Exam glossary
Illinois real estate exam glossary
244 terms the Illinois broker exam actually tests, each defined for the exam rather than for a dictionary. Search for the one you need, or open the area you are working through.
Last updated: August 22, 2026
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The national paper100 scored questions, 70% to pass
Property Ownership10 questions4 terms
- Defeasible feeA defeasible fee is fee-simple ownership that can end when a deed condition or limitation operates.
- Life estateA life estate is a present freehold estate that lasts for the life of a named measuring person.
- Ownership in trustOwnership in trust means a trustee holds and administers property under a trust arrangement for one or more beneficiaries.
- TimeshareA timeshare divides recurring use of accommodations by time.
Land Use Controls5 questions13 terms
- Building codeA building code is an enacted public-safety standard governing covered construction, alteration, repair, occupancy, and building systems.
- CC&RsCC&Rs are covenants, conditions, and restrictions, usually contained in a recorded declaration that creates private land burdens and reciprocal community rights.
- CondemnationCondemnation is the legal proceeding used to exercise eminent domain.
- Deed restrictionA deed restriction is a private limitation or obligation affecting real property, commonly created in a deed, declaration, plat, or separate recorded covenant.
- Eminent domainEminent domain is the authorized power to take or damage private property for public use without the owner's consent upon payment of just compensation.
- EscheatEscheat is the legal transfer of property to government when no private owner is entitled or capable of taking it.
- HOA bylawsHOA bylaws govern the association's internal decision-making, including boards, officers, elections, meetings, notice, quorum, voting, records, budgets, contracts, and administrative procedures.
- Nonconforming useA legal nonconforming use was lawful when established but no longer complies with later zoning.
- Police powerPolice power is government's authority to regulate property and conduct to protect public health, safety, morals, comfort, and welfare.
- Property taxProperty tax is a value-based local tax on real property. For a standard exam calculation, move from market value to assessed value, apply equalization to reach EAV, subtract applicable exemptions, and multiply taxable EAV by the composite tax rate.
- Special assessmentA special assessment is a governmental charge against property that receives a special benefit from a specific local improvement.
- VarianceA variance is limited, property-specific relief from strict application of a zoning regulation when the required practical-difficulty or hardship standards are proved.
- ZoningZoning is government's division of land into districts with rules for use, density, height, bulk, setbacks, lot coverage, open space, and other development characteristics.
Valuation and Market Analysis8 questions18 terms
- AppraisalAn appraisal is an independent and impartial value opinion for an identified property interest, intended use, intended users, value definition, and effective date.
- Appraisal processThe appraisal process moves from assignment acceptance and problem identification to scope of work, subject and market research, data verification, market and highest and best use analysis, applicable sales, cost, and income approaches, reconciliation, reporting, review or correction, and workfile retention.
- Automated valuation model (AVM)An AVM is a computerized model that estimates property value from data and mathematical relationships.
- Broker price opinion (BPO)A broker price opinion is an Illinois broker or managing broker's written estimate or analysis of the probable selling price of a particular real estate interest.
- Comparative market analysis (CMA)A comparative market analysis is an Illinois broker or managing broker's written analysis or opinion about pricing, marketing, or financial aspects of a specified real estate interest.
- Cost approachThe cost approach estimates property value as land value plus the current replacement or reproduction cost of improvements, less all accrued depreciation.
- DepreciationAppraisal depreciation is the loss in improvement value from all causes: physical deterioration, functional obsolescence, and external obsolescence.
- External obsolescenceExternal obsolescence is value loss caused by an influence outside the property or the owner's control.
- Functional obsolescenceFunctional obsolescence is value loss caused by an internal design, feature, capacity, layout, or utility problem.
- Income approachThe income approach converts expected property income into a present value indication.
- Licensed appraiser requirementIllinois generally prohibits a person from developing a real estate appraisal, practicing or advertising as an appraiser, or using protected appraisal titles without an appraisal license.
- Market priceMarket price is the amount agreed to or paid in a specific real estate transaction.
- Market valueMarket value is the most probable price a specified property interest should bring as of a stated date under the market conditions in the applicable definition.
- PlottageAssemblage is the process of acquiring and combining adjacent parcels.
- Principle of substitutionThe principle of substitution holds that a prudent buyer generally will not pay more for one property than the cost of acquiring an equally desirable alternative, assuming similar utility, reasonable knowledge, and no material delay or risk difference.
- ProgressionProgression is the tendency for a lower-value or under-improved property to receive upward value influence from nearby or competing properties with greater value, quality, utility, or market appeal.
- RegressionRegression is the tendency for a superior, higher-value, or over-improved property to receive downward value influence when surrounding or competitive market evidence does not fully support its cost, scale, quality, features, or price.
- Sales comparison approachThe sales comparison approach develops a value indication from sales and other market evidence involving properties that compete with the subject.
