Key Terms - Level 5

Question 1

Trade Name

Answer 1

A person or business entity’s unofficial or fictitious name.

Question 2

Blind Advertisement

Answer 2

An ad in which a license holder attempts to promote or solicit real estate activity without disclosing the fact that they are a license holder.

Question 3

Point of Contact Information

Answer 3

A brokerage’s or an individual’s contact information in an advertisement, such as relevant addresses or fax and telephone numbers.

Question 4

Deposit

Answer 4

A payment made from one party to another that shows sincerity to fulfill the transaction, a.k.a. binder deposit or good-faith deposit.

Question 5

Commingle

Answer 5

The illegal act of mixing personal funds with a client’s funds.

Question 6

Conflicting Demands

Answer 6

Opposing, unresolvable demands made by the buyer and seller in a transaction regarding escrowed property disbursement.

Question 7

Conversion

Answer 7

A license holder’s personal use or misuse of money belonging to others.

Question 8

Arbitration

Answer 8

A process whereby the parties to a dispute present their conflict to a disinterested third party and honor the third party’s binding judgment.

Question 9

Litigation

Answer 9

The legal process of resolving a dispute in court that involves an interpleader or declaratory judgment.

Question 10

Mediation

Answer 10

An informal negotiation held by an independent third party to settle a dispute such as conflicting demands.

Question 11

Earnest Money

Answer 11

Funds paid to confirm or commit to a contract.

Question 12

Escrow Account

Answer 12

Accounts that allow for a process in which funds and/or financial documents are held by a disinterested third party on behalf of the other two parties in the real estate transaction until specific conditions are satisfied.

Question 13

EDO

Answer 13

Escrow Disbursement Order - the FREC’s decision regarding who should receive disputed escrow funds held in a brokerage escrow account.

Question 14

Good-Faith Doubt

Answer 14

A doubt that is honest, honors the business contract, is free of fraudulent motive, and implies an intent to fulfill the contract.

Question 15

Interpleader

Answer 15

A court procedure meant to resolve a dispute when a party holds funds they know they do not own, but to which multiple other parties lay claim.

Question 16

Kickback

Answer 16

A payment made to a licensee for a service unrelated to the real estate transaction or a service that does not fall under the responsibility of the licensee.

Question 17

Limited Liability Company (LLC)

Answer 17

A business entity in which parties are protected against personal liability for business debts.

Question 18

Limited Liability Partnership (LLP)

Answer 18

A business entity in which parties are protected from some liabilities while retaining other liabilities.

Question 19

Corporation (INC)

Answer 19

A legally created business entity representing the interests of more than one person.

Question 20

General Partnership

Answer 20

A business entity consisting of two or more parties in which all co-owners actively share power, responsibilities, and profit.

Question 21

Sole Proprietorship

Answer 21

Ownership of a business by a lone individual.

Question 22

Ostensible Partnership

Answer 22

The appearance that a partnership exists between two parties even though no partnership was intentionally created.

Question 23

Professional Association (PA)

Answer 23

Two or more individuals who come together as a business corporation to provide a professional service to others.

Question 24

Limited Partnership

Answer 24

A business entity composed of both general and limited partners. the general partners manage the business and assume most of the risk, while the limited partners are passive investors with limited risk.