Texas Real Estate Glossary

A tax-deferred exchange under Internal Revenue Code Section 1031 that lets an investor reinvest proceeds from one investment property into another like-kind property.

A mortgage provision that lets the lender demand the entire unpaid balance at once when the borrower defaults or another triggering event occurs.

A unit of land area equal to 43,560 square feet. A section of land contains 640 acres.

A property tax based on the appraised value of real estate, set as of January 1 and paid in arrears in Texas.

A mortgage whose interest rate changes over time based on an index plus a fixed margin, subject to rate caps.

A way to gain legal title by openly possessing another owner's land without permission for the limitation period Texas law sets.

The gradual repayment of a loan through regular payments that cover both interest and principal until the balance reaches zero.

A license holder a broker may appoint, with written consent, to communicate with and advise one party while the broker acts as intermediary.

Transferring contractual rights to a third party, while the original party often remains secondarily liable.

A bilateral contract is a promise for a promise; a unilateral contract is a promise in exchange for an act.

A single mortgage that covers more than one parcel of land, often with a partial release clause so parcels can be freed as they sell.

Real estate advertising that omits the broker's name, which the TREC Rules prohibit.

The illegal practice of inducing owners to sell by suggesting that members of a protected class are moving into the area.

A failure to perform a contractual obligation without legal excuse, which gives the other party remedies.

A Texas license holder who may operate a brokerage independently, hold trust money, and sponsor and supervise sales agents.

Government standards that regulate how structures must be built for safety, separate from zoning, which regulates use.

The set of legal rights that come with real property ownership: possession, control, enjoyment, exclusion, and disposition.

The rate of return on an income property, equal to net operating income divided by value.

The money left after subtracting operating expenses and mortgage debt service from a property's income.

The recorded history of ownership of a property, tracing each transfer from owner to owner over time.

The federal form that gives a borrower the final loan terms and closing costs, which must be received at least 3 business days before closing.

Mixing money held in trust for others with a broker's personal or business funds, which is a TRELA violation.

The parts of a condominium owned collectively by all unit owners, such as the lobby, pool, and parking.

Property a married couple acquires during marriage, which Texas presumes belongs equally to both spouses.

A Texas municipality's long-range land use plan, adopted under the Local Government Code to guide zoning and development.

A form of ownership in which a buyer holds fee simple title to an individual unit plus an undivided share of the common elements.

Something of legal value that each party exchanges, which is required for a valid contract.

Short-term financing disbursed in stages as a building project reaches milestones, with the balance due at completion.

The legal presumption that the public is aware of a fact, such as ownership, because a document is recorded in the public record.

A condition in a contract that must be satisfied for the deal to move forward, such as financing, inspection, or appraisal.

The approved coursework a Texas license holder must complete each renewal period to keep a license active.

A mortgage that is not insured or guaranteed by a government agency. PMI is required when the loan-to-value ratio is above 80 percent.

Using money held in trust for others for the broker's own benefit, a serious TRELA violation that can carry criminal penalties.

A form of ownership in which a resident owns shares in a corporation that owns the building and holds a proprietary lease for the unit.

An appraisal method that adds land value to the depreciated cost to replace the improvements. It fits new or special-purpose buildings.

The Texas consumer-protection statute that gives a consumer remedies for false, misleading, or deceptive acts, including in real estate.

The written instrument that transfers title to real property from the grantor to the grantee.

The Texas security instrument that pledges real property for a loan and lets a trustee sell it non-judicially if the borrower defaults.

A private limitation on how a property may be used, written into a deed or recorded subdivision rules and enforced by owners or an association.

A court judgment against a borrower for the loan balance still owed after a foreclosure sale brings less than the debt.

In appraisal, a loss in value from physical deterioration, functional obsolescence, or external obsolescence.

The range of sanctions TREC may impose for a TRELA or rule violation, from a fine or reprimand to suspension or revocation.

Prepaid interest a borrower pays at closing to lower the loan's interest rate, where one point equals one percent of the loan amount.

One license holder fully representing both the buyer and the seller in the same transaction, a relationship Texas does not recognize.

A mortgage clause that lets the lender call the full balance due if the borrower transfers the property without paying off the loan.

A good-faith deposit a buyer puts down to show serious intent, held in escrow and applied at closing.

A right to use another person's land for a specific purpose, such as access or utilities, without owning it.

The four things a property needs to have value: demand, utility, scarcity, and transferability, remembered as DUST.

The government's power to take private property for public use, which requires just compensation.

