Washington Real Estate Glossary

A

Ability-to-Repay rule

The federal requirement, effective January 10, 2014, that a lender make a reasonable, good-faith, verified determination that a borrower can repay a mortgage — considering incom…

Acceleration clause

A provision in a mortgage or deed of trust that lets the lender declare the entire unpaid balance immediately due, typically after the borrower defaults.

Acceptance

The grantee's act of taking a delivered deed as their own, the final step that completes a transfer of real property.

Acknowledgment

A signer's formal declaration before a notary public that a signature on a deed or other document is genuine and made voluntarily, which allows the document to be recorded.

Actual authority

Power a principal grants directly to an agent, spoken or in writing, to act on the principal's behalf; it can be broad or narrowly limited to specific tasks.

Actual notice

Knowledge a person gains firsthand — from what they are told, what documents they read, or what they see when inspecting a property. It contrasts with constructive notice, which…

Ad valorem

A Latin phrase meaning 'according to value.' Taxes charged this way, such as property taxes, are based on the assessed value of what is being taxed.

Addendum

An attachment added to a contract that spells out extra terms or provisions the main form does not cover. Included when the contract is written, it becomes part of the binding a…

Adjustment

A dollar correction applied to a comparable's sale price for features it has more or less of than the property being valued. Superior features in the comparable are deducted; mi…

Adjustment period

On a variable-rate loan, the interval that sets when the interest first changes and how often it resets afterward, commonly once a year.

Administrator

A person a court appoints to settle the estate of someone who died without naming an executor in a valid will.

Adverse possession

Gaining legal ownership of land by occupying it openly, exclusively, and without the owner's permission for a set period. In Washington that period is generally 10 years, or 7 y…

Advertising

Under Washington licensing law, any attempt to induce someone to use a firm's or licensee's services — websites, social posts, email, signs, video included. Every piece must sho…

Affiliated licensee

A broker or managing broker who is licensed to represent a real estate firm and works under its supervision. Washington uses this term rather than "salesperson," a license the s…

Agency

The legal relationship in which one person, the agent, is authorized to act on behalf of another, the principal, in dealings with third parties.

Agency disclosure

Making clear in writing whom a broker represents in a transaction. Under Washington's 2024 rules, a broker owes no representation duties to a buyer or seller until that party si…

Agency relationship

The professional connection between a real estate firm and a principal — buyer, seller, landlord, or tenant — created in Washington through a written services agreement or by pr…

Agent

Before 2010, one of Washington's two real estate license levels. An agent could provide brokerage services to clients but could not manage other licensees inside a firm. The sta…

Air rights

An owner's legal claim to the usable space above the surface of their land. In practice this claim is limited by government control of navigable airspace for aircraft.

Amortization

The gradual payoff of a loan through regular payments over its term, with each payment covering the interest due and reducing the principal until the balance reaches zero.

Annuity

A series of payments of equal size made at fixed, regular intervals. Loan repayments work this way, which is why lenders and secondary-market investors value the steady, predict…

Antitrust laws

Federal and state laws that protect competition by prohibiting agreements that restrain trade, such as price fixing, market allocation, and group boycotts.

Appraisal

A professional, supported opinion of a property's value as of a specific date, prepared by a licensed or certified appraiser using recognized valuation methods.

Appraiser

A trained professional who estimates the market value of real property. The written opinion of value they produce, called an appraisal, is commonly ordered when property is boug…

Appreciation

An increase in a property's value over time, from market forces, improvements, or inflation. It builds the owner's equity without any payment toward the loan.

Appurtenances

Rights, benefits, or attachments that belong to a piece of land and automatically pass with it when it is sold, such as a building, a fence, or an easement to cross a neighbor's…

Assessed value

The worth the county assessor assigns a property for calculating property tax. Washington assesses at 100 percent of true and fair value under RCW 84.40.030, so the figure track…

Assessment

The official valuation a county assessor places on property to calculate property tax. In Washington, property must be valued at 100% of its true and fair market value (RCW 84.4…

Assignment

The transfer of one party's rights and interests under a contract to another person. The party transferring is the assignor and the party receiving is the assignee; the original…

Assumed name

A business name different from the owner's legal name, under which a firm operates and advertises; it must usually be registered with the state (a 'doing business as' or DBA nam…

Assumption

An arrangement in which a buyer takes over the seller's existing loan and becomes primarily liable for the remaining payments, keeping the loan's original terms instead of getti…

Attorney-in-fact

A person authorized by a written power of attorney to act on another's behalf, such as signing documents; this person need not be a lawyer.

B

Balloon payment

A large lump sum that pays off the remaining loan balance in one shot at the end of the term. It happens when the regular payments only partly pay down the debt, leaving most of…

Basis

For tax purposes, the amount invested in a property: its purchase price plus settlement and closing costs. It is the starting figure subtracted from the sale price to measure ta…

Benchmark

A permanent, marked reference point of known elevation, often a brass disk set in concrete, that surveyors use as a starting point for measuring heights tied to a datum.

Beneficiary

Under a deed of trust, the lender: the party entitled to repayment and, if the borrower defaults, to direct the trustee to sell the pledged property to satisfy the debt.

Bilateral contract

An agreement in which both parties make promises and are each obligated to perform, exchanging one promise for another. Most real estate purchase agreements are this kind of con…

Bill of sale

A written document that transfers ownership of personal property, items that are not real estate, from one party to another.

Blanket mortgage

A single loan secured by two or more separate parcels of real estate. Developers often use one to finance a subdivision, with a partial release clause freeing individual lots fr…

Blockbusting

The illegal practice of scaring homeowners into selling cheaply by suggesting that people of a certain race, religion, or other protected group are moving into the neighborhood,…

Branch manager

The person a firm puts in charge of a satellite office and the brokers who work out of it. In Washington that person is a managing broker, a license level authorized to supervis…

Branch office

An additional business location a real estate firm operates apart from its main office. In Washington, each branch must be separately licensed with the Department of Licensing u…

Breach

The failure to fulfill a promise or obligation in a contract without a legal excuse. It gives the injured party the right to remedies such as damages or specific performance.

