California Real Estate Salesperson Course

Community Property

Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse has equal rights of management, alienation and testamentary disposition of community property

Criminal Law

A body of rules and statutes that defines conduct prohibited by the government because it threatens and harms public safety and welfare and that establishes punishment to be imposed for the commission of such acts

Bilateral Contract

A contract in which each party promises to do something

Bond

A debt instrument that represents debt.

Certificate of Occupancy

A document issued by a local government agency after satisfactory inspection of a structure authorizing that the structure can be occupied

Civil Rights Act of 1866

A federal law that prohibits all discrimination on the basis of race

Accord and Satisfaction

A method of discharging a claim whereby the parties agree to give and accept something in settlement of the claim and perform the agreement, the accord being the agreement and the satisfaction its execution or performance, and it is a new contract substituted for an old contract which is thereby discharged, or for an obligation or Cause of Action which is settled, and must have all of the elements of a valid contract.

Bench Mark

A monument used to establish the elevation of the point, usually relative to Mean Sea Level, but often to some local datum.

Assignment

A transfer of benefits and obligations within a contract to a 3rd party who is not originally a party to the contract.

Borrower Paid Points

Additional amounts paid by the borrower outside the cost of procuring the loan.

Covenants

Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or non‐uses of the property.

Closing Statement

An accounting of the funds received and disbursed in a real estate transaction

Actual Fraud

An act intended to deceive another, e.g., making a false statement, making a promise without intending to perform it, suppressing the truth

Contract

An agreement to do or not to do a certain thing. It must have four essential elements: parties capable of contracting, consent of the parties, a lawful object, and consideration. A contract for sale of real property must also be in writing and signed by the party or parties to be charged with performance.

Balloon Payment

An installment payment on a promissory note, usually the final one for discharging the debt, which is significantly larger than the other installment payments provided under the terms of the promissory note.

Conveyance

An instrument in writing used to transfer (convey) title to property from one person to another, such as a deed or a trust deed.

Capital Improvement

An item that adds value to a property, adapts the property to new users, or prolongs the life of the property. Maintenance is not a capital improvement.

Buyer's Market

An oversupply plus lessened or decreased demand.

Consideration

Anything given or promised by a party to induce another to enter into a contract, ex: personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other.

Capital Gain

At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Usually taxed at lower rates than ordinary income.

Actual Authority

Authority expressly given by the principal or given by the law and not denied by the principal.

Closing Costs

Expenses incurred in the purchase and sale of real property paid at the time of settlement or closing

Actual Notice

Express or implied knowledge of a fact.

Debt

That which is due from one person or another; obligation, liability

Chronological Age

The actual age of a building

Ad Valorem

Latin for "according to value"

Contiguous

Lots that touch at any point (even corners)

Beneficiary

The lender on the security of a note and deed of trust

Alienation

The transferring of property to another; the transfer of property and possession of lands, or other things, from one person to another.

Agent

One who acts for and with authority from another called the principal

Bequest

Personal property given by the terms of a will

Adjusted Basis

Value of property used to determine the amount of gain or loss realized by an owner upon sale of the property; equals acquisition cost plus capital improvements minus depreciation taken.

Anticipatory Repudiation

When a breach occurs before performance is due as a result of one party's unequivocal intention not to substantially perform.

Boot

cash received in a tax‐deferred exchange

Assignor

one who assigns or transfer property

Cooperating Broker

A broker who participates in facilitating a real estate transaction along with the broker who listed the property.

Acceleration Clause

A condition in a real estate financing instrument giving the lender the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of the note

Constructive Notice

A fact, imputed to a person by law, which should have been discovered because of the person's actual notice of circumstances and the inquiry that a prudent person would have been expected to make.

Americans with Disabilities Act (ADA)

A federal law protecting the rights of individuals with physical or mental impairments.

Acknowledgement

A formal declaration made before an authorized person (ex: a notary public) by a person who has executed an instrument stating that the execution was his or her free act. In California, an acknowledgement is the statement by an officer such as a notary that the signatory to the instrument is the person represented to be.

Chain of Title

A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner

Civil Rights Act of 1964

A law that prohibited discrimination on the basis of race, color, national origin, or gender in any housing program receiving federal money.

Bankruptcy

A legal proceeding by an individual or company who are no longer able to pay their respective debts

Associate Broker

A licensed real estate broker who chooses to work under the name and supervision of another licensed broker

Associate Licensee

A licensee who is licensed under a broker, or who has entered into a written contract with the broker to act as the broker's agent in a real estate transaction

Adjustable Rate Mortgage (ARM)

A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise

Conventional Loan

A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. This type of loan is customarily made by a bank or savings and loan association.

Arbitration

A neutral third party who listens to each party's position and makes a final binding decision.

Debt Instrument

A paper or electronic obligation

Administrator

A person appointed by a court to administer the estate of a one who has died intestate

Creditor

A person who regularly extends consumer credit that is subject to a finance charge, or is payable by a written agreement in more than four installments, not including the down payment, and to whom the obligation is initially payable, either on the face value of the note or contract, or by agreement where there is no note or contract.

