interest the grantor has, if any, with no warranties. Commonly used to clear title clouds or transfer between family.

Insurance protecting against losses from title defects not discovered in the title search. Owner's policy protects buyer; lender's policy protects mortgagee.

Filing a document in public records to give constructive notice of ownership or interest. Priority generally determined by recording date.

A quick valuation tool for income property. Calculated as Sale Price divided by Gross Annual (or Monthly) Rent.

Annual income from property after deducting operating expenses but before debt service and income taxes. Used in income approach.

The division of ongoing expenses (taxes, insurance, HOA fees) between buyer and seller at closing based on their days of ownership.

The division of commission between listing and selling brokers, and between brokers and their agents, as agreed.

Prepaid interest charged by lenders, where one point equals 1% of the loan amount. Used to lower the interest rate (discount points).

A contract authorizing a broker to represent an owner in selling or leasing property. Types include exclusive right to sell, exclusive agency, and open listing.

Listing where the broker earns a commission if the property sells during the listing period, regardless of who finds the buyer.

A database of properties for sale shared among member brokers, allowing cooperation and compensation between listing and selling brokers.

An informal estimate of market value prepared by a real estate agent using comparable sales, active listings, and expired listings.

A neutral third party that holds funds, documents, and coordinates closing activities. Ensures all conditions are met before disbursing funds and recording documents.