- Real property
- Land, everything permanently attached to it (improvements and fixtures), and the bundle of legal rights of ownership.
- Personal property (chattel)
- Movable items not permanently affixed to land; everything that is not real property.
- Fee simple absolute
- The most complete ownership — absolute, of unlimited duration, and freely transferable by deed or will.
- Life estate
- A freehold estate lasting for the lifetime of a named person; it ends at death and cannot be willed.
- Leasehold estate
- A tenant's right to possess and use property for a term without owning it.
- Bundle of rights
- The rights of ownership: possession, use (enjoyment), exclusion, disposition, and control.
- Fixture
- Personal property attached to real property so it becomes part of it and transfers with the land.
- MARIA test
- Tests for a fixture: Method of attachment, Adaptability, Relationship of parties, Intention, Agreement.
- Trade fixture
- An article a business tenant attaches; it stays personal property and may be removed before the lease ends.
- Easement
- A nonpossessory right to use another's land for a specific purpose, such as a driveway or utility line.
- Easement appurtenant
- A use right benefiting an adjacent parcel that runs with the land.
- Easement in gross
- A use right benefiting a person or company (such as a utility), not a parcel of land.
- Encumbrance
- Any claim, lien, charge, or right that limits an owner's title.
- Encroachment
- An unauthorized intrusion of an improvement onto a neighbor's land, usually revealed by survey.
- Lien
- A monetary claim against property securing a debt; it can force a sale if unpaid.
- CC&Rs
- Covenants, Conditions & Restrictions — private deed restrictions, often enforced by an HOA, that can be stricter than zoning.
- Police power
- Government's authority to regulate land for public health, safety, and welfare — zoning and building codes, with no payment to the owner.
- Eminent domain
- Government's power to take private property for public use through condemnation, paying just compensation.
- Escheat
- The reversion of property to the State of California when an owner dies with no will and no heirs.
- PETE
- The four government powers: Police power, Eminent domain, Taxation, Escheat.
- Zoning
- Local police-power regulation dividing land into use districts; a variance permits a hardship deviation.
- Metes and bounds
- A legal description using distances (metes) and compass directions (bounds) from a point of beginning.
- Subdivision Map Act
- California law giving local governments control over the design and improvement of land subdivisions.
- Acre
- A unit of land area equal to 43,560 square feet.
- Community property
- Property acquired by a married couple or registered domestic partners during marriage, owned equally — a hallmark of California law.
- Separate property
- Property a spouse owned before marriage or received during marriage by gift or inheritance.
- Community property with right of survivorship
- California vesting combining equal community ownership with automatic transfer to the surviving spouse at death.
- Severalty
- Sole ownership of property by one person or entity.
- Joint tenancy
- Co-ownership with the right of survivorship; requires the four unities of time, title, interest, and possession.
- Tenancy in common
- Co-ownership with no survivorship; each owner holds an undivided, willable share.
- Right of survivorship
- The feature by which a deceased co-owner's share passes automatically to the surviving co-owners.
- Four unities
- Time, Title, Interest, and Possession — all required to create a valid joint tenancy.
- Grant deed
- California's usual deed; it carries two implied warranties — no prior conveyance and no undisclosed encumbrances by the grantor.
- Quitclaim deed
- A deed conveying only whatever interest the grantor has, with no warranties; used to clear a cloud on title.
- Grantor
- The party conveying title (typically the seller) who signs the deed.
- Grantee
- The party receiving title (typically the buyer); the grantee does not sign the deed.
- Delivery and acceptance
- Title passes only when the grantor delivers the deed and the grantee accepts it — not on recording.
- Recording
- Entering a deed in the county recorder's public record, giving constructive notice and setting lien priority.
- Constructive notice
- Notice the law presumes everyone has because a document is recorded or possession is visible.
- Actual notice
- Notice a person genuinely has from direct knowledge of a fact.
- Chain of title
- The recorded history of ownership of a parcel, established by a title search.
- Title insurance
- A policy protecting the insured against loss from title defects existing before the policy date, such as liens or forgery.
- CLTA policy
- California Land Title Association owner's policy — the standard coverage protecting a buyer's equity.
