MA Real Estate Pre-license Study guide – Flashcards
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Acceleration Clause
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The clause in a mortgage that can be enforced to make the entire debt due if the mortgage defaults on any covenant in the mortgage
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Accession
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Acquiring land from deposit of soil washed up from a river, lake or ocean
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Ad Valorem Tax
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A tax levied "according to value". Refers to real estate taxes in relation to value assessed on the property for tax purposes
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Alienation
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The transferring of property to another.
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Allodial system
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Land ownership is held free of any rents or services due to the government. Contrasting system is feudal system
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Amortized Loan
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A loan which applies both principal and interest to the payment, made periodically
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Antitrust Laws
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Laws designed to preserve free enterprise in the marketplace by making certain activities illegal. "Price fixing" is one such illegal activity where companies conspire to set prices to create unfair competition
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Assumption
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Taking over existing mortgages(s) and becoming personally liable for the debt, including all payments
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Attachment
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An involuntary lien against property as action to secure payment for debt incurred
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Avulsion
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The sudden tearing away of the land affecting the size and condition of the land
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Balloon Payment
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A final payment on the mortgage that becomes due prior to full amortization of the loan
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Bargain and Sale Deed
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A deed that carries no warranties but implies that the grantor has the power and right to transfer title. Similar to a quitclaim deed
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Benchmark
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A permanent reference point established for use by land surveyors to measure elevations
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Beneficiary
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The person whom a trust is established, the recipient of the activity in a trust
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Bill of Sale
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The mechanism to transfer personal property
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Binder
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Also known as "offer to purchase", places in writing initial terms of a purchase
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Blockbusting
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An illegal practice of inducing an owner to sell based upon the fear of the entry into the neighborhood of persons of a particular race or nation origin
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Boot
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Money or property given to make up for value inequities in an exchange of property
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Breach
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Violation of a term, or terms in a contract
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Brokerage
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The bringing together of parties in a real estate transaction
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Capital Gain
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Profit from the sale if an asset
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Capitalization
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The estimation of value based upon the use of a mathematical formula in which the net operating income of a property is divided by the expected rate of return on a similar type of investment
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Cash Flow
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The net spendable income from an investment. Income remaining after deducting all operating and fixed expenses from the gross income
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Chain of Title
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The succession of title changes of a property
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Closing Statement
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A detailed accounting of all debits and credits in a real estate transaction, a prper posting of all cash due and owed
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Cloud on Title
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Anything that may impair the title of a property, or the condition of a title
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Cluster
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A group of housing sites within a development closer together than normal with the remaining land being dedicated to open space
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Commission
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Payment to a broker for services rendered in the course of real estate activities
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Comparables
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Properties that are used to compare to a subject property in the formation of a valuation estimate
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Competent parties
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Legal terminology indicating a party's ability to contract. Sound mind, legal age and no duress are examples of competent parties
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Competitive Market Analysis
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An analysis of the proper value range of a property based upon sales of comparable properties
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Condemnation
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The process of government taking of land under eminent domain
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Constructive notice
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Notice of a transfer of property through public recording
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Counteroffer
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An offer made in reply to a previous offer made. A counteroffer makes the previous offer rejected and void
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Credit
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On the closing statement, an amount owed to a person, or an amount needed to be paid
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Debit
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On the closing statement a debit shows an amount being charged, or the amount needed to be paid
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Deed Restriction
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Clause in a deed limiting the use of a property
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Deed
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The document that transfers all rights, title and interest in real property
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Default
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The non-performance on a duty or obligation, breach of contract
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Defeasance Clause
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A clause in a mortgage that releases all security interest in a property by a mortgage upon satisfaction of the terms of the mortgage by the mortgage by the mortgagor
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Duress
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Under pressure to perform an act, Forced to do something against your will
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Earnest Money
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Money deposited by a buyer under contractual terms, forfeited upon default, credited upon sale
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Emblements
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Frusctus industriales. Emblements are annual crops produced on real property and are considered to be items of person property
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Environmental Obsolescense
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Also known as external/economic obsolescence. Factors that affect a property's value caused from outside sources
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Erosion
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The gradual wearing away of land through natural forces
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Estoppel
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The creation if an agency relationship by implying that an agency exists and someone relies on that representation
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Eviction
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The legal process to remove someone from possession of real estate
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Exchange
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A transaction in which "like properties" are exchanged as part or all of the consideration.