Financing10 questions21 terms
- Acceleration clauseAn acceleration clause lets the lender or note holder declare all unpaid principal and other authorized amounts immediately due after a specified default and required notice and cure process.
- Adjustable-rate mortgage (ARM)An adjustable-rate mortgage is a loan whose interest rate may change after closing according to contractual terms.
- Alienation clauseAn alienation or due-on-sale clause allows a lender, at its option, to accelerate secured debt when the property or an interest in it is sold or transferred without prior written consent.
- AmortizationAmortization is scheduled repayment of a loan through periodic payments.
- Balloon paymentA balloon payment is a large scheduled payment, commonly due at the end of a loan term after earlier payments did not fully retire the debt.
- Conventional loanA conventional loan is a mortgage not insured or guaranteed by a federal or state government agency.
- Debt-to-income ratioDebt-to-income ratio measures monthly debt obligations against gross monthly qualifying income.
- Deed of trustA deed of trust is a three-party real estate security instrument.
- Equal Credit Opportunity Act (ECOA)The Equal Credit Opportunity Act and Regulation B prohibit creditor discrimination on specified bases in any aspect of a credit transaction.
- FHA loanAn FHA loan is funded by an FHA-approved lender and insured by the Federal Housing Administration.
- ForeclosureForeclosure is the court-supervised enforcement of a mortgage after default.
- MortgageA mortgage is a written security instrument creating a consensual lien on real estate to secure a debt or other obligation.
- Owner financingOwner financing means the seller extends purchase credit to the buyer.
- Prepayment penaltyA prepayment penalty charges the borrower for paying principal before its scheduled due date.
- Private mortgage insurance (PMI)Private mortgage insurance protects a conventional mortgage lender or investor against part of a covered default loss, even when the borrower pays the premium.
- Promissory noteA promissory note is a written promise by the maker to pay the payee or later person entitled to enforce a stated debt under defined terms.
- Real Estate Settlement Procedures Act (RESPA)RESPA governs many federally related mortgage loans through Regulation X.
- TRID integrated disclosure ruleTRID integrates federal mortgage disclosures into the Loan Estimate and Closing Disclosure for most closed-end consumer loans secured by real property or a cooperative unit.
- Truth in Lending Act (TILA)The Truth in Lending Act and Regulation Z standardize consumer-credit disclosures and regulate mortgage practices.
- UnderwritingUnderwriting is the lender's evaluation of the borrower, loan terms, and property before approving credit.
- VA loanA VA-backed loan is funded by a private lender and partially guaranteed by the Department of Veterans Affairs for an eligible borrower.
Contracts19 questions25 terms
- AddendumA real estate addendum adds terms to a base contract and becomes binding when properly incorporated, assented to, signed, and delivered.
- AmendmentA real estate contract amendment changes an existing agreement through a valid new bargain.
- Attorney review periodAn Illinois attorney review period exists because the parties put it in their contract, not because every home buyer receives an automatic statewide five-day cancellation right.
- Bilateral contractA bilateral contract is created by exchanged promises. In a typical purchase agreement, the buyer promises to purchase and pay, and the seller promises to convey the described property and perform agreed obligations.
- ConsiderationConsideration is a bargained-for exchange of promises, acts, or forbearance.
- ContingencyA real estate contingency makes a duty, right, or continuation of the transaction depend on a stated event.
- CounterofferA counteroffer rejects a standing offer and proposes a materially different bargain.
- Earnest moneyEarnest money is an agreed deposit connected to a purchase contract.
- Executed contractAn executed contract, in the performance sense used to contrast it with an executory contract, is one whose material duties have been fulfilled.
- Executory contractAn executory contract is a binding contract with material performance still due from one or both parties.
- Lease purchaseA lease-purchase combines present tenancy with a binding future sale, while a lease-option gives the tenant a choice that becomes a purchase contract only after valid exercise.
- Liquidated damagesAn enforceable Illinois liquidated-damages clause is a genuine advance settlement for a specific breach.
- Multiple offersIn a multiple-offer situation, an Illinois licensee timely presents every offer unless the client waived presentation, protects confidential negotiating information, and lets the seller decide.
- Mutual assentMutual assent means objective agreement to the same terms. It is usually established through a definite offer and an unqualified acceptance made by words, signature, or authorized conduct.
- NovationIllinois novation has four elements: a prior valid obligation, an all-party agreement to a new contract, a valid new contract, and intent to extinguish the old contract.
- OfferAn offer is a communicated, sufficiently definite proposal showing present intent to be bound if the offeree accepts as invited.
- Option contractA real estate option is a supported agreement that keeps an underlying offer open for a specified period.
- RescissionRescission retroactively disaffirms and unwinds a contract. Parties can mutually rescind through a new agreement, or a court can award equitable rescission on a proven ground such as fraud, material breach, or qualifying mistake.