Broker

A person licensed to help clients buy, sell, rent, exchange, or manage property on behalf of a real estate firm, working under the supervision of the firm's designated or managi…

Broker price opinion

A broker's written estimate of a property's probable value, less formal than an appraisal, often ordered by lenders or relocation companies. Copies belong in the transaction fil…

Broker's open house

A showing aimed at other real estate brokers, usually held on a weekday, so agents can preview a new listing for their buyers and give the listing broker pricing and condition f…

Brokerage

The business of facilitating the sale, purchase, rental, or exchange of real estate for others in return for compensation. The word also names the company that provides these se…

Brokerage affiliation

The required association between a licensee and a licensed real estate firm. In Washington a broker cannot provide brokerage services independently; the firm's designated broker…

Brokerage services

The licensed real estate activities performed for another person for compensation, such as listing, selling, buying, exchanging, leasing, or managing property, and negotiating t…

Brokerage services agreement

A written contract between a real estate firm and a client that sets the terms of representation. In Washington, one is required before, or as soon as reasonably practical after…

Building code

A set of minimum standards for construction methods and materials, adopted and enforced by local government through permits and inspections, meant to protect the public from uns…

Bundle of rights

The separate legal powers that come with owning real property: to possess, use, lease, mortgage, sell, will, and subdivide it. Each of these can be split off and transferred on …

Buyer agency

The relationship in which a broker represents only the buyer in a transaction and owes that buyer a broker's statutory duties. In Washington this broker is called the selling br…

C

CAN-SPAM Act

A 2003 federal law that sets rules for commercial email, such as requiring honest subject lines and a working opt-out, and banning deceptive headers. It applies to the marketing…

Cancellation

The ending of a contract by mutual agreement of the parties, releasing them from further obligations. Unlike rescission, it does not necessarily return the parties to their orig…

Capacity

A borrower's financial ability to repay a loan, which lenders judge from income, employment history, and existing debt. It is one of the core factors weighed in underwriting a m…

Capital gain

The profit made when an asset sells for more than its adjusted basis, roughly the sale price minus what was paid to acquire and improve it, less certain allowed costs. It is gen…

Case law

Law that comes from published court decisions rather than statutes, in which judges' rulings interpret, update, or clarify existing legal rules and guide later similar cases.

Cash to close

The total amount of money a buyer must bring to the settlement table to finish the purchase — the down payment plus closing costs and prepaid items, minus the earnest money and …

Chain of title

The unbroken sequence of recorded owners of a property, from the earliest records to the present, with each transfer linked to the next.

Changed circumstance

A defined event — new or inaccurate information, a consumer-requested change, a rate lock, an expired estimate — that lets the lender re-issue a Loan Estimate and reset fee-tole…

Clear and conspicuous

Washington's standard for how the firm name must appear in advertising: readily noticed and understood. Department of Licensing guidance applies it to websites and social media,…

Client

A buyer or seller who has entered an agency relationship with a broker and is therefore owed the broker's full representation and duties, unlike a customer.

Closing

The final step of a real estate sale, when funds and signed documents are exchanged and title passes to the buyer. The neutral third party handling it — the escrow or settlement…

Closing costs

The fees and charges a buyer and seller owe at settlement beyond the property's purchase price, such as loan fees, title and escrow charges, prepaid taxes, and insurance.

Closing date

The day set in the purchase and sale agreement for the sale to be finalized — when documents are signed and recorded and title passes from seller to buyer. Missing it without an…

Closing Disclosure

A five-page federal form itemizing the final loan terms, costs, and credits in a mortgage transaction, which the lender must deliver to the borrower at least three business days…

Closing statement

An itemized accounting given to the buyer and seller at the completion of a real estate sale, listing the purchase price and every credit, debit, prorated cost, and fee, so each…

Code of Ethics

The National Association of REALTORS conduct standards binding on REALTOR members. Article 10 prohibits denying equal professional services or discriminating based on race, colo…

Collateral

Property a borrower pledges to secure a loan. If the borrower defaults, the lender can take the pledged asset and sell it to recover what it is owed.

Commingling

Illegally mixing money that belongs to clients — such as earnest money held in trust — with a firm's own operating funds. Prohibited because it puts others' money at risk and ca…

Commission split

An arrangement in which the earnings from a closed sale are divided between the licensee and the firm by an agreed percentage, such as the office keeping 60% and the licensee ke…

Common law

A body of law built up over time from court decisions and long-standing custom rather than from written statutes, with roots in early English, French, and Spanish rulings.

Community property

A form of marital ownership used in Washington in which most assets either spouse earns or acquires during the marriage belong equally to both, each holding a one-half interest.

Comparables

Recently sold properties similar to the one being valued, in location, size, age, and features, whose sale prices are adjusted to estimate the subject property's value.

Comparative market analysis

A broker's estimate of a home's value built by comparing it to similar nearby properties — sold, pending, active, and expired — and adjusting the comparables for differences. Le…

Compensation Disclosure

The written statement of compensation sources and amounts a broker in a Washington commercial transaction must give the buyer before an offer is signed, used in place of the ser…

Compensatory damages

A money award that reimburses the non-breaching party for the actual financial loss caused by a breach of contract. It is the most common remedy and aims to make the injured par…

Comprehensive plan

A local government's long-range policy document setting a community's goals for growth, land use, housing, and public services over many years. Zoning and development rules are …

Condemnation

The legal proceeding a government uses to carry out eminent domain, taking private property for public use and setting the just compensation the owner must be paid.

Condominium

A form of ownership in which a person holds outright title to an individual unit, defined largely by its airspace, plus a shared interest in the common elements of the larger pr…

Confidential information

Client information a Washington broker may not disclose, defined by five statutory tests: acquired during the agency, reasonably expected to stay private, not already disclosed,…

Conforming loan

A mortgage that meets the purchase standards set by Fannie Mae and Freddie Mac, including loan-size limits. Meeting those standards lets the lender sell the loan into the second…

Consideration

Something of value that each party gives or promises in a contract, such as money, services, property, or a transfer of rights. It is one of the essential elements of a valid co…

Conspiracy to boycott

An illegal agreement among competitors to refuse to do business with a particular firm or person in order to hurt or eliminate competition; a per se antitrust violation.

Construction lag

The delay between deciding to build and finishing a project, which keeps housing supply from responding quickly to rising demand.

Construction lien

In Washington, the statutory claim a contractor, worker, or material supplier can place on a property they improved but were not paid for. It is the state's umbrella term coveri…

Construction loan

A short-term, interim loan that finances building or development costs and is secured by the property being built. The lender releases the funds in stages, called progress payme…

Constructive notice

Legal notice a person is presumed to have because information is available in the public record or through visible possession, whether or not they actually read or saw it.

Consumer Financial Protection Bureau

The federal agency, operating since July 21, 2011 under the Dodd-Frank Act, that writes and enforces the consumer mortgage rules — TILA and Regulation Z, RESPA and Regulation X,…

Consumer Protection Act

Washington's law (RCW 19.86) banning unfair or deceptive business practices. The Attorney General can enforce it, and a private party can sue for up to three times their actual …

Consummation

Under federal lending rules, the moment a borrower becomes contractually obligated on the loan, generally when the note is signed. Required disclosures are timed from this point…

Contingency

A condition written into a purchase and sale agreement that must be met before the deal is binding — a satisfactory inspection or loan approval, for example. If the condition fa…

Controlling interest

The power to direct a real estate firm's operational or financial decisions, or both. In Washington, the person holding it in a business entity must be the firm's designated bro…

Conventional loan

Any mortgage that is not insured or guaranteed by a government program such as FHA or VA. Seller financing counts as conventional. Lenders set their own qualifying standards for…

Conversion

Wrongfully taking or using someone else's money or property as if it were your own. For a licensee, using a client's or the firm's trust funds for personal purposes is conversio…

Conveyance

The legal transfer of ownership in real property from one party to another, usually carried out through a deed.