- ALTA policy
- American Land Title Association extended policy, commonly required by lenders to protect the loan.
- Cloud on title
- A claim or defect that impairs marketable title until it is removed or cleared.
- Will / intestate succession
- A tenancy-in-common or separate-property interest passes by the owner's will, or by intestate succession if there is no will.
- Market value
- The most probable price a property should bring in a competitive, open market under fair conditions — an opinion of value.
- Market price
- The actual price a property sold for, which may differ from market value.
- Appraisal
- An impartial, supported opinion of value by a licensed appraiser as of a specific date, following USPAP.
- USPAP
- Uniform Standards of Professional Appraisal Practice — the rules an appraiser must follow.
- Comparative market analysis (CMA)
- A licensee's estimate of value from recent comparable sales to help price a listing — not an appraisal.
- Sales comparison approach
- Estimates value by comparing the subject to recently sold similar properties; best for homes.
- Cost approach
- Land value plus the cost to rebuild improvements new, minus depreciation; best for new or special-use property.
- Income (capitalization) approach
- Estimates value as net operating income ÷ capitalization rate; best for income property.
- Net operating income (NOI)
- Effective gross income minus operating expenses, before any mortgage payment.
- Capitalization rate
- The rate of return on income property: NOI ÷ value. A higher cap rate implies more risk and lower value.
- Reconciliation
- Weighing the three approach indications into one final opinion of value — not averaging them.
- Highest and best use
- The legally permissible, physically possible, financially feasible, and most profitable use of a site.
- Substitution
- A buyer pays no more than the cost of an equally desirable substitute property.
- Conformity
- Value is maximized when a property fits in with its surroundings.
- Progression
- A modest home's value is supported upward by larger, more valuable nearby homes.
- Regression
- A higher-value home loses value when surrounded by lesser homes.
- Supply and demand
- Value rises when demand exceeds supply and falls when supply exceeds demand.
- Depreciation (appraisal)
- A loss in value from physical deterioration, functional obsolescence, or external (economic) obsolescence.
- Functional obsolescence
- A loss in value from outdated design or features within the property.
- External obsolescence
- A loss in value from negative influences outside the property, such as a nearby nuisance.
- Gross rent multiplier (GRM)
- A quick value tool: value = monthly (or annual) rent × the gross rent multiplier.
- Plottage
- The increase in value from combining adjacent parcels into one larger, more useful site (assemblage).
- Valid contract elements
- Mutual consent, consideration, a lawful object, and capable parties — and writing for real estate.
- Statute of frauds
- Requires contracts for the sale of real estate (and most leases over a year) to be in writing to be enforceable.
- Void contract
- A contract with no legal effect because it lacks an essential element.
- Voidable contract
- A contract one party may rescind, such as one signed by a minor or obtained by fraud.
- CAR Residential Purchase Agreement (RPA)
- The standard California Association of REALTORS® form used as the residential purchase contract in most sales.
- Earnest money
- A buyer's good-faith deposit; in California it is handled as a trust fund.
- Contingency
- A condition (financing, inspection, appraisal) that must be satisfied for a contract to move forward.
- Counteroffer
- A response that rejects the original offer and proposes new terms, creating a new offer.
- Specific performance
- A court remedy compelling a defaulting party to complete the contract because real estate is unique.
- Liquidated damages
- A pre-agreed amount (often the deposit) a buyer forfeits on default, limited by California law on residential sales.
- Listing agreement
- A contract employing a broker to find a buyer for the owner's property in exchange for compensation.
- Exclusive right-to-sell listing
- The listing broker earns the commission no matter who finds the buyer.
- Exclusive agency listing
- The broker earns the commission unless the owner sells the property themselves.
- Open listing
- Only the broker who actually finds the buyer earns a commission.
- Net listing
- The broker keeps any amount above the seller's set price — tightly restricted and discouraged in California.
- Agency
- A fiduciary relationship in which an agent represents a principal in dealings with third parties.
- Fiduciary duties (OLD CAR)
- Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care.
- Dual agency
- Representing both buyer and seller; legal in California only with the informed written consent of both parties.
