Glossary

Click on each term to see full definitions

Abatement

In simplest terms means "a reduction". Usually in real estate it is used with a reduction in rent or amount due, but is also used with terms such as noise Abatement (putting up sound barriers to reduce noise) and Pollution abatement (controlling smokestack emissions).

Reference: http://legal-dictionary.thefreedictionary.com/abatement

Absorption Rate

This is a good indicator as to how fast properties are selling/leasing during a specific period of time. To figure it out you take a time frame and divided it by the the number of properties that sold/ leased in a specific area (you can even narrow it down more ie. specific price range, property etc.). Then you multiply it by the number of active listings.

(Time Frame/Number of Homes Sold) x Active Listings

Abstract Of Title

It is a written history of the title for a parcel of land and it is how someone would prove that the property they are buying actually belongs to the one selling it and that the property is clear form any liens or anything else that. This is usually done by the buyers lawyer. This is only done in areas that still use the Registry system.

Reference: http://legal-dictionary.thefreedictionary.com/Abstract+of+title

Acceleration Clause

A clause in mortgage/loan documents which say that the lender can "Call the loan" (make you pay the rest of what you owe before it is due) if certin criterias are met (for example you do not make your payments).

Reference: http://legal-dictionary.thefreedictionary.com/Acceleration+Clause

Accured Interest

Interest which has been accumulating (being earned) but has not been paid out yet.

Ad Valorem

"According to value". (For real estate) A Tax based on the Value of the Property, also known as property tax. This value is based on what the government thinks your house is worth (in many instances you can dispute there valuation)

Add-On Factor

Often referred to as the R/U (Rentable/Usable) Factor, it is how someone can figure out how much rent you have to pay for a property with common elements (ie. An indoor mall). For example: You may only have 800sqft of Rented space in your unit but they may expect you to pay rent on an extra 100sqft to cover your share of the common area expenses. In this case the rentable area is 800sqft and the Usable area is be 900sqft. There for the Add on Factor is 1.125 . So if your monthly rent for 800sqft is $2,000 your actual amount is $2,250.

Usable sqft/Rentable Sqft

Add-On Interest

An interest amount added to the principal of a debt and made payable as part of the debt , usually in equal periodic installments (also called Pre-calculated interest).

Adjustable Rate Mortgage (ARM)

A mortgage for which the interest rate is adjusted periodically according to movements in a pre-selected index.

Adverse Possession

When an individual, not the owner, takes actual possession of the property, hostile to, and without the consent of, the owner.

Affidavit

A statement of declaration in writing and sworn or affirmed before an authorized individual, such as a notary public.

Agency

A relationship which arises out of a contract, where an agent is authorized by a principal (client) to engage in certain acts, usually in dealing with one or more third party(s).

Agreement Of Purchase And Sale

A written contract to buy property in which the purchaser and vendor agree to sell upon terms and conditions as set forth in the agreement.

Air Lines

Compressed air lines for operating machinery, such as pneumatic tools.

Air Rights

The right to undisturbed use and control of designated air space above a specific land area within stated elevations. Such rights may be acquired to construct a building above the land or building of another or to protect the light and air of an existing or proposed structure on an adjoining lot. See also transferable development right (TDR).

Alienation Clause

This is a clause that enables the mortgagee to demand payment of the outstanding balance including interest upon sale or transfer of title. (also known as a "due on sale" clause).

Allowance Over Building Shell

Most often used in a yet-to-be constructed property, the tenant has a blank canvas upon which to customize the interior finishes to their specifications. This arrangement caps the landlord’s expenditure at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price.

Amenities

Special characteristics that can enhance a property's appeal.

Amortization Of A Mortgage

The arrangement for paying off a mortgage by installments, over a period of time.

Amortization Period

The time period required to completely retire a debt through scheduled payments of principal.

Amortization

The gradual retirement of a debt by means of partial payments of the principal at regular intervals.

Amps

The basic flow of electrons in a conductor is called current. The basic unit of electrical current is measured in Amperes, often referred to as Amps. Any service rated over 400 amps is typically commercial service although 200-400 amps are generally seen in flex buildings and 800+ for heavy industrial buildings. Amps fields allow a range from low to accommodate different sources of power.

Anchor Tenant

The major or prime tenant in a shopping center, building, etc.

Anniversary Date

The occasion of one year from an event pertaining to a mortgage. (Eg. Registration date)

Annual Avg Daily Traffic: (AADT)

This is the total volume of vehicle traffic for a highway or road for a year divided by 365 days.

Annual Debt Service

Annualized payment of a loan obligation. (AKA monthly payment annualized).

Annual Percentage Rate (APR)

The actual cost of borrowing money, expressed in the form of an annual interest rate. It may be higher than the note rate because it represents full disclosure of the interest rate, loan origination fees, loan discount points, and other credit costs paid to the lender.

Appraisal

An estimate of opinion and value based upon a factual analysis of a property by a qualified professional.

