| Abatement |
Often
and commonly referred to as free
rent or early occupancy and may
occur outside or in addition to
the primary term of the lease.
|
| Absorption |
The
rate, expressed as a percentage,
at which available space in the
marketplace is leased during a
predetermined period of time.
|
| Abstract of Title |
A
condensed version of the history
of title to a piece of land that
lists any transfers in ownership,
as well as any liabilities attached
to it, such as mortgages. |
| Abutting |
The
joining, reaching or touching
of adjoining land. Abutting pieces
of property have a common boundary
|
| Acceleration clause |
A
provision in a written mortgage,
note, bond or conditional sales
contract that, in the event of default,
the whole amount of principal and
interest may be declared to be due
and payable at once. |
| Acre |
A
measure of land equal to 43,560
square feet. |
| Ad Valorem |
According
to value. |
| Adjustable Rate Mortgage (ARM) |
A
mortgage loan whose interest rate
fluctuates according to the movements
of an assigned index or designated
market indicator--such as the weekly
average of one-year US Treasury
Bills--over the life of the loan.
To avoid constant and drastic fluctuations,
ARMs typically limit how often and
by how much the interest rate can
vary. |
| Adjustment Date |
The
date on which the interest rate
changes for an adjustable rate mortgage
(ARM). |
| Alienation Clause |
A
clause in a mortgage, which gives
the lender the right to call the
entire loan balance due if the property
is sold, also known as a due-on-sale
clause. |
| Amortization |
Calculation
to determine a regular-interval
payment plan over time, with interest,
to pay a set sum. |
| Anchor Tenant |
The
major or prime tenant in a shopping
center, building, etc. |
| Annual Percentage Rate (APR) |
The
actual cost of borrowing money,
expressed in the form of an annual
interest rate. |
| Appraisal |
A
determination of the value of something
by a qualified, disinterested expert.
|
| Appreciation |
An
increase in value or worth of property.
|
| Asking (list) price |
The
price placed on a property for sale.
|
| Assignee |
A
person to whom a property right
is transferred. |
| Assumable Mortgage |
An
existing mortgage that can be taken
over by the buyer on the same terms
given to the original borrower.
|
| Assumption of Mortgage |
The
transfer of title to property to
a grantee wherein he assumes liability
for payment of an existing note
secured by a mortgage against the
property. |
| 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 on the leased premises. |
 
|
| Balloon Mortgage |
A
mortgage where the final payment
is considerably larger than the
preceding payments. |
| 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.
|
| Base Year |
The
year of a lease term which is used
to compare subsequent years; usually
when calculating operating expense
pass throughs. |
| BOMA |
Building
Owners and Managers Association
|
| BOMA Standard |
A
nationally published standard of
measuring office space. Standards
are published by other organizations
and can affect how the size of space
is calculated. |
| Brokerage |
For
a commission or fee, bringing together
parties interested in buying, selling,
exchanging or leasing real property.
|
| 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 credit
to tenants and which offer multitude
of amenities to tenants. The class
of a building may vary depending
on the location of the property.
What is a class B in one market
might be a class C in a different
market. Also, as the class of the
building decreases (moves from A
to B etc) the rents tend to decrease.
|
| Building Core |
The
section of the building where the
restrooms, ventilation shafts, electrical
distribution, elevator shafts and
stairwells are located. |
| Building Standard |
The
project specifications set out by
the owner, usually in conjunction
with the project architect. Details
the type, quality and color selection
available with respect to carpet,
paint, light fixtures, wall coverings
and other project finishes. |
| Build-out |
The
space improvements put in place
per the tenant's specifications.
|
| Build-to-suit |
An
approach taken to lease space by
a property owner where a new building
is designed and constructed to the
tenant's specifications. |
| Buyer's broker |
A
licensee who has declared to represent
only the buyer in a transaction,
regardless of whether compensation
is paid by the buyer or the listing
broker through a commission split.
|
|
| Calendar Year |
A
year using the actual number of
days in each month for a total of
365 days in a year (366 days in
a leap year). |
| Cap |
The
maximum allowable increase, for
either payment or interest rate,
for a specified amount of time on
an adjustable rate 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. |
| Carrying Charges |
Costs
incidental to property ownership,
other than interest (i.e. taxes,
insurance costs & maintenance
expenses) that must be absorbed
by the landlord during the initial
lease up of a building and thereafter
during periods of vacancy. |
| Ceiling |
The
maximum allowable interest rate
over the life of the loan of an
adjustable rate mortgage. |
| 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.
|
| Clear Title |
A
title that doesn't have any liens
(including a mortgage) against it.
|
| Closing |
The
conclusion of a sales transaction
when the seller transfers title
to the buyer in exchange for consideration.