- Agency Disclosure (AD) form
- California's required Disclosure Regarding Real Estate Agency Relationships — Disclose, Elect, Confirm.
- Procuring cause
- The agent whose actions set in motion an unbroken chain of events leading to the sale, earning the commission.
- Principal
- The party (client) who hires and is represented by an agent.
- Customer
- A party an agent deals with but does not represent; owed honesty and fair dealing, not full fiduciary duties.
- Ready, willing, and able buyer
- A buyer prepared to purchase on the seller's terms; producing one generally earns the commission.
- Power of attorney
- A written authority making someone an attorney-in-fact to act for another, e.g., to sign documents.
- Fair Housing Act (1968)
- Federal law banning housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.
- Seven federal protected classes
- Race, color, religion, national origin, sex, familial status, and disability.
- Unruh Civil Rights Act
- California law barring business establishments, including brokerages, from discriminating against protected classes.
- Fair Employment and Housing Act (FEHA)
- California law adding housing protections such as marital status, source of income, ancestry, sexual orientation, and gender identity.
- Holden Act
- California's Housing Financial Discrimination Act, prohibiting discriminatory mortgage lending (redlining).
- Steering
- Illegally guiding buyers toward or away from neighborhoods based on a protected class.
- Blockbusting
- Inducing owners to sell by claiming a protected class is moving in, to profit from turnover — illegal.
- Redlining
- A lender's illegal refusal to lend or insure in an area based on its racial or ethnic makeup.
- Reasonable accommodation
- A rule change a housing provider must allow for a person with a disability, such as permitting a service animal.
- Reasonable modification
- A physical change to a unit a person with a disability may make for accessibility.
- Familial status
- Protection for households with children under 18 and pregnant persons.
- Trust funds
- Money belonging to others (such as earnest money) that a broker must safeguard separately from personal funds.
- Trust account
- A separate account where a broker holds trust funds, with a required ledger and monthly reconciliation.
- Commingling
- Improperly mixing a client's trust funds with the broker's own or business funds — a license-law violation.
- Conversion
- Actually using a client's trust funds for the broker's own purposes — more serious than commingling.
- Next-business-day rule
- California requires trust funds to be placed into escrow, the principal, or the broker's trust account generally by the next business day.
- Antitrust / price fixing
- Competing brokers may not agree to fix commission rates; rates are always negotiable.
- Lessor / lessee
- In a lease, the landlord is the lessor and the tenant is the lessee.
- Gross lease
- A lease in which the landlord pays the property's operating expenses.
- Net lease
- A lease in which the tenant pays some or all property expenses in addition to rent.
- Percentage lease
- A retail lease in which rent is tied to the tenant's sales.
- Property management agreement
- A contract making a broker the owner's agent to manage, lease, and maintain a property.
- Security deposit (California)
- A refundable tenant deposit subject to California limits and accounting and return rules.
- DRE Code of Ethics
- Commissioner's Regulations on professional conduct and fair dealing that California licensees must follow.
- Transfer Disclosure Statement (TDS)
- California's mandatory seller disclosure of a property's condition and known defects for most 1–4 residential units (Civil Code §1102).
- Civil Code §1102
- The statute requiring the TDS in most California sales of one-to-four residential units.
- Easton v. Strassburger
- 1984 case creating the agent's duty to conduct a diligent visual inspection and disclose what it reveals — now codified.
- Agent Visual Inspection Disclosure (AVID)
- The form on which an agent reports the results of their diligent visual inspection of accessible areas.
- Natural Hazard Disclosure (NHD)
- California disclosure stating whether a property lies in a flood, fire, seismic, or other state hazard zone.
- Megan's Law disclosure
- Statutory notice that a public registered-sex-offender database exists; the agent does not research it for the buyer.
- Mello-Roos disclosure
- Notice of a special tax for a Community Facilities District funding local infrastructure; not capped by Prop 13.
- Alquist-Priolo zone
- A California earthquake fault zone that must be disclosed, typically through the NHD.
- Material fact
- A fact that would affect a reasonable buyer's decision or price; it must be disclosed.