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External Obsolescence
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Depreciation resulting from outside forces and factors
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Fraud
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Deception intended to cause someone to buy or sell by misrepresenting material facts
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General Lien
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A type of lien that can affect both real and personal property
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General Warranty Deed
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A deed in which the grantor warrants good and marketable title. A general warranty deed offers the greatest protection against to a guarantee than any other type of deed. AKA warrantee deed
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Ground Lease
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A lease of land only
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Habendum Clause
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In a deed, beginning with the words "to have and to hold", defining the extent of ownership being granted
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Heir
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One who may inherit an interest in land
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Homestead
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The principal residence protected against certain debts and creditors by statute
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Hypotheication
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The pledging of real property as security for a debt incurred
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Improvement
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Anything added to land to enhance the value of the property
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Independent Contractor
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In contrast to an employer-employee relationship, an independent contractor is empowered to attain a result without specific control as to how the result is attained. A popular form of broker/salesperson business relationship
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Installment Contract
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A contract for the purchase of property whereby the purchase price is paid in installments but the title does not transfer from the seller to the buyer until the final installment payment has been paid. Also known as a "land contract" or "contract of sale"
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Interest
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A charge for the use of money
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Intestate
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Dying without a will or without heirs
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Judgement
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The decision of a court in which the rights of a creditor are enforced again a property. A lien against the property
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Land
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The earth's surface, extending downward to the center of the earth and upward to infinity
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Leasehold Estate
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A right to possession of real property. Non-freehold estate
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Leverage
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The use of borrowed funds to acquire property
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Lis Pendis
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A recorded document that gives notice of action against the property
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Marketable Title
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Good and clear title, free from title defects
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Mechanic's Lien
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A lien created against property in favor of anyone having performed work on the property, with money remaining owed
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Metes and Bounds
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A method of describing land that uses linear measurements and compass directions. MASS
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Minor
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Someone who has not yet reached the age of maturity
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Monument
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A fixed marker or point used to established boundaries
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Offer
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A proposal made for the purchase of property
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Party Wall
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A wall located at the boundary line that is used as a common wall between between two land owners
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Planned Unit Development PUD
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A mixed use of land in a development including such uses as residential, commercial, recreational etc. Efficient use of a particular tract of land
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Point of Beginning
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The starting point in the description of land in a deed.
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Power of Attorney
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A written instrument that gives authorization to a person to represent the interests of another person to an extent indicated in the instrument
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Prepayment Penalty
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A charge to a mortgagor who pays off loan early
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Priority of Lien
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The position of a creditor, usually based upon time of recording of the lien. Taxes and first mortgage liens have priority over other recorded liens
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Probate
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A process by which a court determines who has the rights and interests in a deceased person's property
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Proration
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Calculations made at the closing to account for money owed to, or owed from, the parties as of the date of closing
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Puffing
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Exaggerating the benefits of features of the property
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Ready, Willing and Able Buyer
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One who is prepared to purchase a property in all respects
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Rectangular survey system
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A method of describing land established by the federal government in 1785, utilizing meridians and baselines as reference
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Redemption
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The right of a defaulted party to recover the property by paying back fees and taxes
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Redlining
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The illegal practice of a lending institution that denies a loan based upon the location of the property
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Regulation Z
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From the Truth in Lending Act, the provision that requires lenders of residential mortgages to disclose the true and full cost of borrowing
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Rent
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The consideration given to the leer by the lessee for the use of the property
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Restriction
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A limitation placed on a property recited in the deed to the property
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Section
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A portion of a township under the rectangular survey system, measuring one square mile or 640 acres
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Severalty
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Individual, singular ownership
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Specific Lien
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A lien attaching to one specific property
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Statute of Frauds
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In order for a contract for purchase and sale of real estate to be enforceable, it must be in writing
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Steerin
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The illegal practice of steering a home buyer to a specific location
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Subsurface Rights
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That portion of land, rights and interests located beneath the surface of the land
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Survey
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The process by which land areas are calculated and boundaries are determined
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Testate
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To die with a valid will
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Title Insurance
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An insurance policy that insures against loss by reason of title defects
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Township
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A township contains 36 sections with an area of six miles square or 36 square miles
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Transfer Tax
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Tax stamps required upon transfer of title. Usually paid by the seller of property. In MA referred to as "deed excise stamps"
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Trust