Appraised Value

An estimate of property value written by a qualified individual (AACI). Appraisals performed for mortgage lending purposes, may not reflect the market value of the property, or the purchase price.

Appreciation

The increased value of an asset.

Appurtenance

Something which is outside the property itself, but belongs to the land and is joined thereto; eg. a road over another's land providing an access (right-of-way) is an appurtenance.

Annual Percentage Rate (APR)

The yearly interest percentage of a mortgage as expressed by the actual rate of interest paid given the term, rate, amount and cost of arrangement.

Adjustable Rate Mortgage (ARM)

A mortgage for which the interest rate is adjusted periodically according to movements in a pre-selected index.

Arrears

To be "in arrears" is to be behind in the payments called for under a mortgage agreement.

As-Is Condition

When in a real estate contract this means that the Seller (or Landlord) is not responsibe for condition of the property, even for things that may be expected in other transactions. If you see this in your contract (and you are the buyer/tennant)… do your home work, get a proffessional to check everything out (ie. home inspector, building inpector, enviromental expert, structural engeneer etc.) You do not want to close a deal and realize there are huge problems that are going to cost you a fortune.

Reference: http://legal-dictionary.thefreedictionary.com/As-is

Asking Rent

AKA Face Rent, this represents the dollar amount the lessor is asking for in order to lease their building/space/land. It is represented as an annual or monthly amount depending on the area where the property is located. Most markets reflect an annual amount while some western markets use a monthly amount.

Assemblage

A purchase of two or more parcels by one property owner. The buyer may (but not always) pay a premium over the market value because of the buyer's special motivations associated with buyer's use of the combined parcels. Typically the buyer is in the process of assembling several contiguous parcels to make one large parcel for a particular project and this transaction is one of many purchases that have or will take place.

Assessed Value

An amount assigned to taxable property, for the purpose of equalizing the burden of taxation.

Assessed Value

For commercial real estate it's a value assigned by the local tax assessor on land and/or structures for purposes of taxation only.

Assessment

A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.

Asset Manager

The company or contact that handles all the financial transactions for the subject property insuring the loans, appraisals, and management requirements are in order and operating correctly. Asset Managers usually handle portfolios of properties, which the subject property may be one of.

Assignee

One who takes the rights or title of another by assignment.

Assignment Of Mortgage

The assigning of a mortgagee's interest in the mortgage to a new mortgagee. The legal sale of the mortgage with or without an agreement to repurchase.

Assignment Of Rentals

The enforcable diversion of income from mortgaged property to the Mortgagee.

Assignment

A transfer by lessee of lessee’s entire estate in the property. Distinguishable from a sublease where the sublessee acquires something less than the lessee’s entire interest.

Assignor

One who transfers or assigns the rights or title to another.

Assumption Agreement

A document which binds someone other than the mortgagor, to perform mortgage obligations.

Assumption Of Mortgage

The action of a purchaser taking responsibility for a mortgage debt by way of a legal agreement. The original covenantor(s) responsibility pursuant to the mortgage obligation remains intact in such arrangement, so long as the existing documentation remains registered.

Atrium

A lobby with a high, vaulted ceiling or a grand, central court that separates two halves of a large building. An atrium will decrease the amount of rentable area in a building but increase the amount of high value space by incorporating more windowed offices into the building design and adding aesthetic value. See also: Amenities

Attachment

In context of the My Surveys page, refers to a file that is associated with a saved survey and is uploaded for storage into a Client Folder. See also: Client Folder, Publish.

Attorn

To turn over or transfer to another money or goods. To agree to recognize a new owner of a property and to pay him/her rent. In a lease, when the tenant agrees to attorn to the purchaser, the landlord is given the power to subordinate tenant's interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.

Attornment Of Rent

The redirection of rental income to a Mortgagee, usually in the event of default.

Auction Sale

The offering for sale of real property to the highest bidder. It's important to understand the reason for the auction. Typically this type of sale occurs in a declining market when other traditional types of sales have not been successful.

Auditorium

A large room used to accommodate an audience for large meetings or performances.

Authority

The legal right given by a principal to an agent to act on the principal's behalf in performing specific acts or negotiations. Auto Dealership: Retail secondary type. New or used car dealership facility with substantial amount of building improvements that includes some or all of the following: showroom, offices, parts dept., auto repair/service dept., body shop.

Auto Mall

A group of retail stores clustered together involved in sales, service, repair, and/or parts for automobiles.

Auto Repair

Retail secondary type. Commercially zoned single and/or multi-tenant buildings featuring service/work bays for wide ranges of auto repair and auto care services.

Availability Rate

The percent of space available on the last day of each quarter or the current date in the case of the current quarter. Total Available SF divided by the total RBA on the last day of each quarter.

Average Rent

Average rent is the weighted average rent for a building or market. Rents are weighted based on the total square footage available at a rental rate. If the rental rate is zero, TBD (to be determined) or negotiable; it is not counted in the average rent. Average rent is calculated from suite-by-suite detail. However, average rent can be reconstituted by multiplying the listed average by the listed space available. See Weighted Average Rent

Balance Due On Completion

The amount of money a purchaser will be required to pay to the vendor to complete the purchase, after all adjustments have been made.

