75 Real Estate Vocabulary Terms You Must Know for the Exam

A significant portion of exam questions simply test whether you know what terms mean. Master these 75 vocabulary words and you'll pick up easy points that others miss.

Property & Ownership Terms

• Appurtenance — Rights that go with property ownership (easements, water rights)
• Bundle of Rights — All rights that come with property ownership (possess, control, enjoy, exclude, dispose)
• Chattel — Personal property; movable items not attached to real estate
• Emblements — Annual crops planted by a tenant; considered personal property
• Encroachment — Unauthorized intrusion onto another's property
• Encumbrance — Any claim or liability that affects property title
• Escheat — Property reverting to the state when owner dies without heirs
• Fee Simple — The highest form of property ownership
• Fixture — Personal property that becomes real property by attachment
• Freehold Estate — Ownership for an indefinite period
• Leasehold Estate — Right to occupy property for a specific time
• Life Estate — Ownership that ends when a specific person dies
• Littoral Rights — Rights for properties bordering large bodies of water
• Riparian Rights — Rights for properties bordering flowing water

Transfer & Title Terms

• Abstract of Title — Summary of all documents affecting property title
• Acknowledgment — Formal declaration before a notary
• Alienation — Transfer of property ownership
• Chain of Title — History of property ownership
• Cloud on Title — Any claim that may impair title
• Conveyance — Transfer of property interest from one party to another
• Deed — Written document that transfers property ownership
• Grantee — Person receiving property
• Grantor — Person transferring property
• Quitclaim Deed — Transfers whatever interest the grantor has, no warranties
• Recording — Filing documents with the county to provide public notice
• Title Insurance — Insurance protecting against title defects
• Warranty Deed — Deed with full guarantees of clear title

Contract Terms

• Acceptance — Agreement to the terms of an offer
• Bilateral Contract — Both parties promise to perform
• Consideration — Something of value exchanged in a contract
• Contingency — Condition that must be met for contract to proceed
• Earnest Money — Deposit showing buyer's good faith
• Executed Contract — Contract where all parties have performed
• Executory Contract — Contract not yet fully performed
• Novation — Substituting a new contract or party for an existing one
• Specific Performance — Court order to complete contract terms
• Statute of Frauds — Law requiring certain contracts to be in writing
• Time is of the Essence — Contract deadlines must be strictly met
• Unilateral Contract — Only one party promises to perform
• Void Contract — Contract that never had legal effect
• Voidable Contract — Valid contract that can be voided by one party

Agency Terms

• Agency — Relationship where one person acts for another
• Agent — Person authorized to act for another
• Broker — Licensed person who supervises real estate transactions
• Client — Person represented by an agent (principal)
• Customer — Person NOT represented by the agent
• Dual Agency — Agent representing both buyer and seller
• Fiduciary — Person in position of trust (agent to client)
• Principal — Person who hires an agent
• Subagent — Agent who works under another agent
• Transaction Broker — Facilitator who doesn't represent either party
• Vicarious Liability — Broker responsible for agent's actions

Finance Terms

• Amortization — Paying off loan through regular payments
• APR — Annual Percentage Rate; true cost of borrowing
• Equity — Property value minus debt owed
• LTV — Loan-to-Value ratio
• Mortgage — Loan secured by real property
• PMI — Private Mortgage Insurance for high LTV loans
• Points — Prepaid interest; 1 point = 1% of loan amount
• Principal — Original loan amount (or remaining balance)
• Subordination — Changing priority of liens
• Usury — Charging illegally high interest rates

Valuation Terms

• Appraisal — Professional opinion of property value
• Cap Rate — Capitalization rate for income properties
• CMA — Comparative Market Analysis
• Depreciation — Loss of value over time
• GRM — Gross Rent Multiplier
• Market Value — Most probable price in an open market
• NOI — Net Operating Income

Land Use Terms

• Condemnation — Government taking property through eminent domain
• Easement — Right to use another's property for specific purpose
• Eminent Domain — Government's right to take private property
• Nonconforming Use — Use that doesn't comply with current zoning
• Variance — Exception to zoning rules
• Zoning — Local laws regulating land use

Study Tips for Vocabulary

• Make flashcards (physical or digital)
• Group similar terms together
• Use terms in sentences
• Quiz yourself daily
• Focus on terms you keep missing