Corporate fee

A percentage of gross commission, commonly 5% to 7%, that a franchise brokerage takes off the top before the agent's split or desk fee is applied.

Corporation

A business owned by shareholders who hold stock in it. The law treats it as a separate 'artificial person,' so it can own property and shields its owners from personal liability…

Cost approach

A valuation method that estimates the price to rebuild the improvements today, subtracts depreciation, then adds land value to reach the property's worth.

Counteroffer

A response to an offer that changes one or more of its terms. It legally rejects and ends the original offer and puts a new offer on the table for the other party to accept or r…

Covenant

A binding promise written into a deed or other agreement, such as a grantor's assurance about the condition of the title being transferred.

Covenant Homeownership Program

Washington's special purpose credit program giving down-payment and closing-cost help to first-time buyers descended from those excluded by pre-1968 racial covenants. Funded by …

Covenant of quiet enjoyment

A warranty-deed promise that the grantee's possession of the property will not be disturbed by a third party's superior legal claim.

Covenants, Conditions, and Restrictions (CC&R)

Recorded private rules that govern how owners may use and maintain their property within a condominium, subdivision, or homeowners association. Buyers take title subject to them.

Credit risk

The chance that a borrower will default and fail to repay, causing the lender a loss. It is inherent in every loan and is what underwriting is designed to measure and price.

Credit score

A number, generally 300 to 850, rating how risky a borrower is based on payment history, amounts owed, history length, new credit, and credit mix. Higher scores earn better rate…

Credit union

A not-for-profit financial cooperative owned by its members rather than outside investors. Because it need not earn a profit for shareholders, it can often offer better loan and…

Critical areas

Environmentally sensitive lands that Washington's Growth Management Act requires cities and counties to protect, including wetlands, aquifer recharge areas, fish and wildlife ha…

Customer

A buyer or seller a broker assists without representing them; the broker owes honesty and fair dealing but not the full duties owed to a client.

D

De facto

Existing in actual practice or reality, even though not formally established by law. De facto segregation, for example, is separation that results from private choices and econo…

Debits and credits

Accounting entries on a settlement statement: a debit is an amount a party owes, and a credit is an amount applied in a party's favor. One side's debit is often the other side's…

Debt-to-income ratio

A qualifying measure that compares what a borrower owes each month to what they earn, shown as a percentage. Lenders use it to gauge whether someone can afford a new loan paymen…

Dedication

The gift of private land or an interest in it, such as an easement or a street, by an owner to a government or the public, often as a condition of subdividing land.

Deed

A signed written document that transfers ownership of real estate from one party to another.

Deed in lieu of foreclosure

A voluntary transfer of a property's title from the borrower to the lender to satisfy the debt without a forced sale. The lender must agree, and it may not release the borrower …

Deed of trust

A security instrument for a loan in which the borrower conveys legal title to a neutral third-party trustee, who holds it until the debt is repaid. Washington uses deeds of trus…

Deed restriction

A private limit on how land may be used, written into a deed or recorded covenant and binding on future owners. Also called a restrictive covenant or condition.

Default

Failure to keep the promises made in a contract — also called a breach. When a buyer or seller does not perform, the other party may pursue remedies such as keeping the earnest …

Deficiency judgment

A court order making a borrower personally pay the shortfall when a foreclosure sale brings less than the debt. In Washington this is barred after a nonjudicial trustee's sale o…

Delivery

The grantor's act of handing over a signed deed to the grantee with intent to transfer ownership; it must happen during the grantor's lifetime to be valid.

Department of Financial Institutions

The Washington state agency (DFI) that licenses and regulates lenders, mortgage brokers, loan servicers, and consumer-finance firms, and separately licenses escrow agents and of…

Department of Licensing

The Washington state agency (DOL) that regulates real estate licensees, sets and enforces licensing standards, issues and renews licenses, and investigates complaints. Its direc…

Depreciation

In appraisal, the loss of a property's value from any cause, such as physical wear, outdated design, or negative outside factors, measured against its cost when new.

Descent

The passing of a deceased owner's real property directly to their legal heirs when there is no valid will. Title vests in the heirs at death, before any court proceeding settles…

Designated agency

An arrangement in which two brokers at the same firm each represent opposite parties—one the buyer, one the seller—in one transaction. In Washington the supervising and designat…

Designated broker

The person the state holds ultimately accountable for a real estate firm, typically its owner or someone with a controlling interest in the business. In Washington this must be …

Desk fee

A flat charge, usually paid monthly, that a licensee pays the firm for office space and support instead of giving up a share of each commission.

Devise

A gift of real estate made through a will. The person who receives the property this way is called a devisee.

Director of Licensing

The governor-appointed official who heads Washington's Department of Licensing and holds final authority to license, supervise, and discipline the state's real estate brokers, c…

Discount points

An upfront fee a borrower pays the lender, each point equal to one percent of the loan amount, to permanently lower the mortgage interest rate.

Dodd-Frank Act

A 2010 federal law passed after the financial crisis that created the Consumer Financial Protection Bureau (CFPB) and gave it authority over mortgage-disclosure rules such as TI…

Down payment

Money the borrower puts toward the purchase price from their own funds rather than borrowing it. A larger one lowers the loan-to-value ratio, shifting risk away from the lender …

Down payment assistance

Help with a buyer's down payment and closing costs, structured in Washington's WSHFC programs as payment-deferred second mortgages — not grants — that must pair with a WSHFC fir…

Dual agency

One broker or firm representing both buyer and seller in the same sale. Washington calls it limited dual agency and permits it only with both parties' written, separately initia…

Due-on-sale clause

A loan provision that lets the lender demand immediate payment of the entire remaining balance when the property securing the loan is sold or transferred.

E

Earnest money

A deposit a buyer puts down to show a serious commitment to purchasing a property. It is usually held in a trust account and applied toward the purchase price at closing.

Easement

A legal right to use part of another person's land for a specific purpose, such as a driveway or utility line, without owning it. The owner keeps title but gives up that limited…

Elastic

Describes demand or supply that responds sharply to a change in price: when price shifts, the quantity people want or produce changes by a large amount.

Eminent domain

The constitutional power of government to take private property for public use, even over the owner's objection, as long as it pays just compensation. The taking is carried out …

Encroachment

A structure or improvement, such as a fence, wall, or roof overhang, that extends across a boundary onto a neighbor's land. It is a physical trespass that can cloud title.

Encumbrance

A claim, right, or liability that another party holds against a property, such as a lien, easement, or deed restriction. It limits the owner's use or lowers value but does not b…

Endorsement

An add-on to a title insurance policy that expands or tailors its coverage to protect against a specific risk the standard policy leaves out.