|
| Closing Costs |
Costs
the buyer must pay at the time of
closing, in addition to the down
payment which may include points,
title charges, credit report fee,
document preparation fee, mortgage
insurance premium, inspections,
appraisals, prepayments for property
taxes, deed recording fee and property
insurance. Closing costs can vary
considerably from one financial
institution to another. |
| Closing Statement |
A
detailed written summary of the
financial settlement of a real estate
transaction showing all charges
and credits made, and all cash received
and paid out. |
| Commission |
The
compensation paid to a licensed
real estate broker or by the broker
to the salesperson for services
rendered. Usually a percentage of
the selling price of the property
or the total value of the lease.
|
| Common area |
There
are two components of the term common
area. If referred to with the Load
Factor calculation, the common areas
are those areas within a building
that are available for common use
by all tenants of groups of tenants
and their invitees. On the other
hand, the cost of maintaining parking
facilities, malls, sidewalks, public
toilets, service facilities and
the like are included in the term
"common area" when calculating the
tenants pro-rata share of building
operating expenses. |
| Common Area Maintenance (CAM) |
This
is the amount of additional rent
charged to the tenant in addition
to the base rent to maintain the
common areas of the property shared
by the tenants and from which all
tenants derive some benefit. Most
often, this does not include capital
improvements (see capital expenses)
that are made to the property. |
| Comparables |
Properties
which are similar to a particular
property and are use to compare
and establish a value for that property.
|
| Concessions |
Cash
or cash equivalents expended by
the landlord in the form of rental
abatement, additional tenant finish
allowance, moving expenses, cabling
expenses or other monies expended
to influence or persuade the tenant
to sign a lease. |
| Condemnation |
The
process of taking private property,
without the consent of the owner,
by a governmental agency for public
use through the power of eminent
domain. |
| Condominium |
A
form of real estate, usually a dwelling
with individual ownership of separate
portions of the building plus shared
ownership of the common areas. Also
found in industrial parks, where
individual units are separately
owned, but the common areas (such
as guard gates, common landscaping,
etc) are shared. |
| Contiguous space |
1)
Multiple suites/spaces within the
same building and on the same floor
which can be combined and rented
as a single unit.
2) A block of space located on multiple
adjoining floors in a building.
|
| Contingency |
A
provision in a contract stating
that some of all of the terms of
the contract will be altered or
voided by the occurrence of a specific
event. |
| Conveyance |
Most
commonly refers to the transfer
of title to property between parties
by deed. The term may also include
most of the instruments by which
an interest in real estate is created,
mortgaged or assigned. |
| Coterminous |
Two
or more leases that end at the same
time. |
| Counter offer |
The
rejection of an offer to buy or
sell that simultaneously makes a
different offer, changing the terms
in some way. |
| CPI
|
Consumer
Price Index. Sometimes used to index
rental rate escalations. |
| CPM
|
Certified
Property Manager. Professional designation
conferred by Institute of Real Estate
Management; requires extensive specialized
education and experience. |
|
| DBA |
Doing
Business As. Business names or aliases
filed with the county. |
| Debt
Service |
The
total amount of debt which you must
pay. |
| Deed
|
A
written instrument by which title
to land is conveyed. |
| Default |
The
failure to meet an obligation, including
lease clauses (i.e. timely rent
payment, tenant use of premises,
etc) and mortgages (i.e. timely
mortgage payments, timely payoff
upon due date). |
| Demising walls |
The
partition wall that separates one
tenant's space from another or from
the building's common area such
as a public corridor. |
| Depreciation |
A
loss in value. |
| Disclosure |
The
making known of a fact that had
previously been hidden. |
| Down
payment |
An
amount of money the buyer pays which
is the difference between the purchase
price and the mortgage amount. |
|
| Earnest money |
A
deposit made by the buyer as evidence
of good faith in offering to purchase
real estate and to secure performance
of the contract. Earnest money is
typically held by a title company,
in an escrow account during the
period between acceptance of the
contract and the closing. |
| Easement |
A
right to use another person's real
estate for a specific purpose. The
most common type of easement is
the right to travel over another
person's land, knows as a right
of way. In addition, property owners
commonly grant easements for the
placement of utility poles, utility
trenches, water lines or sewer lines.
The owner of property that is subject
to easement is said to be "burdened"
with the easement because he or
she is not allowed to interfere
with its use. |
| Effective rent |
The
actual rental rate to be achieved
by the landlord after deducting
the value of concessions from the
base rental rate paid by the tenant,
usually expressed as an average
rate over the term of the lease.
|
| Eminent domain |
The
right of the government to take
private property for public use,
through court action known as condemnation.
