Your FREE Real Estate Exam Flashcards 2026 – 200+ Cards

The most complete form of ownership — absolute, of unlimited duration, and freely transferable by deed or will. Also called fee simple absolute.

Land plus everything permanently attached to it (improvements, fixtures) and the bundle of legal rights that go with ownership.

All property that is not real property — movable items not permanently affixed to the land.

The rights of ownership: possession, use (enjoyment), exclusion, disposition (transfer), and control.

An item of personal property that has been so attached to real property that it becomes part of the real estate and transfers with it.

An article attached by a tenant for use in a business; it remains the tenant's personal property and may be removed before the lease ends.

Method of Attachment, Adaptability, Relationship of the parties, Intention, and Agreement — used to decide if an item is a fixture.

A right or improvement that belongs to and transfers with the land, such as an easement, water rights, or a garage.

An estate of ownership of indefinite duration — fee simple or a life estate.

A freehold estate that lasts for the lifetime of a named person; it cannot be willed because it ends at death.

The third party who receives the property in fee simple when a life estate ends.

The future interest left when the property returns to the original grantor (or heirs) after a life estate ends.

A tenant's right to possess and use property for a fixed or renewable term without owning it; a less-than-freehold estate.

A leasehold with a definite beginning and ending date; it terminates automatically with no notice required.

Any claim, lien, charge, or right that limits an owner's title — liens, easements, encroachments, and deed restrictions.

A nonpossessory right to use another's land for a specific purpose, such as a driveway or utility line.

An easement that benefits an adjacent parcel; it runs with the land. The benefited parcel is the dominant tenement; the burdened one is the servient tenement.

An easement that benefits a person or company (e.g., a utility) rather than a neighboring parcel; there is no dominant tenement.

An easement gained through open, continuous, and hostile use of another's land for the statutory period.

An unauthorized intrusion of an improvement (fence, building, driveway) onto a neighbor's property; usually revealed by a survey.

A monetary claim or charge against property used as security for a debt; an encumbrance that can force a sale if unpaid.

Government's authority to regulate land for the public health, safety, and welfare — the basis for zoning and building codes.

Government's power to take private property for public use through condemnation, paying the owner just compensation.

The legal process by which the government exercises eminent domain to acquire private property for public use.

The reversion of property to the state when an owner dies with no will and no legal heirs.

Government's right to levy charges on real property to raise public revenue; an unpaid tax creates a lien with high priority.

Local police-power regulation that divides land into districts (residential, commercial, industrial) and controls use and density.

Permission to deviate from a zoning requirement because strict application would cause the owner undue hardship.

A use that was lawful before a zoning change but no longer complies; often allowed to continue as a grandfathered use.

Private limits on land use placed in the deed or recorded covenants; they may be more restrictive than zoning.

A legal description using distances (metes) and compass directions (bounds) that traces a property's boundary back to a point of beginning.

A legal-description method using principal meridians and base lines to form townships, ranges, and sections.

One square mile of land — 640 acres — and 1/36 of a township in the rectangular survey system.

A 6-mile-by-6-mile square of land containing 36 sections (36 square miles).

A legal description that refers to a lot and block number on a recorded subdivision plat map.

A unit of land area equal to 43,560 square feet.

Water rights of an owner whose land borders a lake, sea, or ocean (a stationary body of water).

Water rights of an owner whose land abuts a flowing watercourse such as a river or stream.

The legal evidence of ownership and the bundle of rights in real property; not a physical document but a concept of ownership.

The written instrument that transfers (conveys) title to real property from the grantor to the grantee.

The party who transfers (conveys) an interest in real property by deed.

The party who receives an interest in real property by deed.

The deed offering the greatest protection; the grantor warrants clear title against all defects, even those arising before the grantor owned the property.

A deed in which the grantor warrants title only against defects arising during the grantor's own period of ownership.

A deed that conveys only whatever interest the grantor has, with no warranties; often used to clear clouds on title.

Something of value exchanged for the property; a deed must recite consideration to be valid.

A formal declaration before a notary that the grantor signed the deed voluntarily; required to record the deed.

A deed transfers title only when it is delivered by the grantor and accepted by the grantee during the grantor's lifetime.

Entering a document in the public record to give constructive notice of an interest and establish its priority.

Notice the law presumes everyone has because a document is recorded in the public record or possession is visible.

Knowledge a person directly has of a fact, such as seeing a tenant in possession or reading a document.

The recorded history of ownership transfers of a property from the earliest owner to the present.