- Specific performanceSpecific performance is a court order compelling the promised real estate transaction.
- Statute of fraudsIllinois's Frauds Act generally requires a contract for the sale of land or an interest in land for longer than one year to be evidenced by a writing or memorandum signed by the party to be charged or a lawfully authorized agent.
- Unenforceable contractAn unenforceable contract is an agreement for which a court will not grant the requested enforcement because a rule or defense applies.
- Unilateral contractA unilateral contract uses an offer that seeks acceptance by specified performance rather than a return promise.
- Valid contractA valid real estate contract rests on a definite offer, matching acceptance, and consideration, with genuine assent by parties who have legal capacity, a lawful objective, and terms certain enough to understand and enforce.
- Void contractA void contract is legally ineffective from inception and cannot be ratified.
- Voidable contractA voidable contract is valid unless the protected party elects to avoid it.
Agency13 questions11 terms
- AgencyAgency is the consensual relationship in which a broker or licensee represents a consumer in a real property transaction.
- Agency disclosureIllinois designated agents disclose the relationship and the designated agent names in writing no later than beginning to work for the consumer.
- Buyer brokerage agreementAn Illinois buyer brokerage agreement is the written contract between a buyer and sponsoring broker for licensed purchase assistance and representation.
- ClientA real estate client is a consumer represented by a licensee.
- Conflict of interestA conflict of interest is a competing personal, financial, ownership, referral, or representation interest that may impair a licensee's loyalty or judgment.
- CustomerAn Illinois real estate customer is a consumer whom the licensee does not represent.
- Fiduciary dutyReal estate fiduciary duty traditionally means loyalty, lawful obedience, disclosure, confidentiality, accounting, and reasonable care owed by an agent to a principal.
- Listing agreementA listing agreement is the written service contract through which an owner hires a sponsoring broker to market identified real estate for sale or lease.
- Power of attorneyA power of attorney is a written grant of authority from a principal to an agent.
- Termination of agencyTermination of agency ends the agent's authority to represent the principal.
- Transaction brokerA transaction broker is a statutory non-agent relationship available in some jurisdictions, where a licensee assists a deal without fiduciary advocacy for either side.
Property Disclosures7 questions9 terms
- Environmental disclosureEnvironmental disclosure is a layered information process, not proof that property is clean.
- Inspection red flagAn inspection red flag is a clue that requires focused investigation before the buyer's contractual deadline.
- Land use red flagA land use red flag is a mismatch or missing proof concerning zoning, use approval, dimensional compliance, permits, occupancy, lot creation, access, easements, private restrictions, floodplain, wetlands, utilities, or development rights.
- Latent defectA latent defect is hidden or not discoverable by reasonably diligent inspection.
- Lead-based paint disclosureFor most pre-1978 housing sales and leases, federal law requires disclosure before the buyer or tenant is obligated.
- Material defectUnder the Illinois residential disclosure form, a material defect substantially adversely affects value or significantly impairs future occupants' health or safety, unless the seller reasonably believes it was corrected.
- Material factA material fact is information significant enough to affect a reasonable transaction decision, price, terms, value, health, safety, legality, or risk.
- Seller disclosureA covered Illinois seller must complete every item on the statutory Residential Real Property Disclosure Report and deliver it before the buyer signs the contract.
- Stigmatized PropertyNational VII.CProperty affected by a nonphysical issue, such as reputation or past events. Disclosure duties depend on state law.
Property Management3 questions11 terms
- Assignment of LeaseNational VIII.BTransfer of the tenant's entire lease interest to another person, subject to the lease terms.
- Constructive EvictionNational VIII.BA landlord's act or failure to act makes the property unusable, allowing the tenant to leave and claim the lease ended.
- Estoppel CertificateNational VIII.BA tenant statement confirming lease terms, rent, deposits, and defaults for a buyer or lender.
- Fair Housing ScreeningNational VIII.A.2Applying the same written rental criteria to applicants without discriminating based on protected class.
- LeaseNational VIII.BA contract giving a tenant the right to possess property for a period of time in exchange for rent.
- LesseeNational VIII.BThe tenant who receives the right to possess under a lease.
- LessorNational VIII.BThe landlord or property owner who gives the lease.
- Market RentNational VIII.A.3Rent supported by comparable rentals, condition, location, amenities, concessions, and current demand.
- Security DepositNational VIII.BMoney held by a landlord or broker to secure a tenant's obligations under a lease.
- SubleaseNational VIII.BA tenant leases part or all of the premises to another person while the original tenant remains liable to the landlord.
- Tenant ScreeningNational VIII.A.1Evaluating applicants using lawful, consistent criteria such as income, rental history, credit, and references.
Transfer of Title6 questions19 terms
- Actual NoticeNational IX.C.2Direct knowledge of a fact, such as seeing someone occupying the property.
