- Fiduciary Duty
- The legal obligation a broker owes to a client to act in the client's best interest, including loyalty, confidentiality, obedience, disclosure, accounting, and reasonable care. Breaching these duties can expose the licensee to liability.
- Dual Agency
- An arrangement in which a single broker or brokerage represents both the buyer and the seller in the same transaction. Because loyalties are divided, it generally requires the informed written consent of both parties.
- Escrow
- An arrangement in which a neutral third party holds funds or documents on behalf of the transacting parties until agreed-upon conditions are met. Earnest money is commonly held in an escrow account.
- Earnest Money
- A deposit a buyer submits to demonstrate good-faith intent to purchase a property. It is typically held in escrow and credited toward the purchase price at closing.
- Encumbrance
- Any claim, lien, or restriction on a property held by a party other than the owner that may affect its use or transferability. Examples include mortgages, easements, and property tax liens.
- Easement
- A right granted to use another person's land for a specific, limited purpose, such as a utility line or shared driveway. The easement runs with the land rather than belonging to a particular owner.
- Title
- The legal evidence of ownership and the bundle of rights a person holds in a parcel of real property. Marketable title is title reasonably free of defects that a prudent buyer would accept.
- Lien
- A legal claim against a property used as security for a debt or obligation, which can allow a creditor to force a sale if the debt is unpaid. Common examples include mortgage liens and mechanic's liens.
- Steering
- The illegal practice of directing prospective buyers or renters toward or away from particular neighborhoods based on race, religion, national origin, or another protected characteristic. It is a violation of fair housing law.
- Commingling
- The prohibited practice of mixing a client's or customer's funds (such as escrow deposits) with the broker's own personal or business funds. Brokers must keep client funds in a separate account.
- Agency
- The relationship in which one party (the agent) is authorized to act on behalf of another (the principal) in dealings with third parties. In real estate, agency defines whom the broker represents and the duties owed.