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Glossary of Florida Real Estate Exam

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Abandonment
A surrender of rights; point when a broker makes no effort to service or sell listed property; failure to perform.
Absentee owner
A property holder who does not reside on the property and who usually relies on a property manager to supervise the investment.
Abstract of title
Condensed history of title to real property consisting of a summary of the links in the "chain of title" extracted from documents bearing on the title status.
Acceleration clause
Stipulation in a mortgage that the entire unpaid balance of the debt may become due and payable if a default of expressed conditions should occur.
Acceptance
Voluntary receipt of an item offered by another.
Accretion
Gradual addition of land caused by natural forces, such as wind, tide, flood, or watercourse deposits.
Acknowledgment
Formal declaration before an authorized official, by the person who executed the instrument, that it is a free act.
Actual notice
Information a person has actually learned by reading, seeing, or hearing.
Adjudication
A judicial or court decision.
Adjustable-rate mortgage (ARM)
A financing technique in which the lender can raise or lower the interest rate according to a set index.
Adjusted basis
The owner's original cost plus buying expenses plus capital improvements.
Administrative law judge
An attorney employed by the Division of Administrative Hearings, Department of Administration, to hear complaints and issue recommended orders.
Ad valorem
According to the value; in proportion to worth.
Advance fees
Up-front money collected by a broker for the listing of real property.
Adversary
Opponent; a person or group that opposes another.
Adverse interest
A purpose in opposition to the interest of another party (as, for example, with a buyer and a seller).
Adverse possession
A method of obtaining title to real property by occupying it in an open and hostile manner contrary to the interests of the owner.
Affidavit
A sworn statement written down before a notary or public official.
Agency
Express or implied authorization for one person to act for another.
Agent
A representative; one who is authorized to act on behalf of another.
Agricultural
Defined in Chapter 475, F.S., to mean property zoned as such, consisting of more than ten acres.
Air rights
The freedom to use the open space above a property.
Alienation
The act of transferring ownership, title, or an interest or estate in real property.
Allodial system
A theory of land ownership that individuals may own land free of the rights of an overlord.
Alluvion (alluvium)
The increase of land by the gradual and imperceptible action of natural forces (e.g., deposits of sand and mud on a riverbank).
Amortized mortgage
A loan characterized by payment of a debt by regular installment payments.
Anniversary date
Recurring each year; the date an insurance policy must be renewed to continue in effect.
Annual debt service
The amount of money required each year for the payment of all mortgage interest and principal.
Annual percentage rate (APR)
Total yearly cost of credit.
Appeal
A request to some authority for a decision or judgment.
Applicant
A person who applies for something; a candidate.
Appraisal
Professional service provided by a registered, licensed, or certified appraiser or real estate licensee to produce an estimate of value.
Appraisal plant
Copies of current statistics and publications kept by appraisers in their library or record room.
Appraised value
Estimated worth of a property determined by someone qualified in valuation
Appraiser, real estate
One who is a registered, licensed, or certified by the DBPR and provides an estimate of value.
Appreciation
An increase in value.
Arbitration
The act of having a third party render a binding decision in a dispute between two parties.
Arrears
The state of being behind in the discharge of an obligation; paid at the end of the period for which due (the opposite of in advance).
Assemblage
The combining of two or more adjoining properties into one tract.
Assessed value
Worth established for each unit of real property for tax purposes by a county property appraiser.
Assessment
The imposition of a tax or charge according to a preset rate; the allocation of the proportionate individual share of a common expense in a condo or co-op building.
Asset
Anything of value.
Assignee
Person to whom a right or interest is transferred.
Assignment
Written instrument that serves to transfer the rights or interests of one person to another.
Assignment of mortgage
A legal instrument that states that the mortgagee assigns (transfers) the mortgage and promissory note to the purchaser.
Assignor
Person who gives his or her legal rights or interests to another person.
Associate
Person working for a broker.
Association
An organization of persons having a common interest.
