50 Must-Know Phrases & Definitions for the Michigan Real Estate Exam!

These definitions and phrases will most certainly find their way on to the Michigan Real Estate Exam. So, if you’re studying for the MI exam and want a little help, read through this list, and then check out the practice questions we’ve included for each term. Good luck!

• Encumbrance
  • a) What is an encumbrance?
    • A real estate tax.
    • A claim, lien, charge, or liability attached to real property.
    • A type of legal deed.
    • A property improvement.
      
  • Answer: 2) A claim, lien, charge, or liability attached to real property.
    
  • Explanation: An encumbrance is a claim, lien, charge, or liability attached to and binding real property, which may lessen its value or obstruct its use. Examples of encumbrances include liens, mortgages, easements, and restrictive covenants.
• • b) How is a lien typically resolved?
    • By transferring ownership of the property to the creditor.
    • By refinancing the property.
    • By releasing the lien upon payment of the debt.
    • By ignoring it and hoping it goes away.
  • Answer: 3) By releasing the lien upon payment of the debt.
  • Explanation: A lien is a type of encumbrance that gives the creditor the right to sell the property to pay off a debt. Liens can be resolved by releasing the lien upon payment of the debt, by negotiating a settlement, or by foreclosing on the property.

• Explanation: A lien is a type of encumbrance that gives the creditor the right to sell the property to pay off a debt. Liens can be resolved by releasing the lien upon payment of the debt, by negotiating a settlement, or by foreclosing on the property.
• c) Can an encumbrance be removed from a property?
• Yes, but it requires a court order.
• No, encumbrances are permanent.
• Yes, but only if the owner sells the property.
• Yes, but only if the owner pays off the debt in full.
• Answer: 1) Yes, but it requires a court order.
• Explanation: An encumbrance can be removed from a property through various legal processes, such as releasing a lien or obtaining a court order to extinguish an easement.
• Easement
• Title
• Deed
• Appraisal
• Mortgage
• Brokerage
• Closing
• Commission
• Zoning
• Escrow
• Lease
• Encroachment
• Equity
• Inflation
• Principal
• Interest
• Amortization
• Fixture
• Lien
• Market value
• Property management
• Real estate investment trust (REIT)
• Real property
• Tenancy in common
• Tenancy by the entirety
• Joint tenancy
• Tax assessment
• Tax lien
• Property tax
• Homeowner association (HOA)
• Home inspection
• Lead-based paint disclosure
• Offer
• Counteroffer
• Acceptance
• Earnest money deposit
• Breach of contract
• Listing agreement
• Buyer’s agency agreement
• Dual agency
• Exclusive agency
• Exclusive right-to-sell agreement
• Multiple listing service (MLS)
• Comparative market analysis (CMA)
• Real estate commission
• Real estate license
• Real estate transaction
• Real estate appraisal process
• Real estate contracts