TX Real Estate key terms

A relationship in which a real estate broker is authorized to act for a client and owes that client fiduciary duties. In Texas the relationship must be established in writing and may cover buyers, sellers, landlords, or tenants.

An agent's legal obligation to put the client's interests first, including obedience, loyalty, disclosure, confidentiality, accounting for money, and reasonable care. Breaching these duties can lead to discipline and civil liability.

A Texas broker who, with the written consent of both parties, represents both the buyer and seller or both landlord and tenant in one transaction. The broker must treat both fairly and may not advocate for either side.

A written contract that creates an agency relationship between a buyer or tenant and a broker, stating duties, term, and how the broker will be paid. Texas requires it before the broker acts as the buyer's agent.

A listing agreement under which the seller promises to pay the broker a commission no matter who finds the buyer during the listing period, even if the seller produces the buyer personally.

Money a buyer deposits to show good faith and commitment to a purchase, later applied to the price or refunded per the contract. In Texas it is usually held in trust by a title company or broker.

A negotiated window, common in Texas resale contracts, during which the buyer may terminate for any reason and get the earnest money back. The buyer pays a nonrefundable option fee for that right.

Standardized contract, addendum, and notice forms adopted by TREC that license holders must use for most residential transactions. Brokers may fill in blanks but may not rewrite the preprinted language.

TREC's standard form for reselling existing residential property of one to four units. It contains blanks for price, financing, title policy, option period, surveys, and closing date.

A contract condition that must be met for the deal to stay binding, such as loan approval or a satisfactory inspection. If the condition fails, the buyer may terminate and recover earnest money.

A pre-agreed sum the defaulting party pays if the contract is breached, commonly the earnest money kept by the seller when a buyer defaults. The amount must be a reasonable estimate, not a punishment.

A legal rule requiring certain agreements, including real estate sales contracts and leases longer than one year, to be written and signed before a court will enforce them.

The written legal instrument that conveys an ownership interest in real property from a grantor to a grantee. It must be delivered and accepted to transfer title.

A deed in which the grantor guarantees title against defects arising both before and during the grantor's ownership, promising to defend the grantee. It offers the broadest protection of any deed.

A deed in which the grantor warrants title only against problems the grantor personally created, not those of earlier owners. Corporations, trustees, and fiduciaries frequently use this form.

A deed that releases whatever interest the grantor may hold with no promise that title is good. It is often used to clear title defects or transfer property between family members.

The most complete form of real property ownership, lasting indefinitely and passing to heirs. It is limited only by government powers such as taxation and by private encumbrances like easements.

A right to enter and use another owner's land for a defined purpose, such as utility lines or driveway access, without owning the land. It is an encumbrance that usually runs with the property.

Any claim or burden on real property, such as a lien, easement, or restriction, that may lower value or limit use. An encumbrance does not always prevent the owner from transferring title.

A statutory claim filed by contractors, subcontractors, or suppliers who provided labor or materials for improvements and were not paid. Texas requires strict notice and filing deadlines for the lien to be valid.

In Texas, the owner's principal residence and accompanying land, protected by the state constitution from forced sale for most debts and subject to special limits on borrowing against its equity.

A Texas marital property rule under which most property acquired by either spouse during marriage belongs equally to both, while separate property is owned before marriage or received by gift or inheritance.

A tax levied on real estate according to its assessed value by Texas counties, school districts, cities, and other taxing units. It is usually paid in arrears and becomes a lien on the property.

The security instrument used in Texas instead of a mortgage, conveying bare legal title to a trustee to secure a lender. After default the trustee may sell the property through nonjudicial foreclosure.

The borrower's written promise to repay a loan according to stated terms, including interest rate, payment amount, and maturity date. It is the lender's primary evidence that the debt exists.

The loan amount divided by the property's appraised value or purchase price, whichever is lower, expressed as a percentage. Lenders use it to determine down payment needs and insurance requirements.

Coverage that protects a lender against loss when a conventional borrower defaults with a high loan-to-value loan. It is typically charged when the down payment is less than twenty percent.

A lender-held account funded by monthly borrower payments that is used to pay property taxes and hazard insurance when they come due, with the servicer adjusting the amount annually.

A loan secured by a Texas homestead under Section 50(a)(6) of the state constitution, carrying strict limits on loan-to-value, fees, and a required cooling-off period before closing.

A contract giving a tenant the right to possess and use real property for a set term in exchange for rent, creating a leasehold interest that is personal property.

Money a tenant gives a landlord to cover possible damage or unpaid rent. Texas law requires the landlord to refund it or provide an itemized accounting within thirty days after move-out.

A written contract authorizing a broker to manage property for an owner, setting out rent collection, maintenance authority, management fees, reporting duties, and the length of the arrangement.

The process of splitting an item such as property taxes or rent between buyer and seller according to how many days each owns the property during the period the charge covers.

A federally required form delivered to a residential borrower at least three business days before closing that itemizes final loan terms, payments, and every closing cost charged.

Money a broker holds for others, such as earnest money, rents, or security deposits. It must be kept in a separate escrow or trust account and disbursed only as authorized.

Illegally mixing client, tenant, or escrow money with a broker's personal or business funds instead of keeping it in a separate trust account. It is a common basis for TREC disciplinary action.

The Texas Real Estate Commission, the state agency that licenses brokers and sales agents, adopts promulgated contract forms, and enforces the Real Estate License Act and its rules.

The standards of conduct in TREC rules requiring license holders to act honestly, deal fairly with all parties, and protect the public. Violations can result in suspension, revocation, or fines.

A broker's written estimate of what a property would likely sell for, often prepared for lenders or relocation firms. It is an opinion of value and not a licensed appraisal.

A TREC promulgated form for selling acreage with agricultural improvements, providing blanks and addenda for minerals, crops, grazing leases, and other rural property concerns.