Real Estate Vocabulary (Guide to
Passing the PSI Real Estate Exam)
Questions and Answers | Latest Version
| 2025/2026 | Correct & Verified
What is the definition of "real property"?
✔✔ Land and anything permanently attached to it, such as buildings and improvements.
What does the term "chattel" refer to in real estate?
✔✔ Personal property that is movable, such as furniture or appliances.
What is the meaning of "fee simple absolute" in property ownership?
✔✔ The highest form of ownership in real estate, with complete control and no limitations.
What is a "mortgage"?
✔✔ A legal agreement in which a lender provides funds to a borrower to purchase property, with
the property serving as collateral.
What does the term "encumbrance" mean in real estate?
1
,✔✔ A claim, lien, charge, or liability attached to property that may affect its transferability or
value.
What is "eminent domain"?
✔✔ The government's right to take private property for public use, with compensation to the
owner.
What is the meaning of "deed of trust"?
✔✔ A legal document that transfers title of real property to a trustee as security for a loan.
What is a "listing agreement" in real estate?
✔✔ A contract between a property owner and a real estate broker, authorizing the broker to sell
the property.
What is an "easement"?
✔✔ A legal right to use another person’s land for a specific purpose, such as a right of way.
What does "real estate commission" refer to?
2
,✔✔ The fee paid to real estate agents for their services in facilitating a transaction, typically a
percentage of the sale price.
What is meant by "title insurance"?
✔✔ A policy that protects the buyer and lender against defects or disputes related to the title of
the property.
What does the term "property tax" mean?
✔✔ A tax imposed by a local government on the value of a property, typically used to fund local
services.
What is a "zoning ordinance"?
✔✔ Local laws that regulate land use, including the type of structures allowed and their
permitted uses.
What does "cloud on title" mean in real estate?
✔✔ A claim or encumbrance on a title that may affect the transferability of the property.
What is a "real estate appraisal"?
3
, ✔✔ An evaluation of a property’s value by a licensed appraiser based on factors such as
location, size, and condition.
What is the difference between "joint tenancy" and "tenancy in common"?
✔✔ Joint tenancy involves equal ownership with right of survivorship, while tenancy in common
allows ownership to be divided among owners without survivorship rights.
What is "accretion" in real estate?
✔✔ The gradual addition of land to a property through natural forces, such as the deposition of
sediment by a river.
What does "capital gain" mean in real estate?
✔✔ The profit made from the sale of a property, calculated by subtracting the purchase price and
selling expenses from the sale price.
What is the term "prorate" used for in real estate transactions?
✔✔ The process of dividing financial obligations, such as property taxes or utilities, between
buyer and seller based on the closing date.
4
Passing the PSI Real Estate Exam)
Questions and Answers | Latest Version
| 2025/2026 | Correct & Verified
What is the definition of "real property"?
✔✔ Land and anything permanently attached to it, such as buildings and improvements.
What does the term "chattel" refer to in real estate?
✔✔ Personal property that is movable, such as furniture or appliances.
What is the meaning of "fee simple absolute" in property ownership?
✔✔ The highest form of ownership in real estate, with complete control and no limitations.
What is a "mortgage"?
✔✔ A legal agreement in which a lender provides funds to a borrower to purchase property, with
the property serving as collateral.
What does the term "encumbrance" mean in real estate?
1
,✔✔ A claim, lien, charge, or liability attached to property that may affect its transferability or
value.
What is "eminent domain"?
✔✔ The government's right to take private property for public use, with compensation to the
owner.
What is the meaning of "deed of trust"?
✔✔ A legal document that transfers title of real property to a trustee as security for a loan.
What is a "listing agreement" in real estate?
✔✔ A contract between a property owner and a real estate broker, authorizing the broker to sell
the property.
What is an "easement"?
✔✔ A legal right to use another person’s land for a specific purpose, such as a right of way.
What does "real estate commission" refer to?
2
,✔✔ The fee paid to real estate agents for their services in facilitating a transaction, typically a
percentage of the sale price.
What is meant by "title insurance"?
✔✔ A policy that protects the buyer and lender against defects or disputes related to the title of
the property.
What does the term "property tax" mean?
✔✔ A tax imposed by a local government on the value of a property, typically used to fund local
services.
What is a "zoning ordinance"?
✔✔ Local laws that regulate land use, including the type of structures allowed and their
permitted uses.
What does "cloud on title" mean in real estate?
✔✔ A claim or encumbrance on a title that may affect the transferability of the property.
What is a "real estate appraisal"?
3
, ✔✔ An evaluation of a property’s value by a licensed appraiser based on factors such as
location, size, and condition.
What is the difference between "joint tenancy" and "tenancy in common"?
✔✔ Joint tenancy involves equal ownership with right of survivorship, while tenancy in common
allows ownership to be divided among owners without survivorship rights.
What is "accretion" in real estate?
✔✔ The gradual addition of land to a property through natural forces, such as the deposition of
sediment by a river.
What does "capital gain" mean in real estate?
✔✔ The profit made from the sale of a property, calculated by subtracting the purchase price and
selling expenses from the sale price.
What is the term "prorate" used for in real estate transactions?
✔✔ The process of dividing financial obligations, such as property taxes or utilities, between
buyer and seller based on the closing date.
4
