Real Estate key terms

The most complete form of property ownership, giving the holder unlimited rights to possess, use, and transfer the property, with no conditions attached and no time limit on the estate.

An ownership interest lasting only for the lifetime of a named person. The holder may use the property but must not commit waste, and the interest ends automatically at that person's death.

A future ownership right held by someone other than the grantor that becomes full possession when a prior estate, such as a life estate, ends.

Sole ownership of property by one person or one legal entity, as opposed to ownership shared with others.

Co-ownership in which each owner holds a separate, transferable share with no right of survivorship. Shares may be unequal, and an owner may sell or will that share freely.

Co-ownership with equal undivided shares that carries the right of survivorship, so a deceased owner's share passes automatically to the surviving owners rather than through probate.

The feature of certain co-ownership forms under which a deceased co-owner's interest automatically transfers to the remaining owners, avoiding probate and the deceased's heirs.

A form of co-ownership available only to married couples in some states, featuring equal shares and the right of survivorship, and generally requiring both spouses to act to transfer or encumber.

A legal action by which co-owners force the division or sale of jointly held property when they cannot agree on how to manage or divide it.

A legal description method that identifies boundaries by starting at a known point, then stating compass directions and distances along each course until the boundary closes.

A fixed physical object, natural or man-made, used as a reference point in a metes and bounds legal description to mark a corner or boundary.

A legal description method that identifies a parcel by its recorded lot number, block number, and the name or number of a recorded subdivision plat.

A recorded map of a subdivision showing lot lines, block numbers, streets, and easements, used with lot and block numbers to legally describe parcels.

A federal system of land description using principal meridians and base lines to divide land into a grid of townships, ranges, sections, and fractions of sections.

A fiduciary relationship in which a broker or salesperson is authorized to act on behalf of a client, owing duties of loyalty, obedience, disclosure, confidentiality, and accounting.

The heightened legal obligation an agent owes a principal, including loyalty, obedience, full disclosure, confidentiality, reasonable care, and accounting for all funds.

A situation in which one broker represents both the buyer and the seller in the same transaction, requiring informed written consent and limited ability to advocate for either side.

An arrangement permitted in some states where a brokerage represents both parties to a transaction but assigns different individual licensees to act for each side.

A client is a party the agent represents with fiduciary duties; a customer is a party the agent assists without representation, receiving only honesty and fair dealing.

A written employment contract between a seller and a broker authorizing the broker to market the property, and setting out compensation, term, and type of authority granted.

A listing in which the broker earns a commission no matter who procures the buyer during the listing period, including the owner, offering the strongest incentive to market the property.

A non-exclusive listing in which the owner may employ several brokers and pays only the one who brings an acceptable buyer, with no commission owed if the owner sells alone.

The broker whose efforts started an uninterrupted chain of events leading to a completed sale, which typically determines who is entitled to the commission.

The two essential acts that create a contract: one party proposes definite terms, and the other agrees to those exact terms without conditions or counteroffers.

A response to an offer that changes its terms, which legally rejects the original offer and creates a new offer from the responding party.

Something of legal value exchanged between parties, such as money or a promise, that makes a contract binding and distinguishes it from a gift.

A contract clause making an obligation conditional on a specified event, such as financing approval, inspection, or appraisal, allowing a party to exit if the condition fails.

A deposit made by a buyer to demonstrate good faith and secure the contract, typically held in trust and applied to the purchase price or forfeited on default.

A neutral third party holds funds and documents until all conditions of a transaction are satisfied, then disburses them according to the parties' written instructions.

The written promise by a borrower to repay a loan on stated terms, including principal, interest rate, and payment schedule; it is separate from the mortgage or deed of trust.

A written instrument pledging real property as security for a loan, giving the lender the right to foreclose if the borrower fails to repay.

A security instrument used in some states in place of a mortgage, in which a trustee holds title on the lender's behalf and may sell the property non-judicially if the borrower defaults.

The legal process by which a lender sells pledged property to satisfy a defaulted debt, either through court action or a power-of-sale clause.

The loan amount divided by the property's appraised value or purchase price, expressed as a percentage, used by lenders to measure risk and set insurance requirements.

Insurance a borrower pays when the down payment is small, protecting the lender against loss on default; it is typically required above a set loan-to-value threshold.

The gradual repayment of a loan through regular payments that cover interest first and apply the remainder to principal, eventually retiring the debt.

A tenant's right to possess and use property for a stated period under a lease, which is a personal property interest rather than an ownership estate.

A lease in which the tenant pays a fixed rent and the landlord covers operating expenses such as taxes, insurance, and maintenance.

Money a tenant gives the landlord as protection against unpaid rent or damage, which must generally be held and returned according to state rules.

The legally permissible, physically possible, financially feasible use of a property that produces the greatest value, forming the basis of appraisal analysis.

An appraisal method that estimates value by comparing the subject property to recently sold similar properties and adjusting for differences.

A rate used to convert a property's net operating income into an estimate of value, calculated by dividing income by value or price.

A written instrument that transfers title to real property from a grantor to a grantee, containing a granting clause, legal description, and signatures.

A deed in which the grantor guarantees clear title and promises to defend the grantee against all claims, including those arising before the grantor owned the property.

A policy protecting an owner or lender against losses from title defects or claims existing at the time the policy is issued, based on a title search.

A doctrine allowing a person who openly, continuously, and hostilely occupies another's land for a statutory period to gain legal title to it.

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

Any claim, lien, easement, or restriction that burdens a property and may reduce its value or limit the owner's use, though not necessarily preventing transfer.

Local government regulation that divides land into districts and specifies permitted uses, building size, density, and setbacks for each district.

A use of property that was lawful when established but no longer complies with current zoning rules; it is typically allowed to continue with limits on expansion.

An administrative exception allowing an owner to depart from a zoning rule because of hardship unique to the property, without changing the permitted use.

Federal law, known as CERCLA or Superfund, that makes parties responsible for releasing hazardous substances liable for cleanup costs, including in some cases current owners of contaminated property.

Categories such as race, color, religion, sex, national origin, familial status, and disability that federal law protects from discrimination in the sale or rental of housing.

The practice of guiding home seekers toward or away from neighborhoods based on protected characteristics, which is illegal under fair housing law.

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

A change in rules, policies, or practices, often needed for a person with a disability, that a housing provider must make unless it causes undue hardship.

Federal law requiring disclosure of settlement costs and prohibiting unearned fees or kickbacks in federally related mortgage transactions.

Mixing client funds with the broker's own money or failing to keep them in a separate trust account, a violation of license law in most states.

Performing acts that require a real estate license, such as negotiating a sale for compensation, without holding a valid license, which may result in penalties.