A claim or defect that impairs marketable title until it is resolved, often by a quitclaim deed or suit to quiet title.

Title free of reasonable doubt or serious defects that a well-informed buyer would accept.

A policy that protects the insured against losses from title defects, liens, or encumbrances not excepted in the policy.

Ownership of property by one person or entity alone; sole ownership.

Co-ownership in which each owner holds an undivided fractional interest that can be willed; no right of survivorship.

Co-ownership with the right of survivorship; the four unities of time, title, interest, and possession must be present.

The feature of joint tenancy by which a deceased co-owner's interest passes automatically to the surviving joint tenants, not to heirs.

Co-ownership available only to a married couple, with right of survivorship; neither spouse can convey separately.

Ownership in fee simple of an individual unit plus an undivided share of the common elements.

A form of ownership in which a corporation owns the building and residents own shares plus a proprietary lease for their unit.

A written document directing how a person's property is distributed at death; real property passed by will is a devise.

Dying without a valid will; property then passes by the state's laws of descent (intestate succession).

The court process that proves a will, settles debts, and distributes a deceased person's estate.

Acquiring title by open, notorious, continuous, hostile, and exclusive possession of another's land for the statutory period.

The most probable price a property should bring in a competitive, open market under fair-sale conditions.

The actual price a property sold for, which may differ from its market value.

An impartial expert's opinion or estimate of a property's value as of a specific date, supported by data.

A licensee's estimate of value based on recent sales of comparable properties; used to price a listing, not a formal appraisal.

An appraisal method that estimates value by comparing the subject to recently sold similar properties and adjusting for differences.

An appraisal method: land value plus the cost to rebuild improvements new, minus depreciation. Best for new or special-use property.

An appraisal method that converts a property's net operating income into value; used mainly for income-producing property.

The rate of return on an income property: net operating income ÷ value. A higher cap rate implies more risk and lower value.

Effective gross income minus operating expenses, before debt service; the income figure used in the income approach.

A quick valuation factor: sale price ÷ gross monthly (or annual) rent; multiply a property's rent by the GRM to estimate value.

A loss in property value from physical deterioration, functional obsolescence, or external (economic) obsolescence.

Loss of value from wear, tear, or damage to the improvements.

Loss of value from outdated or poorly designed features within the property, such as a one-car garage or a dated floor plan.

Loss of value caused by factors outside the property, such as a nearby nuisance or a declining neighborhood; usually incurable.

The legally permissible, physically possible, financially feasible, and most profitable use of a site — the basis of value.

A buyer will pay no more for a property than the cost of an equally desirable substitute. Underlies the sales comparison approach.

Value is maximized when a property is in reasonable harmony with surrounding properties in use and style.

A modest property's value increases when surrounded by larger, more expensive properties.

The economic principle that property value rises when demand exceeds supply and falls when supply exceeds demand.

Weighing the value indications from the three approaches to arrive at a single final opinion of value; not averaging.

The value a taxing authority places on property to compute property taxes; often a percentage of market value.

The Uniform Standards of Professional Appraisal Practice — the ethical and performance standards appraisers must follow.

Depreciation in appraisal is any loss in value from any cause; it differs from the accounting tax write-off of basis over time.

A legally enforceable agreement between competent parties to do or refrain from doing a lawful act.

A contract that meets all legal requirements: offer and acceptance, consideration, legal purpose, competent parties, and (for real estate) writing.

An agreement that has no legal effect from the start because it lacks an essential element or has an illegal purpose.

A contract that is valid but may be rescinded by one party, such as a contract signed by a minor or under duress.

A valid agreement that a court will not enforce, often because it is not in writing as required by the statute of frauds.

The law requiring that contracts for the sale of real estate (and most leases over one year) be in writing to be enforceable.

A contract in which both parties make a promise — a promise for a promise, like a purchase agreement.

A contract in which one party promises to perform only if the other acts, like an open listing or an option.

Mutual agreement to the same terms; a counteroffer rejects the original offer and creates a new one.

A buyer's good-faith deposit showing serious intent; held in trust and usually applied to the purchase price at closing.

A condition that must be met for a contract to become binding, such as financing, inspection, or appraisal contingencies.

An amount agreed in advance (often the earnest money) that the seller keeps if the buyer defaults.

A court remedy compelling a defaulting party to carry out the contract because real estate is unique.

Failure to perform a contractual duty without legal excuse; gives the other party the right to remedies.

An agreement giving a buyer the right, but not the obligation, to purchase within a set time at a set price for consideration.