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A fiduciary relationship whereby property is conveyed to a trustee who maintains the value of the trust assets for the benefit of the beneficiary
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USAR
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Uniform Residential Appraisal Report
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Usury
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The lending of money at rates in excess of those permitted by law
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Will
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A witnessed legal document that recites the intentions of the deceased
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Real Estate
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Land + improvements
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Real Property
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Land + improvements + benefits + rights
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Joint Tenancy
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Right of survivorship, heirs get nothing
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Tenancy in Common
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No right of survirorship. Interest goes to heirs
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Tenancy by the Entirety
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Only applies to married couples
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Lis Pendis
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A notice that is recorded at the registry of deeds that litigation is pending
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Escheat
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Involuntary transfer of property to the government when a person dies without a will or without an heir
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Fee Simple
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Greatest level of interest in land recognized by law
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Fee Simple Determinable
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Type of estate subject to the occurrence of a specific event. Used only has hunting lodge and nothing else
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Fee Simple on Condition
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Subject to a condition that prohibits activity. Do whatever you want but drinking is not allowed
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Chattel
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Personal property, personalty
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Trade Fixture
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Owned by tenant and attached to the building being rented for use in conducting business. Must be removed by tenant otherwise it becomes part of real property by accession
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Easement Appurtenant
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When an easement benefits land
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Easement in Gross
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When an easement benefits a company or entity
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Easement by necessity
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Created by operation of law. An easement that grants access over the land of another in the case of a landlocked parcel.
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easement by prescription
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When a person had made use of the land of another for a period of 20 years
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Tacking
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Use of someone else's land for 10 years by current owner, and 10 years by previous owner
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Encumbrance
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Anything that affects the title of the property
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License
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A personal privilege to enter the land of another for a specified purpose. Think ballpark ticket
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Riparian Rights
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waterfront homes of rivers and streams
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Littoral rights
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Deal with owners who border large navigable lakes and oceans. Ownership is to the high water mark
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Adverse Possession
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Open, notorious, continuous and adverse use of another;s property without permission or authorization for 20 years can results in an involuntary transfer of property
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Foreclosure
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Statutory right of a lender to take property for non-payment of debt
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Estate for Years
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A type of leasehold with a definite start and end date. Does not automatically renew. has nothing to do with years, the term is for any length of terms agreed upon
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Estate from period to period
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This type of leasehold can be for any agreed upon time period. It automatically renews unless lessor or lessee takes action otherwise. Notice must be given to terminate
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Estate at will
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Month to month tenancy. No ending date, uncertain duration. To terminate, notice must be given equal to the rental period but no less than 30 days
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Estate at Sufferance
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Tenant stays after lease has expired
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Gross Lease
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Tenant pays only rent and landlord takes care of everything
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Net lease
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Tenant pays for some or all of the expenses associated with the property in addition to rent
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Percentage Lease
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Rent is based on the income that a tenant can produce
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Ground Lease
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Tenant leases the land only. Think CVS or many 55+ communities
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Waste
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Damage to the property
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Eviction Suit
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The legal process of removing a tenant
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c.183A
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Establishes standards that must be followed in order to properly and legally form a condo
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6(d) Certificate
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Document that shows all condo fees are paid up to date
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Contract
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A voluntary agreement between parties who have the legal authority to perform and act backed by consideration
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Bilateral Ccontract
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Both parties have to perform
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Unilateral Contract
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Only one party has to perform. Think reward for something returned
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Elements of Contract
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In order for a contract to be valid and enforceable it must contain: Offer and acceptance, Consideration, Competent Parties, Legal Purpose
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Default
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Breach of contract
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Suit for Specific Performance
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If seller defaults, buyer can sue seller to live up to terms of the contract. buyer may recover money for damages from seller by filing suit. Seller may also file a suit if buyer defaults, and force the buyer to buy. May also be entitled to COMPENSATORY DAMAGES
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Equitable Title
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When the P&S is signed by both parties the buyer acquires and interest in the land of the seller
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Chapter 93A
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Consumer protections law
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Conveyance
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When real property is transferred, written evidence is provided in order to prove that a transfer of all right and interest has taken place
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Devise
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Real property given by a will
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Appraisal
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An opinion or estimate of value, not a determination of price, supported by valuations of methods
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Equity
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The difference between the value of the property and the remaining principal owed
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Graduated Payment Mortgage
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A type of mortgage where payments start out lower in the early years and increase later
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Reverse Annuity Mortgage
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Payments are made to the borrower by the lender
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Federal Housing Administration
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Created in 1934 as part of the National Housing Act. Does not loan money for mortgages but it insures loans.