- Chain of TitleNational IX.B.1The recorded history of ownership transfers for a property.
- ClosingNational IX.C.3The settlement process where documents are signed, funds are handled, and ownership transfer is completed.
- Cloud on TitleNational IX.B.2A claim, document, or defect that may impair title, such as an unreleased lien or deed error.
- Constructive NoticeNational IX.C.2Notice the law gives everyone because a document was properly recorded in public records.
- DeedNational IX.AThe written instrument used to transfer title to real property from grantor to grantee.
- Escrow ClosingNational IX.C.3A closing where a neutral holder manages documents and funds until all closing conditions are met.
- General Warranty DeedNational IX.AA deed giving the grantee the strongest warranties, covering title problems from all prior owners.
- GranteeNational IX.AThe person or entity receiving title by deed.
- GrantorNational IX.AThe person or entity transferring title by deed.
- Marketable TitleNational IX.B.3Title free from serious defects and reasonable doubt, so a prudent buyer would accept it.
- ProbateNational IX.D.3Court-supervised handling of a deceased person's estate, including authority to transfer real property.
- Quitclaim DeedNational IX.AA deed that transfers whatever interest the grantor has, if any, with no warranties.
- RecordationNational IX.C.2Placing a document in public records to give constructive notice and help establish priority.
- Sheriff's DeedNational IX.D.1A deed often used to transfer property after a foreclosure sale.
- Short SaleNational IX.D.2A sale for less than the debt owed, requiring lender approval because the lender will accept a reduced payoff.
- Special Warranty DeedNational IX.AA deed where the grantor warrants only against title problems that arose during the grantor's ownership.
- Title InsuranceNational IX.B.1Insurance protecting an owner or lender against covered title defects that existed before the policy date.
- Title SearchNational IX.B.1Reviewing public records to trace ownership and identify liens, defects, restrictions, and other title issues.
Practice of Real Estate12 questions16 terms
- AntitrustNational X.B.2Laws protecting competition. Brokers must avoid price fixing, market allocation, group boycotts, and tying arrangements.
- BlockbustingNational X.A.4Inducing owners to sell by suggesting people of a protected class are moving into the area.
- Confidential Personal InformationNational X.C.1Sensitive client or consumer information, such as account numbers, IDs, wiring details, and private financial data.
- Disparate TreatmentNational X.A.4Treating people differently because of protected-class status.
- Do-Not-CallNational X.B.3Rules limiting telemarketing calls to consumers who are on national or company do-not-call lists.
- Due DiligenceNational X.C.3Reasonable investigation and follow-up before relying on facts or completing a transaction.
- Fair Housing ActNational X.A.1Federal law prohibiting discrimination in housing based on protected classes.
- Independent ContractorNational X.B.1A worker treated as self-employed under tax and brokerage rules, rather than as an employee.
- Internet AdvertisingNational X.B.4Online and social media advertising must be truthful, not misleading, and include required brokerage disclosures.
- Market AllocationNational X.B.2Competitors agreeing to divide customers, territories, or property types. It is an antitrust violation.
- Price FixingNational X.B.2Competitors agreeing on commission rates, fees, or pricing. Real estate commissions are always negotiable.
- Protected ClassNational X.A.2A group protected by fair housing law, such as race, color, religion, sex, disability, familial status, or national origin.
- Reasonable AccommodationNational X.A.6A change in rules, policies, or services needed so a person with a disability can use and enjoy housing.
- RedliningNational X.A.4Denying or changing lending, insurance, or services based on the protected-class makeup of an area.
- SteeringNational X.A.4Guiding people toward or away from areas or properties based on a protected class.
- Wire FraudNational X.C.1A fraud scheme that tricks a party into sending funds to the wrong account, often through fake closing instructions.
Real Estate Calculations7 questions11 terms
- Buyer Funds NeededNational XI.A.2The amount a buyer must bring to closing after adding costs and subtracting credits and deposits.
- Capitalization RateNational XI.B.2The rate of return found by dividing net operating income by value or price.
- CommissionNational XI.A.1A broker fee, usually calculated by multiplying sale price by the commission rate.
- Discount PointsNational XI.B.4Prepaid interest paid at closing. One point equals 1 percent of the loan amount.
- EquityNational XI.B.1Property value minus debt owed against the property.
- Loan-to-Value RatioNational XI.B.3Loan amount divided by property value or purchase price, usually expressed as a percentage.
- Net Operating IncomeNational XI.B.2Income from an investment property after operating expenses, but before debt service and income taxes.
- PITINational XI.A.5Principal, interest, taxes, and insurance. These are the core parts of a typical mortgage payment estimate.
- ProrationNational XI.A.3Dividing an expense or income item between buyer and seller based on ownership days.
- Seller NetNational XI.A.1The seller's estimated proceeds after subtracting liens, closing costs, prorations, and other seller debits.
