TN Real Estate key terms

The legal obligations an agent owes a client - care, obedience, loyalty, disclosure, accounting, and confidentiality - that require putting the client's interests ahead of the agent's own.

A relationship in which one brokerage firm represents both the buyer and the seller in the same transaction; in Tennessee it requires the informed written consent of both parties.

A Tennessee practice in which the firm appoints one licensee to represent the buyer and another to represent the seller in the same deal, so each client gets undivided loyalty from its own agent.

A written contract between a buyer and a brokerage that establishes agency, states whether it is exclusive, defines the broker's duties, and sets how and when compensation is earned.

The broker whose efforts began an uninterrupted chain of events that resulted in the sale; it usually determines who is paid a commission when more than one broker claims the deal.

A person who deals with a licensee but is not represented by that licensee, so the licensee owes honesty and fairness but not fiduciary loyalty or confidentiality.

The exchange in which one party proposes terms and the other agrees to exactly those terms, creating a binding contract; a change in terms instead creates a counteroffer.

A rejection of the original offer combined with a new offer on different terms; it ends the first offer, so the original offeror is no longer bound to it.

A contract condition that must be satisfied - such as loan approval or a satisfactory inspection - before a party is obligated to close; if it fails, that party may cancel without penalty.

The legal rule requiring certain agreements, including real estate sales contracts and leases longer than one year, to be in writing and signed to be enforceable.

A deposit a buyer gives to show good faith and supply consideration; it is usually held in a trust account and applied to the purchase price or forfeited on default.

A court remedy ordering a party to carry out the contract as written; it is common in real estate because each parcel of land is treated as unique.

The most complete form of ownership, giving the holder unlimited right to use, sell, lease, or give away the property, with no time limit and inheritable by heirs.

A right to use a neighboring parcel of land that runs with and benefits the owner's own land, transferring automatically when either property is sold.

Co-ownership in which each owner holds a separate, transferable share with no right of survivorship, so a deceased owner's interest passes to that owner's heirs.

A legal doctrine letting a person who openly, notoriously, exclusively, and continuously occupies another's land for the required statutory period gain legal title to it.

An existing use of property that no longer complies with current zoning rules but may continue because it was lawful when it began.

A three-party security instrument, common in Tennessee, in which a borrower conveys title to a trustee who may sell the property at foreclosure if the loan is not repaid.

The borrower's written promise to repay a stated sum with interest on a schedule; it is the evidence of the debt, separate from the document that secures it.

The loan amount divided by the property's value or purchase price, expressed as a percentage; higher ratios usually require mortgage insurance and cost the borrower more.

The gradual repayment of a loan through scheduled installments that cover interest first and reduce principal over time until the balance reaches zero.

Coverage a lender requires on many conventional loans with a down payment below twenty percent; it protects the lender, not the buyer, if the borrower defaults.

The most profitable legally permissible, physically possible, financially feasible, and productive use of a property, which sets the basis for its market value.

A valuation method that estimates value by analyzing recent sales of similar properties and adjusting for differences such as size, condition, and location.

A rate that converts a property's net operating income into an estimate of value; dividing the income by the rate produces the value in the income approach.

A loss in value caused by outdated design or features within the property itself, such as a poor floor plan or too few bathrooms for the market.

A licensee's opinion of a likely listing or sale price based on active, pending, and recently sold comparable properties; it is not an appraisal.

A conveyance in which the seller guarantees clear title and defends the buyer against all title defects, including those created before the seller owned the property.

A one-time policy that protects an owner or lender against losses from covered title defects, such as forged documents or undisclosed liens, that existed at closing.

The division of ongoing costs such as taxes, rent, or association dues between buyer and seller at closing so each pays only for the period of ownership.

A federally required form delivered to the borrower at least three business days before closing that itemizes the final loan terms and settlement costs.

A tax-deferral strategy in which an investor sells qualifying business or investment real estate and reinvests the proceeds in like-kind replacement property within strict deadlines.

The state body within the Department of Commerce and Insurance that licenses real estate professionals, adopts rules, and disciplines licensees under the Tennessee Real Estate Broker License Act.

Tennessee's license level for a real estate professional who works under a licensed broker and may not operate independently or collect commissions directly from clients.

The higher Tennessee license level that allows a person to own or manage a real estate firm, supervise affiliate brokers, and hold client trust funds.

Mixing client money, such as earnest money or rent, with a licensee's personal or business funds; Tennessee prohibits it and requires separate trust accounts.

A Tennessee-required written statement in which a residential seller reports known defects and conditions to the buyer before the sale, subject to statutory exceptions.

The ongoing coursework Tennessee licensees must complete each two-year renewal cycle, including the Commission-approved core course, to keep a license active.