Any claim, lien, or restriction on a property that affects its title or use, such as a mortgage, easement, lien, or deed restriction.

The owner's value in a property, equal to its current market value minus the debt owed against it.

The borrower's right to stop a foreclosure by paying the full amount owed before the foreclosure sale takes place.

The government power by which property passes to the state when an owner dies with no will and no heirs.

A separate account where money belonging to others is held apart from a broker's own funds, often at the title company in a Texas sale.

An executed contract is fully performed by both parties; an executory contract still has obligations left to complete.

The federal law that prohibits housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.

A Fair Housing protected class covering households with children under 18 and pregnant people.

The highest and most complete form of property ownership, with rights that last indefinitely and pass to heirs.

A fee simple estate held subject to a condition, so ownership can be lost or revert if the condition is violated.

A mortgage insured by the Federal Housing Administration that allows low down payments and requires mortgage insurance premiums.

The full duties of trust a broker owes a client, often memorized with the mnemonic OLD CAR.

Personal property that has become permanently attached to real property and is treated as part of the real estate, conveying with it.

The process by which a lender forces the sale of property after default. Texas usually uses non-judicial foreclosure under a deed of trust.

The deed that gives a buyer the greatest protection, warranting the full chain of title against all defects.

Also called the rectangular survey system, a method that describes land using townships and sections measured from principal meridians and base lines.

A quick valuation tool equal to sale price divided by gross rent, using gross income rather than net.

The legally permissible, physically possible, financially feasible, and maximally productive use of a property, used as the basis for appraised value.

Texas constitutional protection that shields a primary residence from forced sale by most creditors, subject to urban and rural acreage limits.

A Texas limit that holds the annual increase in the appraised value of a residence homestead to 10 percent, plus the value of new improvements.

A Texas property tax break that lowers the taxable value of an owner's primary residence, reducing the school and other taxes owed.

The TREC notice a license holder must provide at the first substantive communication, explaining the types of representation a broker can offer.

An appraisal method that estimates value by dividing a property's net operating income by the capitalization rate.

The Texas relationship in which one broker represents both the buyer and the seller in the same transaction with the written consent of both parties.

Co-ownership with the right of survivorship that requires the four unities of time, title, interest, and possession.

The federal requirement that sellers and landlords of pre-1978 housing disclose known lead hazards, provide an EPA pamphlet, and allow a 10-day inspection.

The use of borrowed money to control a larger investment, which can magnify both returns and risk.

A monetary claim against property that secures payment of a debt. It can be voluntary, like a mortgage, or involuntary, like a tax or judgment lien.

Ownership of property measured by the duration of a person's life, after which it passes to a remainderman or reverts to the grantor.

An amount the parties agree in advance that one will keep or pay if the other defaults, such as retained earnest money.

A recorded notice that a lawsuit affecting title to a property is pending, warning third parties that the outcome could affect the property.

The water rights of an owner whose land borders a standing body of water such as an ocean, sea, or lake.

The ratio of the loan amount to the property value, used to size a loan and to decide whether PMI applies.

A legal description method that identifies a parcel by its lot and block numbers on a recorded subdivision plat.

The most probable price a property should bring in a competitive and open market under fair conditions with informed, willing parties.

A fact that affects the value or desirability of property and that a license holder must disclose if it is not readily observable.

A Texas lien that secures payment to a contractor or supplier for labor or materials furnished to improve real property.

A legal description method that defines a parcel by starting at a point of beginning and tracing directions and distances around its perimeter back to the start.

A security instrument that pledges real property as collateral for a debt. In Texas, lenders use a deed of trust to play this role.

A cooperative system in which member brokers share their listings and offers of cooperation with one another.

A Texas special district that finances and operates water, sewer, drainage, and similar utilities, often by levying its own property tax on the homes inside it.

A property's income after operating expenses but before mortgage debt service, used in the income approach to value.

Foreclosure conducted by the trustee under a deed of trust's power of sale, without a court action, on the first Tuesday of the month in Texas.

A land use that was lawful before a zoning change and is allowed to continue, though generally not to expand; also called grandfathered.

Replacing an original party or contract with a new one, which releases the original party from liability.

The matching offer and acceptance that create the mutual assent, or meeting of the minds, required for a contract.

A unilateral contract in which the optionor must sell at a set price if the optionee exercises, while the optionee is not obligated to buy.

A mortgage that finances real property together with personal property, such as appliances and furniture, under one loan.

A recorded map of a subdivision showing the lots, blocks, streets, and easements, referenced by the lot and block description method.

Insurance a conventional borrower pays when the loan-to-value ratio is above 80 percent, protecting the lender against default.

