100 Texas real estate exam terms you should know first.
This is a focused first pass through the vocabulary that carries the most exam work. The list covers every official content area, not just the large national sections.
There is no official Pearson VUE list of 100 required terms. Pearson publishes the content outline. This editorial shortlist follows that outline, balances all eight National / General and six Texas State Law areas, and links each term to a fuller definition and its sources.
Contracts and Agency
This is the largest national content area. It tests how contracts are formed, classified, performed, breached, and ended, plus how agency relationships begin and what a license holder owes each party.
- Valid Contract
- An agreement that has the four essential elements: competent parties, mutual assent, a legal purpose, and consideration.
- Offer and Acceptance (Mutual Assent)
- The matching offer and acceptance that create the mutual assent, or meeting of the minds, required for a contract.
- Consideration
- Something of legal value that each party exchanges, which is required for a valid contract.
- Statute of Frauds
- The rule that contracts for the sale of real property must be in writing and signed to be enforceable.
- Void vs Voidable Contract
- A void contract was never legally valid; a voidable contract is valid until the protected party chooses to void it.
- Bilateral vs Unilateral Contract
- A bilateral contract is a promise for a promise; a unilateral contract is a promise in exchange for an act.
- Executed vs Executory Contract
- An executed contract is fully performed by both parties; an executory contract still has obligations left to complete.
- Fiduciary Duties
- The full duties of trust a broker owes a client, often memorized with the mnemonic OLD CAR.
- Novation
- Replacing an original party or contract with a new one, which releases the original party from liability.
- Assignment
- Transferring contractual rights to a third party, while the original party often remains secondarily liable.
- Contingency
- A condition in a contract that must be satisfied for the deal to move forward, such as financing, inspection, or appraisal.
Property Characteristics and Legal Descriptions
This area asks you to classify property, recognize the physical and economic characteristics of land, identify legal-description systems, and separate public controls from private restrictions.
- Fixture
- Personal property that has become permanently attached to real property and is treated as part of the real estate, conveying with it.
- Metes and Bounds
- A legal description that starts at a point of beginning and traces directions, distances, and monuments around a parcel.
- Lot and Block
- A legal description method that identifies a parcel by its lot and block numbers on a recorded subdivision plat.
- Government Survey System
- Also called the rectangular survey system, a method that describes land using townships and sections measured from principal meridians and base lines.
- Point of Beginning (POB)
- The fixed starting point of a metes and bounds description, where the boundary must also close.
- Acre
- A unit of land area equal to 43,560 square feet. A section of land contains 640 acres.
- Section (640 Acres)
- A one-square-mile unit of the government survey system containing 640 acres, with 36 sections to a township.
- Police Power
- The government's authority to regulate property to protect public health, safety, and welfare, without paying compensation.
- Eminent Domain
- The government's power to take private property for public use, which requires just compensation.
- Escheat
- The government power by which property passes to the state when an owner dies with no will and no heirs.
- Deed Restriction (Restrictive Covenant)
- 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.
Property Value and Appraisal
Appraisal questions test the meaning of value, the appraisal process, and when to use the sales comparison, cost, or income approach. They also test CMA and BPO distinctions.
- Market Value
- The most probable price a property should bring in a competitive and open market under fair conditions with informed, willing parties.
- Highest and Best Use
- The legally permissible, physically possible, financially feasible, and maximally productive use of a property, used as the basis for appraised value.
- Elements of Value (DUST)
- The four things a property needs to have value: demand, utility, scarcity, and transferability, remembered as DUST.
- Sales Comparison Approach
- An appraisal method that estimates value by comparing the subject to recent sales of similar properties and adjusting the comparables toward the subject.
- Cost Approach
- An appraisal method that adds land value to the depreciated cost to replace the improvements. It fits new or special-purpose buildings.
- Income Approach
- An appraisal method that estimates value by dividing a property's net operating income by the capitalization rate.
- Depreciation (Appraisal)
- In appraisal, a loss in value from physical deterioration, functional obsolescence, or external obsolescence.
- Capitalization Rate (Cap Rate)
- The rate of return on an income property, equal to net operating income divided by value.
- Gross Rent Multiplier (GRM)
- A quick valuation tool equal to sale price divided by gross rent, using gross income rather than net.
- Net Operating Income (NOI)
- A property's income after operating expenses but before mortgage debt service, used in the income approach to value.
- Equity
- The owner's value in a property, equal to its current market value minus the debt owed against it.
Real Estate Practice
This area covers brokerage agreements, property management, fair housing, antitrust, supervision, fraud, advertising, and the risk controls used in day-to-day real estate practice.
- Fair Housing Act
- The federal law that prohibits housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.
- Steering
- The illegal practice of directing buyers toward or away from neighborhoods based on a protected class.
- Blockbusting
- The illegal practice of inducing owners to sell by suggesting that members of a protected class are moving into the area.
- Redlining
- The illegal practice of a lender denying or limiting loans in certain areas based on the neighborhood's racial or ethnic makeup.
- Familial Status
- A Fair Housing protected class covering households with children under 18 and pregnant people.
