Texas Real Estate License Glossary

E
EASEMENT – A property interest which one person has in land owned by another entitling the holder of the interest to limited use or enjoyment of the other’s land.

EASEMENT IN GROSS – The limited right of one person to use another’s land (servient estate), which right is not created for the benefit of any land owned by the owner of the easement; that is, there is no dominant estate, as the easement attaches personally to the owner, not to the land.

EMBLEMENTS – Growing crops (called “fructus industriales”),such as rice and taro, which are produced annually through labor and industry.

EMINENT DOMAIN – The right of government, both state and federal, to take private property for a necessary public use, with just compensation paid to the owner.

ENCROACHMENT – An unauthorized invasion or intrusion of a fixture or other real property wholly or partly upon another’s property, thus reducing the size and value of the invaded property.

ENCUMBRANCE – Any claim, lien, charge or liability attached to and binding upon real property which may lessen the value of the property but will not necessarily prevent transfer of title.

ENTIRETY, TENANCY BY – A form of joint ownership of property between husband and wife with the right of survivorship.

ENVIRONMENTAL IMPACT STATEMENT – A report which includes a detailed description of a proposed development project with emphasis on the existing environment setting, viewed from both a local and regional perspective, and a discussion of the probable impact of the project on the environment during all phases.

EQUITY – That interest or value remaining in property after payment of all liens or other charges on the property. A owner’s equity is normally the monetary interest over and above the mortgage indebtedness.

ERRORS AND OMISSIONS INSURANCE – A form of insurance which covers liabilities for errors, mistakes and negligence in the usual listing and selling activities of a real estate office or escrow company.

ESCHEAT – The reversion of property to the state when a decedent dies intestate and there are no heirs capable of inheriting, or when the property is abandoned.

ESCROW – The process by which money and/or documents are held by a disinterested third person (a “stakeholder”) until the satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow).

ESTOPPEL – A legal doctrine by which a person is prevented from asserting rights or facts which are inconsistent with a previous position or representation he had made by his act, conduct or silence.

ETHICS – A system of moral principles, rules and standards of conduct.

EVICTION – The legal process of removing a tenant from possession of the premises for some breach of the lease contract.

EXCHANGE – A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of a like kind.

EXCLUSIVE AGENCY – A written listing agreement giving one agent the right to sell property for a specified time, but reserving to the owner the right to sell the property himself without payment of any commission.

EXCLUSIVE LISTING – A written listing of real property in which the seller agrees to appoint only one broker to sell the property for a specified period of time. The two types of exclusive listings are the exclusive agency and the exclusive right to sell.

EXECUTIVE – The act of making a document legally valid, such as formalizing a contract by signing, or acknowledging and delivering a deed.

EXECUTOR – A person appointed by a testator to carry out the directions and requests in the last will and testament, and to dispose of property according to the provisions of the will.

EXECUTORY CONTRACT – A contract in which one or both of the parties has not yet performed.

EXTENDER CLAUSE – A “carry over” clause (referred to as a safety clause) contained in a listing which provides that a broker is still entitled to a commission for a set of period of time after the listing has expired if the property is sold to a former prospect of the broker.

EXTENSION – An agreement to continue the period of performance beyond the specified period.

F
FAIR MARKET VALUE – The highest monetary price which a property would bring, if offered for sale for a reasonable period of time in a competitive market, to a seller who is willing but not compelled to sell, from a buyer, willing but not compelled to buy, both parties being fully informed of all the purposes to which the property is best adapted and is capable of being used.

FARM AREA – A selected geographical area or one specific building to which a real estate salesperson devotes special attention and study.

FEASIBILITY STUDY – An analysis of a proposed project with emphasis on the attainable income, probable expenses, and most advantageous use and design.

FEDERAL HOUSING ADMINISTRATION (FHA) – The FHA was set up in1934 under the National Housing Act to encourage improvement in housing standards and conditions, to provide an adequate home financing system by insurance of housing mortgages and credit, and to exert a stabilizing influence on the mortgage market.

FEDERAL TAX LIEN – A federal lien which attaches to real property, either if the federal estate tax is not paid, or if the taxpayer has violated the federal income tax or payroll tax laws.

FEDERAL TRADE COMMISSION (FTC) – A federal agency created to investigate and eliminate unfair and deceptive trade practices in business.

FEE SIMPLE – The largest estate one can possess in real property. A fee simple estate is the least limited interest and the most complete and absolute ownership in land: it is of indefinite duration, freely transferable and inheritable. Fee simple title is sometimes referred to as “the fee.