Equal Credit Opportunity Act

The federal law prohibiting discrimination in any aspect of a credit transaction based on race, color, religion, national origin, sex, marital status, age, or public-assistance …

Equitable title

A buyer's financial interest in property before legal ownership transfers, giving the buyer the benefit of any rise in value. Under a land contract the buyer holds it until the …

Equity

The share of a property's value the owner actually holds, found by subtracting the loan balance from the current market value. It grows as the loan is paid down or the property …

Errors and omissions insurance

Professional liability insurance that covers a real estate licensee or firm against claims of mistakes, negligence, or failures to act in their professional services. It pays de…

Escalation addendum

A contract attachment that automatically raises a buyer's offer in set increments to beat competing bids, up to a stated ceiling. Used in bidding wars so a buyer can stay compet…

Escalation clause

A clause in a buyer's purchase offer that automatically raises the price a set amount above the highest verified competing offer, up to a stated cap, usually on a standard assoc…

Escheat

The reversion of a person's real estate to the state government when they die without a will and without any heirs to inherit it.

Escrow

A process in which a neutral third party holds money and documents and releases them only when both sides of a contract have met the agreed terms.

Escrow instructions

Written directions that authorize a neutral third party, such as a closing or escrow agent, to complete a transaction according to the terms the parties agreed on.

Escrow officer

The licensed individual who conducts a real estate closing: collecting and reviewing lender and title documents, handling the signing, disbursing funds, and making sure the deed…

Estate

The nature and extent of a person's ownership or possessory interest in land, deciding who may control or occupy it, now or in the future.

Estate at sufferance

The lowest-ranking tenancy, arising when a tenant stays on after the lease ends without the landlord's permission. The holdover occupant can be removed but is still liable for r…

Estate at will

A tenancy with no fixed end date that either the landlord or the tenant may end at any time, usually with proper notice. It often arises informally after a fixed-term lease expi…

Estate for years

A lease that runs for a fixed, definite period with set start and end dates, such as a one-year lease. It ends automatically when the term expires, without either party giving n…

Exclusive agency listing agreement

A contract giving one firm the sole right to market a property, but letting the seller avoid paying the listing commission if the seller personally finds the buyer without the f…

Exclusive right to sell listing

A listing under which the firm earns its commission no matter who procures the buyer, even the seller. The most commonly used listing form because it protects the commission.

Exclusive right-to-sell listing agreement

A contract under which the firm earns the agreed listing-side commission when the property sells during the term, no matter who finds the buyer — even the seller. The most commo…

Executor

The person named in a will to carry out its instructions — paying the estate's debts, guiding it through probate, and distributing property to the heirs the will identifies.

Executory contract

An agreement in which one or more terms, obligations, or promises have not yet been carried out. A real estate purchase agreement is one until closing completes the sale.

Express contract

An agreement whose terms are stated directly in words, either written or spoken, so each party's promises are spelled out rather than inferred from conduct.

F

FAA Part 107

The federal rule governing commercial drone flight. Listing drone photography requires the pilot to hold a current remote pilot certificate under this rule, with airspace author…

Fair Housing Act

The 1968 federal law that bans discrimination in the sale, rental, financing, and advertising of housing based on race, color, religion, national origin, sex, disability, or fam…

Fair housing poster

A notice, bearing the Equal Housing Opportunity logo and slogan, that HUD requires real estate offices and housing providers to display where clients can see it, announcing that…

Familial status

A protected class covering households with one or more children under 18, plus pregnant people and those securing custody of a child. Fair-housing law bars treating families wit…

Fannie Mae

The Federal National Mortgage Association, a government-sponsored enterprise that buys mortgages from lenders and packages them for investors. Its purchase standards help define…

Farming

Prospecting a chosen neighborhood or contact list repeatedly over time — mailings, door knocks, market updates — so the broker becomes the area's known real estate resource and …

Fee simple

The highest and most complete form of property ownership, holding the entire bundle of rights indefinitely and freely passing to the owner's heirs.

Fee simple determinable

A form of ownership that lasts only as long as a stated condition holds true and ends automatically the moment it is violated. It often uses words like 'so long as,' 'until,' or…

Fee simple subject to condition subsequent

A form of ownership that continues even after a stated restriction is broken, ending only when the grantor actively steps in to take the property back.

Fiduciary relationship

A relationship of trust in which one party must act with loyalty, good faith, and full disclosure for another's benefit. In Washington, real estate agency instead runs on the st…

Financial instruments

Documents that carry monetary value or record a money transaction, for example promissory notes, checks, drafts, and bonds. Each represents a legally enforceable right to payment.

FIRPTA

A federal tax law requiring the buyer to withhold part of the sale price when the seller is a foreign person, so U.S. capital-gains tax on the sale can be collected. Stands for …

First position

The top spot in the order of claims against a property, giving that lender the right to be paid first from a foreclosure sale before any junior lienholder. Priority usually foll…

Fixed-rate mortgage

A home loan whose interest rate stays the same for the entire term, so the principal-and-interest payment never changes. It shields the borrower from rising rates but will not f…

Fixture

An item once personal property that has been permanently attached to land or a building, so it is now treated as part of the real estate and normally stays when the property sells.

Foreclosure

The legal process a lender uses to take and sell a property when the borrower defaults on the loan, applying the sale proceeds to the unpaid debt.

Form 17

Washington's mandatory Seller Disclosure Statement, which the seller of most residential property must complete and deliver to the buyer, listing known conditions and defects (R…

Freddie Mac

The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise. Like Fannie Mae, it buys loans from lenders to keep money flowing, adding liquidity and size to th…

Freehold estate

An ownership interest in land that lasts for an indefinite period, giving the holder the exclusive right to use and enjoy the property without a set end date.

G

General agent

An agent authorized to handle a range of a principal's affairs on a continuing basis, such as a property manager, but not every matter the principal has.

General lien

A claim that attaches to a debtor's property generally rather than to one specific parcel, such as a judgment lien or an unpaid tax lien. In Washington, RCW 4.56.190 makes a jud…

Good faith estimate

A now-retired disclosure form that estimated a borrower's settlement costs and listed the required service providers. TRID replaced it with the Loan Estimate for applications ta…

Government survey

A method of describing land by a grid of numbered townships, ranges, and sections tied to principal meridians and baselines. Also called the rectangular survey system.

Graduated payment mortgage

A fixed-rate loan whose payments start low and step up on a set schedule to a higher final level. The early payments can be so small that the balance rises for a time before it …

Grantee

The party who receives the property in a deed — the buyer in a sale. The deed transfers the seller's interest to this person, whose name is listed as the one taking title.

Grantor

The party who transfers or conveys the property in a deed — typically the seller. This person signs the deed and gives up whatever interest they held to the buyer.