The fixed starting point of a metes and bounds description, where the boundary must also close.

The government's authority to regulate property to protect public health, safety, and welfare, without paying compensation.

The borrower's written promise to repay a debt, which is the instrument that actually creates the obligation.

A standard contract form adopted by TREC that Texas license holders must use, filling in the blanks rather than drafting their own language.

A Texas owner's right to challenge the appraisal district's value or determinations before the appraisal review board.

The Texas property tax rate, expressed as dollars per $100 of taxable appraised value rather than in mills.

The division of a recurring expense such as property tax, insurance, or HOA dues between buyer and seller at closing based on the closing date.

A mortgage the buyer gives as part of the purchase price, commonly when the seller finances part of the sale.

A deed that transfers whatever interest the grantor holds, if any, with no warranties of title.

A Texas account that reimburses a member of the public who holds an uncollectible court judgment against a license holder for certain violations.

A registered trademark of the National Association of Realtors, referring only to a licensee who is a member, not to every licensee.

Entering a deed or other instrument into the county public records, which gives constructive notice and establishes priority.

The illegal practice of a lender denying or limiting loans in certain areas based on the neighborhood's racial or ethnic makeup.

The document a lender records when a loan is fully paid, releasing the deed-of-trust lien from the property.

Canceling a contract and returning the parties to the positions they held before it was made.

A federal law that governs disclosures in residential mortgage settlements and prohibits kickbacks and unearned fees.

A loan that lets an eligible older homeowner convert home equity into payments with no monthly repayment while living in the home.

The feature by which a deceased co-owner's share passes automatically to the surviving co-owners. In Texas it must be created by a written survivorship agreement.

The water rights of an owner whose land borders a flowing watercourse such as a river or stream.

A Texas license holder who performs real estate brokerage only under the sponsorship and supervision of a broker.

The additional Texas education a sales agent must complete before the first license renewal.

An appraisal method that estimates value by comparing the subject to recent sales of similar properties and adjusting the comparables toward the subject.

The market where existing mortgage loans are bought and sold, giving lenders fresh capital to make new loans.

A one-square-mile unit of the government survey system containing 640 acres, with 36 sections to a township.

The statutory Texas form on which a seller of most residential property discloses the property's known condition to the buyer.

Property a spouse owns individually: owned before marriage, or received during marriage by gift, devise, or inheritance.

The independent Texas body whose administrative law judges hear contested TREC cases and issue a proposal for decision.

A charge levied only on the properties that benefit from a specific public improvement, based on benefit rather than value.

A use allowed in a zoning district only with specific approval after meeting stated conditions; also called a conditional use.

A deed in which the grantor warrants the title only against defects that arose during the grantor's own period of ownership.

A court remedy that forces a defaulting party to complete the agreed sale, available because real property is unique.

The Texas broker who sponsors a sales agent, supervises the agent's brokerage activity, and is responsible for the agent's acts.

The rule that contracts for the sale of real property must be in writing and signed to be enforceable.

The illegal practice of directing buyers toward or away from neighborhoods based on a protected class.

The Texas property tax lien that attaches January 1, and the foreclosure tax sale that can follow if the taxes stay delinquent.

The default form of co-ownership in which each owner holds a separate, possibly unequal interest that passes to heirs, with no survivorship.

A negotiated period in the TREC residential contract during which the buyer may terminate for any reason, in exchange for an option fee.

A contract clause that makes the stated deadlines strictly enforceable, so missing a date is a breach.

Insurance that protects against title defects existing before the policy date, with separate owner and lender policies.

A six-mile-square block of the government survey system that contains 36 sections.

The state agency that administers and enforces TRELA, adopts the TREC Rules, and licenses and disciplines Texas real estate license holders.

The Texas statute, Occupations Code Chapter 1101, that governs real estate licensing and brokerage. License holders call it The Act.

The neutral third party named in a Texas deed of trust who holds the power of sale and conducts a non-judicial foreclosure if the borrower defaults.

A mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, allowing no down payment and a funding fee instead of monthly mortgage insurance.

An agreement that has the four essential elements: competent parties, mutual assent, a legal purpose, and consideration.

Permission to deviate from a specific zoning requirement because strict compliance would cause an unnecessary hardship.

A Texas program that offers eligible veterans below-market loans for land, homes, and home improvements.

A void contract was never legally valid; a voidable contract is valid until the protected party chooses to void it.

A new, larger loan that wraps around an existing loan that stays in place, with the borrower paying the new lender who continues paying the old one.