Assumption of mortgage
The taking over of an existing mortgage by a buyer.
Attachment
A legal writ obtained to prevent removal of property that is expected to be used to satisfy a judgment.
Attorney-in-fact
One who is authorized to perform certain acts for another under a power of attorney.
Attorney, power of
Designation of another person to act for a principal who may not be present.
Automated underwriting
A service that enables lenders to obtain a credit risk classification using applications software in the loan underwriting process.
Balance sheet
A financial report that shows the company's financial position at a stated moment in time.
Balloon payment
A single, large payment made at maturity of a partially amortized mortgage to pay off the debt in full.
Bargain and sale deed
A type of deed in which title is transferred and a limited number of warranties are made respecting title to or use of the property.
Base industries
Businesses that attract outside money into the area; primary.
Base lines
Imaginary lines running east and west and crossing a principal meridian at a definite point; used by surveyors for reference in locating and describing land under the government survey system.
Before-tax cash flow (BTCF; cash throwoff; gross spendable income)
The resulting amount when annual debt service is subtracted from net operating income.
Biennium (biennial)
A period of two years.
Bilateral contract
An agreement wherein both parties are legally obligated to each other to perform.
Binder
A memorandum given subject to the writing of a formal contract for sale, usually acknowledging receipt of a portion of the down payment for purchase of real property.
Blanket mortgage
One debt instrument covering two or more parcels.
Blind advertisement
An advertisement of a principal's property providing only a telephone number, a post office box, and/or an address without the licensed name of the brokerage firm.
Blockbusting
The illegal practice of inducing homeowners to sell their property by making misrepresentations regarding the entry or prospective entry of minority persons in order to cause a turnover of properties in the neighborhood; discriminatory acts against sellers.
Bona fide
Without deceit or fraud; genuine; in good faith.
Boot
Money or other property that is not like-kind, which is given to make up any difference in value or equity between exchanged properties.
Borrower (debtor)
The mortgagor; one who gives a mortgage as security for a debt.
Branch office
A business location other than the real estate broker's principal place of business.
Breach
Failure to do or perform what has been promised.
Broker
A licensee who acts as an intermediary between two parties and negotiates contracts between them.
Broker associate
An individual who is qualified to be issued a broker's license but who operates as a sales associate in the employ of another.
Buffer zone
A strip of land separating one land use from another.
Building codes
Government ordinances regulating construction practices and materials.
Business brokerage
The sale, purchase, or lease of businesses that provide goods and/or services.
Business broker
Real estate licensees who engage in the sale, purchase, or lease of businesses.
Business opportunity brokerage
The real estate activity dealing in the sale, purchase, or lease of businesses.
Business trust (syndicate)
A group of people who associate with each other for the purpose of purchasing shares or units at a specified amount per unit, with the money raised to be used to purchase the real property, often for subdividing and resale.
Buydown
A financing technique in which points are paid to the lender by the seller or builder that lowers (buys down) the effective interest rate paid by the buyer/borrower, thus reducing the amount of the monthly payment for a set period of time.
Buyer brokerage agreement
An employment contract with a purchaser.
Buyer's market
The supply of available properties exceeds the demand.
Bylaws
Rules that govern the administration of the condominium.
Canceled
A license ceases to exist, effective as of the date approved by the Commission, and does not involve disciplinary action.
Capital
The collective wealth (money and property) of a person or business; the investment in a property. (See also Equity.)
Capital asset
Certain property held by a taxpayer, not including inventory for sale to customers.
Capital-deficit area
A region where the total amount of local savings is not sufficient to finance economic development already under way in that area.
Capital gain
The profit from the sale of an asset, including real property.
Capitalization rate
The relationship between the net income from a real estate investment and the present value.
Cash flow (after-tax cash flow)
The resulting amount when annual debt service, tax liability, and capital improvement costs are subtracted from net operating income.
Caveat emptor
Let the buyer beware!