Gross misdemeanor

Under Washington law, a mid-level criminal offense that is more serious than a petty offense but less serious than a felony, carrying heavier maximum jail time and fines. Many r…

Guarantee

A promise by a builder or seller to perform a specific act for the purchaser — replace a roof, repair a handrail — as distinguished from a home warranty, which is an insurance-s…

H

HB 1110

A 2023 Washington law requiring larger cities to allow middle housing, such as duplexes and fourplexes, on most residential lots, easing single-family-only zoning to add housing…

HB 1337

A 2023 Washington law requiring cities and counties to allow at least two accessory dwelling units (ADUs) per residential lot in urban growth areas, expanding options like backy…

Highest and best use

The legally permitted, physically possible, financially feasible, and most profitable way a property can be developed, the assumption an appraiser makes when estimating market v…

Home Advantage

WSHFC's flagship 30-year fixed first-mortgage program, available statewide through Commission-trained lenders with a single statewide income cap. Unlike most programs it is not …

Home equity loan

A loan for a fixed lump sum, secured by the value an owner holds in their house and repaid on a set schedule. Unlike a revolving credit line, the full amount is advanced all at …

Home inspector

A professional who performs a non-invasive, visual examination of a property and reports on the condition of its systems and structure, such as the roof, foundation, plumbing, e…

Homestead exemption

A law protecting part of the equity in a person's primary home from forced sale by most unsecured creditors. In Washington the protected amount is the greater of $125,000 or the…

House Key Opportunity

WSHFC's first-mortgage program for lower-income, first-time buyers — generally those who have not owned a principal residence in three years or are buying in a target area — wit…

Housing cooperative

A corporation that owns an entire residential building and sells shares to its members. Each member's shares carry the right to occupy a specific unit, but the corporation holds…

HUD

The U.S. Department of Housing and Urban Development, the federal agency that administers housing programs and enforces the Fair Housing Act, investigating complaints of housing…

HUD-1 Settlement Statement

A pre-2015 itemized closing form listing every charge to buyer and seller in a mortgage transaction, replaced for most loans by the Closing Disclosure under the TRID rule.

Hybrid ARM

An adjustable-rate mortgage whose interest rate is fixed for an initial period, then adjusts periodically after that. Labels like 5/1 or 3/1 show the fixed years first and how o…

I

Imbalanced commission splits

A one-sided or exploitive division of a shared commission between cooperating brokers. Because agreeing with competitors on splits can violate antitrust law, each split should r…

Implied agency

An agency relationship that arises from the parties' conduct rather than any spoken or written agreement, when they act as though the broker represents the principal.

Implied contract

An agreement created by the parties' conduct rather than by spoken or written words, recognized when denying it would unfairly enrich one party at another's expense.

Imputed knowledge

The presumption that one person knows what an associate knows because of their relationship. Washington rejects this in real estate: under RCW 18.86.100 a principal is not charg…

Independent contractor

A worker who provides services under the terms of a written agreement rather than as an employee, controlling how the work gets done and handling their own taxes. Most real esta…

Index

A published market interest rate that rises and falls with general economic conditions. An adjustable-rate loan ties its rate to one, and the lender adds a set margin to it to s…

Inelastic

Describes demand or supply that barely responds to price changes; because land cannot be quickly added, real estate demand is often this way, which can drive sharp price swings.

Initial escrow account statement

The itemization of the first year's escrow activity — deposits, tax and insurance disbursements, and the cushion — that RESPA requires at settlement or within 45 days after. The…

Installment contract

A financing arrangement in which the buyer pays the seller directly over time and takes possession, but the seller keeps legal title until the final payment. Also known as a lan…

Interest rate cap

A ceiling on how much the interest on an adjustable loan can climb. There are usually three kinds: an initial cap at the first adjustment, a periodic cap at each later one, and …

Interest-only loan

A loan whose early payments go entirely toward the finance cost, leaving the principal untouched so the balance does not fall. Later the payments rise to include principal, and …

Intestate

Describes a person who dies without leaving a valid will, so state law decides how their property is distributed to heirs.

Involuntary alienation

Transfer of title by operation of law without the owner's consent — through foreclosure, tax sale, eminent domain, adverse possession, or descent when someone dies without a will.

J

Joint tenancy

A form of co-ownership in which two or more people hold equal shares with the right of survivorship: when one owner dies, that share passes automatically to the survivors instea…

Joint venture

A business arrangement in which two or more parties pool their resources for a single project or transaction, rather than to run an ongoing business together.

Judgment

A court's final decision that resolves a lawsuit and fixes the rights and obligations of the parties, including any money one party must pay another.

Judgment lien

An involuntary general claim that attaches to a debtor's real estate once a court money judgment is recorded, letting the winning party collect from the property.

Judicial foreclosure

A court-supervised way of forcing the sale of a mortgaged property to repay a defaulted loan; the lender begins it by filing a lawsuit. It is slower than an out-of-court sale an…

Just compensation

The payment a government must give a property owner when it takes private property through eminent domain, usually equal to the property's fair market value, as required by the …

K

Kickback

A fee or thing of value exchanged for referring settlement-service business, prohibited by RESPA Section 8 along with fee splits for work not performed. No dollar amount is too …

L

Land contract

A seller-financed sale in which the buyer pays the price in installments and takes possession, while the seller keeps legal title until the balance is paid. Also called a contra…

Law of Real Estate Agency Pamphlet

The required Washington disclosure booklet explaining broker duties, agency relationships, limited dual agency, compensation, and short sales. Firms must deliver it and obtain a…

Lawful objective

The requirement that a contract's purpose be legal. An agreement that requires a party to knowingly break the law is usually void and cannot be enforced.

Lease agreement

A contract in which a property owner, the landlord or lessor, lets a tenant, the lessee, use property for a set period in exchange for rent.

Lease option

A rental contract that gives the tenant the right, but not the obligation, to buy the property at a set price during or at the end of the term. The tenant can walk away if they …

Legal description

A precise written identification of a parcel's boundaries, using a recognized survey method, exact enough to transfer the land in a deed. It is not the same as a street address.

Legal title

Ownership of property that is enforceable in court and shown in the public record. Under a land contract it stays with the seller until the buyer completes payment.

Legally competent parties

The requirement that everyone entering a contract have the legal capacity to do so, meaning they are of sound mind and at least 18 years old. A business, trust, or corporation c…

Lessee

The party who holds the right to use and occupy a property under a lease; the tenant. This person pays rent to the property owner in exchange for possession.

Lessor

The property owner who grants the right to use and occupy the property under a lease; the landlord. This party receives rent in exchange for giving up possession.

Leverage

The use of borrowed money, rather than one's own cash, to fund an investment. It magnifies both gains and losses: a small down payment can multiply returns, but also multiply th…

License

Permission to use another person's land for a specific purpose while the owner keeps control. It can be given orally, is revocable at any time, and is not an interest in the land.

Lien

A monetary claim recorded against property to secure payment of a debt, letting the creditor force a sale if the debt goes unpaid. It is a type of financial encumbrance.

