10 Principles Real Estate Vocab Words on the State Exam

By
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Aug 15, 2022
5 min.

Studying vocabulary should be a big part of preparing for your state real estate licensing exam. The exam is made up of seven sections, each with its own keywords and terms. 

The Real Estate Principals portion includes basic information, from contract management and closing procedures to agency relationships.

As you study for the California real estate exam, make sure you know these 10 vocabulary words so you pass your test!

What is a Bilateral Contract?

In real estate, a bilateral contract is a contract that involves two people, each with a contractual promise they must perform. As a result, each party is obligated to complete their tasks according to the contract. 

For example, a seller will give a deed to the property in exchange for money from the buyer. Both parties are held responsible for their side of the contract.

What is a Unilateral Contract

In a unilateral contract, only one person or party is obligated to perform their contractual duty. For example, if you lose your wallet and offer a reward for finding the wallet, they’ll only get the reward if they find and return the wallet. Only one person is contractually required to perform a duty.

What does Caveat Emptor Mean?

In Latin, the phrase caveat emptor translates literally to “buyer beware.” For real estate, this means that when a buyer is purchasing a house, it is up to them to be familiar with the condition and inadequacies of the house. 

While the seller will provide their own disclosures about the condition, it is up to the buyer to also get their own data to inform their decision about the property. Usually, this means that a buyer will hire an inspector to provide a first-party report about the status of the house where they can have a full picture of the property, separate from that provided by the seller. 

From there, the buyer will be able to make their own decision with the knowledge they have.

What does Dual Agency Mean?

A dual agency agreement is when a real estate agent represents two people or parties on the same deal. Usually, this will mean an agent is helping both the buyer and seller, and they’ll receive the full commission. 

While this is not always legal, it is in California. When you represent both the buyer and the seller on the same deal, you’ll have two principles. That means you earn the whole commission. This is different than a single agency, where the agent will only represent one party.

What does Escheat Mean?

If a property owner dies and there are no identified heirs or successors, a property can be reverted to the state upon an owner’s death. 

The state will be required to take ownership of the property, since the property can’t be sitting abandoned or in limbo without any owners. 

What does Intestate Mean?

If a person dies without a will, their estate is then categorized as intestate. Similar to escheat, this could mean that the individual’s property is turned over to the state to manage. 

While these laws vary from state to state, the lack of a will can turn a person’s estate over to the government. 

What is a Holdover Tenant?

A holdover tenant is a lessee who stays in the property longer than they are supposed to. Once their lease is up, they’re supposed to be vacated from the property. 

But a holdover tenant stays in the property past their intended time. Even if the tenant is paying rent but they’re past their lease, they can be sued for being a holdover tenant.

What is a Real Estate Transfer Disclosure Statement (TDS)?

A real estate transfer disclosure statement, also called a TDS, is a document containing what items are included in the purchase of a home. 

This is the seller's opportunity to put in writing what is included in the purchase, including all the deficiencies listed and a checklist of items that come with the house like a microwave, furniture, or any other belongings. This is often the biggest disclosure a real estate agent will utilize when working with a buyer.

What is a Voluntary Lien?

A voluntary lien is placed on property with the consent of the individual receiving the lien. For example, a mortgage is a voluntary lien because the buyer consents to the lien through the bank. Or, if you wanted to get a secondary loan or a car loan, these are all voluntary liens because the buyer asked for the responsibility that comes with the loan.

This differs from an involuntary lien, which someone else imposes, like a tax lien or a mechanics lien.

What does TRID Mean?

TRID stands for TILA (Truth in Lending Act) RESPA (Real Estate Settlement Procedures Act) Integrated Disclosures. This disclosure was specifically developed so that the lender has to be transparent in the purchase and provide two things. 

The first is a loan estimate that outlines fees and costs associated with a mortgage. Additionally, they must provide a closing disclosure listing exactly how they will charge and where each fee is allocated in the closing process.

The Truth in Lending Act was developed in 1968 to protect the consumer and provide transparency throughout the lending process. Shortly after, the Real Estate Settlement Procedures Act was developed to prevent unnecessary settlement costs and promote transparency into each fee’s purpose.

 TRID wasn’t put in place until 2015, but now ensures all parties are providing the appropriate information and disclosures for both buying and selling.

Final Thoughts on the 10 Principles Real Estate Vocab Words

While you should know these terms for your real estate exam, you will also see these terms in real life if you pass and become a real estate agent. Familiarize yourself with them now, so you can breeze through the exam and get your license! 

Don’t forget we also have state exam prep and a real estate exam crash course, which makes studying for the exam quick and easy. It’s the best way to prepare for and pass the exam on your first try.

TL;DR: Studying for the real estate exam is a challenge. You can make the process easy by enrolling in our state exam prep and crash course program.

By
|
Aug 15, 2022
Terminology
5 min.