Balloon Payment

This is a final mortgage payment at the end of the term which pays off the outstanding loan in full. The amount of money (principal) required to discharge a mortgage at maturity.

Bankrupt

The condition or state of a person (individual, partnership, corporation, etc.) who is unable to repay it's debts as they are, or become, due.

Bankruptcy

Proceedings under federal statures to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the bankrupt’s property and other assets are distributed by the court to creditors as full satisfaction for the debt. See also: "Chapter 11".

Base Rent

A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease. See also "Escalation Clause", "Operating Expense Escalation" and "Percentage Lease".

Base Year

Actual taxes and operating expenses for a specified base year, most often the year in which the lease commences. Once the base year expenses are known, the lease essentially becomes a dollar stop lease.

Below-grade

Any structure or a portion of a structure located underground or below the surface grade of the surrounding land.

Blanket Mortgage

A single registered document which encumbers more than one property.

Blended Payment

Equal payments consisting of both principal and interest, paid regularly during the term of the mortgage.

Breach Of Contract

Failure to fulfil an obligation under a contract. Breach confers a right of action on the offended party.

Building Classifications

Building classifications in most markets refer to Class "A", "B", "C" and sometimes "D" properties. While the rating assigned to a particular building is very subjective, Class "A" properties are typically newer buildings with superior construction and finish in excellent locations with easy access, attractive to credit tenants, and which offer a multitude of amenities such as on-site management or covered parking. These buildings, of course, command the highest rental rates in their sub-market. As the "Class" of the building decreases (i.e. Class "B", "C" or "D") one component or another such as age, location or construction of the building becomes less desirable. Note that a Class "A" building in one sub-market might rank lower if it were located in a distinctly different sub-market just a few miles away containing a higher end product.

Building Code

The various laws set forth by the ruling municipality as to the end use of a certain piece of property and that dictate the criteria for design, materials and type of improvements allowed.

Building Codes

Regulations established by government providing for structural requirements.

Building or "Core" Factor

Represents the percentage of Net Rentable Square Feet devoted to the building's common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage. See also "Rentable/Usable Ratio".

Building Standard Plus Allowance

The landlord lists, in detail, the building standard materials and costs necessary to make the premises suitable for occupancy. A negotiated allowance is then provided for the tenant to customize or upgrade materials. See also "Workletter".

Building Standard

A list of construction materials and finishes that represent what the Tenant Improvement (Finish) Allowance/Work Letter is designed to cover while also serving to establish the landlord's minimum quality standards with respect to tenant finish improvements within the building. Examples of standard building items are: type and style of doors, lineal feet of partitions, quantity of lights, quality of floor covering, etc.

Build-out

The space improvements put in place per the tenant's specifications. Takes into consideration the amount of Tenant Finish Allowance provided for in the lease agreement. See also "Tenant Improvement Allowance".

Build-To-Suit

An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant’s specifications.

Bullet Loan

Any short-term, generally five to seven years, financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation. Essentially, should the refinancing not be available, often due to the property not performing as anticipated, the borrower is "shot" and the property is subject to foreclosure. An example of this is when a developer borrows to cover the costs of construction and carry-costs for a new building with the expectation that it would be replaced by long-term (or "permanent") financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.

Buydown

A payment to the lender from the seller, buyer or third party causing the lender to reduce the interest rate during the term of the mortgage.

Cap

Refers to a maximum interest rate increase for a mortgage.

Capital Expenses

This type of expense is most often defined by reference to generally accepted accounting principles (GAAP), but GAAP does not provide definitive guidance on all possible expenditures. Accountants will often disagree on whether or not to include certain items.

Capitalization Rate

The rate of return anticipated by an investor in property.

Capitalization Rate

The rate that is considered a reasonable return on investment (on the basis of both the investor's alternative investment possibilities and the risk of the investment). Used to determine and value real property through the capitalization process. Also called "free and clear return". See "Capitalization".

Capitalization

A method of determining value of real property by considering net operating income divided by a predetermined annual rate of return. See "Capitalization Rate".

Capitalized Value

The value of a property based on the net income.

Carrying Charges

Costs incidental to property ownership, other than interest (i.e. taxes, insurance costs and maintenance expenses), that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy.

Caveat Emptor

Let the buyer beware. A buyer must examine fully before the purchase is made.

Certificate Of Cherge

A mortgage document in the Land Titles System.

Certificate of Occupancy

A document presented by a local government agency or building department certifying that a building and/or the leased premises (tenant's space), has been satisfactorily inspected and is/are in a condition suitable for occupancy.

Foreclosure

A procedure by which the mortgagee (“lender”) either takes title to or forces the sale of the mortgagor’s (“borrower”) property in satisfaction of a debt. See also "Deed In Lieu Of Foreclosure".