Life estate

An ownership interest that lasts only for the lifetime of a named person. When that measuring life ends, the property passes to someone else, either back to the grantor or on to…

Limited dual agency

One broker representing both the buyer and the seller in the same transaction, allowed in Washington only with both parties' written consent. The broker stays neutral and may no…

Liquidated damages

An amount both parties agree to in advance as the payment owed if one side breaches the contract. In Washington, a residential purchase agreement may forfeit earnest money as li…

Liquidity

How quickly and easily an asset can be turned into cash without losing much value. Real estate is considered a low-liquidity asset because selling it takes time.

Listing agreement

A contract between a seller and a real estate firm authorizing the firm to market a property and find a buyer. It works much like an employment contract for the firm's services.

Listing broker

In Washington, the broker who represents the seller in a transaction, also called the listing agent. This broker markets the property and owes the seller the statutory duties of…

Loan Estimate

A three-page federal form a lender must give a mortgage applicant within three business days of application, laying out the loan's key terms, projected costs, and risks.

Loan-to-value ratio

How big a mortgage is compared with the price or worth of the property securing it, shown as a percentage (LTV). A $180,000 loan on a $200,000 home is 90%; a higher figure means…

M

Managing broker

A senior real estate license level in Washington that permits both serving clients directly and supervising other licensees within a firm. A managing broker answers to the firm'…

Manufactured home

A dwelling built almost entirely in a factory on a permanent steel chassis, then transported to the site — constructed to the federal HUD code. Older versions were called mobile…

Margin

The fixed percentage a lender adds on top of the index to set the rate on an adjustable loan. It stays the same for the life of the loan and represents the lender's markup. Inde…

Market value

The most probable price a property should bring in a competitive, open sale when both a willing buyer and a willing seller act knowledgeably and free of undue pressure.

Marketable title

Ownership so free of doubts, liens, and defects that a reasonable buyer would accept it without objection and a court would compel the sale to close. It need not be perfect — ju…

Material fact

Information important enough that it could affect a reasonable buyer's decision or the property's value, such as a structural problem or a lien; brokers must disclose known mate…

Metes and bounds

A way of describing land by tracing its perimeter from a point of beginning, using monuments, compass directions, and measured distances, then returning to the start to close th…

Modular home

A dwelling built in large factory-made sections (modules) that are trucked to the lot and assembled on a permanent foundation. Unlike a manufactured home, it is built to the Sta…

Mortgage banker

A lender that uses its own funds to make home loans, then either keeps and services those loans or sells them to investors.

Mortgage broker

A financing intermediary who does not lend money directly but shops a borrower's loan request among many lenders, banks, investors, and others, to find the best available terms.

Multiple listing service

A shared database, run by cooperating firms, where members post properties for sale so other brokers and the public can see them — the central marketplace that matches buyers' b…

Mutual acceptance

The point at which a buyer and seller have agreed to all terms of an offer, forming a binding contract. Many purchase timelines are counted from this date.

Mutual agreement

The shared consent of all parties to a contract and its terms, with each acknowledging that a deal has been made. It is one of the essential elements of a valid contract.

N

NAR Settlement

A 2024 legal agreement resolving antitrust claims against the National Association of Realtors. Effective August 17, 2024, it barred offers of buyer-broker pay in the MLS and re…

Negative amortization

A situation where a loan's monthly payment is too small to cover the interest owed, so the unpaid interest is added to the principal and the balance grows instead of shrinking.

Net listing

An arrangement where the seller sets a minimum amount to pocket and the broker keeps the rest as commission. Washington doesn't expressly ban it, but the broker's statutory duti…

Net proceeds

The amount a seller actually receives at closing after paying off the mortgage balance, commissions, excise tax, title and escrow fees, and other closing costs. Estimated on a n…

Non-agency

A working relationship in which a broker helps a buyer or seller without representing either one, treating that person as a customer rather than a client. The broker still owes …

Novation

The replacement of an existing contract or party with a new one, with all sides agreeing. The old obligation is discharged and the new agreement takes its place.

O

Open house

A scheduled period, usually on a weekend, when the public may walk through a listed property without an appointment — maximizing exposure and giving the hosting licensee a chanc…

Open listing

A non-exclusive arrangement in which a seller may hire several brokers at once and owes a commission only to the one who actually finds the buyer — the procuring cause. If the s…

Open-end mortgage

A loan that a borrower can draw on repeatedly up to a set limit, rather than receiving a single lump sum. A home equity line of credit is a common example, letting the owner reb…

Optionee

The party who holds the right created by an option, such as the chance to buy property at a set price, but who has no obligation to exercise it.

Origination charges

The amount a lender or mortgage broker collects to process and create a new loan, often expressed as points and listed first among the loan costs on a Loan Estimate or Closing D…

P

Payment cap

A limit, stated in dollars, on how much the monthly payment on an adjustable-rate loan can rise at each adjustment. Unlike an interest rate cap, it restricts the payment amount,…

Periodic tenancy

A rental that automatically renews for successive periods, such as month to month, with no fixed end date. In Washington a landlord may not end one except for a cause RCW 59.18.…

Personal property

Movable belongings that are not permanently attached to land, which the owner may take along when the real estate is sold. Also called chattels or personalty.

Personal representative

The person appointed to administer a deceased owner's estate, named in the will or by the court. Only this person has authority to sign a listing or purchase agreement for estat…

Point

A fee equal to one percent of the loan amount, paid to the lender at closing. On a $700,000 loan, one point costs $7,000; borrowers may pay points to lower the interest rate.

Police power

Government's authority to make and enforce laws protecting public health, safety, and welfare. It is the constitutional basis for zoning, building codes, and other land-use regu…

Possession

Physical occupancy and control of a property. The date the buyer actually takes it can differ from the closing date, so a purchase agreement states when the seller must move out…

Power of attorney

A signed legal document that authorizes one person (the agent, or attorney-in-fact) to act on another's behalf — for example, to sign a deed or closing papers when the owner can…

Pre-approval letter

A lender's conditional commitment to a maximum loan amount after a completed application, credit pull, and documentation of income, debts, and funds. Stronger than pre-qualifica…

Prepayment penalty

A fee charged when a borrower pays off a loan earlier than the schedule allows. A hard version applies to any early payoff, while a soft version applies only to a refinance, not…

Primary market

Where lenders originate real estate loans directly with borrowers, the place a mortgage is first created before it may be sold to investors in the secondary market.

Principal

The person who authorizes an agent to act on their behalf; in real estate, the buyer or seller who has engaged a broker to represent them.

Principle of substitution

The core appraisal idea that a buyer will pay no more for a property than the cost of acquiring an equally desirable alternative; it underlies all three approaches to value.

Probate

The court-supervised process of settling a deceased person's estate: proving any will, paying debts, and distributing what remains to heirs through a personal representative.