- Multiple Listing Service (MLS)
- A cooperative system in which member brokers share their listings and offers of cooperation with one another.
- Realtor
- A registered trademark of the National Association of Realtors, referring only to a licensee who is a member, not to every licensee.
Ownership, Transfer, and Title
This area connects ownership interests with the documents and notice rules used to transfer and protect title. Expect estates, co-ownership, deeds, liens, recording, and title assurance.
- Bundle of Rights
- The set of legal rights that come with real property ownership: possession, control, enjoyment, exclusion, and disposition.
- Fee Simple Absolute
- The highest and most complete form of property ownership, with rights that last indefinitely and pass to heirs.
- Life Estate
- Ownership of property measured by the duration of a person's life, after which it passes to a remainderman or reverts to the grantor.
- Tenancy in Common
- The default form of co-ownership in which each owner holds a separate, possibly unequal interest that passes to heirs, with no survivorship.
- Joint Tenancy
- Co-ownership with the right of survivorship that requires the four unities of time, title, interest, and possession.
- Deed
- The written instrument that transfers title to real property from the grantor to the grantee.
- General Warranty Deed
- The deed that gives a buyer the greatest protection, warranting the full chain of title against all defects.
- Quitclaim Deed
- A deed that transfers whatever interest the grantor holds, if any, with no warranties of title.
- Recording
- Entering a deed or other instrument into the county public records, which gives constructive notice and establishes priority.
- Constructive Notice
- The legal presumption that the public is aware of a fact, such as ownership, because a document is recorded in the public record.
- Title Insurance
- Insurance that protects against title defects existing before the policy date, with separate owner and lender policies.
Property Disclosures and Environmental Issues
This area tests property-condition hazards, federal environmental laws, and the disclosure duties and liability that can arise when a seller or license holder knows material facts.
- Material Fact
- A fact that affects the value or desirability of property and that a license holder must disclose if it is not readily observable.
- Seller's Disclosure Notice
- The statutory Texas form on which a seller of most residential property discloses the property's known condition to the buyer.
- Lead-Based Paint Disclosure
- The federal rule for most pre-1978 housing requiring lead disclosures, an EPA pamphlet, and a buyer's inspection opportunity.
Financing and Settlement
Financing questions move from the borrower's promise and the security instrument to loan programs, federal consumer rules, lender requirements, and the documents used at settlement.
- Promissory Note
- The borrower's written promise to repay a debt, which is the instrument that actually creates the obligation.
- Deed of Trust
- The Texas security instrument that pledges real property for a loan and lets a trustee sell it non-judicially if the borrower defaults.
- Mortgage
- A security instrument that pledges real property as collateral for a debt. In Texas, lenders use a deed of trust to play this role.
- Amortization
- The gradual repayment of a loan through regular payments that cover both interest and principal until the balance reaches zero.
- Conventional Loan
- A mortgage that is not insured or guaranteed by a government agency and may require PMI when the original LTV exceeds 80 percent.
- FHA Loan
- A mortgage insured by the Federal Housing Administration that allows low down payments and requires mortgage insurance premiums.
- VA Loan
- A loan partly guaranteed by the U.S. Department of Veterans Affairs that can offer eligible borrowers no down payment and no monthly mortgage insurance.
- PMI (Private Mortgage Insurance)
- Insurance often required on a conventional loan above 80 percent LTV, protecting the lender if the borrower defaults.
- RESPA (Real Estate Settlement Procedures Act)
- A federal law that governs disclosures in residential mortgage settlements and prohibits kickbacks and unearned fees.
- Discount Points
- Prepaid interest a borrower pays at closing to lower the loan's interest rate, where one point equals one percent of the loan amount.
Real Estate Math
The math area uses property measurements, valuation, commissions, financing, settlement, investment, and property-management scenarios. The setup matters more than fast arithmetic.
- Property Tax Rate (per $100)
- The Texas property tax rate, expressed as dollars per $100 of taxable appraised value rather than in mills.
- Loan-to-Value Ratio (LTV)
- The ratio of the loan amount to the property value, used to size a loan and to decide whether PMI applies.
- Proration
- 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.
- Closing Disclosure
- The federal form showing final loan terms and closing costs, generally due at least three business days before consummation.
- Ad Valorem Tax
- A property tax based on the appraised value of real estate, set as of January 1 and paid in arrears in Texas.
TREC Duties and Powers
This Texas area tests what TREC may do, how complaints move through investigation and hearing, and how the Commission handles violations, discipline, and the Recovery Trust Account.
- TREC (Texas Real Estate Commission)
- The state agency that administers and enforces TRELA, adopts the TREC Rules, and licenses and disciplines Texas real estate license holders.
- Real Estate Recovery Fund
- A Texas account that reimburses a member of the public who holds an uncollectible court judgment against a license holder for certain violations.
- Disciplinary Action (TREC)
- The range of sanctions TREC may impose for a TRELA or rule violation, from a fine or reprimand to suspension or revocation.
- SOAH (State Office of Administrative Hearings)
- The independent Texas body whose administrative law judges hear contested TREC cases and issue a proposal for decision.