Foreclosure

Remedial court action taken by a mortgagee when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor.

Forward Commitment

Lender's commitment to make or assume a future loan.

Freehold

The ownership of a tract of land on which the building(s) are located. The oldest and most common typed of ownership of real estate.

Full Recourse

A loan on which an endorser or guarantor is liable in the event of default by the borrower.

Full Service Rent

An all-inclusive rental rate that includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increase in operating expenses over the base year amount. See also "Pass Throughs".

Fully Amortized Loan

Mortgage loan wherein the stipulated repayments repay the loan in full by its maturity date.

Further Charge

A second or subsequent loan of money to a mortgagor by a mortgagee, either on the same or on an additional security.

Future Proposed Space

Space in a proposed commercial development which is not yet under construction or where no construction start date has been set. Future Proposed projects include all those projects waiting for a lead tenant, financing, zoning, approvals or any other event necessary to begin construction. Also may refer to the future phases of a multi-phase project not yet built.

G/E Capitol

The General Electric Capitol Corporation insures high ratio mortgages for lenders.

Gale Date

The dates on which interest is charged or compounded on the mortgage loan.

Gap Financing

A loan required by a builder to obtain funds during the period between a permanent take out commitment and a construction loan. The construction lender will usually require permanent mortgage commitment to the full amount of the construction loan plus a hold back provision that only the "floor" amount will be funded at the completion of construction.

General Contractor

The prime contractor who contracts for the construction of an entire building or project, rather than just a portion of the work. The general contractor hires subcontractors, (e.g., plumbing, electrical, etc.), coordinates all work, and is responsible for payment to subcontractors.

General Partner

A member of a partnership who has authority to bind the partnership. A general partner also shares in the profits and losses of the partnership. See also “Limited Partnership”.

Graduated Amortization Mortgage

A special method of repayment on a mortgage whereby repayments in the initial period are low and are gradually later stepped up at a higher rate. Graduated payments mortgages were devised to enable lower income families to become home owners.

Graduated Lease

A lease, generally long term in nature, which provides that the rent will vary depending upon future contingencies, such as a periodic appraisal, the tenant’s gross income or simply the passage of time.

Grant

A technical term used in deeds of conveyance to indicate a transfer of an interest or estate in land.

Grant

To bestow or transfer an interest in real property by deed or other instrument; either the fee or a lesser interest, such as an easement.

Grantee

One to whom a grant is made.

Grantee

The party to whom an interest in real property is conveyed (the buyer).

Grantor

The person making the grant.

Grantor

The person who conveys an interest in real estate by deed (the seller).

Gross Absorption

A measure of the total square feet leased over a specified period of time with no consideration given to space vacated in the same geographic area during the same time period. See also “Net Absorption”.

Gross Building Area

The total floor area of the building measuring from the outer surface of exterior walls and windows and including all vertical penetrations (e.g. elevator shafts, etc.) and basement space.

Gross Debt Service (GDS)

The percentage of gross annual income required to cover payments associated with housing.

Gross Debt Service Ratio

Allowable ration of payments for principal, interest and taxes to gross income.

Gross Income

The scheduled income from the operation of the business of the management of the property, customarily stated on an annual basis.

Gross Lease

A lease in which the tenant pays a flat sum for rent out of which the landlord must pay all expenses such as taxes, insurance, maintenance, utilities, etc.

Gross Rent Multiplier

Method of appraising the fair market value of property by multiplying the gross rents by a factor which varies according to the type of property, and the location o the property.

Ground Rent

Rent paid to the owner for use of land, normally on which to build a building. Generally, the arrangement is that of a long-term lease (e.g. 99 years) with the lessor retaining title to the land.

Guaranteed Income Mortgage
Guarantor

A third party without interest in the property who agrees to assume responsibility for a debt in the event of default by the mortgagor.

Guarantor

One who makes a guaranty. See also “Guaranty”.

Guaranty

Agreement whereby the guarantor undertakes collaterally to assure satisfaction of the debt of another or perform the obligation of another if and when the debtor fails to do so. Differs from a surety agreement in that there is a separate and distinct contract rather than a joint undertaking with the principal. See also "Guarantor".

Hard Cost

The cost of actually constructing the improvements (i.e. construction costs). See also “Soft Cost”.

High Ratio Mortgage

A mortgage loan which exceeds 75% of the lending value of the property, and must be insured against default of payment.

High Rise

In the Central Business District, this could mean a building higher than 25 stories above ground level but in suburban sub-markets, it generally refers to buildings higher than 7 or 8 stories.

Highest and Best Use

The use of land or buildings which will bring the greatest economic return over a given time which is physically possible, appropriately supported, financially feasible.

Hold Back

An amount of money retained by a construction lender or owner until satisfactory completion of the work performed by a contractor.

Hold Over Tenant

A tenant retaining possession of the leased premises after the expiration of a lease.

Heating, Ventilating and Air-Conditioning (HVAC)

The acronym for “Heating, Ventilating and Air-Conditioning”.