- Latent defect
- A hidden physical defect not found by ordinary inspection; a known latent defect must be disclosed.
- Caveat emptor
- “Let the buyer beware” — now sharply limited in California by mandatory disclosure laws.
- Stigmatized property
- A property psychologically impacted by an event; California limits required disclosure of certain stigmas.
- Lead-based paint disclosure
- Federal rule for pre-1978 housing: disclose known lead paint, give the EPA pamphlet, allow a 10-day test window for sales.
- Title X (1992)
- The Residential Lead-Based Paint Hazard Reduction Act that created the federal lead-paint disclosure rule.
- Radon
- An odorless radioactive soil gas; the second-leading cause of lung cancer.
- Asbestos
- A hazardous fiber in old insulation and flooring; remove or encapsulate to control it.
- Mold
- Grows in damp areas; may require disclosure and remediation.
- Underground storage tank
- A tank that can leak and contaminate soil and groundwater, creating cleanup liability.
- CERCLA / Superfund
- Federal law imposing liability for cleanup of hazardous-substance contamination.
- FIRPTA
- Foreign Investment in Real Property Tax Act — requires withholding on sales by foreign sellers.
- Right to cancel (TDS)
- A buyer who receives the TDS after signing generally has a statutory right to cancel within a set period.
- Death on the property
- California requires disclosure of a death on the property only within the prior three years (with limits).
- Deed of trust
- California's usual security instrument: the trustor conveys title to a neutral trustee for the lender (beneficiary).
- Trustor / trustee / beneficiary
- In a deed of trust: the borrower (trustor), the neutral holder of title (trustee), and the lender (beneficiary).
- Promissory note
- The borrower's written promise to repay the debt that the deed of trust secures.
- Mortgage
- A two-party loan instrument pledging property as collateral; less common in California than the deed of trust.
- Amortization
- Repaying a loan through regular principal-and-interest payments so the balance reaches zero by term's end.
- Loan-to-value ratio (LTV)
- The loan amount divided by the property's value or price; a higher LTV means more lender risk.
- Private mortgage insurance (PMI)
- Insurance usually required on a conventional loan when the LTV exceeds 80%.
- Discount points
- Prepaid interest paid at closing to lower the rate; one point equals 1% of the loan amount.
- Conventional loan
- A loan not insured or guaranteed by the government; PMI applies above 80% LTV.
- FHA loan
- A loan insured by the Federal Housing Administration, allowing low down payments.
- VA loan
- A loan guaranteed by the Department of Veterans Affairs for eligible veterans, often with no down payment.
- Acceleration clause
- Lets the lender demand the full balance upon default.
- Due-on-sale (alienation) clause
- Requires the loan to be paid in full when the property is sold.
- Power-of-sale clause
- Lets the trustee conduct a nonjudicial foreclosure under a deed of trust.
- Nonjudicial foreclosure
- California's common foreclosure by the trustee under a deed of trust's power of sale, without a court.
- RESPA
- Federal law requiring settlement-cost disclosures and prohibiting kickbacks on federally related mortgage loans.
- TILA (Regulation Z)
- Federal Truth in Lending Act requiring disclosure of the cost of credit, including the APR.
- TRID / Loan Estimate & Closing Disclosure
- Combined RESPA/TILA forms: Loan Estimate within 3 business days of application, Closing Disclosure 3 business days before closing.
- Escrow
- A neutral third party that holds documents and funds and closes a California transaction once conditions are met.
- Usury / California financing law
- Limits on excessive interest, with broad exemptions for licensed lenders and arranged loans.
- Commission formula
- Commission = sale price × commission rate; a $500,000 sale at 5% = $25,000.
- Price for a target net
- Price = net ÷ (1 − commission rate); a $475,000 net at 5% = $475,000 ÷ 0.95 = $500,000.
- Loan-to-value (LTV)
- LTV = loan amount ÷ value; an 80% LTV on a $500,000 home is a $400,000 loan.
- Income-approach value
- Value = net operating income ÷ capitalization rate; $90,000 ÷ 0.09 = $1,000,000.
