PA Real Estate key terms

A legal obligation of an agent to act in the client's best interest, including loyalty, confidentiality, disclosure, obedience, and accounting. Pennsylvania licensees must explain these duties to clients in the Consumer Notice.

A written contract in which a seller hires a broker to market and sell property, setting the term, commission, and agency relationship. Common types include exclusive right to sell, exclusive agency, and open listing.

A written contract in which a buyer hires a broker to represent the buyer's interests in a purchase, establishing the term, compensation, and agency duties before showings or negotiations begin.

A situation where one broker represents both buyer and seller in the same transaction with consent. Pennsylvania requires written informed consent and limits the broker's ability to advocate for either party on price or terms.

A deposit made by a buyer to show good faith and secure the purchase contract. It is usually held in escrow and may be applied to the purchase price or refunded if a contingency is not met.

A neutral account or arrangement where money or documents are held by a third party until contract conditions are satisfied. Pennsylvania brokers must handle escrow funds according to Commission rules and not mix them with personal funds.

A contract condition that must be met for the sale to proceed, such as financing, inspection, or sale of the buyer's current home. If the condition fails, the buyer may cancel and recover earnest money.

A written legal instrument that transfers ownership of real property from a grantor to a grantee. It must be delivered and accepted, and in Pennsylvania it should be recorded to protect the grantee's interest.

The legal right to own, use, and transfer property. Before closing, public records are searched and insurance is purchased to confirm ownership and reveal liens or claims.

A legal claim against property that must be paid before the property can be sold free of the claim. Common examples include mortgages, tax liens, and mechanics' liens.

A right to use another person's land for a specific purpose, such as a driveway or utility line. Easements run with the land and can be appurtenant or in gross.

The most complete form of property ownership, giving the owner unrestricted rights to use, sell, lease, or pass the property to heirs, subject only to government powers and private restrictions.

A form of co-ownership with right of survivorship, where two or more owners hold equal shares. When one owner dies, that share passes automatically to the surviving owners, not through probate.

Personal property that has been permanently attached to real estate and becomes part of the real property. Whether an item is a fixture depends on attachment, adaptation, and intent.

The final settlement of a real estate transaction where documents are signed, funds are transferred, and title passes to the buyer. Pennsylvania closings are often conducted by title companies or attorneys.

A written or oral agreement that gives a tenant the right to possess and use property for a set term in exchange for rent. In Pennsylvania, residential leases are subject to landlord-tenant law.

Local government regulation that divides land into districts and controls how property may be used, including setbacks, density, and building height. Zoning is adopted under Pennsylvania's Municipalities Planning Code.

A local zoning board approval that allows a property owner to deviate from a zoning rule because of unnecessary hardship, such as an unusual lot shape. A variance is not a change to the zoning map.

The state board within the Department of State that licenses brokers and salespersons, writes regulations, investigates complaints, and disciplines licensees under RELRA.

Pennsylvania's statute governing real estate licensing, agency relationships, escrow, advertising, and discipline. It defines broker and salesperson activities and authorizes the Real Estate Commission to enforce the law.

A Pennsylvania form that licensees must provide at the first substantive contact to explain agency relationships, dual agency, transaction licensee status, and the consumer's rights. It must be signed and retained as required.

A Pennsylvania licensee who is not an agent for either party but provides communication and document preparation services. The licensee must remain neutral and may not advocate for either side in negotiations.

A Pennsylvania arrangement where a broker assigns one licensee to represent the buyer and another to represent the seller in the same transaction, with written consent, to reduce conflicts of interest.

A Pennsylvania fund that may pay unpaid court judgments to consumers who were harmed by the dishonest or fraudulent acts of a licensed broker or salesperson, subject to statutory limits.

Illegally mixing client or escrow funds with a broker's personal or business funds. Pennsylvania requires escrow funds to be kept in a separate account and handled according to Commission regulations.

A tax imposed when real property is transferred in Pennsylvania, generally 1% state tax plus any local tax. The buyer and seller may negotiate who pays, but the deed must show the tax.

A Pennsylvania form in which a residential seller discloses known defects and conditions about the property. It must be delivered before an agreement of sale and is not a warranty.

Required coursework that Pennsylvania licensees must complete to renew a license, covering mandatory topics and elective hours. It helps licensees stay current on law, ethics, and practice.

The most probable price a property should bring in a competitive and open market under all conditions of a fair sale, with buyer and seller acting prudently and without undue pressure.

The reasonable, legal, physically possible, financially feasible use of a property that produces the greatest value. It may be the current use or a different use supported by market demand.

A valuation method that estimates value by comparing the subject property to recently sold similar properties, adjusting for differences in location, size, condition, and features.

A valuation method that estimates value from the income a property can produce, often by dividing net operating income by a capitalization rate. It is common for rental and commercial property.

A rate that reflects the relationship between a property's net operating income and its value. It is calculated as net operating income divided by value or price.

A quick income-valuation tool calculated by dividing a property's price or value by its gross monthly or annual rent. It helps compare similar rental properties.

The cost to build a structure with modern materials and current methods at today's prices, producing a building of equal utility. It is used in the cost approach to value.

The amount of a mortgage divided by the property's appraised value or purchase price, expressed as a percentage. Lenders use it to measure risk and set down payment requirements.

The four main monthly housing payments: principal, interest, property taxes, and homeowners insurance. Lenders use PITI to calculate a borrower's housing expense ratio.

The process of paying off a mortgage over time through scheduled payments. Early payments go mostly to interest, while later payments reduce principal more quickly.

The division of property taxes, rents, or other expenses between buyer and seller at closing based on the number of days each owns the property during the billing period.

A unit used in property tax calculations equal to one-tenth of a cent, or $1 of tax per $1,000 of assessed value. Tax bills are often expressed as a millage rate.