- Transfer FeeNational XI.A.4A charge paid when ownership transfers, often calculated from the sale price.
The Illinois paper40 scored questions, 75% to pass
Illinois Licensing Requirements4 questions13 terms
- Activities Requiring a LicenseState I.AReal estate brokerage acts for another and for compensation, such as listing, selling, leasing, negotiating, or managing real estate transactions.
- Broker Post-License EducationState I.GPost-license education is the 45 hours of coursework a first-time Illinois broker must complete before the first license renewal: three 15-hour courses (Applied Brokerage Principles, Risk Management/Discipline, and Transactional Issues), each requiring a passing final exam. See 225 ILCS 454/5-50.
- Change of License InformationState I.HA licensee must report a change of address, email, phone, or office location within 24 hours; a legal name change must be reported within 14 days. A sponsoring broker must report an office opening, closing, or relocation within 24 hours.
- Continuing EducationState I.GThe 12 hours of IDFPR-approved continuing education a Broker completes in a regular two-year renewal term: at least 6 core hours (including at least 2 fair-housing hours) and at least 6 elective hours. A limited 2026 transition accepted qualifying 4-hour core courses taken by June 30, 2025. The initial license term uses post-license education instead, subject to the 180-day exception.
- Illinois BrokerState I.CIllinois's entry-level real estate license for representing buyers, sellers, landlords, or tenants when properly sponsored.
- Illinois License ExaminationState I.EThe PSI-administered Illinois Broker exam. Broker candidates must pass the national portion and the Illinois state portion.
- Illinois License RenewalState I.FThe biennial process of keeping an Illinois broker license active. A broker license expires April 30 of even-numbered years and, to renew, the licensee must complete 12 hours of approved continuing education (or the required post-license education on a first renewal) and pay the renewal fee.
- License ExemptionState I.BA situation where a person may perform certain real estate acts without an Illinois real estate license, such as an owner acting for self.
- Managing BrokerState I.CThe Illinois supervisory license. A managing broker may supervise sponsored licensees and operate a brokerage.
- Pre-License InstructorState I.CAn Illinois license allowing a qualified person to teach approved real estate pre-license or continuing education courses.
- Registered SponsorshipState I.DThe Department-registered relationship between a sponsoring broker and a managing broker, broker, or residential leasing agent. A person may not perform licensed brokerage activity without both an issued license and a valid registered sponsorship.
- Residential Leasing AgentState I.CA limited Illinois license for residential leasing activity only.
- SponsorshipState I.DThe Illinois requirement that a Broker or Residential Leasing Agent work under a sponsoring broker to practice.
Illinois Real Estate License Act16 questions21 terms
- ComminglingState II.IMixing client or escrow money with the broker's own money. It is prohibited.
- Compensation RequirementState II.EIllinois compensation must be paid through the sponsoring broker and must follow the brokerage agreement and license law.
- ConversionState II.IUsing client or escrow money for the broker's own purposes. It is a serious license violation.
- Designated AgencyState II.AIn Illinois, the sponsoring broker designates one licensee to represent one client and another licensee to represent the other client.
- Designated AgentState II.AThe individual Illinois licensee appointed by the sponsoring broker to represent a specific client.
- Dual AgencyState II.AOne Illinois licensee representing both buyer and seller in the same transaction with prior written consent from both parties.
- Exclusive Brokerage AgreementState II.DAn Illinois brokerage agreement giving one brokerage the exclusive right to represent a client for a stated period.
- Handling DocumentsState II.JIllinois licensees must deliver copies of signed transaction documents to the parties and the sponsoring broker must retain all transaction records (contracts, offers/counteroffers, disclosures, closing statements, escrow records) for 5 years under 68 Ill. Adm. Code 1450.755.
- IDFPRState II.NThe Illinois Department of Financial and Professional Regulation. Its Division of Real Estate licenses and regulates real estate professionals.
- Illinois AdvertisingState II.BIllinois real estate advertising must be truthful, not misleading, and identify the brokerage as required.
- Illinois BPOState II.LAn Illinois broker price opinion prepared by a licensee. It estimates probable price and is not an appraisal.
- Illinois CMAState II.LAn Illinois comparative market analysis prepared by a licensee. It must not be represented as an appraisal.
- Illinois Real Estate License ActState II.NThe Illinois law, 225 ILCS 454, that governs real estate licensing, brokerage relationships, advertising, discipline, and practice.
- Interference with AgencyState II.FImproperly interfering with another brokerage agreement or agency relationship.
- Minimum ServicesState II.DIllinois duties a licensee must provide under a brokerage agreement, including presenting offers and answering client questions.
- Quinlan & Tyson DoctrineState II.MUnder Chicago Bar Association v. Quinlan and Tyson, Inc. (Ill. 1966), an Illinois broker may fill in the blanks on the customary preliminary sales contract form as an incident to a brokerage transaction, but may not draft or complete deeds, mortgages, or other instruments used to clear or transfer title, because doing so is the unauthorized practice of law.