Procuring cause

The broker whose actions set in motion the unbroken chain of events leading to a completed sale, making that broker the one entitled to the commission. It is the usual test for …

Promissory note

A signed written pledge by which one person (the maker) agrees to pay a set sum to another, at a future date or in installments, often with interest. It can even serve as a form…

Property management agreement

A contract between a rental owner and a manager that spells out the manager's duties, authority, and pay, along with the owner's responsibilities, for running the rental day to …

Proration

Dividing an expense between buyer and seller by days of ownership at closing — property taxes, insurance, interest. Calculated on a 360- or 365-day year; in Washington teaching …

Prospecting

The ongoing work of finding potential clients — contacting your sphere of influence, mailing farm areas, asking for referrals, holding open houses — paired with a follow-up syst…

Protected class

A group the law shields from discrimination based on a shared trait. Washington protects more traits than federal law — adding creed, marital status, sexual orientation and gend…

Public offering statement

The disclosure document a developer must give each buyer of a new Washington condominium before the purchase contract is signed. A buyer who first receives it seven days or less…

Purchase and sale agreement

The written contract in which a buyer and seller set the price, closing date, contingencies, and other terms for transferring a piece of real estate.

Purchase-money mortgage

A loan the seller extends directly to the buyer to help fund the sale, instead of the buyer borrowing the full amount from a bank. The seller effectively becomes the lender.

Q

Qualified fee estate

An ownership interest that is complete but limited by a stated condition or event; if the condition is violated, the holder can lose title or it reverts to the grantor. Also cal…

Qualified Mortgage

A loan meeting CFPB criteria — no negative amortization, interest-only, or balloon features; term of 30 years or less; capped points and fees — that gives the lender a presumpti…

Quiet enjoyment

The right of an owner or tenant to use and possess a property in peace, free from interference by the seller, landlord, or anyone claiming a superior title. A core promise backi…

Quitclaim deed

A conveyance that transfers only whatever interest the grantor happens to hold, with no promise that the title is good or even that the grantor owns anything. Common between spo…

R

Radon

A naturally occurring radioactive gas that is odorless, tasteless, and invisible, detectable only by testing. It can seep into buildings from the ground and poses a health risk …

Ready, willing, and able buyer

A prospect who is prepared to buy on the seller's terms and has the financial means to close. Producing one whose offer the seller accepts in writing is generally what earns the…

Real Estate Brokerage Relationships Act

Washington's agency statute (chapter 18.86 RCW) defining broker duties, agency creation, and compensation rules. SB 5191, effective January 1, 2024, added the written buyer serv…

Real estate excise tax (REET)

Washington's tax on the sale of real property, figured as a graduated percentage of the selling price and normally paid by the seller. It is due at sale and must be paid before …

Real Estate Settlement Procedures Act

The 1974 federal law protecting consumers in federally related mortgage closings: it requires settlement-cost and servicing disclosures and prohibits kickbacks, referral fees, a…

Real property

Land plus everything permanently attached to it, buildings, fixtures, and growing things, along with the legal rights and privileges that come with owning the land.

Reconciliation

The final step of an appraisal, in which the appraiser weighs the value indications from the different approaches and judgment to arrive at a single supported estimate of value.

Reconveyance

The act of returning legal title to a borrower after a deed-of-trust loan is paid in full. The trustee performs it by recording a deed of reconveyance, which clears the lender's…

Recording

The act of entering a deed, mortgage, or other document into the county's public land records. In Washington, recording gives public notice and, under the state's recording act,…

Redlining

The illegal practice of denying or pricing loans, insurance, or other services worse for properties in a neighborhood because of the racial or ethnic makeup of the people who li…

Referral fee

A portion of a commission paid to a broker for sending a client to another broker; it is paid brokerage to brokerage, not to an unlicensed person.

Regulation X

The CFPB regulation implementing RESPA — settlement-cost disclosures, servicing rules, escrow limits, and the anti-kickback provisions. Older materials naming HUD as the RESPA r…

Regulation Z

The federal rule that carries out the Truth in Lending Act, requiring lenders to disclose credit terms and costs. It also grants the right of rescission on certain loans secured…

Rescission

The canceling of a contract that returns both parties to the positions they held before it was made, as if the agreement never existed.

Residential Landlord-Tenant Act

Washington's set of statutes, RCW 59.18, that governs the rights and duties between a residential landlord and tenant, covering deposits, repairs, entry, notices, and eviction. …

Residual income

The dollars left each month after housing costs, debts, taxes, and maintenance — the primary qualification test for VA loans, which treat the 41% debt-to-income figure as a guid…

Restrictive covenant

A private, recorded condition in a deed or subdivision rules that limits how an owner may use or transfer land. Historically some barred sale to people of certain races; such ra…

Reverse mortgage

A loan for homeowners age 62 or older that converts home equity into cash, with the lender paying the borrower instead of the reverse. The balance grows over time and is repaid …

Rezoning

A change to a property's official zoning classification, such as from residential to commercial, approved by the local governing body and permanently altering the uses the ordin…

Right of rescission

A borrower's three-business-day right to cancel certain home loans, such as a refinance or home equity loan on a primary residence, under the Truth in Lending Act. It does not a…

S

Sale and leaseback

A single transaction in which an owner sells a property and at once becomes its tenant, leasing it back from the new buyer. It frees up capital tied in the real estate while the…

Secondary mortgage market

Where existing loans are bought and sold by investors and institutions that did not originate them. Selling loans here frees up lenders' funds to make new loans.

Section

In the government survey system, a block of land one mile square and containing 640 acres. Thirty-six of them make up a township.

Security deposit

Money a tenant pays at move-in that the landlord may keep to cover unpaid rent or damage beyond normal wear. In Washington, the landlord must hold it in a trust account and may …

Security instrument

A document that pledges real property as collateral for a debt, giving the lender rights against the property if the borrower defaults. A mortgage or a deed of trust serves this…

Seller agency

The relationship in which a broker represents only the seller in a transaction and owes that seller a broker's statutory duties. In Washington this broker is called the listing …

Seller concession

Money the property's owner agrees to credit the buyer at closing — for closing costs, repairs, or, since the 2024 NAR changes, the buyer's broker fee — paid out of the sale proc…

Selling broker

In Washington, the broker who represents the buyer in a transaction—despite a name that sounds like the seller's side. This broker brings the buyer to the deal and owes the buye…

Setback

A zoning requirement that a building sit a minimum distance from the property line, at the front, side, or rear, leaving open space between structures and neighboring lots or st…

Short sale

A sale in which the lender agrees to accept less than the balance owed on the mortgage; the seller may still owe the shortfall afterward unless the lender forgives it.

Simple interest

A charge figured only on the original principal, ignoring compounding. You calculate it by multiplying the starting balance by the annual rate and the time in years.

Site

In a market analysis, the property being evaluated — the home the comparables are measured against. Adjustments for differences are always made to the comparables, never to this…

Source of income

The lawful money a tenant uses to pay rent — wages, benefits, or housing vouchers like Section 8. Since 2018, Washington bars landlords from refusing or penalizing a renter beca…

Special assessment taxes

Charges levied only on the properties that directly benefit from a local public improvement, such as new sidewalks, sewers, or streetlights, to help pay for that specific project.