An installment sale in which the seller keeps legal title until the buyer pays in full, while the buyer takes possession.

A contract employing a broker to find a buyer or tenant for the principal's property in exchange for compensation.

A listing in which the broker earns a commission no matter who sells the property during the listing term.

A listing in which one broker is the only agent, but the owner may sell it themselves without owing a commission.

A nonexclusive listing in which only the broker who finds the buyer earns a commission; the seller may use several brokers.

A listing where the broker keeps any amount above a price the seller sets; illegal or discouraged in many states.

A fiduciary relationship in which an agent represents a principal in dealings with third parties.

The party who hires and authorizes an agent to act on their behalf; the client to whom fiduciary duties are owed.

Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care — the duties an agent owes the principal.

The duty to put the principal's interests above all others, including the agent's own.

The duty not to disclose a principal's personal or financial information that could harm their bargaining position, even after the relationship ends.

The duty to account for all money and property entrusted to the agent, such as earnest money held in trust.

The duty to reveal to the principal all material facts the agent knows that affect the transaction.

Representing both buyer and seller in the same transaction; legal only with the informed written consent of both parties.

A relationship in which the licensee represents the buyer and owes the buyer fiduciary duties.

A licensee who assists parties without representing either as an agent; owes honesty and fair dealing but not fiduciary duties.

The agent whose actions set in motion an unbroken chain of events leading to the sale, earning the commission.

A buyer prepared to buy on the seller's terms and financially able to do so; producing one typically earns the commission.

The negotiable fee a broker earns for services, usually a percentage of the sale price, paid at closing.

A licensee who may operate independently, employ salespeople, and represent clients in real estate transactions.

A licensee who must work under a sponsoring broker and cannot operate independently or hold client funds alone.

A separate account where a broker holds client funds such as earnest money, kept apart from the broker's own money.

Improperly mixing client trust funds with the broker's personal or business funds — a license-law violation.

Using a client's trust funds for the broker's own purposes — a serious violation more severe than commingling.

A cooperative database where member brokers share listings and offers of compensation to one another.

Illegally guiding buyers toward or away from neighborhoods based on a protected class — a fair-housing violation.

Inducing owners to sell by claiming people of a protected class are moving in, to profit from turnover — illegal.

A lender's illegal refusal to lend or insure in certain areas based on the racial or ethnic makeup of the neighborhood.

The 1968 federal law (Title VIII) prohibiting discrimination in housing based on race, color, religion, national origin, sex, disability, and familial status.

Race, color, religion, national origin, sex, familial status, and disability — the seven classes protected by federal fair-housing law.

A protected class covering households with children under 18, pregnant persons, and those securing custody of a child.

A change in rules or services a housing provider must allow so a person with a disability can use the housing, such as a service animal.

Competing brokers conspiring to set commission rates — a per se antitrust violation; commissions must be set independently.

A contract conveying the right to use property for a term in exchange for rent; the landlord is the lessor, the tenant the lessee.

A lease in which the tenant pays a fixed rent and the landlord pays the property's operating expenses.

A lease in which the tenant pays rent plus some or all of the property's expenses (taxes, insurance, maintenance).

A lease, common in retail, where rent is a base amount plus a percentage of the tenant's gross sales.

When a landlord's failure to maintain the premises makes them uninhabitable, allowing the tenant to leave and stop paying rent.

Funds a landlord holds to cover unpaid rent or tenant damage; state law limits the amount and the return timeline.

A false statement of material fact that induces reliance; can be innocent, negligent, or fraudulent.

A fact that would affect a reasonable buyer's decision to purchase or the price they would pay; must be disclosed.

A hidden physical defect not discoverable by ordinary inspection; sellers and agents who know of it must disclose it.

A statement, required in most states, in which the seller discloses known material defects in the property to the buyer.

'Let the buyer beware' — an older doctrine now limited by mandatory seller and agent disclosure laws.

A property psychologically impacted by an event (e.g., a death) rather than a physical defect; disclosure rules vary by state.

Federal law requires sellers and landlords of pre-1978 housing to disclose known lead-based paint and give the EPA pamphlet plus a 10-day inspection window.

The 1992 federal law mandating lead-based paint disclosure for housing built before 1978.

A fibrous mineral once used in insulation and flooring; airborne fibers cause lung disease, requiring careful removal or encapsulation.

A naturally occurring, odorless radioactive gas that can seep into homes from the soil; the second-leading cause of lung cancer.

A fungus that grows in damp areas and can cause health problems; disclosure and remediation may be required.