- Special AccountState II.IAn Illinois escrow account used for money belonging to others, such as earnest money or security deposits.
- Sponsoring BrokerState II.CThe Illinois broker or brokerage responsible for supervising and sponsoring a licensee.
- Team NameState II.HAn Illinois team name must not mislead the public or imply the team is a separate brokerage.
- Unlicensed AssistantState II.GA person who may perform clerical or ministerial tasks but may not negotiate, show property, host open houses, or perform licensed activity.
- Unprofessional ConductState II.KConduct that can lead to Illinois discipline, including dishonest dealing, improper money handling, false advertising, or license-law violations.
Additional Illinois Laws10 questions14 terms
- Assistance Animal Integrity ActState III.HIllinois law addressing documentation and rules for assistance animals in housing.
- Business Broker ActState III.BThe Illinois Business Brokers Act of 1995 (815 ILCS 307/) requires a person who arranges the sale of a business (not primarily a real estate transaction) to register as a business broker with the Illinois Secretary of State; if an interest in real estate is the dominant element of the deal, the Real Estate License Act of 2000 (225 ILCS 454/) applies instead.
- Commercial Broker Lien ActState III.JIllinois law allowing a broker to claim a lien for certain earned commercial real estate commissions when requirements are met.
- Homestead ExemptionState III.AThe Illinois homestead exemption (735 ILCS 5/12-901) protects a homeowner's equity in a principal residence from most creditors up to \$50,000 per individual owner (raised from \$15,000 effective January 1, 2026), or up to \$100,000 for property owned by two or more persons.
- Illinois Human Rights ActState III.GIllinois civil rights law that includes fair housing protections and advertising rules beyond the federal baseline.
- Illinois Land TrustState III.AAn Illinois land trust is an arrangement in which the trustee holds full legal and equitable title to the real estate, while the beneficiary retains the power of direction and the rights to possess, manage, and receive income/sale proceeds; the beneficiary's interest is classified as personal property, not real property (Land Trust Beneficial Interest Disclosure Act, 765 ILCS 405/).
- Illinois Landlord Tenant ActState III.IIllinois landlord-tenant law is a set of statutes governing residential rental rights and duties, including the Landlord and Tenant Act (765 ILCS 705, which voids lease exculpatory clauses), the Security Deposit Return Act (765 ILCS 710) and Security Deposit Interest Act (765 ILCS 715). It covers deposits, disclosures, and eviction, and may be supplemented by local ordinances.
- Illinois Plat ActState III.EThe Illinois Plat Act (765 ILCS 205) governs when an owner subdividing land must prepare and record a subdivision plat and how legal descriptions are stated. A recorded plat is generally required, but division into parcels of 5 acres or more with no new streets or access easements (and certain sub-1-acre divisions in a recorded subdivision) is exempt.
- Illinois Property Tax ExemptionState III.FAn Illinois reduction in taxable property value, such as certain homestead exemptions.
- Illinois Transfer of TitleState III.DHow ownership of Illinois real estate passes from one party to another, either voluntarily by deed, will, or sale, or involuntarily by foreclosure, escheat, eminent domain, or adverse possession. A deed transfers title only on delivery to and acceptance by the grantee, and recording gives constructive notice to the world.
- Illinois Transfer TaxState III.CIllinois imposes a state real estate transfer tax of \$0.50 per \$500 of value or fraction (\$1.00 per \$1,000) under 35 ILCS 200/31-10, plus a county tax of \$0.25 per \$500 (\$0.50 per \$1,000), for a combined \$0.75 per \$500; the seller (grantor) customarily pays, and many home-rule municipalities add their own transfer tax.
- Radon Resistant Construction ActState III.KThe Radon Resistant Construction Act (420 ILCS 52) requires that all new residential construction in Illinois (single-family homes and dwellings of two or fewer units) include passive radon-resistant construction, meaning installation of a passive radon vent pipe from below the foundation to above the roof so the building is prepared for later radon mitigation.
- Scope of License LawState III.BIllinois brokers must avoid activities outside a real estate license, such as giving legal advice or securities advice.
- Tenancy by the EntiretyState III.AIllinois co-ownership for married couples in a homestead, with survivorship and protection from creditors of only one spouse.
Illinois Disclosures10 questions12 terms
- Compensation Source DisclosureState IV.CIllinois requires a licensee to disclose the source(s) of compensation in a transaction, and a licensee may not accept compensation from more than one party without the informed written consent of all parties (225 ILCS 454, Article 10 of the Real Estate License Act).
- Contemporaneous OffersState IV.AWhen a licensee receives multiple simultaneous (contemporaneous) offers, the License Act agency duties (225 ILCS 454/15-15) require the licensee to promptly present all offers to the client, obey the client's lawful instructions on whether and how to disclose the existence or terms of competing offers, and keep one party's confidential terms from another. The client decides how the offers are handled.