Texas Real Estate Licensing
Licensing questions test who needs a license, who is exempt, how a sales agent qualifies, and what sponsorship, status, renewal, education, and disciplinary rules mean in practice.
- Sales Agent
- A Texas license holder who performs real estate brokerage only under the sponsorship and supervision of a broker.
- Broker
- A Texas license holder who may operate a brokerage independently, hold trust money, and sponsor and supervise sales agents.
- Sponsoring Broker
- The Texas broker who sponsors a sales agent, supervises the agent's brokerage activity, and is responsible for the agent's acts.
- Sales Apprentice Education (SAE)
- The additional Texas education a sales agent must complete before the first license renewal.
- Continuing Education (CE)
- The approved coursework a Texas license holder must complete each renewal period to keep a license active.
Texas Standards of Conduct
Standards of Conduct tests how a Texas license holder handles money, advertising, compensation, legal boundaries, and conduct that can support discipline.
- Commingling
- Mixing money held in trust for others with a broker's personal or business funds, which is a TRELA violation.
- Conversion
- Using money held in trust for others for the broker's own benefit, a serious TRELA violation that can carry criminal penalties.
- Blind Ad
- Real estate advertising that omits the broker's name, which the TREC Rules prohibit.
- TRELA (The Real Estate License Act)
- The Texas statute, Occupations Code Chapter 1101, that governs real estate licensing and brokerage. License holders call it The Act.
- Escrow / Trust Account
- 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.
Texas Agency and Brokerage
This is the largest Texas state-law area. It tests IABS delivery, representation, intermediary practice, minimum services, broker supervision, and the proper use of unlicensed assistants.
- Intermediary
- 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.
- Appointed License Holder
- A license holder a broker may appoint, with written consent, to communicate with and advise one party while the broker acts as intermediary.
- IABS (Information About Brokerage Services)
- The TREC notice required at the first substantive communication about a proposed transaction involving specific real property.
- Dual Agency (Prohibited in Texas)
- One license holder fully representing both the buyer and the seller in the same transaction, a relationship Texas does not recognize.
Texas Contracts and Promulgated Forms
This Texas area tests when license holders must use promulgated forms, how they may complete them, which addenda fit a transaction, and how Texas option and disclosure rules work.
- Earnest Money
- A good-faith deposit a buyer puts down to show serious intent, held in escrow and applied at closing.
- Promulgated Form
- A contract form adopted by TREC for mandatory use by license holders when the form applies and no rule exception controls.
- Termination-Option Period
- A negotiated period in the TREC residential contract during which the buyer may terminate for any reason, in exchange for an option fee.
Texas Real Estate Special Topics
Special Topics collects the Texas rules that do not fit one narrow bucket: marital property, homestead, DTPA, landlord-tenant law, foreclosure, recording, liens, the Veterans Land Board, and HOAs.
- Homestead (Texas Creditor Protection)
- Texas constitutional protection that shields a primary residence from forced sale by most creditors, subject to urban and rural acreage limits.
- Community Property
- Property a married couple acquires during marriage, which Texas presumes belongs equally to both spouses.
- Separate Property
- Property a spouse owns individually: owned before marriage, or received during marriage by gift, devise, or inheritance.
- Deceptive Trade Practices Act (DTPA)
- The Texas consumer-protection statute that gives a consumer remedies for false, misleading, or deceptive acts, including in real estate.
- Mechanic's and Materialman's Lien
- A Texas lien that secures payment to a contractor or supplier for labor or materials furnished to improve real property.
- Homestead Exemption (Texas Tax)
- A Texas property tax break that lowers the taxable value of an owner's primary residence, reducing the school and other taxes owed.
- Homestead Appraisal Cap (10%)
- 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.
- Tax Certificate (Texas Property Tax)
- A certificate from a Texas tax collector stating the delinquent taxes, penalties, interest, and known costs due on a property.
- Property Tax Protest
- A Texas owner's right to challenge the appraisal district's value or determinations before the appraisal review board.
- Municipal Utility District (MUD)
- 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.
How to use a 100-term real estate vocabulary list.
What are the most important terms for the Texas real estate exam?+
Start with contract formation, agency duties, property rights, deeds and title, financing, appraisal, fair housing, TREC authority, licensing, Texas intermediary practice, promulgated forms, and special Texas property rules. This page selects 100 terms across all 14 official content areas so smaller Texas sections are not ignored.
Is this an official Pearson VUE vocabulary list?+
No. Pearson VUE publishes the exam content outline, not a 100-term vocabulary list. Pass Texas selected these terms from the topics named in that outline and from the laws and rules cited in the linked definitions.
Should I memorize definitions word for word?+
No. Learn the distinction that changes the answer. For example, know why void differs from voidable, why a deed differs from a promissory note, and why Texas intermediary practice is not dual agency. Then apply the distinction in a short scenario.
Where can I find the complete glossary?+
The complete Pass Texas glossary contains 148 definitions. It includes exam notes, traps, related terms, and primary-source links.
Turn vocabulary into decisions
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