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Real estate terms
| Question | Answer |
|---|---|
| Fee simple estate | You own the property with the greatest ownership rights possible. |
| Fee simple absolute | You own it forever. You can sell it or leave it for your heirs. Most common type of ownership |
| Fee simple defeasible | You own it but only under certain conditions. If the condition is broken, ownership can end. “land must always be used as a park” |
| Interest | A legal right in real estate |
| Freehold interest | ownership of real estate. fee simple. life estate. |
| Non-freehold interest | Right to use property, but not own it. renting. |
| Easement | right to use someones property for specific thing |
| Appurtenant easement | Benefits another piece of land (runs with the land) |
| In gross easement | Benefits a person or company (duke energy) |
| by necessity easement | Landlocked property needs access |
| By prescription easement | Someone has used the land openly without permission for many years. |
| Tenancy in commom | Owners can own different percentages. no right of survivorship. |
| Joint tenancy | Equal ownership. Has the right to survivorship. Not common in NC. |
| Tenancy by the entirety | Married couple. Right of survivorship. |
| Exclusive right to sell | Broker gets paid no matter who finds the buyer. |
| Exclusive agency | broker gets paid unless the seller finds the buyer |
| open listing | seller can hire multiple brokers. only the broker who finds the buyer gets paid. |
| net listing | seller wants a certain amount, broker keeps anything above it. illegal in NC. |
| Universal agent | Can do almost everything for the client. someone with power of attorney. |
| General agent | Handles many ongoing tasks. property manager |
| Special agent | Handles one specific task. real estate brokers are special agents. |
| Designated agency | one real estate firm represents the buyer and seller but one broker represents the buyer, one represents the seller. |
| Dual agency | Same broker represents the buyer and seller. |
| Discount points | prepaid interest paid at closing to lower the interest rate on a mortgage. 1 point = 1% of the loan amount. |
| Purchase agreement | Transfer property ownership |
| Lease agreement | Long-term property use. Landlord and tenant. |
| Rental agreement | Short-term property use. landlord and tenant. |
| Listing agreement | Authorize agent to sell property. seller and agent. |
| Assignment contract | Transfer purchase rights. original buyer and new buyer. |
| Option contract | Lock purchase price during due diligence. buyer and seller. |
| Power of attorney | Authorize someone to act on your behalf. Principal and attorney-in-fact |
| Gross lease | One big payment. Tenant pays one fixed rent; landlord pays most expenses. |
| Net lease | Tenant pays rent + extra costs. |
| Percentage lease | Used in shopping centers. Base rent + percent of sales. |
| Ground lease | land only |
| graduated lease | rent increases on a schedule |
| Index lease | Rent changes with an economic index. |
| Leasehold estate | You are renting, not owwning |
| Estate for years | Has a specific start date and end date. lease ends automatically. |
| Estate from year to year | lease automatically renews until someone gives proper notice. |
| Estate at will | tenant stays with the landlord’s permission, but there is no definite end date. |
| Estate at sufferance | Tenant stays after the lease has ended without the landlord permissions |
| Exclusive right to sell | The broker gets paid no matter who finds the buyer |
| Exclusive agency listing | The seller hires one brokerage, but keeps the right to find their own buyer. Seller Can Sell = No Commission. |
| Net listing | * Seller wants $300,000. * Broker sells for $315,000. * Broker keeps $15,000. 🚨 This is illegal in North Carolina |
| Multiple listing | a property is shared with other brokers through the Multiple Listing Service |
| Express agency | Written or spoken agreement. The client clearly tells the broker to represent them. |
| Implied agency | No formal agreement, but actions suggest an agency relationship exists |
| Universal agency | The agent has very broad authority to act for the client. Usually created through a power of attorney. |
| General agency | The agent has authority to handle ongoing business for the principal. |
| Special agency | The broker has authority to perform one specific task. This is how most real estate brokers work |
| Machinery Act | Determines how property is valued for taxes. |