- Square feet to acres
- Divide square feet by 43,560; 43,560 sq ft = 1 acre, and 1 section = 640 acres.
- Proposition 13 base tax
- Base property tax = assessed value × 1%; a $500,000 home = $5,000 a year before local add-ons.
- Proration
- Divide taxes, rent, or interest by days each party owns the property; the seller is usually charged through closing.
- Area of a rectangle
- Area = length × width; a 150 ft × 290 ft lot = 43,500 square feet.
- Profit / loss percent
- Percent of profit or loss = gain or loss ÷ the original (not the new) cost.
- Documentary transfer tax
- A county tax on transfers, commonly $1.10 per $1,000 of the sale price (plus any city tax).
- California Department of Real Estate (DRE)
- The state agency that licenses and regulates California salespersons and brokers under the Real Estate Law.
- Real Estate Law
- California's licensing statute in Business & Professions Code Division 4, enforced by the DRE.
- Commissioner's Regulations
- The DRE's administrative rules (Title 10, CCR) implementing the Real Estate Law.
- Real Estate Commissioner
- The chief officer of the DRE who enforces the Real Estate Law and can discipline licensees.
- Salesperson license
- Lets a person perform real estate acts for compensation only while employed by a responsible licensed broker.
- Broker license
- Lets a person operate independently, employ salespersons, and be responsible for trust funds and supervision.
- Responsible broker
- The broker who employs and supervises a salesperson and is accountable for their real estate conduct.
- Pre-license education (135 hours)
- Three 45-hour college-level courses: Real Estate Principles, Real Estate Practice, and one approved elective.
- Real Estate Principles course
- A required 45-hour survey course covering ownership, agency, contracts, financing, and California license law.
- Real Estate Practice course
- A required 45-hour course on brokerage practice; since 2024 it must include fair-housing and implicit-bias content.
- Approved elective
- The third required 45-hour course — e.g., Appraisal, Property Management, Finance, or Legal Aspects.
- Salesperson exam format
- 150 multiple-choice questions in 3 hours, administered by the DRE.
- Salesperson passing score
- 70% — you must answer at least 105 of the 150 questions correctly.
- Broker exam format
- 200 multiple-choice questions over 4 hours; the broker needs more education and experience.
- Minimum age
- You must be at least 18 years old to be issued a California real estate license.
- Live Scan background check
- Electronic fingerprinting and a DRE honesty/criminal-history review required before licensure.
- Combined exam/license application
- A DRE option to apply for the exam and license together (RE 435).
- Exam fee (salesperson)
- $100 to take the California salesperson exam — confirm the current amount on the DRE Fees page.
- Original license fee (salesperson)
- $350 for the original salesperson license — confirm on the DRE Fees page.
- License term
- California real estate licenses are issued for a four-year term.
- Continuing education (45 hours)
- DRE-approved coursework a licensee must complete each four-year renewal cycle.
- First-renewal CE
- Includes separate 3-hour courses in Ethics, Agency, Fair Housing, Trust Fund Handling, and Risk Management, plus a 2-hour Implicit Bias course.
- Consumer-protection CE
- At least 18 of the 45 renewal hours must be in consumer-protection courses.
- Implicit Bias training
- A required continuing-education course on recognizing and countering implicit bias in real estate.
- Late renewal
- A license may be renewed late within a two-year grace period by paying a late fee; otherwise it expires.
- Trust-fund recordkeeping
- Brokers must keep a columnar trust-fund ledger and reconcile the trust account monthly.
- Advertising disclosure
- A licensee's solicitation materials must include their DRE license identification number.
- Mortgage Loan Originator (MLO) endorsement
- A separate NMLS endorsement a DRE licensee needs to originate residential mortgage loans.
- Recovery Account
- A DRE-administered fund that can pay victims of certain licensee fraud who cannot collect a judgment.
- License discipline
- The Commissioner may suspend or revoke a license for commingling, misrepresentation, or unlicensed activity.
- Subagent / cooperating broker
- A broker from another office who works with the listing broker, often the buyer's side of a deal.
- California State Bar exemption
- Active members of the California State Bar are exempt from the pre-license course requirement.