- Flooding DisclosureState IV.E.5Effective January 1, 2025 (765 ILCS 705/25), an Illinois landlord must disclose to a tenant in writing before lease signing whether the rental unit is in a FEMA Special Flood Hazard Area and any actual knowledge of prior flooding; a lower-level unit additionally requires disclosure of any flooding within the last 10 years.
- Illinois Lead-Based Paint DisclosureState IV.E.2For most housing built before 1978, federal law (Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. 4852d) requires the seller or landlord to disclose known lead-based paint and hazards, provide the EPA pamphlet 'Protect Your Family from Lead in Your Home,' and give a buyer a 10-day period to inspect for lead before becoming obligated.
- Illinois Material DefectState IV.DA known problem that substantially affects value, habitability, or safety and must be handled under Illinois disclosure rules.
- Illinois Radon DisclosureState IV.E.1Under the Radon Awareness Act (420 ILCS 46), before a buyer is obligated to purchase residential real property the seller must give the buyer the IEMA pamphlet 'Radon Testing Guidelines for Real Estate Transactions' and the 'Illinois Disclosure of Information on Radon Hazards' form; the Act does not require the seller to conduct radon testing or mitigation.
- Licensee Interest DisclosureState IV.BUnder 225 ILCS 454/10-30, a licensee who buys, sells, or leases property for their own account, or who otherwise has a direct or indirect interest in the property or transaction, must disclose that interest and their status as a licensee in writing to all parties.
- Mine Subsidence DisclosureState IV.E.3On the Residential Real Property Disclosure Report (765 ILCS 77/35) the seller must disclose awareness of mine subsidence, underground pits, settlement, or other earth-stability defects; separately, under the Mine Subsidence Disclosure Act (765 ILCS 95) a transferor must disclose in writing, at the time of transfer, any mine subsidence insurance claims previously paid on the property.
- No-Agency NoticeState IV.AA written notice a licensee must give a customer stating the licensee is not acting as that customer's agent, delivered no later than preparation of an offer to purchase or lease. In a typical transaction the licensee still represents the other party (225 ILCS 454/15-35(c)).
- Residential Real Property Disclosure ReportState IV.DUnder the Residential Real Property Disclosure Act (765 ILCS 77), the seller of residential real property must complete the statutory Residential Real Property Disclosure Report, disclosing material defects of which the seller has actual knowledge, and deliver it to the buyer before the buyer signs the purchase contract.
- Transactional Broker ProhibitionState IV.AIllinois does not use the transactional broker or facilitator role for real estate brokerage representation.
- Underground Storage Tank DisclosureState IV.E.4On the Residential Real Property Disclosure Report (765 ILCS 77/35) the seller must disclose whether they are aware of an underground fuel or storage tank on the property, delivered to the buyer before the purchase contract is signed.
Assumed knowledgevocabulary the questions expect you to arrive with
Property and ownership vocabularyNot a numbered outline area26 terms
- Real propertyReal property is land, things permanently attached to the land, and the legal interests and rights that accompany ownership.
- Personal propertyPersonal property is property that is not real property. Tangible personal property includes movable objects such as furniture, tools, and freestanding appliances.
- FixtureA fixture is an item that began as personal property but is treated as real property because it was attached or adapted to the land or an improvement with an objectively apparent intention that it remain.
- Trade fixtureA trade fixture is an item a commercial tenant installs or attaches to leased premises for use in the tenant's trade or business.
- EmblementsEmblements are annual crops produced through a tenant's labor and cultivation that are treated as the tenant's personal property in qualifying circumstances.
- Bundle of rightsThe bundle of rights is the group of legal rights commonly associated with real-property ownership: possession, control, enjoyment, exclusion, and disposition.
- AppurtenanceAn appurtenance is a right, privilege, improvement, or accessory that belongs to and benefits real property and ordinarily passes with the land when the property is conveyed.
- EncumbranceAn encumbrance is a claim, right, interest, or condition that burdens real property and can affect its title, use, or value.
- EasementAn easement is a nonpossessory real-property interest that allows its holder to use another person's land for a specific purpose, or in some cases restricts a use of that land.
- Easement appurtenantAn easement appurtenant is a nonpossessory right that benefits one parcel of land and burdens another.
- Easement in grossAn easement in gross is a nonpossessory right to use land that benefits a person, company, or organization rather than a dominant parcel.
- LicenseA license in property law is personal permission to enter land or perform a particular act on it without receiving an estate or easement.
- EncroachmentAn encroachment is an unauthorized physical intrusion of a structure, improvement, or object onto, over, or under another person's land.
- Adverse possessionAdverse possession is a doctrine under which a claimant can obtain title by possessing a definitely defined tract in a manner that satisfies every required element for the statutory period.