| Homestead act | Protects part of a homeowner's equity from certain creditors. It helps prevent someone from losing everything in some debt situations. |
| Condominium Act | Governs condominiums. |
| Fair housing act 1968 | Prevents discrimination in housing |
| Civil Rights Act of 1866 | Prohibits discrimination based on race |
| RESPA (Real Estate Settlement Procedures Act) | Protects buyers during the closing process. |
| Equal Credit Opportunity Act (ECOA) | Prevents discrimination when applying for credit. |
| North Carolina Real Estate Acts | rules for brokers |
| Ad Valorem Tax | Tax based on property value |
| Excise tax | Tax paid when real estate is transferred (sold). |
| Special Assessment | A tax charged to properties that receive a specific public improvement. |
| Income tax | Tax on income earned |
| Capital Gains Tax | Tax on the profit from selling an asset. |
| Estate Tax | Tax that may apply to property transferred after someone dies. |
| General Warranty Deed | Most protection for the buyer |
| Special Warranty Deed | Protects only against issues that arose during the seller's ownership. |
| Quitclaim Deed | Transfers whatever interest the grantor has, with no warranties. |
| Lien | Claim against property for a debt. |
| Judgment Lien | Results from a court judgment. |
| Mechanic's Lien | Filed by someone who wasn't paid for labor or materials. |
| Property Tax Lien | Has priority over most other liens. |
| Appurtenant Easement | Benefits another parcel of land. |
| Easement in Gross | Benefits a person or company (like a utility company). |
| Prescriptive Easement | Created by long-term, unauthorized use. |
| Easement by Necessity | Needed to access landlocked property. |
| Discount points | points are prepaid interest that lower the interest rate. 1% of loan amount |
| Loan to value ratio | Compares the loan amount to the property's value. |
| Amortization | Paying off a loan through regular payments over time. |
| Acceleration Clause | Allows the lender to demand the entire loan balance immediately. |
| Alienation Clause (Due-on-Sale Clause) | Requires the loan to be paid off when the property is sold. |
| Prepayment Penalty | A fee charged if the borrower pays off the loan early. |
| Balloon Mortgage | Small payments now, big payment later. |
| Fixed-Rate Mortgage | Interest rate never changes. |
| Adjustable-Rate Mortgage | Interest rate can change over time. |
| Bilateral Contract | A promise for a promise. both parties make a promise. |
| Unilateral Contract | A promise for an action. Only one party makes a promise. The other party must perform an action to accept. |
| Option Contract | The right to buy, but not the obligation to buy. A buyer pays the seller for the option to purchase property within a certain time |
| Assignment | Transfer of rights in a contract to another person. |
| Novation | Replacing one party in a contract with a new party. Everyone agrees to the change. The old party is released from responsibility |
| Amendment | Changes an existing contract. The original contract stays in place, but something is changed |
| Addendum | Adds something new to a contract. It becomes part of the original contract |
| Executed Contract | All parties have performed |
| Executory Contract | The contract has been signed, but something still needs to happen |
| Void Contract | It was never a valid contract. |
| Voidable Contract | Valid unless one party chooses to cancel it. One party has the right to void it |
| Unenforceable Contract | A valid contract, but the court will not enforce it. Usually because of a legal technicality |
| Zoning | Government rules that control how land can be used. |
| Building Codes | Safety standards for construction. |
| Eminent Domain | Government's right to take private property for public use. |
| Condemnation | The legal process used to take property through eminent domain. |
| police power | Government's power to regulate property to protect health, safety, morals, and welfare. |
| Escheat | property goes to the state when someone dies without heirs or a valid will |
| Residential Property and Owners' Association Disclosure Statement | Seller tells what they know |
| Earnest Money Deposit | Money showing the buyer is serious |
| Designated Agency | Two agents in the same firm represent different clients. |
| Due Diligence Fee | Money paid directly to the seller for the buyer's right to investigate the property. |
| Equity | Property value minus debts owed. |
| Chattel | personal property |
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