Immediate Participation Loan

A loan in which all of the partners contribute their share immediately.

Improvements

In the context of leasing, the term typically refers to the improvements made to or inside a building but may include any permanent structure or other development, such as a street, sidewalks, utilities, etc. See also “Leasehold Improvements”. See also “Leasehold Improvements” and "Tenant Improvements".

Income Bond

Bonds which pay a fixed rate of interest contingent upon earnings. These bonds may originate from a reorganization because of a default on mortgage bonds.

Income Property Loan

A loan which is secured on property which already has a source of income, eg. Rents which will cover the debt service payments on the loan.

Income/Expense Ratio

Ratio of operation expenses to gross income and expressed as a percentage (also known as operating ratio).

Indenture

A document of deed, usually in duplicate, expressing certain objects between the parties.

Indirect Costs

Development costs, other than material and labor costs which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.

Injunction

A judicial process or order requiring the person to whom it is directed to do or refrain from doing a particular thing.

Instrument

A form of written legal document.

Insurable Value

The term is used conventionally to designate the amount of insurance which may be carried on destructible portions of a property to indemnify the owner in the event of loss.

Interest (Rate)

The profit of a loan as expressed on a percentage basis.

Interest Adjustment

A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin, as interest payable is due from the date your mortgage is advanced.

Interest Escalation

Rate of interest on a loan is raised periodically during the term of the loan so as to encourage early repayment.

Interest Only Loan

Borrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.

Interim Financing

Interim loans are used to bridge the gap between the construction loan and the permanent loan (hence "bridge" loans) lasting form one to three years.

Intermediate Term Loan

A short-term loan from 3 to 5 years with no or partial amortization (balloon loan).

Intestate

A person who dies without a will, or leaves one which is defective in form, in which case the estate descends by operation of law to the next of kin.

Inventory

The total amount of rentable square feet of existing and any forthcoming space (whether it be a tenant vacating space or new buildings coming on the market), in a given category, for example, all warehouse space in a specified submarket. Inventory refers to all space within a certain proscribed market without regard to its availability or condition, and categories can include all types of leased space such as office, flex, retail and warehouse space.

Irrevocable

Incapable of being recalled or revoked; unchangeable, unalterable.

Joint And Several Note

Promissory note on which there are two or more promisors who are jointly and severally liable.

Joint Tenancy

Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.

Judgment Lien

An encumbrance that arises by law when a judgment for the recovery of money attaches to the debtor’s real estate. See also "Lien".

Judgment

The final decision of a court resolving a dispute and determining the rights and obligations of the parties. Money judgments, when recorded, become a lien on real property of the defendant.

Junior Financing

This is a subordinate mortgage or loan very often given by a seller of property, second in priority to an existing loan.

Just Compensation

Compensation which is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain). The theory is that in order to be “just”, the property owner should be no richer or poorer than before the taking.

Kicker

An extra bonus or additional payment over and above the fixed interest already paid to an investor eg. A percentage of gross profits or cash flow.

Loan-To-Value Ratio (LTV)

The ratio of the loan to the lending value of a property, expressed as a percentage.

Land Acquisition Loan

Loan advanced to acquire land as opposed to improving land or buildings.

Land Contract

A contract drawn between a buyer and seller for the sale of property.

Land Development Loan

Loan advanced for the purpose of developing raw land for residential and related uses.

Landlord’s Lien Or Warrant

A warrant from a landlord to levy upon a tenant’s personal property (e.g., furniture, etc.) and to sell this property at a public sale to compel payment of the rent or the observance of some other stipulation in the lease.

Landlord’s Lien

A type of lien that can be created by contract or by operation of law. Some examples are: (1) a contractual landlord’s lien as might be found in a lease agreement; (2) a statutory landlord’s lien; and (3) landlord’s remedy of distress (or right of distraint), which in not truly a lien but has a similar effect. See also "Lien".

Lease Agreement

The formal legal document entered into between a Landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights.

Lease Commencement Date:

The date usually constitutes the commencement of the term of the Lease for all purposes, whether or not the tenant has actually taken possession so long as beneficial occupancy is possible. In reality, there could be other agreements, such as an Early Occupancy Agreement, which have an impact on this strict definition.

Lease

An agreement whereby the owner of real property (i.e., landlord/lessor) gives the right of possession to another (i.e., tenant/lessee) for a specified period of time (i.e., term) and for a specified consideration (i.e., rent).

Leasehold Appraisal

A method of estimating the value of leasehold property.

Leasehold Improvements

Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by Landlord. See also “Tenant Improvements”.

Leasehold Mortgage

A mortgage given by a lessee on the security of the leasehold interest in the land.

Leasehold

A type of interest in a property that is certain only for a specified period of tie granted by contract.

Legal Description

A geographical description identifying a parcel of land by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion thereof that is subject to an easement or reservation.

Legal Description

A written description by which property can be definitely located, and which is acceptable for registration in a land registry system.

Legal Mortgage

A transfer of a legal estate or interest in property for the purpose of securing the repayment of a debt.