- Mineral rightsMineral rights are ownership interests in specified minerals beneath the land and the related rights established by the deed, lease, and law.
- Water rightsWater rights are legal rights to access, use, enjoy, divert, or withdraw surface water or groundwater.
- Metes and boundsMetes and bounds is a legal-description method that identifies a parcel by tracing its boundary from a stated point of beginning through a sequence of directions, distances, monuments, curves, and adjoining boundaries, then returning to the point of beginning.
- Lot and blockLot and block, also called the recorded-plat method, is a legal-description system that identifies a parcel by its lot number, block number when used, named subdivision, and recording jurisdiction or plat reference.
- Rectangular survey systemThe rectangular survey system, also called the government survey or Public Land Survey System, identifies land by reference to a principal meridian, base line, township, range, section, and smaller aliquot parts or government lots.
- Gross living areaGross living area, or GLA, is the traditional appraisal term for the total finished above-grade residential area of a one-unit dwelling, measured under the applicable standard and assignment requirements.
- AcreAn acre is a unit of land area equal to exactly 43,560 square feet.
- Ownership in severaltyOwnership in severalty, also called sole ownership, means one person or legal entity holds the identified ownership interest without a co-owner on that title.
- Tenancy in commonTenancy in common is co-ownership in which two or more owners hold separate undivided interests in the same property.
- Joint tenancyJoint tenancy is co-ownership in which the joint tenants hold undivided interests with a right of survivorship.
- CondominiumA condominium is a form of common-interest ownership in which a unit is separately owned and carries an undivided percentage interest in the common elements.
- CooperativeA housing cooperative, or co-op, is a common-interest ownership structure in which a corporation, trust, or similar cooperative entity holds title to the real estate.
If you only have time for some of it
Six areas carry 72 of the 100 national questions between them. Learning their vocabulary first is worth more than working evenly across all eleven.
- ContractsNational 519 of 100
- AgencyNational 613 of 100
- Practice of Real EstateNational 1012 of 100
- Property OwnershipNational 110 of 100
- FinancingNational 410 of 100
- Valuation and Market AnalysisNational 38 of 100
The Illinois paper is smaller but the pass mark is higher, and the License Act alone is 16 of its 40 questions. Every entry in these four areas is tagged with the PSI outline node it came from.
- Illinois Licensing RequirementsIllinois 14 of 40
- Illinois Real Estate License ActIllinois 216 of 40
- Additional Illinois LawsIllinois 310 of 40
- Illinois DisclosuresIllinois 410 of 40
Pairs the exam likes to confuse
A definition on its own rarely wins a mark. Most questions describe a situation and ask which of two close terms it matches, so the boundary is what gets tested. These walk through the ones that catch people out most often.
- Addendum or amendment
- Client or customer
- Commingling or conversion
- Actual or constructive notice
- Assignment or novation
- Fixture or trade fixture
- Easement, license, or encroachment
- Void, voidable, or unenforceable
If a whole area keeps costing you marks, work through the 15-topic study guide instead of looking terms up one at a time. The study library holds the rest of the side-by-side comparisons.
Ready to practice
Definitions stick once you have to choose between them
Pass Illinois puts these terms into 1,339 original questions where several answers look right. Try up to 20 questions free. Full access is an optional one-time $59.99 purchase.
Glossary FAQ
How many terms does this Illinois real estate glossary cover?
This glossary defines 244 terms across all 15 PSI content areas, 11 national and 4 Illinois. Each one is written for the exam rather than for general reading, so it names the content area the term belongs to and the distinction the question usually turns on.
Should you memorize every definition before the exam?
No. The exam rarely asks for a bare definition. It gives you facts and asks which term those facts match, so study the boundaries between neighboring terms rather than the wording of any single one.
Do the definitions cover Illinois rules or only national ones?
Both. All four Illinois areas are covered here, including the License Act, Illinois disclosures, licensing requirements, and the additional Illinois laws, each entry tagged with the PSI outline node it comes from. National entries flag the Illinois rule wherever it differs.
Which terms are most worth your time?
Follow the exam weights shown on each area. Contracts, Agency, and Practice of Real Estate carry 19, 13, and 12 of the 100 scored national questions, so their vocabulary earns more than the smaller areas. On the Illinois paper, the License Act alone is 40% of the 40 questions.
Official exam source
Content areas and weights come from the official PSI Illinois Candidate Information Booklet. Illinois definitions are checked against Illinois primary sources before publication. Reviewed August 22, 2026.
Entries for Transfer of Title, Practice of Real Estate, Property Management, Real Estate Calculations, and the four Illinois areas come from the Pass Illinois app's reviewed key-term list, each mapped to its PSI outline node. Source: PSI Illinois Broker Candidate Information Booklet, 6/24/2026; verified 8/24/2026.