A buried tank, often for heating oil, that can leak and contaminate soil and groundwater, creating cleanup liability.

The federal law imposing strict, joint, and several liability on owners for cleanup of hazardous-waste contamination, even prior owners.

An area at risk of flooding; properties in a designated flood zone usually require flood insurance for a federally backed loan.

A loan secured by real property; the borrower (mortgagor) pledges the property as collateral to the lender (mortgagee).

A security instrument used instead of a mortgage in some states, involving a trustee who holds title until the loan is repaid.

The borrower's written promise to repay a debt; the evidence of the debt that the mortgage or deed of trust secures.

The two parts of a loan payment: principal repays the amount borrowed, interest is the cost of borrowing it.

Repaying a loan through regular payments that cover interest and principal so the balance reaches zero by the end of the term.

The loan amount divided by the property's value or price; a higher LTV means a smaller down payment and more lender risk.

Prepaid interest paid at closing to lower the loan's interest rate; one point equals 1% of the loan amount.

Insurance a borrower pays on a conventional loan when the down payment is under 20%, protecting the lender against default.

A mortgage not insured or guaranteed by a government agency; it follows lender and secondary-market guidelines.

A loan insured by the Federal Housing Administration, allowing low down payments; the borrower pays mortgage insurance premiums.

A loan guaranteed by the Department of Veterans Affairs for eligible veterans, often with no down payment.

Where existing loans are bought and sold (Fannie Mae, Freddie Mac, Ginnie Mae), giving lenders funds to make new loans.

A loan whose interest rate adjusts periodically based on an index plus a margin, shifting rate risk to the borrower.

A loan with an interest rate and payment that stay the same for the entire term.

A loan provision letting the lender demand the entire balance at once if the borrower defaults.

A clause requiring the loan to be paid in full when the property is sold, preventing the buyer from assuming the loan.

The legal process by which a lender forces the sale of property to recover an unpaid debt.

A court judgment against a borrower when a foreclosure sale does not cover the full debt owed.

The Real Estate Settlement Procedures Act — a federal law requiring loan-cost disclosures and prohibiting kickbacks and referral fees in closings.

A federal law requiring lenders to disclose the cost of credit, including the annual percentage rate (APR) and finance charges.

A standardized TRID form a lender must give within three business days of application, disclosing estimated loan terms and closing costs.

A TRID form the borrower must receive at least three business days before closing, showing final loan terms and settlement costs.

A federal law prohibiting lenders from discriminating in credit decisions based on protected characteristics.

A neutral third party holds documents and funds and disburses them when all conditions of the sale are met.

Dividing prepaid or accrued expenses (taxes, rent, interest) fairly between buyer and seller as of the closing date.

On a settlement statement, a debit is a charge a party owes; a credit is an amount in a party's favor.

Length × width. To find the area of rectangular land or a building footprint, multiply the two dimensions.

43,560 square feet. Divide a parcel's square footage by 43,560 to convert it to acres.

Sale price × commission rate = total commission. A $300,000 sale at 6% yields an $18,000 commission.

Sale price − commission − other costs = net to seller. To find the price for a target net, divide the net by (1 − commission rate).

Loan amount ÷ value (or price) = LTV. An 80% LTV on a $375,000 home is a $300,000 loan and a $75,000 down payment.

Price − loan amount. With a $45,000 down payment on a $375,000 home, the buyer finances $330,000 (an 88% LTV).

One point = 1% of the loan amount. Two points on a $200,000 loan cost $4,000, paid at closing.

Assessed value × tax rate = annual tax. A $320,000 assessment at a rate of 1.8% (18 mills) yields $5,760.

A property-tax rate expressed in thousandths: 1 mill = $1 of tax per $1,000 of assessed value (0.001).

Cap rate = net operating income ÷ value, so value = NOI ÷ cap rate. $96,000 NOI at a 9% cap rate ≈ $1,066,667 value.

GRM = sale price ÷ gross rent. Multiply a property's rent by the area GRM to estimate its value.

(Sale price − cost) ÷ original cost × 100. Always divide the gain or loss by the original purchase price.

Split annual taxes by the number of days each party owns the property. The seller is usually charged through the closing date.

Allocate collected rent by days of ownership; the buyer is typically credited for the portion covering days after closing.

A tax on conveyance based on price, charged per a set increment (e.g., $0.55 per $500 of value), often paid by the seller.

Apply each split in turn: total commission × company split, then × the agent's share, to find each party's amount.

Effective gross income − operating expenses = NOI. Exclude mortgage payments and depreciation from operating expenses.