The NY real estate licensing exam tests your ability to apply concepts, not just define them. But you cannot apply a concept you cannot define. This glossary covers the most frequently tested vocabulary terms organized by topic area.<\/p>\n\n\n\n
Agent \u2014 A person authorized to act on behalf of another (the principal) in real estate transactions.<\/p>\n\n\n\n
Principal \u2014 The person who authorizes an agent to act on their behalf. In real estate, this is typically the buyer or seller.<\/p>\n\n\n\n
Fiduciary \u2014 A person who holds a position of trust and is legally required to act in the best interest of another party. A real estate agent is a fiduciary to their client.<\/p>\n\n\n\n
Fiduciary duties \u2014 The legal obligations an agent owes to their principal. In New York, these include: loyalty, confidentiality, disclosure, obedience, reasonable care, and accounting.<\/p>\n\n\n\n
Listing agent \u2014 The agent who represents the seller in a real estate transaction.<\/p>\n\n\n\n
Buyer’s agent \u2014 The agent who represents the buyer in a real estate transaction.<\/p>\n\n\n\n
Dual agency \u2014 When a single agent or brokerage represents both the buyer and seller in the same transaction. Must be disclosed and consented to by both parties in New York.<\/p>\n\n\n\n
Exclusive right-to-sell listing \u2014 A listing agreement where the broker earns a commission regardless of who finds the buyer, including the seller themselves.<\/p>\n\n\n\n
Exclusive agency listing \u2014 A listing agreement where the broker earns a commission unless the seller finds the buyer themselves.<\/p>\n\n\n\n
Open listing \u2014 A listing agreement where multiple brokers can be hired and only the broker who finds the buyer earns a commission.<\/p>\n\n\n\n
Net listing \u2014 A listing where the broker keeps everything above a set sale price as commission. Illegal in New York.<\/p>\n\n\n\n
Contract \u2014 A legally binding agreement between two or more parties. To be valid, a contract must have offer, acceptance, consideration, competent parties, and legal purpose.<\/p>\n\n\n\n
Consideration \u2014 Something of value exchanged between parties in a contract. In real estate, this is typically money.<\/p>\n\n\n\n
Contingency \u2014 A condition that must be met for a contract to become binding. Common contingencies include home inspection, financing, and appraisal.<\/p>\n\n\n\n
Earnest money deposit \u2014 A good-faith deposit made by the buyer when entering into a purchase contract. Held in escrow until closing.<\/p>\n\n\n\n
Escrow \u2014 A neutral third party that holds funds or documents until conditions of a transaction are met.<\/p>\n\n\n\n
Void contract \u2014 A contract that has no legal effect from the beginning. Example: a contract where the seller does not own the property.<\/p>\n\n\n\n
Voidable contract \u2014 A contract that is valid but can be cancelled by one party due to a defect. Example: a contract signed by a minor.<\/p>\n\n\n\n
Breach of contract \u2014 When one party fails to fulfill their contractual obligations.<\/p>\n\n\n\n
Specific performance \u2014 A legal remedy requiring a party to fulfill their contractual obligations rather than pay damages.<\/p>\n\n\n\n
Liquidated damages \u2014 A pre-agreed amount of money to be paid if one party breaches the contract. Often the earnest money deposit.<\/p>\n\n\n\n
Fee simple \u2014 The highest form of property ownership. The owner has complete control and can sell, lease, or pass the property to heirs.<\/p>\n\n\n\n
Life estate \u2014 Ownership of property for the duration of a person’s life. The property reverts to the remainderman upon the life tenant’s death.<\/p>\n\n\n\n
Joint tenancy \u2014 Ownership by two or more people with equal shares and the right of survivorship. When one owner dies, their share passes automatically to the surviving owners.<\/p>\n\n\n\n
Tenancy in common \u2014 Ownership by two or more people where shares may be unequal and each owner’s share passes to their heirs (not surviving owners).<\/p>\n\n\n\n
Tenancy by the entirety \u2014 A form of co-ownership available only to married couples in New York. Includes right of survivorship and protection from individual creditors.<\/p>\n\n\n\n
Easement \u2014 The right to use another person’s property for a specific purpose. Example: a utility company’s right to run power lines across your land.<\/p>\n\n\n\n
Easement by necessity \u2014 An easement created when a property is landlocked and has no other access to a public road.<\/p>\n\n\n\n
Easement appurtenant \u2014 An easement that benefits an adjacent property and runs with the land when the property is sold.<\/p>\n\n\n\n
Easement in gross \u2014 An easement that benefits an individual or company rather than an adjacent property. Example: utility easements.<\/p>\n\n\n\n
