RI Real Estate flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Agency relationship

A fiduciary relationship in which a principal authorizes an agent to act on the principal's behalf and the agent consents to that authority.

Dual agency

A broker represents both buyer and seller in the same transaction; Rhode Island requires informed written consent from both parties before dual representation begins.

Agency by ratification

A principal accepts the benefits of an unauthorized act performed by an agent, thereby creating an agency relationship retroactively for that act.

Fiduciary duty of loyalty

The agent must place the principal's interests above the agent's own and avoid self-dealing, secret profits, and conflicts of interest without disclosure.

Confidentiality duty

The agent must not disclose information acquired during the agency that could harm the principal's bargaining position, and the duty generally survives termination.

Accounting duty

The agent must keep client funds in a separate escrow account, maintain accurate records, and never commingle client money with personal or brokerage funds.

Rhode Island Real Estate Commission

The state agency within the Department of Business Regulation that administers Rhode Island real estate license law, investigates complaints, and imposes discipline on licensees.

Salesperson affiliation

A Rhode Island salesperson must work under a licensed broker who supervises the salesperson's real estate activities and is responsible for those activities.

Commission payment rule

In Rhode Island, real estate commissions may be paid only to licensed brokers; paying a referral fee to an unlicensed person for brokerage activity is prohibited.

Biennial license renewal

Rhode Island real estate licenses renew every two years, and licensees must complete required continuing education before the renewal deadline to remain active.

Statute of Frauds

A legal rule requiring real estate sale contracts and leases longer than one year to be written and signed by the party to be charged.

Counteroffer

A response to an offer that changes its terms; it terminates the original offer and creates a new offer that the original offeror may accept or reject.

Earnest money

A buyer's good-faith deposit held in escrow; it is applied to the purchase price at closing or forfeited according to the contract if the buyer defaults.

Exclusive right to sell

A listing in which the broker earns a commission if the property sells during the listing term, regardless of whether the broker, another broker, or the seller procures the buyer.

Exclusive agency listing

A listing in which the broker earns a commission if the broker or another broker sells the property, but the seller may sell without paying the broker if the seller procures the buyer.

Open listing

A non-exclusive listing in which a broker earns a commission only if that broker is the procuring cause of the sale; the seller may use multiple brokers.

Seller disclosure form

Rhode Island requires most sellers of one-to-four unit residential property to deliver a written disclosure of known property conditions to the buyer before the purchase agreement is signed.

Loan-to-value ratio

The loan amount divided by the lesser of the property's purchase price or appraised value; lenders use it to measure mortgage risk.

PITI payment

The monthly housing payment that includes principal, interest, property taxes, and hazard insurance; lenders may also include mortgage insurance and HOA dues.

Adjustable-rate mortgage

A mortgage whose interest rate changes over time based on an index plus a margin, with caps limiting periodic and lifetime rate increases.

Proration

The division of an annual expense or income between buyer and seller at closing based on the number of days each party owns the property.

Title insurance

A policy protecting an owner or lender against covered title defects that existed before the policy date, such as liens or recording errors.

Conveyance tax

A Rhode Island tax imposed on the consideration paid for transferring real property; municipalities may impose an additional local conveyance tax.

Fee simple absolute

The most complete form of real property ownership; it lasts indefinitely, can be inherited, and is subject only to government powers and private restrictions.

Tenancy in common

A co-ownership form in which owners hold undivided interests with no right of survivorship; each owner may sell or devise their share.

Joint tenancy

A co-ownership form requiring unity of time, title, interest, and possession, with a right of survivorship that passes the property to surviving joint tenants.

Market value

The most probable price a property should bring in an arm's-length transaction with a willing, informed buyer and seller, neither under duress.

Capitalization rate

A rate used in the income approach; value equals net operating income divided by the capitalization rate, so a lower cap rate raises value.

Highest and best use

The use that is legally permissible, physically possible, financially feasible, and maximally productive, and that produces the highest property value.

Warranty deed

A deed in which the grantor makes covenants of title, including seisin, quiet enjoyment, and warranty against encumbrances, protecting the grantee.

Zoning variance

An administrative approval allowing a property owner to depart from a zoning rule because application of the rule creates unnecessary hardship.

Eminent domain

The government's power to take private property for public use, provided the taking is for a public purpose and just compensation is paid.