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HUD
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Department of Housing and Urban Development
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Conventional Loans
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Requires no special insurance or guarantee from private insurance companies or government
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RESPA
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Real Estate Settlement Procedures Act. Insures that borrowers involved with the purchase of a home needing a a new first mortgage will have the knowledge of all costs associated with the purchase
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Listing Contract
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A binding agreement that sets forth the terms and conditions of the employment of a broker, along with the duties and responsibilities of both parties
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Open Listing
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The owner can hire as many brokers as he wants, with the only broker who made the sale entitled to a comission
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Exclusive Agency
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Only one broker is authorized to sell the property, being named an exclusive agent. The seller retains the right to sell the property by himself without owing the broker a commission.
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Exclusive Right to Sell
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Only one broken is given sole authority to represent the seller. No matter who sells the property, broker or owner, broker still receives a commission
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Regulation 254
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Requires all licensed real estate brokers and salespersons to disclose to prospective purchasers, at the time of the first meeting, that the brokers/salespersons represent the seller in the marketing, negotiating, and sale of the property, unless otherwise disclosed
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Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
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Requires that any appraisal used in connection with a federally related transaction be performed by a competent individual whose professional conduct is subject to supervision and regulationq
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Value
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Can be defined as the present worth of future benefits arising from real property ownership
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Elements that need to be present in order for real estate to have value
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Demand Utility Scarcity Transferability
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Market Value
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Most probable price which which a property will sell for in an open and competitive market
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Market price
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The actual price paid, in terms of cash
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Highest and Best Use
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The greatest and most profitable allowable use for the property today and in the reasonably near future. This analysis is one of the first steps in the appraisal process
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Plottage
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Combining two or more parcels of land may result in a greater value as one large lot than the sum of value of the two smaller lots
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Assemblage
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The process of combining lots
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Substitution
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This principle holds that the options of competitive properties available to purchasers tend to set the maximum price a purchaser is willing to pay by substituting one property for another
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Supply and Demand
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Excess supply with weak demands tend to diminish value
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Cost Approach Formula
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Land value + depreciated building value + site value
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Reproduction Cost
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the cost of constructing, at today's prices, an exact duplicate of the subject property's amenities and features
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Replacement Cost
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the cost of constructing, at today's prices, a building with similar utility and functionality
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Physical Deterioration
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The wearing out of the improvements, or the putting off of maintenance
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Functional Obsolescence
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Depreciation due to poor design or layout,
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Value by Income Approach
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=Net operating income/capitalization rate
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Chapter 151B
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Massachusetts Fair Housing Laws
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Civil Rights Act of 1866
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The law that prohibits discrimination of race only
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Title VIII of the Civil Rights Act of 1968
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Aka Federal Fair Housing Act. Prohibits discrimination based on race, sex, religion, ethnicity
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Massachusetts Commission Against Discrimination (MCAD)
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The agency that's responsible for enforcing the provisions of the Mass Fair Housing Law
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Urea Formaldehyde Foam Insulation (UFFI)
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Banned in MA in 1979 because, in installed improperly, it can be of danger to people who are sensitive to its main component
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Chapter 21E
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Regulates environmental hazards dealing with hazardous waste
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MGL Chapter 13
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Real Estate License Law