Cease and desist order
An action by a government agency to require a person or business to stop an illegal or unfair practice.
Censure
An official act of strong disapproval.
Certificate of occupancy
An occupancy permit issued by the local government after construction is completed and the final inspection is approved.
Certificate of title opinion (opinion of title)
A document signed by a title examiner (attorney or title company agent) stating the judgment that, based on an examination of the public records, the seller has good title to the property being conveyed to the buyer (not to be confused with title insurance).
Certiorari, writ of
An order to bring from a lower court to an appellate court an action or record of proceedings in a case.
Chain of title
A successive listing of all previous holders of title (owners) back to an acceptable starting point.
Chattel
Any item of personal property. (See also Personal property.)
Check
A square measuring 24 miles on each side and representing the largest unit of measure in the government survey system.
Circuit breakers
Devices that will shut off the flow of electricity if more electrical current is flowing through the wire than the wire can handle.
Citations
Statements of alleged violations and the penalties to be imposed.
Civil Rights Act of 1866
A federal act that prohibits any type of discrimination based on race in any real estate transaction (sale or rental) without exception.
Clause
A distinct provision in a written document.
Closing
Final settlement between the buyer and seller; the date on which title passes from the seller to the buyer
Cloud on title
Any defect, valid claim, or encumbrance that serves to impair the title or curtail an owner's rights.
Collateral
Real or personal property pledged as security on a debt.
Collusion
Two or more parties jointly attempting to defraud a third party.
Color of title
A condition in which ownership of real property appears to be good but is not good because of a defect.
Commercial
A classification of real estate that includes income-producing properties such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, and parking lots. Commercial property usually must be zoned for business purposes.
Commingle
To mix together money or a deposit with personal funds; combine; intermingle.
Commission
Compensation paid to a broker or sales associate for successfully concluding a real estate transaction; short form for the Florida Real Estate Commission (FREC).
Common elements
The parts of a multiple-ownership property not included in the units; those parts in which each unit owner holds an undivided interest.
Common law
A system of law based on accepted customs and traditions.
Community property
Real property acquired during a marriage. (Florida is not a community property state.)
Comparable property (comparable; comp)
A recently sold property similar to one being evaluated.
Comparative market analysis (CMA)
An informal estimate of market value performed by a real estate licensee for the seller to assist in arriving at an appropriate listing price, or if working with the buyer, an informal estimate of market value to assist the buyer in arriving at an appropriate offering price.
Compensation
Anything of value or a valuable consideration, directly or indirectly paid, promised, or expected to be paid or received.
Competent
A party to a contract who possesses the legal capacity to enter into a binding contract.
Complainant
A person who makes an allegation or a charge against another (the respondent). (See also Plaintiff.)
Complaint
Formal allegation or charge.
Comprehensive plan (master plan)
A statement of policies for the future physical development of an area (e.g., city, county, region).
Concealment
The act of keeping from sight or keeping secret.
Concurrency
A provision in Florida's Growth Management Act that mandates that the infrastructure, such as roads and water and waste treatment facilities needed to support additional population, be in place before new development is allowed.
Condemnation
The taking of private real property for a public purpose under the right of eminent domain for a fair price.
Condominium
A multiunit project consisting of individual ownership of a dwelling unit and undivided ownership of common areas.
Conflicting demands
When different parties each make claims that are inconsistent with one another.
Consideration
Inducement offered to conclude a contract.
Construction lien
A claim based on the principle of "unjust enrichment"; favors parties who have performed labor or delivered materials or supplies for the repair or building of an improvement to real property.
Constructive notice
The recording of a document or an instrument in the public records designed to give adequate notice to all.
Consumer Price Index (CPI)
A measurement of average price changes of goods and services using a base period.
Contract
An agreement between two or more competent parties to do, or not do, some legal act for a legal consideration.
Contract for deed
A financing technique wherein the seller agrees to deliver the deed at some future date and the buyer takes possession while paying the agreed amount (also called land contract, an installment sale contract, and an agreement for deed).