License (property) \u2014 A personal, revocable right to use another’s land. Unlike an easement, it is not a property right.<\/p>\n\n\n\n
Encroachment \u2014 When a structure or improvement extends onto a neighboring property.<\/p>\n\n\n\n
Lien \u2014 A legal claim against a property as security for a debt. A lien must be satisfied before title can transfer clearly.<\/p>\n\n\n\n
Mechanic’s lien \u2014 A lien filed by a contractor or supplier who has not been paid for work done on a property.<\/p>\n\n\n\n
Mortgage \u2014 A loan secured by real property. The borrower (mortgagor) pledges the property as collateral to the lender (mortgagee).<\/p>\n\n\n\n
Amortization \u2014 The process of paying off a loan through regular scheduled payments of principal and interest.<\/p>\n\n\n\n
Equity \u2014 The difference between a property’s market value and the outstanding mortgage balance.<\/p>\n\n\n\n
Loan-to-value ratio (LTV) \u2014 The ratio of the loan amount to the appraised value of the property. A lower LTV means less risk for the lender.<\/p>\n\n\n\n
Private mortgage insurance (PMI) \u2014 Insurance required by lenders when the buyer puts down less than 20%. Protects the lender, not the buyer.<\/p>\n\n\n\n
Points \u2014 Upfront fees paid to a lender at closing. One point equals 1% of the loan amount. Points are used to buy down the interest rate.<\/p>\n\n\n\n
Adjustable-rate mortgage (ARM) \u2014 A mortgage where the interest rate changes periodically based on a market index.<\/p>\n\n\n\n
Conventional loan \u2014 A mortgage not insured or guaranteed by the federal government.<\/p>\n\n\n\n
FHA loan \u2014 A mortgage insured by the Federal Housing Administration, allowing lower down payments and credit scores.<\/p>\n\n\n\n
VA loan \u2014 A mortgage guaranteed by the Department of Veterans Affairs, available to eligible veterans and service members.<\/p>\n\n\n\n
RESPA \u2014 The Real Estate Settlement Procedures Act. Requires lenders to provide disclosure of closing costs and prohibits kickbacks between settlement service providers.<\/p>\n\n\n\n
TILA \u2014 The Truth in Lending Act. Requires lenders to disclose the annual percentage rate (APR) and total loan costs.<\/p>\n\n\n\n
Appraisal \u2014 A professional estimate of a property’s market value.<\/p>\n\n\n\n
Market value \u2014 The most probable price a property would sell for in a competitive and open market.<\/p>\n\n\n\n
Comparative market analysis (CMA) \u2014 An estimate of value prepared by a real estate agent using recent sales of similar properties. Not the same as an appraisal.<\/p>\n\n\n\n
Sales comparison approach \u2014 An appraisal method that estimates value by comparing the subject property to similar recently sold properties.<\/p>\n\n\n\n
Cost approach \u2014 An appraisal method that estimates value based on the cost to replace the improvements minus depreciation, plus land value.<\/p>\n\n\n\n
Income approach \u2014 An appraisal method that estimates value based on the income the property generates. Used for investment properties.<\/p>\n\n\n\n
Capitalization rate (cap rate) \u2014 Net operating income divided by property value. Used to evaluate investment properties.<\/p>\n\n\n\n
Depreciation \u2014 A loss in property value. Can be physical (wear and tear), functional (outdated features), or external (outside factors like nearby development).<\/p>\n\n\n\n
Title \u2014 Legal ownership of a property.<\/p>\n\n\n\n
Clear title \u2014 A title with no liens, encumbrances, or claims that would prevent transfer.<\/p>\n\n\n\n
Title insurance \u2014 Insurance protecting the buyer or lender against defects in title that existed before the policy date.<\/p>\n\n\n\n
Deed \u2014 The legal document that transfers ownership of real property from seller to buyer.<\/p>\n\n\n\n
General warranty deed \u2014 A deed where the seller guarantees title against all claims, including those from before they owned the property.<\/p>\n\n\n\n
Special warranty deed \u2014 A deed where the seller guarantees title only against claims arising during their period of ownership.<\/p>\n\n\n\n
Bargain and sale deed \u2014 A deed with no warranties. The seller implies they have title but makes no guarantees.<\/p>\n\n\n\n
Quitclaim deed \u2014 A deed that transfers whatever interest the grantor has with no warranties. Often used between family members or to clear title issues.<\/p>\n\n\n\n
Closing \u2014 The final step in a real estate transaction where title transfers from seller to buyer.<\/p>\n\n\n\n
Proration \u2014 The division of expenses (taxes, insurance, utilities) between buyer and seller at closing based on the closing date.<\/p>\n\n\n\n
Knowing vocabulary is the foundation. Our NY Real Estate Practice Tests<\/a> apply these terms in full exam-format questions across four 25-question sets.<\/p>\n\n\n\n For exam preparation strategies, see: How to Prepare for the NY Real Estate Exam<\/a><\/p>\n\n\n\n