10 Real Estate Exam Vocabulary Words You Have to Know
The real estate exam, regardless of the state you take it in, can be pretty tasking, and passing it takes probably more than you think.
One of the reasons for this is the real estate vocabulary you have to familiarize yourself with before the exam.
In this guide, we have provided 10 essential real estate vocabulary terms you should know before your real estate exam. These terms are fundamental:
- Real Property
- Personal Property
- Bundle of Rights
- Eminent Domain
It is important that you are familiar with these terms and concepts to successfully ace your licensing exam.
What is Real Property?
Real property is all things attached to the surface of the land, the ground below, the air above, and all the legal rights to them.
It is used to refer to things that are typically immovable.
This includes the building itself and other appurtenances, such as landscaping, walkways, and other structures.
What is Personal Property?
Personal property is a real estate vocabulary word that refers to any tangible and moveable objects such as gadgets, furniture, vehicles, machinery, and so on.
This simply means that personal property would be any property that does not qualify as real property.
Another difference between real and personal property is the mode of transfer. A deed is used to transfer real property from an owner to a buyer, while a bill of sale is used to transfer personal property.
What is a Fixture?
A fixture is any item that was once personal property but has become real property by way of permanent attachment to real property.
Examples of fixtures include kitchen cabinets, ceiling fans, chandeliers, and window treatments.
What is the Bundle of Rights?
The bundle of rights is a term that describes a collection set of legal rights that is generally vested in an owner of real property upon purchase and receipt of a title deed.
The bundle of rights consists of five rights. These rights may be held by the titleholder alone or may be shared with other parties.
The Right of Use
The right of use allows a titleholder to use their property in any way that suits them as long as it is not illegal.
This could include things like hosting guests, renting out the property, or even making changes to the property.
Keep in mind that this right can be somewhat restricted in practice by HOA regulations, and local, state, and federal laws where applicable.
The Right of Possession
The right of possession gives a titleholder the freedom and power to choose who may or may not enter their property.
This right may be limited in the instances of search warrants, easements, or rental properties.
The Right of Transfer
The right of transfer guarantees the right of a titleholder to dispose of a property.
This means they can transfer the ownership of their property to another party by selling it, willing it, or gifting it. Exclusion to this right exists in cases of mortgages and liens.
The Right of Encumberment
The right of encumberment means that the title owner has the right to take out a loan on the home. By building and using the home’s equity, they can finance development projects to raise the home’s value.
The Right of Enjoyment
This right permits a titleholder the freedom to engage in any activities of their choice on their property and enjoy the property as they see fit, as long as the activities are not illegal.
A good way to remember the bundle of rights ahead of your exam is the acronym “UPTEE.” It stands for Use, Possession, Transfer, Encumber, and Enjoyment.
What is Commingling?
In real estate, commingling occurs when an agent mixes their client’s funds with their own funds.
Usually, these funds may be designated for different purposes and in some instances, the funds may be from different sources.
An example of commingling is when the homebuyer provides the money to buy a home but the real estate agent deposits the money in their personal bank account. The money becomes mixed with the agent’s personal funds.
What is Steering?
Steering, in real estate, is when a real estate agent discriminatorily influences the choice of a buyer by only showing them properties in certain communities.
This discrimination is often based on factors like the buyer’s gender, race, sexual orientation, religion, or other protected factors.
An example of steering would be showing a person of a race only properties that are located in communities or neighborhoods where their race is prominent while avoiding areas dominated by another race.
What is Escrow?
Escrow, in real estate, is a legal arrangement between the buyer and the seller to have a neutral third party hold the funds temporarily until specific conditions have been met, usually a transfer of title.
Once the set condition is met, the funds are transferred to the seller.
Escrow typically assures the seller of the seller’s good faith and protects the buyer from a fraudulent transaction.
Escrow companies typically serve as a neutral third party and they hold onto the deed and other related documents.
Remember, escrow is a neutral third party that protects the integrity of the transaction.
What is an Acreage?
Acreage is a real estate term that refers to a large expanse of land that is yet to be divided into small lots for residential purposes.
An acreage is made up of 43,560 square feet. A section is made up of 640 acres and a survey township is made up of 36 sections.
What is Eminent Domain?
Eminent domain is the power that the local, state, and federal government has to acquire private property from a person for public use. This is usually done in exchange for fair compensation from the government.
For example, if the government wants to expand a highway, they may need to purchase and demolish buildings close to the highway to facilitate the widening.
What is an Easement?
An easement refers to the legal right of a person to access and use another person’s real property for a specific purpose.
For example, utility companies hold easements that permit them to access power cables on a property.
Here are a few terms that you should know to help you understand how easements work:
The servient tenement in an easement arrangement refers to the property that bears the burden of an easement.
A dominant tenement, on the other hand, is the property that benefits from the easement on another property.
Ingress and Egress
Ingress, in easements, refers to the right of a person to enter a property while egress is the right to leave the property.
In easements, these rights come to play when a property is landlocked. It invokes an easement by necessity so that a person can access their property even if it means crossing another person’s property.
Final Thoughts on these Real Estate Exam Vocabulary Words
By now, you should have an idea of what these vocabulary words mean.
Having a proper understanding of these terms comes in handy as you prepare for your real estate exam and increases your chances of acing it.
To study these vocab words effectively, you can consider using abbreviations or flashcards to help you effectively remember them.
TL;DR: These real estate vocabulary words will help you prepare for the exam. Make sure you know these before you take the test because they are fundamental to getting a passing score.