Conventional mortgage
A real estate loan granted that is neither FHA-insured nor VA-guaranteed.
Conversion
Unauthorized use or retention of money or property that rightfully belongs to another person.
Convertible mortgage
A financing instrument allowing a change from an adjustable-rate to a fixed-rate mortgage.
Conveyance
Written instrument that serves to transfer an interest in real property from one party to another.
Cooperative
A multiunit project consisting of individual dwelling units owned by the corporation in which the individual apartment tenants own stock rather than owning their respective units.
Co-ownership (concurrent or multiple ownership)
Title to real property held by two or more persons at the same time.
Corner lot
A lot bounded with streets on two sides (intersecting).
Corporation
An artificial or fictitious person formed to conduct specified types of business activities.
Corporation not for profit
An artificial or fictitious person organized for business purposes and similar to a corporation for profit.
Corporation sole
An artificial or fictitious person formed by an ecclesiastical body.
Cost
The amount to produce or acquire something.
Cost-depreciation approach
A method for estimating the market value of a property based on the cost to buy the site and to construct a new building on the site, less depreciation.
Counselors
Professionals who analyze existing or potential real estate problems and recommend a course of action.
Counteroffer
A rejection of the original offer by proposing a new offer, thereby terminating the original offer.
Covenant
A warranty, guarantee, or promise formally given in a legal document.
Credit
As a verb, to make an entry on the right or credit side of an account; as a noun, payment or value received.
Creditor
A lender; person or business entity to whom a debt is owed.
Cul-de-sac lot
A lot located where a street is open at one end only and the street has a circular turnaround at the other end.
Culpable negligence
Inadequate attention to duties and obligations by one who knows, or should know, what is required of him or her.
Curable
When the correction of a defect results in as much added value as the cost to correct the defect.
Curbstone operation
Conducting business without maintaining an office.
Current mailing address
Where a licensee receives letters and so forth through the U.S. Postal Service.
Customer
One with whom the broker or sales associate hopes to be successful in accomplishing the purpose of employment. Per Section 475.01, F.S., a member of the public who is or may be a buyer or seller of real property and may or may not be represented by a real estate licensee in an authorized brokerage relationship.
Damages
Losses incurred as a result of a breach of contract or some other cause. (See also Liquidated damages and Unliquidated damages.)
Debit
As a verb, to make an entry on the left or charge side of an account; as a noun, a charge or expense.
Decedent
A deceased person, usually one who has recently died.
Declaration
The legal document that the developer of a condominium must file and record in order to create a condominium under state law.
Declaration of trust
A formal instrument filed by a business trust with the Department of State as a prerequisite for creating the trust.
Declaratory judgment
A course of action declaring rights claimed under a contract or statute intended to prevent loss or to guide performance by the party or parties affected.
Dedication
An offer of land for some public use, by an owner, together with acceptance by or on behalf of the public.
Deed
A type of conveyance; a written instrument to transfer title to real property from one party to another.
Deed in lieu of foreclosure
A friendly foreclosure (nonjudicial procedure) in which the mortgagor gives title to the mortgagee.
Deed restrictions
Provision placed in deeds to control future uses of the property.
Default
Failure to comply with the terms of an agreement or to meet an obligation when due.
Defeasance clause
A provision in a mortgage that specifies the terms and conditions to be met in order to avoid default and thereby defeat the mortgage.
Defendant
The person or party being sued or charged.
Deficiency decree
Judgment brought when a mortgage is foreclosed and the sale proceeds fail to cover the costs of the sale, taxes, and the unpaid mortgage balance.
Demand
The quantity of goods or services wanted by consumers.
Demand deposits
Checking accounts; payable on demand by holder.
Denial
A refusal or rejection.
Density
The number of homes or lots per acre.
Deposit
Earnest money or some other valuable consideration given as evidence of good faith to accompany an offer to purchase or rent. (See also Binder and Earnest money.)