Back‐End Ratio

A ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit‐card payments, child support and other loan payments.

Constructive Fraud

A situation where a person or entity gained an unfair advantage over another by deceitful or unfair methods

Avulsion

A sudden and perceptible loss of land by the action of water as by a sudden change in the course of a river

Abstract of Title

A summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impair title.

Building Code

A systematic regulation of construction of building within a municipality established by ordinance or law

Bill of Sale

A written instrument given to pass title of personal property from vendor to the vendee

Appraisal

A written statement, independently and impartially prepared by a qualified appraiser setting forth an opinion in a federally related transaction as to the market value of an adequately described property as of a specific date. It is supported by the presentation and analysis of relevant market information. An opinion of value

Blind Ad

An ad for real property placed by a real estate broker that does not indicate that the advertiser is a broker and does not include the name of the broker and telephone number

Commission

An agent's compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.

Comparative Market Analysis

An analysis of the competition in the marketplace that a property will face upon sale attempts.

Cooperative

An apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by purchase of shares of the stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building. In California, this type of ownership is called a "stock cooperative".

Crawl Space

An area of limited height under a floor or roof, giving access to wiring and plumbing.

Corporation

An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person. Being created by law it may continue for any length of time the law prescribes.

Constructive Eviction

Any disturbance of the tenant's possession of the leased premises by the landlord whereby the premises are rendered unfit or unsuitable for the purpose for which they were leased.

Condominium

Five or more units where in the owner has a fee simple interest in the air space, or four walls in which they live or occupy, plus common areas which are owned as a tenancy in common

Debit

In a closing statement, an expense or money received against a credit.

Credit

In a closing statement, money to be received or credit given for money or an obligation given.

Deceit

Making a statement of fact that you know not to be true. Making a statement of fact in which no one has the grounds to believe it is true, or failing to disclose a "material fact".

Cost Approach

One of three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.

Appraiser

One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes.

Client

Prior to signing a listing agreement, a party in a real estate transaction who will employ an agent.

Closing

Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds.

Common Interest Subdivision

Subdivided lands which include a separate interest in real property combined with an interest in common with other owners. The interest in common may be through membership in an association. Examples are condominiums and stock cooperatives.

Condemnation

Taking private property for public use, with fair compensation to the owner; exercising the right of eminent domain

Appurtenances

That which belongs to something, by not immemorially; all those rights, privileges, and improvements which belong to and pass with the transfer of the property, but which are not necessarily a part of the actual property.

Annexation

The attaching of personal property to land so that the law views it as part of the real property (a fixture)

Covenants, Conditions, and Restrictions (CC&Rs)

The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners.

Alienate

The capacity for a piece of property or a property right to be sold or otherwise transferred from one party to another.

Best Alternative To A Negotiated Agreement (BATNA)

The course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached

Alluvium

The gradual increase of the earth on a shore of an ocean or bank of a stream resulting from the action of the water

Damages

The indemnity recoverable by a person who has sustained an injury, either in his or her person, property, or relative rights, through the act or default of another. Loss sustained or harm done to a person or property.

Accession

The potential right of ownership to land which is produced, then added or united to the owner's land.

Advertising

The process of calling people's attention to something to arouse a desire to buy, or to at least obtain additional information about the product or service being promoted

Accretion

The process of gradual growth or increase over a period of time from naturally occurring events, resulting in additional layers of matter.

Capitalization Rate

The rate of interest which is considered a reasonable return on the investment, and used in the process of determining value based upon net income. Capitalization Rate = NOI / Purchase Price

Agency

The relationship between principal and the principal's agent which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party

Annual Percentage Rate (APR)

The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act

Actual Eviction

The removal of a tenant by the landlord because the tenant breached a condition of a lease or another rental contract

Alternative Dispute Resolution (ADR)

The resolution of disputes by various means including, but not limited to negotiation, mediation, and arbitration

Air Rights

The rights in real property to the reasonable use of the air space above the surface of the land.

Bundle of Rights

The rights, or interests, that an individual has in a particular piece of property. The right to dispose, the right to encumber, the right to possess, the right to use, and the right to exclude others (the right of quiet enjoyment).

Civil Law

The system of law concerned with private relations between members of a community rather than criminal, military, or religious affairs

Appropriation of Water

The taking, impounding or diversion of water flowing on the public domain from its natural course and the application of the water to some beneficial use personal and exclusive to the appropriator.

Conversion

The unlawful appropriation of another's property or funds.

Blockbusting

The use of prejudice to instill fear, or panic (also known as panic selling), in order to motivate individuals in a particular area or neighborhood to sell or dispose of their property because of the entrance, or potential entry, of a protected class.

Conforming Loan

Those loans processed on uniform loan forms according to FNMA/FHLMC guidelines.

Assignees

Those whom property or interests therein shall have been transferred

Clouded Title

Title that is encumbered or burdened with defects

Commingling

To mingle or mix, for example, a client's funds in the broker's personal or general account.