Specific lien

A claim that attaches to a single identified parcel rather than to all of the owner's property. Mortgages, property tax liens, and construction liens are examples.

Specific performance

A court order requiring a breaching party to carry out a contract as promised instead of simply paying damages. It is common in real estate because each property is considered u…

Statute of Frauds

A rule requiring certain contracts, including those for the sale of real estate, to be in a signed writing to be enforceable. An oral real estate contract generally cannot be en…

Statute of limitations

A deadline for filing a lawsuit, counted from when a claim arises. In Washington, a suit on a written contract must be filed within six years, and on an oral contract within thr…

Steering

The illegal practice of guiding home seekers toward or away from particular neighborhoods based on a protected trait such as race or familial status, rather than letting them ch…

Subagent

An agent who works under and is authorized by another agent rather than directly by the principal; for example, a broker acting under the firm's designated broker.

Subdivision

The division of a parcel of land into smaller lots for sale or development. In Washington, splitting land into five or more lots is a subdivision; four or fewer is a short subdi…

Subject to

A transfer in which the buyer takes over the seller's existing loan payments but does not assume personal liability for the debt. The original borrower stays legally responsible…

Subsurface rights

An owner's claim to everything underground beneath a parcel, including the minerals, oil, and gas found there. These can be sold or leased separately from the land above.

Survey

A measurement of a parcel that locates and maps its exact boundaries and features. A licensed surveyor performs it, often driving stakes to mark the property lines on the ground.

T

Tenancy in common

A form of co-ownership in which two or more people each hold a separate, undivided share of the same property. Shares may be equal or unequal, and there is no right of survivors…

Term of the loan

The length of time a borrower has to repay the full debt, such as 15 or 30 years. Also called the repayment period, it affects both the monthly payment and the total interest paid.

Testate

Describes a person who has died leaving a valid will that directs how their property is distributed. The opposite is intestate, which means dying without a will.

Time is of the essence

A contract clause making the stated dates and deadlines strictly mandatory, so that missing one is a material breach rather than a minor, excusable delay.

Title

The bundle of legal rights that establishes who owns a piece of property and may sell or use it. It shows the extent of a person's ownership or other interest in the real estate.

Title company

An insurance company that examines whether the ownership rights being transferred are actually transferable and then protects the buyer against later claims or defects in those …

Title insurance

A one-time-premium policy that reimburses the holder for losses caused by defects in a property's ownership history — forged signatures, unknown heirs, recording errors, or lien…

Transaction fee

A set amount a licensee pays the firm to process each closed deal, charged on top of any commission split to cover administrative paperwork.

Transaction file

The complete record a Washington firm must keep for each transaction — agreements, receipts, closing statements, disclosures, and material correspondence — retained at least thr…

Treble damages

A court award of three times the amount of a plaintiff's actual losses, allowed by certain statutes to punish and deter wrongdoing. Under consumer-protection law, a licensee's u…

TRID

The disclosure regime, effective October 3, 2015, that merged the old TILA and RESPA mortgage forms into the Loan Estimate — due within three business days of application — and …

Trust account

A separate, DOL-regulated fund a firm keeps to hold money belonging to others — earnest money and deposits — apart from its own operating cash. Washington requires deposit by th…

Trustee

A neutral third party who holds or manages property or assets for someone else's benefit — for example, holding the deed under a deed of trust, or administering a debtor's asset…

Truth in Lending Act

The 1968 federal law requiring meaningful disclosure of credit terms so consumers can compare offers. Implemented by Regulation Z, it governs APR disclosure, credit advertising,…

U

Unauthorized practice of law

Doing work reserved for licensed attorneys — drafting contract clauses or advising on legal rights — without a law license. A Washington broker may fill in blanks on approved st…

Unilateral contract

A contract in which only one party makes an enforceable promise, becoming binding only when the other party actually performs the requested act. A reward offer is a common example.

Unlawful detainer

A tenant's wrongful holding of possession after a valid termination or eviction notice has expired; it is also the name of the court action a landlord files to remove the tenant…

Unlicensed assistant

A support worker who helps a broker with tasks that do not require a license, such as clerical work or scheduling. In Washington, this person may not perform activities the law …

Unsecured debt

A debt backed only by the borrower's promise to repay, with no collateral pledged. Because the lender has nothing to seize on default, most credit card balances and similar loan…

Usury

The practice of charging an illegally high rate of interest on a loan. In Washington, the general maximum is the higher of 12 percent per year or 4 percentage points above the 2…

V

VA loan

A home mortgage guaranteed by the U.S. Department of Veterans Affairs and available to eligible veterans and service members, typically with no down payment and no private mortg…

Vacancy rate

The percentage of a property's units or space sitting empty at a given time; unlike the vacancy factor, it does not include losses from unpaid rent.

Valid contract

An agreement that contains every required element—offer, acceptance, consideration, legal capacity, and a lawful purpose—and is therefore fully enforceable in court.

Variance

Local permission to deviate from a zoning rule, such as a setback or height limit, granted when strict enforcement would cause the owner an unusual hardship. It does not change …

Vicarious liability

Responsibility one party bears for another's wrongful acts due to their relationship, such as a principal for an agent. In Washington, RCW 18.86.090 limits this: a principal is …

W

Washington Law Against Discrimination

The state civil-rights statute, codified at RCW 49.60, that bars bias in housing and real estate. Its protected classes exceed federal law — adding marital status, sexual orient…

Washington State Housing Finance Commission

The self-supporting state agency, created in 1983, that finances affordable homeownership through participating private lenders — it runs Home Advantage, House Key Opportunity, …

Washington State Human Rights Commission

The Washington state agency (WSHRC) that enforces the state's anti-discrimination laws and handles most fair-housing complaints filed in Washington, investigating and resolving …

Washington State Real Estate Commission

An advisory body of six members appointed by the governor and chaired by the Department of Licensing director. It advises the director on rules and licensing but does not itself…

Water rights

The legal rules that decide how a property owner may draw on and use the lakes, streams, or underground sources tied to their land. Each state runs its own system, so what a par…

Wetland

Ground that is saturated with water either seasonally or year-round, such as a marsh, swamp, or bog. It is the most common type of protected environmentally sensitive area.

Will

A written, witnessed document that directs how a person's property and assets are to be distributed after death and names who should carry out those instructions.

Written services agreement

The contract Washington law requires between a real estate firm and its principal before the firm can receive compensation. It must state the term, appointed broker, exclusivity…

Y

Yield

The rate of return an investor requires on the money put into a property, expressed as a percentage; it is used to convert future income into present value.

Z

Zoning

Local government rules that divide land into districts and control what may be built and how each parcel may be used, such as for residential, commercial, or industrial purposes.