Deposition
Written testimony of a witness under oath.
Depreciation
A loss in value for any reason; a deduction for tax purposes.
Descent
The passage of title to real property upon the death of the owner to his or her legal descendants.
Designated sales associates
Two real estate licensees designated to represent the buyer and the seller as single agents in a nonresidential transaction. The buyer and seller must have assets of $1 million or more and sign disclosures stating their assets meet the required threshold.
Development of regional impact (DRI)
A large project affecting more than one county.
Devise
A gift of real property by a will.
Devisee
One who receives real property under a will.
Devisor
One who gives real property through a will.
Discount points
A method for increasing a lender's yield. (See also Point, Mortgage discount.)
Discount rate
The amount of interest the Federal Reserve charges to lend money to its eligible banks.
Disintermediation
A disengagement process when depositors withdraw money from savings for direct investment in stocks, money market funds, and other securities.
Doc stamps
An abbreviated term for documentary stamp tax.
Document
Any written paper that provides information or evidence.
Documentary stamp tax on deeds, state
Tax required on all deeds or other documents used as conveyances. The charge is based on the total purchase price.
Documentary stamp tax on notes, state
Tax required on all promissory notes. The cost is based on the face value of the note.
Dormer
A projection built out from the slope of a roof, used to house windows on the upper floor and to provide additional light and ventilation.
Double-hung
A window consisting of two sashes that move up and down in a pair of channels and are held open by tension springs.
Down payment
A portion of a purchase price paid prior to closing the transaction. Earnest money may be part of or the entire down payment.
Draw (installment)
Disbursement made by a lender to a builder.
Dual agency
Representing both principals in a transaction (not a legal agency relationship in Florida).
Dual agent
A broker who represents both the buyer and the seller of a transaction in a fiduciary capacity.
Due-on-sale clause
A provision in a conventional mortgage that entitles the lender to require the entire loan balance to be paid in full if the property is sold.
Dynamic risk
The risk that arises from the continual change in the business environment and therefore dynamic risk cannot be transferred to an insurer.
Earnest money deposit
A type of money that a broker may handle for others in the ordinary course of business; also referred to as good-faith deposit or binder deposit.
Easement
A right, privilege, or interest in real property that one individual has in lands belonging to another; a legal right to trespass; right-of-way authorizing access to or over land.
Economic base studies
An analysis of employment in the primary industries of a region.
Economic life
The period of time a property may be expected to be profitable or productive; useful life.
Effect a sale
A provision in a listing contract requiring the broker to obtain a signed contract from a ready, willing, and able buyer on the terms specified.
Effective gross income (EGI)
The resulting amount when vacancy and collection losses are subtracted from potential gross income. (See also Vacancy and collection losses.)
Elective share
An estate defined as consisting of 30 percent of the decedent's personal property and Florida real property, except homestead-exempt property and claims.
Eminent domain
The constitutional right given to a unit of government to take private property involuntarily if taken for public use and a fair price is paid to the owner.
Employer
The individual who hires the services of another.
Empty nester
Older parents whose housing needs change after their children have moved away.
Encroachment
Unauthorized use of another person's property.
Encumbrance
Any lien, claim, or liability affecting the title or attaching to real property.
Encumbrance clause
A provision in a deed to real property that warrants that no liens, claims, or liabilities exist on the property being conveyed, except as specified.
Equitable title
The right of a vendee to obtain absolute ownership of property to which the vendor has legal title; the interest held by a vendee under a sale contract or contract for deed; beneficial interest.
Equity
The market value of a property less any debt against it; in a business entity, assets minus liabilities equals capital (owner's equity); a system of legal rules administered by a court of chancery.
Equity of redemption
The right of a mortgagor, before a foreclosure sale, to reclaim forfeited property by paying the entire indebtedness.
Erosion
Gradual loss of land due to water or other natural causes.
Escalator clause
A provision in a mortgage permitting the lender to increase the interest rate that is usually tied to an event or a contingency.