Legal Owner

The term is in technical contrast to equitable owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien. See also “Lien”.

Lending Value

An independent appraiser's value interpreted by the lender as to the worth of a property in the current market given a reasonable time period to sell the property.

Lessee 's Interest

The market value of property less the value of the lessor's interest. The present worth o the annual advantage, if any, accruing to the lessee by reason of the contract rent being less than the economic rent.

Lessee

Tenant under a lease.

Lessor

The person who grants us of the property under lease to a tenant.

Letter Of Attornment

A letter from the grantor to a tenant, stating that a property has been sold, and directing rent to be paid to the grantee (buyer). See also “Attorn”.

Letter Of Commitment

Letter written by the lender containing the amount of the loan, specified interest rate, term of loan, and specific conditions.

Renewal Option

A clause giving a tenant the right to extend the term of a lease, usually for a stated period of time and at a rent amount as provided for in the option language.

Rent Commencement Date

The date on which a tenant begins paying rent. The dynamics of a marketplace will dictate whether this date coincides with the lease commencement date or if it commences months later (i.e., in a weak market, the tenant may be granted several months free rent). It will never begin before the lease commencement date.

Rent Contract

Rental received by the real estate owner under any lease contract.

Rent Economic

Is the income that real estate can command in the open market at any given time for its highest and best use.

Rent

Compensation or fee paid, usually periodically (i.e. monthly rent payments, for the occupancy and use of any rental property, land, buildings, equipment, etc.

Rentable Square Footage

Rentable Square Footage equals the Usable Square Footage plus the tenant’s pro rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. The pro-rata share, often referred to as the Rentable/Usable (R/U) Factor, will typically fall in a range of 1.10 to 1.16, depending on the particular building. Typically, a full floor occupancy will have an R/U Factor of 1.10 while a partial floor occupancy will have an R/U Factor of 1.12 to 1.16 times the Usable Area.

Rentable/Usable Ratio

That number obtained when the Total Rentable Area in a building is divided by the Usable Area in the building. The inverse of this ratio describes the proportion of space that an occupant can expect to actually utilize/physically occupy.

Rental Concession

Concessions a landlord may offer a tenant in order to secure their tenancy. While rental abatement is one form of a concession, there are many others such as: increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many. See also "Abatement".

Rental Hold Back Standby Loan

A hold back is an amount withheld from the borrower under permanent financing until a certain occupancy rate is achieved. As this deprives the construction lender of full takeout protection, the developer may obtain a standby loan commitment to supplement the hold back.

Rental Requirements

This is the "ceiling" portion of a permanent loan commitment that is advanced upon reaching a minimum rental or occupancy rate.

Rental Value

The monetary amount reasonably expectable for the right to the agreed use of real estate. It may be expressed as an amount per month or other period of time, or per room, per front foot, or other unit of property.

Rent-Up Period

That period of time, following construction of a new building, when tenants are actively being sought and the project is approaching its stabilized occupancy.

Real Estate Owned (REO):

Real estate that has come to be owned by a lender, including real estate taken to satisfy a debt. Includes real estate acquired by lenders through foreclosure or, in settlement of some other obligation.

Representation Agreement

An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also “Exclusive Listing Agreement”.

Reproduction Cost

The cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.

Кequest For Proposal (“RFP”)

The formalized Request for Proposal represents a compilation of the many considerations that a tenant might have and should be customized to reflect their specific needs. Just as the building’s standard form lease document represents the landlord’s “wish list”, the RFP serves in that same capacity for the tenant.

Restriction

A limitation placed upon the use of property contained in the deed or other written instrument in the chain of title.

Rests

The periodical balancing of an account made for the purpose of converting interest into principal, and charging the party liable thereon with compound interest.

Return On Investment

(a) Free and clear return is calculated as the percentage of net operating income to total investment in the property (b) Cash flow return is the ratio of cash flow to equity investment (also know as return on equity and cash-on-cash return) (c) Total return is cash flow including loan amortization as a percentage of the total invested.

Reversion

The right to repossess and resume the full and sole use and proprietorship of real property which temporarily has been alienated by lease, easement o otherwise. According to the terms of the controlling instrument, the reversionary right becomes effective at a stated time or under certain conditions such as the termination of a leasehold, abandonment of a right-of-way, or at the end of the stimulated economic life of the improvements. The present or discounted value of something to be collected at some future date.

Right Of First Refusal

See “First Refusal Right”.

Right Of Survivorship

The distinguishing feature of joint tenancies which provides that, where land is held in undivided portions by co-owners, upon the death of any joint owner, his/her interest in the land will pass to the surviving co-owner, rather than his/her estate.

Right Of Way

The right to pass over another's land, more or less frequently, according to the nature of an easement.

Right

The interest one has in a piece of property. A claim or title enforceable by law.

Riparian Rights

The rights of the owners of land on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his/her land, including the right to acquire decretions, wharf slips, and fish therefrom.

