Real Estate Transaction Agent Examination key terms

The body of law governing relationships in which one person, the agent, is authorized to act on behalf of another, the principal, and owes that principal fiduciary duties.

The highest standard of care owed by an agent to a principal, encompassing loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care and diligence in the principal's interest.

A client has an agency relationship with the broker and receives fiduciary duties; a customer is a member of the public the broker assists without representation, receiving only honesty and fair dealing.

A single licensee representing both buyer and seller in the same transaction, permitted only with informed written consent where allowed by state law, and limited because full loyalty cannot be given to both.

A statutory arrangement in which different licensees within one brokerage are assigned to represent the buyer and seller separately, so each party receives undivided loyalty from its own agent.

A written contract establishing an agency relationship between a buyer and a brokerage, setting out the term, geographic area, compensation, and duties owed to the buyer.

A listing or buyer agreement in which the broker is entitled to compensation regardless of who produces the transaction during the contract term, offering the strongest protection to the brokerage.

The uninterrupted series of events, begun by a licensee's efforts, that leads to a completed transaction and is used to decide who earns a cooperating commission.

The share of a brokerage fee that the listing broker offers to pay a cooperating broker who brings the buyer, typically published in the multiple listing service.

A cooperative database operated by a local association of brokers through which participants share listings and offers of compensation to cooperating brokers under defined rules.

A listing arrangement in which the seller sets a minimum acceptable amount and the broker keeps everything above it as commission; widely restricted or prohibited because it invites divided loyalty.

Legal requirements that marketing materials avoid discriminatory preferences or limitations based on protected characteristics, enforced through federal, state, and local fair housing statutes.

A group of people shielded from discrimination in housing by law, such as race, color, religion, sex, national origin, disability, or familial status under federal statute, plus state additions.

Directing or limiting a buyer's housing choices, or a seller's pool of buyers, based on protected characteristics rather than objective criteria, which is unlawful discrimination.

Inducing homeowners to sell by suggesting that members of a protected class are moving into the neighborhood and will reduce property values, an unlawful discriminatory practice.

Refusing or limiting loans, insurance, or other services in specific neighborhoods, usually on racial or ethnic grounds, which violates fair lending and fair housing laws.

A form on which a seller reports known material defects and conditions of the property, required in many states and delivered to buyers before they commit to purchase.

Information that a reasonable person would consider important in deciding whether and on what terms to buy or sell, and that a licensee must disclose accurately.

A hidden physical problem with a property that is not readily observable on reasonable inspection and that the seller knows about but the buyer may not discover.

The traditional rule that a buyer takes property as found and bears the risk of defects, now substantially limited by disclosure statutes, fraud doctrine, and implied warranties.

A person's agreement to a transaction or agency change given after receiving a full and understandable explanation of the relevant facts, risks, and alternatives.

A situation in which a licensee's personal, financial, or family interest could reasonably influence the advice given to a client, requiring disclosure and often written consent.

Mixing client funds, such as earnest money or rent deposits, with the broker's own business or personal money, which is prohibited in most jurisdictions.

The unauthorized use or misappropriation of funds or property entrusted to a broker, such as spending escrow money for personal or business purposes.

A segregated bank account in which a broker holds money belonging to clients or third parties, maintained with accurate records and reconciled on a regular schedule.

A deposit a buyer gives to show good faith and secure the contract, held by an escrow agent or broker and applied to the purchase price or returned per contract terms.

A neutral third party's holding of funds and documents until contractual conditions are satisfied, followed by disbursement and recording to complete the transaction.

A federally required settlement statement given to a borrower at least three business days before closing that itemizes loan terms, closing costs, and cash to close.

A standardized disclosure delivered to a mortgage applicant within three business days of application, showing estimated interest rate, monthly payment, and closing costs.

A contract condition that must be satisfied for the transaction to proceed, such as financing, inspection, or appraisal, giving the specified party a right to cancel if unmet.

The negotiated time during which a buyer may investigate the property, title, and financing, and may terminate or renegotiate under the contract's inspection and financing provisions.

The two essential elements of a contract: a definite proposal by one party and an unqualified agreement to it by the other, communicated so that both are bound.

A reply that changes the terms of an offer, which legally rejects the original offer and creates a new offer that the other party may accept or reject.

Something of value exchanged between parties, such as money, a promise, or forbearance, that makes a contract legally enforceable.

A law requiring certain agreements, including most real estate sale contracts and leases over one year, to be in writing and signed to be enforceable.

A written instrument that transfers an interest in real property from a grantor to a grantee, containing a legal description and words of conveyance.

A policy indemnifying an owner or lender against loss from defects in title that existed before the policy date, such as liens, fraud, or recording errors.

Filing a deed or other instrument with the government office that maintains public land records, which gives constructive notice of the interest to the world.

Notice of a fact that a person is legally presumed to have because it is recorded in public records or otherwise openly available, whether or not actually seen.

A right held by one party to use another's land for a specific purpose, such as a driveway or utility line, without owning the land itself.

Any claim, lien, easement, restriction, or other interest that burdens a property and may reduce its value or limit how the owner can use it.

Rules obliging a brokerage to retain transaction files, contracts, disclosures, and account records for a set period and to make them available for regulatory inspection.