Escheat
Reversion of property to the state when an owner dies without leaving a will or any known heirs.
Escrow account
An account in a bank, title company, credit union, savings association, or trust company used solely for safekeeping customer funds and not for deposit of personal funds; impound account or trust account.
Escrow disbursement order (EDO)
A course of action for determining the disposition of a contested deposit.
Estate
Tenancy; the interest one holds in real property; the total of one's property and possessions.
Estate by the entireties
A tenancy created by husband and wife jointly owning real property with instant and complete right of survivorship.
Estate for years
A tenancy measured from a starting date to a termination date (may be for a few days or longer than any natural life; e.g., a leasehold is an estate for years).
Estate in reversion
An estate that comes back to the original grantor.
Estate in sole
Real property owned by a corporation sole.
Estate of remainder
An estate that can become effective only after another estate has terminated.
Estoppel
A principle of law that prohibits (stops) a person from defending himself or herself against his or her own acts or lack of action.
Estoppel certificate
A written statement that bars the signer from making a claim inconsistent with the instrument (commonly used with a mortgage assumption).
Ethics
The moral obligations and duties that a member of a profession or craft owes to the public, to a client, or to other members of the profession or craft.
Evidence
Any proof that may legally be admitted in settlement of an issue.
Exclusion
The right of an owner to control entry onto the property.
Exclusive-agency listing
Employment contract given to one real estate broker as the sole agent for the sale of an owner's property.
Exclusive-right-of-sale listing
An employment contract given to one real estate broker as the sole agent for the sale of an owner's property, with the commission going to that broker regardless of who actually sells the property during the employment contract period.
Exculpatory clause
A provision in a mortgage or note in which the lender waives the right to a deficiency judgment against the borrower and the borrower is relieved of personal liability to repay the loan.
Executed contract
An agreement in which the terms have been fully performed by all parties; a signed document
Executive power, FREC
Duties related to the education of licensees, the regulating of professional practices, and the publishing of materials.
Executory contract
An agreement containing some act or condition that remains to be completed.
Exempt property
Property that has been decreed to be excluded from taxation or claim by others.
Express contract
An agreement wherein the terms are specifically stated by the parties, either orally, in writing, or by a combination of the two.
Facsimile ("fax")
An exact copy.
Factor market
A resource pool representing the four major elements (factors) of production that are bought and sold.
Fair Housing Act
An act contained in Title VIII of the Civil Rights Act of 1968 that created protected classes of people and prohibits discrimination when selling or renting residential property when based on race, color, religion, sex, national origin, familial status, or handicap status.
Familial status
As defined in the Fair Housing Act, a situation in which one or more individuals younger than 18 live with a parent or legal guardian. Pregnant women are also specifically covered under the Act.
Fannie Mae
A private institution in the secondary mortgage market that buys and sells mortgages.
Farm area
A selected and limited geographical district to which a sales associate devotes special attention and study; to farm an area or neighborhood.
Federal Deposit Insurance Corporation (FDIC)
A federal agency that insures deposits of member banks and savings associations.
Federal Housing Administration (FHA)
Insures mortgage loans made by FHA-approved lenders on homes that meet FHA standards in order to make mortgages more desirable investments for lenders.
Federal Housing Finance Board (FHFB)
Supervises regional Federal Home Loan Banks and oversees their mortgage lending.
Federal Reserve System (the Fed)
A central banking authority that influences the cost, availability, and supply of money.
Federal Trade Commission (FTC)
A federal agency that investigates and eliminates unfair and deceptive trade practices.
Federally related transaction
Any sale transaction that ultimately involves a federal agency in either the primary or secondary mortgage market. Under FIRREA, state-certified or state-licensed appraisers must be used for certain loans in federally related transactions.
Fee simple estate
The most comprehensive and complete interest one can hold in real property; freehold estate. Also known as fee or fee simple absolute.
Fiduciary
A person in a position of trust and confidence with respect to another person.

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