The reversion of property to the state when an owner dies without a will and has no legal heirs.
Why Escheat matters on the exam
This term belongs to Transfer of Title. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Escheat
Every Freehold question shows why the right answer is right — and cites its source.
The legal principle under which a broker may be held liable for the wrongful acts of an affiliated licensee performed within the scope of their real estate duties is called:
Novation, substituting a new party or obligation in place of the original one entirely
Subrogation, one party stepping into the legal shoes of another after paying a claim
Escheat, property reverting to the state when an owner dies without heirs or a will
Vicarious liability
Show answer & explanation
Vicarious liability — Vicarious liability holds a broker responsible for an agent's acts committed within the scope of the agency relationship, even without the broker's direct involvement.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
A brokerage is sued after an agent misrepresents square footage to a buyer. The buyer's attorney names both the agent and the broker as defendants even though the broker never spoke with the buyer. This is most likely an application of:
Vicarious liability
Escheat
Adverse possession of the property
The doctrine of laches
Show answer & explanation
Vicarious liability — Because the agent's misrepresentation occurred while conducting brokerage business, the broker can be named as a defendant under vicarious liability principles even absent personal involvement.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
When a borrower pledges real property as collateral for a loan while retaining possession and use of the property, this is known as:
Alienation
Hypothecation
Escheat
Subrogation
Show answer & explanation
Hypothecation — Hypothecation is the act of pledging property as security for a debt without giving up possession, which is exactly how a mortgage borrower continues to live in and use the home.
Source: PSI National Real Estate Exam Content Outline §4 Financing
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