The fiduciary relationship obligates the agent to act in
good faith at all times, obeying the principal's
instructions in accordance with the contract. However,
that obedience is not absolute. The agent may not obey
instructions that are unlawful or unethical. Because
illegal acts do not serve the principal's best
interests, obeying such instructions violates the
broker's duty of loyalty. On the other hand, an agent
who exceeds the authority assigned in the contract will
be liable for any losses that the principal suffers as a
A promisor; one who incurs a lawful obligation to
another (the obligee). The maker of a promissory note is
an obligor. In a performance bond, the contractor is the
obligor. One who guarantees the performance of the
obligation is a surety; also called a guarantor.
The loss of value due to factors that are outmoded or
less useful. Obsolescence may be functional or economic.
A permit issued by the appropriate local governing body
to establish that the property is suitable for
habitation by meeting certain safety and health
An offer is a promise made by one party, requesting
something in exchange for that promise. The offer is
made with the intention that the offeror will be bound
to the terms if the offer is accepted. The terms of the
offer must be definite and specific and must be
communicated to the offeree.
offer and acceptance
Two essential components of a valid contract; a "meeting
of the minds."
The person to whom an offer is made - usually the owner.
The party who makes an offer - usually the buyer.
Improvements made outside of a property's boundaries,
such as sidewalks and streets.
oil and gas lease
A grant of the sole and exclusive right to extract oil
and/or gas from beneath the surface of land. Such a
lease is generally for a designated term of years and is
subject to a payment of royalties in the event of
production, the commencement of drilling operations on
or before a specified date and the performance within a
specified time of a certain amount of development work.
Typically, an express or implied easement is granted to
enter the property in order to drill.
A mortgage loan that is expandable by increments up to a
maximum dollar amount, the full loan being secured by
the same original mortgage.
The common real estate practice of showing listed homes
to the public during established hours.
A listing given to any number of brokers who can work
simultaneously to sell the owner's property. The first
broker to secure a buyer who is ready, willing and able
to purchase at the terms of the listing earns the
commission. In the case of a sale, the seller is not
obligated to notify any of the brokers that the property
has been sold.
Unlike an exclusive listing, an open listing need not
contain a definite termination date. The listing
terminates after a reasonable time, usually whatever is
customary in the community. Either party can, in good
faith, terminate the agency at will.
A projection of income and expenses for the operation of
a property over a one year period.
Those recurring expenses that are essential to the
continuous operation and maintenance of a property.
Operating expenses are generally divided into the
following categories: fixed expenses such as real
property taxes and building insurance; variable costs
such as utilities, payroll, administration and property
management fees; and reserves for replacement. Operating
expenses do not include items such as mortgage payments,
capital expenditures and depreciation.
Earnings that may be available on alternative
An agreement to keep open, for a set period, an offer to
sell or lease real property.
opinion of title
An opinion of the marketability of a title given by an
attorney based on the abstract of title.
The sum of the purchase price of a property plus buying
expenses on acquisition. (See basis)
A form of implied agency relationship created by the
actions of the parties involved rather than by written
agreement or document.
Refers to income other than rent, such as vending and
laundry machines, storage or parking space income, and
over-built for the neighborhood
A home that has been improved to a point that it exceeds
the market value of its neighborhood.
An improvement that costs more than the value it adds to
A property where the owner physically occupies the
An association made up of the owners in a condominium or
neighborhood for the purpose of establishing rule and to
regulate and maintain the common grounds.
The right to use, possess, enjoy, transfer, and dispose
of a thing to the exclusion of all others.
owner's title insurance
An insurance policy protecting the buyer for the amount
of the purchase price in the event of a future title