Question 1

Exclusive Right to Sell Listing

Accepted Answer

A listing contract whereby the owner appoints a real estate broker as their exclusive agent for a designated period of time to sell the property, on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, regardless of who sells it.

Question 2

Net Listing

Accepted Answer

An agreement in which the property seller sets a minimum net amount they will accept for the property, with anything above that amount being kept by the broker as the commission.

Question 3

Multiple Listing Service (MLS)

Accepted Answer

A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own.

Question 4

Commingling

Accepted Answer

The illegal act of a real estate broker combining clients' funds with their own.

Question 5

Escrow

Accepted Answer

A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled.

Question 6

Appurtenance

Accepted Answer

A right, privilege, or improvement belonging to, and passing with, the land.

Question 7

Encumbrance

Accepted Answer

A claim, lien, charge, or liability attached to and binding real property.

Question 8

Tenancy in Common

Accepted Answer

Ownership by two or more persons who hold an undivided interest without right of survivorship.

Question 9

Joint Tenancy

Accepted Answer

A form of co-ownership that includes the right of survivorship.

Question 10

Easement

Accepted Answer

The right or privilege one party has to use land belonging to another for a special purpose not inconsistent with the general property rights of the owner.

Question 11

Eminent Domain

Accepted Answer

The right of a government to take private property for public use upon payment of its fair market value.

Question 12

Title Insurance

Accepted Answer

A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.

Question 13

Closing Statement

Accepted Answer

A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.

Question 14

Lease Option

Accepted Answer

A lease under which the tenant has the right to purchase the property either during the lease term or at its end.

Question 15

Zoning Ordinance

Accepted Answer

Municipal or city regulations that control the use of property.

Question 16

Variance

Accepted Answer

Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws.

Question 17

Real Estate Settlement Procedures Act (RESPA)

Accepted Answer

A federal law that ensures consumers are provided with useful information about the cost of the mortgage settlement and protected from unnecessarily high settlement charges.

Question 18

Fair Housing Act

Accepted Answer

A federal law that prohibits discrimination in housing based on race, color, religion, sex, disability, familial status, and national origin.

Question 19

Bundle of Rights

Accepted Answer

The concept in property law that describes a set of legal rights afforded to the real estate owner.

Question 20

Amortization

Accepted Answer

The gradual repayment of a mortgage loan, both principal and interest, by installments.

Question 21

Purchase Agreement

Accepted Answer

A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Question 22

Adjustable Rate Mortgage (ARM)

Accepted Answer

A mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender.

Question 23

Real Estate Owned (REO)

Accepted Answer

Property owned by a lender—usually a bank—after an unsuccessful sale at a foreclosure auction.

Question 24

Redlining

Accepted Answer

The illegal practice of refusing to make residential loans or issuing insurance policies in specific areas for reasons other than the economic qualifications of the applicants.

Question 25

Tax Lien

Accepted Answer

A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

Question 26

Abstract of Title

Accepted Answer

A summary or digest of all recorded transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any recorded encumbrances or other data relative to the title of the property.

Question 27

Acceleration Clause

Accepted Answer

A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interest may be declared to be due and payable at once.

Question 28

Balloon Payment

Accepted Answer

A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Question 29

Due-On-Sale Clause

Accepted Answer

A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

Question 30

Equity

Accepted Answer

The interest or value that an owner has in property over and above any indebtedness.

Question 31

Fair Market Value

Accepted Answer

The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Question 32

General Warranty Deed

Accepted Answer

A type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer).

Question 33

Homestead Exemption

Accepted Answer

A legal provision that protects a homeowner from the loss of the home, usually up to a certain amount, against creditor claims.

Question 34

Installment Contract

Accepted Answer

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until the purchase price is paid in full.

Question 35

Jumbo Loan

Accepted Answer

A loan that exceeds Fannie Mae's and Freddie Mac's loan limits, currently at $484,350. Also called a non-conforming loan.

Question 36

Land Contract

Accepted Answer

An agreement between a buyer and seller where the buyer promises to pay the seller for the property over time, and the seller agrees to transfer the deed to the buyer once the property is paid off.

Question 37

Marketable Title

Accepted Answer

Good or clear title, reasonably free from the risk of litigation over possible defects.

Question 38

Nonconforming Use

Accepted Answer

A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

Question 39

Origination Fee

Accepted Answer

A fee charged by a lender to cover the administrative costs of processing the loan.

Question 40

Prepayment Penalty

Accepted Answer

A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.

Question 41

Quitclaim Deed

Accepted Answer

A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property, but not professing that such title is valid, nor containing any warranty or covenants for title.

Question 42

Restrictive Covenant

Accepted Answer

A provision in a deed limiting the use of the property and prohibiting certain uses.

Question 43

Subdivision

Accepted Answer

A housing development that is created by dividing a tract of land into individual lots for sale or lease.

Question 44

Tax Deed

Accepted Answer

A deed indicating the public sale of a property to pay for tax liens accrued by the previous owner.

Question 45

Underwriting

Accepted Answer

The process of evaluating a borrower's loan application to determine the risk involved for the lender.

Question 46

Variance

Accepted Answer

An exception that permits a property to be used in a way that differs from the zoning ordinance.

Question 47

Warranty Deed

Accepted Answer

A deed in which the grantor fully warrants good clear title to the premises. Also called a general warranty deed.

Question 48

Xeriscaping

Accepted Answer

Landscaping using plants that are native to the region and are able to survive in the natural climate without additional watering.

Question 49

Yield

Accepted Answer

The return on an investment or the amount of profit, stated as a percentage of the amount invested; the rate of return.

Question 50

Zoning

Accepted Answer

The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, types of structure permitted, building heights, setbacks, and density (the ratio of land area to improvement area).

Question 51

Ad Valorem

Accepted Answer

According to value. This is a tax based on the assessed value of real estate or personal property.

Kentucky Real Estate Agent: Advanced Terms & Concepts Flashcards