AR Real Estate key terms

The most complete form of property ownership, giving the holder unlimited rights to use, sell, lease, or devise the land with no time limit and no conditions attached.

Ownership that lasts only for the lifetime of a named person; the life tenant may use the property but must not commit waste, and the estate ends automatically at that person's death.

A right to use a neighboring parcel that benefits the parcel owned by the easement holder and passes automatically with that parcel when it is sold.

Any right or claim held by someone other than the owner that limits how the property may be used or may reduce its value, such as liens, easements, or deed restrictions.

A private limitation placed in a deed that controls how owners may use the property, such as prohibiting commercial use, and is enforced by other owners or an association.

A local government's division of land into districts that specify permitted uses, density, and building size, adopted under the police power and changed only through established procedures.

Official permission to depart from a zoning requirement on a specific parcel because strict application would cause unnecessary hardship, granted without changing the zoning of the surrounding area.

Gaining title to land by occupying it without the owner's permission, openly, exclusively, and continuously for the number of years state law requires.

Co-ownership by two or more people with equal shares and the right of survivorship, so a deceased owner's interest passes automatically to the survivors instead of through probate.

An item of personal property that has become part of the real estate because of how it is attached or used, so it passes with the land when the property is sold.

A relationship in which one party, the agent, is authorized to act for another, the principal, and must act within that authority for the principal's benefit.

The duty of trust an agent owes a principal, including loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care in carrying out the client's instructions.

A client is the party the agent represents and owes fiduciary duties to; a customer is a party the agent assists or deals with but does not represent.

A practice in which different licensees in the same brokerage represent the buyer and the seller separately, allowing each party to receive full loyalty from its own agent.

Representing both sides of the same transaction, such as buyer and seller, through one brokerage; it requires informed written consent because full loyalty to each party is impossible.

The broker's effort that sets off an unbroken chain of events leading to the sale; it is the basis for claiming a commission even if another licensee closes the deal.

Depositing client funds, such as earnest money or rents, into the broker's business or personal account instead of a separate trust account; a violation of license law.

A state law requiring that contracts for the sale of real estate, and leases longer than one year, be in writing and signed by the party to be charged before they can be enforced.

A deposit a buyer gives when the contract is signed to show good faith; it is usually held in escrow and applied to the price at closing or forfeited if the buyer defaults.

A contract condition that must be satisfied before closing, such as a financing, inspection, or appraisal condition; if it fails, the buyer may usually cancel and recover the deposit.

A deed in which the grantor promises to defend title against all defects, including those created by earlier owners, using present and future covenants of warranty.

A deed that transfers whatever interest the grantor may have with no promises about title, often used to clear clouds or shift interests between family members.

A buyer who pays value for property without notice of another person's claim, and therefore takes title free of that hidden interest.

A one-time policy that indemnifies an owner or lender against losses from title defects that existed at closing but were not revealed by the title search.

An arrangement in which a neutral third party holds money or documents and releases them only when agreed conditions are met, protecting both sides until the transaction closes.

The loan amount divided by the property's appraised value or sale price, expressed as a percentage; lenders use it to gauge risk and set insurance requirements.

The gradual repayment of a loan through regular payments that cover interest first and then reduce principal, retiring the debt by the end of the loan term.

The four parts of a standard monthly housing payment: principal, interest, property taxes, and homeowner's insurance; lenders count the total when qualifying a borrower.

Prepaid interest charged at closing to obtain a lower note rate; one point equals one percent of the loan amount.

A measure used to convert a property's net operating income into an estimate of value; it equals net operating income divided by sale price or value.

A property's effective gross income minus operating expenses, without deducting debt service, income taxes, or depreciation; the key input to income-approach valuation.

The use of a site that is legally permitted, physically possible, financially feasible, and produces the greatest value; it frames the appraisal analysis.

An appraisal method that estimates value by adjusting the prices of recently sold similar properties for differences in features, location, condition, and date of sale.

The state agency that licenses real estate brokers and salespersons, adopts rules, investigates complaints, and imposes discipline for violations of the license law.

The Arkansas credential that allows a person to provide brokerage services independently, sponsor salespersons, and be paid directly for transactions; it requires experience and a qualifying examination.

A license held by an individual who performs brokerage services only while supervised by a licensed broker and may not accept compensation directly from the client.

A separate bank account a broker uses to hold other people's money, such as earnest money and security deposits, kept apart from business funds and accurately recorded.

Course credits that licensed Arkansas brokers and salespersons must complete during each renewal period to keep a license active, covering topics set by the Commission.

The written notice Arkansas law requires licensees to give consumers explaining whom the licensee represents and the duties owed before substantive services or advice are provided.

Performing activities that require a real estate license, or helping an unlicensed person do so, such as negotiating a sale for compensation without holding a license.