Running With The Land

A covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent owners to either liability to perform it or the right to take advantage of it.

Sale And Leaseback

A method of financing where a property is sold to a purchaser who simultaneously enters into a long-term lease of the property with the vendor. The vendor (now lessee) remains in possession for the specified term of the lease and covenants to pay the rental to this purchaser (now lessor) as well as all operation expenses. This enables the user to free his cash investment in the real property for some other use.

Sale-Leaseback

An arrangement by which the owner occupant of a property agrees to sell all or part of the property to an investor and then lease it back and continue to occupy space as a tenant. Although the lease technically follows the sale, both will have been agreed to as part of the same transaction.

Sales Hold Back

A percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee.

Sandwich Lease

A lease in which the "sandwich party" is the lessee f one party and the lessor to another. Usually, the owner of the sandwich lease is neither the fee owner not the user of the property.

Sealed And Delivered

A term indicating that a conveyor has received adequate consideration a evidenced by his/her voluntary delivery. The word "sealed" adds more strength, since under old conveyancing law an official seal was used as a substitute for consideration.

Second Generation Or Secondary Space

Refers to previously occupied space that becomes available for lease, either directly from the landlord or as sublease space. See also "First Generation Space.

Second Mortgage

A mortgage loan granted, (and registered) when there is already a first mortgage registered against the property.

Second Mortgage

A mortgage on property that ranks below a first mortgage in priority. Properties may have two, three, or more mortgages, deeds of trust, or land contracts as liens at the same time. Legal sequence priority, indicated by the date of recording, determines the designation first, second, third, etc.

Security Deposit

A deposit of money by a tenant to a landlord to secure performance of a lease. This deposit can also take the form of a Letter of Credit or other financial instrument.

Seisen (Seizen)

Possession of real property under claim of freehold estate. This term originally referred to the completion of feudal investiture by which a tenant was admitted into the feud and performed the rights of homage and fealty. Presently it has come to mean possession under a legal right (usually a fee interest). As the old doctrine of corporeal investiture is no longer in force, the delivery of a deed gives seisin in law.

Servient Tenement

An estate or land over which an easement or some other service exists in favour of the dominant tenement.

Setback

The distance from the curb or other established line within which no buildings may be erected.

Setback Ordinance

Setback requirements are normally provided for by ordinances or building codes. Provisions of a zoning ordinance regulate the distance from the lot line to the point where improvements may be constructed.

Setback

The distance from a curb, property line or other reference point, within which building is prohibited.

Shell Space

The interior condition of the tenant's usable square footage when it is without improvements or finishes. While existing improvements and finishes can be removed, thus returning space in an older building to its "shell" condition, the term most commonly refers to the condition of the usable square footage after completion of the building's "shell" construction but prior to the build out of the tenant's space. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVAC, electrical or plumbing improvements but not demising walls or interior space partitioning. In a new multi-tenant building, the common area improvements, such as lobbies, restrooms and exit corridors may also be included in the shell construction. With a newly constructed office building, there will often be a distinction between improvements above and below the ceiling grid. In a retail project, all or a portion of the floor slab is often installed along with the tenant improvements so as to better accommodate tenant specific under-floor plumbing requirements.

Short Form Mortgage

Mortgage document which follows the exact language of the long form prescribed by law but is abbreviated, using shortened terminology, at the same time having the identical legal effect.

Single Family Dwelling

A residential property designed for occupancy by one family and situated on land zoned specifically for that purpose.

Site Analysis

The study of a specific parcel of land which takes into account the surrounding area and is meant to determine its suitability for a specific use or purpose.

Site Development

The installation of all necessary improvements, (i.e. installment of utilities, grading, etc.), made to a site before a building or project can be constructed upon such site.

Site Plan

A detailed plan which depicts the location of improvements on a parcel of land which also contains all the information required by the zoning ordinance.

Slab

The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building or laid slab-on-grade in the case of a non-structural, ground level concrete slab.

Soft Cost

That portion of an equity investment other than the actual cost of the improvements themselves (i.e. architectural and engineering fees, commissions, etc.) and which may be tax-deductible in the first year. See also “Hard Cost”.

Space Plan

A graphic representation of a tenant’s space requirements, showing wall and door locations, room sizes, and sometimes includes furniture layouts. A preliminary space plan will be prepared for a prospective tenant at any number of different properties and this serves as a “test-fit” to help the tenant determine which property will best meet its requirements. When the tenant has selected a building of choice, a final space plan is prepared which speaks to all of the landlord and tenant objectives and then approved by both parties. It must be sufficiently detailed to allow an accurate estimate of the construction costs. This final space plan will often become an exhibit to any lease negotiated between the parties.

Special Assessment

Any special charge levied against real property for public improvements (e.g., sidewalks, streets, water and sewer, etc.) that benefit the assessed property.

Specific Performance

A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.

Specific Performance

A requirement compelling one of the parties to perform or carry out the provisions of a contract into which he has entered.