FIDUCIARY – A relationship which implies a position of trust or confidence wherein one is usually entrusted to hold or manage property or money for another. Among the obligations a fiduciary owes to the principal are duties of loyalty; obedience; full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies.

FILLED LAND – An area where the grade has been raised by depositing or dumping dirt, gravel or lava rock.

FINANCE CHARGE – The total of all costs imposed directly or indirectly by the creditor and payable either directly or indirectly by the customer, as defined under the federal Truth-in-Lending Law.

FINANCE FEE – A mortgage brokerage fee to cover the expenses incurred in placing the mortgage with a lending institution; a mortgage service charge or origination fee.

FINANCIAL STATEMENT – A formal statement of the financial status and net worth of a person or company, setting forth and classifying assets and liabilities as of a specified date.

FINDER’S FEE – A fee paid to someone for producing a buyer to purchase or a seller to list property; also called a referral fee.

FIRM COMMITMENT – A definite undertaking by a lender to loan a set amount of money at a specified interest rate for a certain term.

FIRST REFUSAL, RIGHT OF – The right of a person to have the first opportunity either to purchase or lease real property.

FISCAL YEAR – A business year used for tax, corporate or accounting purposes, as opposed to a calendar year.

FIXTURE – An article which was once personal property but has been so affixed to the real estate that it has become real property (e.g. stoves, bookcases, plumbing, etc.). If determined to be a fixture, then the article passes with the property even though it is not mentioned in the deed.

FLAG LOT – A land parcel having the configuration of an extended flag and pole. The pole represents access to the site which is usually located to the rear of another lot fronting a main street.

FLOOR AREA RATIO – The ratio of floor area to land area expressed as a percent or decimal, which is determined by dividing the total floor area on a zoning lot by the lot area.

FLOOR DUTY – A frequent practice in real estate brokerage offices of assigning one sales agent the responsibility for handling all telephone calls and office visitors for a specified period of time.

FORECLOSURE – A legal procedure whereby property used as security for debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document.

FRAUD – Any form of deceit, trickery, breach of confidence or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another.

FREE AND CLEAR TITLE – Title to real property which is absolute and unencumbered by any liens, mortgages, clouds or other encumbrances.

FRONTAGE – The length of a property abutting a street or body of water; that is, the number of feet that “front” the street or water.

FUNCTIONAL OBSOLESCENCE – A loss in value of an improvement due to functional inadequacies, often caused by age or poor design.

G
GARNISHMENT – A legal process designed to provide a means for creditors to safeguard for themselves the personal property of a debtor which is in the hands of a third party (“garnishee”).

GENERAL AGENT – One who is authorized to perform any and all acts associated with the continued operation of a particular job or a certain business.

GENERAL CONTRACTOR – A construction specialist who enters into a formal construction contract with a land owner or master lessee to construct a real estate building or project.

GENERAL PARTNER – A co-owner of a partnership who is empowered to enter into contracts on behalf of the partnership and who is fully liable for all partnership debts.

GIFT TAX – A graduated federal tax paid by a donor upon making a gift.

GOOD FAITH – Bona fide. An act is done in good faith if it is in fact done honestly, whether it be done negligently or not.

GOOD WILL – An intangible, salable asset arising from the reputation of a business.

GOVERNMENT SURVEY – A system of land description in which large blocks of land are divided into tracts bounded by imaginary lines conforming to the true meridian.

GRADUATED RENTAL LEASE – A lease in which the rent payments commence at a fixed, often low rate, but “step up” or increase at set intervals as the lease term matures.

GRANDFATHER CLAUSE – Common expression used to convey the idea that something which was once permissible continues to be permissible despite changes in the controlling law.

GRANTEE – The person who receives from the grantor a grant of real property.

GRANTOR – The person transferring title to, or an interest in, real property. A grantor must be competent to convey; thus, for example, an insane person cannot convey title to real property.

GROSS AREA – The total floor area of a building measured from the exterior of the walls (excluding those unenclosed).

GROSS INCOME MULTIPLIER – A useful rule of thumb to estimate market value of income producing residential property. The multiplier is derived by using comparable sales divided by the actual or estimated monthly rentals and arriving at an acceptable average.

GROSS LEASE – A lease of property under which the lessee pays a fixed rent, and the lessor pays the taxes, insurance, and other charges regularly incurred through ownership.

GUARDIAN – One who is given the lawful custody and care of another(called a ward).