Speculative Builder Or Developer

One who builds without having a commitment to buy or lease from a purchaser or tenant.

Speculative Space

Any tenant space that has not been leased before the start of construction on a new building. See also "First Generation Space".

Standby Commitment

A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.

Statement Of Adjustments

A statement prepared by lawyer setting out the details of a mortgage transaction.

Status Certificate

used to be called an ESTOPPEL CERTIFICATE: A written statement or certificate which states certain facts upon which the receiver of the statement or a third party may rely, eg. Lender's estoppel statement as to a purchaser or property. The lender cannot later deny the truth of these statements because a third party has relied and acted upon them.

Statute Of Frauds

A law which provides that certain contracts must be in writing in order to be enforceable at law. It includes real estate contracts.

Statute Of Limitations

That period of time specified by statute within which an action at law must be brought or else be forfeited.

Statute

A law established by an act of the legislature.

Step Down Lease

A lease providing for decreases in rental payment at specified dates.

Step Up Lease

Opposite to step-down lease.

Step-Up Lease (Graded Lease)

A lease specifying set increases in rent at set intervals during the term of the lease.

Straight Lease (Flat Lease)

A lease specifying the same, a fixed amount, of rent that is to be paid periodically during the entire term of the lease. This is typically paid out in monthly installments.

Strip Center

Any shopping area, generally with common parking, comprised of a row of stores but smaller than the neighborhood center anchored by a grocery store.

Subcontractor

A contractor working under and being paid by the general contractor. Often a specialist in nature, such as an electrical contractor, cement contractor, etc.

Subdivision Plat

A detailed drawing which depicts the manner in which a parcel of land has been divided into two or more lots. It contains engineering considerations and other information required by the local authority.

Subordination Agreement

As used in a lease, the tenant generally accepts the leased premises subject to any recorded mortgage or deed of trust lien and all existing recorded restrictions, and the landlord is often given the power to subordinate the tenant's interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.

Surety

One who at the request of another, and for the purpose of securing to him a benefit, voluntarily binds himself to be obligated for the debt or obligation of another. Although the term includes guarantor and the terms are commonly, though mistakenly, used interchangeably, surety differs from guarantor in a variety of respects.

Surface Rights

A right or easement granted with mineral rights, enabling the possessor of the mineral rights to drill or mine through the surface.

Survey

A document that illustrates the property boundaries and measurements, the position of major structures on that property, any registered or viable easements.

Survey

The process by which a parcel of land is measured and its boundaries and contents ascertained.

Survivorship

The right of a person t secure ownership by reason of his/her outliving someone with whom s/he shared undivided interest in the land.

Takeout Mortgage Loan

A long term mortgage loan that is advanced to borrower on completion of construction or in compliance with any other conditions in the loan commitment. The funds are normally used to pay off or take out the construction lender.

Taking

A common synonym for condemnation or any actual or material interference with private property rights but it is not essential that there be physical seizure or appropriation.

Tax Base

The assessed valuation of all the real property that lies within the jurisdiction of a taxing authority, which is then multiplied by the tax rate or mill levy to determine the amount of tax due.

Tax Lien

A statutory lien, existing in favor of the state or municipality, for nonpayment of property taxes which attaches only to the property upon which the taxes are unpaid.

Tax Roll

A list or record containing the descriptions of all land parcels located within the county, the names of the owners or those receiving the tax bill, assessed values and tax amounts.

Tenancy In Common

Ownership of ad by two or more persons: unlike joint tenancy in that interest f deceased does not pass to the survivor, but is treated as an asset o the deceased's estate.

Tenant (Lessee)

One who rents real estate from another and holds an estate by virtue of a lease.

Tenant At Will

One who holds possession of premises by permission of the owner or landlord, the characteristics of which are an uncertain duration (i.e. without a fixed term) and the right of either party to terminate on proper notice.

Tenant Improvement (“TI”) Allowance Or Work Letter

Tenant Improvement (“TI”) Allowance or Work Letter: Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount. Also commonly referred to as "Tenant Finish Allowance.

Tenant Improvements

Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord. See also “Leasehold Improvements”, “Workletter”.

Credit Worthy

Tenants that are considered "credit worthy" and attract or generate traffic for a retail facility (e.g. a supermarket in a neighborhood shopping center, a major chain or department store in a regional mall).

Tenure

A system of land holdings for a temporary time period.

Term

The length of time which a mortgage agreement covers. Payments made may not repay the outstanding principal by the end of the term because of a longer amortization period.

Time Is Of The Essence

Requires punctual performance of a contract on closing date and is indicated by so stating as in an Agreement of Purchase and Sale.

Title Insurance

A policy issued by a title company after searching the title and which insures against loss resulting from defects of title to a specifically described parcel of real property, or from the enforcement of liens existing against it at the time the title policy is issued.

Title Insurance

A policy which insures the lender against loss due to a flaw in the title of property held as collateral for a mortgage.

Title Search

A review of all recorded documents affecting a specific piece of property to determine the present condition of title.