The Fifth Amendment to the United
States Constitution provides that
the government may take private
property only if the owner is given
"just compensation" (usually fair
market value) for his or her loss.
|
| Encroachment |
The
intrusion of a structure which extends,
without permission, over a property
line, easement boundary or building
setback line. |
| Encumbrance |
A
cloud against clear free title to
the property which does not prevent
conveyance such as unpaid taxes,
easements, deed restrictions, mortgage
loans etc. |
| Environmental impact study |
Documents
which are required by federal and
state laws to accompany proposals
for major projects and programs
that will likely have an impact
on the surrounding area. |
| Escalation clause |
A
clause in a lease which provides
for the rent to be increased to
reflect changes in expenses paid
by the landlord such as real estate
taxes, operating costs, etc. |
| Escrow |
A
trust arrangement by which one or
more parties deposit things of value
with an authorized escrow agent
in accordance with the terms of
a real estate agreement. |
| Escrow Account |
1)
A third party account which holds
money safely while a sale is in
progress.
2) An account used to save monies
required for the payment of an eventual
debt. |
| Estoppel certificate |
A
signed statement certifying that
certain statements of fact are correct
as of the date of the statement
and can be relied upon by a third
party, including a prospective lender
or purchaser. |
|
| Fair Market Value |
The
price a willing buyer will pay a
willing seller for a leased property
on an "as is, where is" basis with
both under no compulsion to either
buy or sell. |
| Financial Statements |
Accounting
statements that provide specific
information about a company's financial
position The include the Profit
and Loss Statement, also known as
the Income Statement, the Balance
Sheet, and the Statement of Cash
Flows. Financial statements can
generally be audited by an outside
CPA firm or unedited and, thus,
prepared by the company. |
| First generation space |
Generally
refers to new space that is currently
available for lease and has never
before been occupied by a tenant.
|
| Fixture |
Personal
property which has been attached
to real estate so as to become a
part of the real property. The article
must meet one of three conditions:
1) attached in a permanent manner
2) specially adapted to the property
or 3) intentionally made part of
the real property. |
| Flex
space |
A
building providing its occupants
the flexibility of utilizing the
space. Usually provides a configuration
allowing a flexible amount of office
or showroom space in combination
with manufacturing, laboratory,
warehouse etc. |
| Force majeure |
A
force that cannot be controlled
by the parties to a contract and
prevents said parties from complying
with the provisions of the contract,
for example a hurricane. |
| Foreclosure |
A
procedure by which the mortgagee
(lender) either takes title to or
forces the sale of the mortgagor's
(borrower's) property in satisfaction
of a debt. |
| 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. |
|
| Government survey method |
A
system of land description which
uses meridians (north and south
lines) and base lines (east and
west lines). Areas include quadrangles
(24 miles on each side), townships
(6 miles on each side) and sections
(1 mile on each side). |
| Gross lease |
A
lease in which the tenant pays a
flat sum for rent out of which the
landlord must pay all expenses.
|
| Gross Square Foot |
Usually
the total building square footage,
including elevator shafts, vertical
penetrations, equipment areas, ductwork
shafts and stairwells. |
| Ground rent |
Rent
paid to the owner for use of land,
normally on which to build a building.
|
|
| 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
and financially feasible. |
| Hold
harmless |
In
a contract, a promise by one party
not to hold the other party responsible
if the other party carries out the
contract in a way that causes damage
to the first party. |
| Hold
over tenant |
A
tenant retaining possession of the
leased premises after the expiration
of a lease. |
| HVAC
|
Heating
Ventilation and Air Conditioning
|
|
| IREM |
Institute
of Real Estate Management. Asset
and property managers, extensive
educations programs, conferences
and networking. |
| ISDN
|
Integrated
Services Digital Network A high-speed
data and media communication system,
as much as ten or more times faster
than conventional phone lines. |
|
| Lease |
A
contract giving the lessee the right
to use the leased property for a
period of time. |
| Lease Term |
The
fixed term of the lease. |
| 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
improvement to be made in the leased
premises by the landlord. |
| Legal description |
A
description of a specific parcel
of real estate which is acceptable
to the courts in that state, and
which allows an independent surveyor
to locate and identify it. Usually
it uses one of the following methods:
government survey, metes and bounds
or recorded plat (lot and block
number). |
| Lessee |
The
user of the leased property under
the lease. |
| Lessor |
Depending
on the type of the lease, either
the owner of the leased property
or the owner of the security interest
in the leased property. |
| Letter of Credit |
A
specific arrangement between a lessee
and one of its banks. The bank agrees
in the event of a defined event,
the lessor can look to the bank
to make payment instead of the lessee.
This is similar to a security deposit
in that it is one way for a lessor
to insure that it will be paid under
the lease. |
| Letter of intent |
A
preliminary agreement stating the
proposed terms for a final contract.
They can be binding or non-binding.
|
| Lien
|
A
monetary claim against a property.
These should be settled before the
sale is finalized. |
| Listing agreement |
The
legal agreement between the listing
agent/broker and the vendor, setting
out the services to be rendered,
describing the property for sale,
and stating the terms of payment.
|
| Load
Factor |
The
common area calculation used to
convert usable square foot measurements
(usually, the physical space actually
occupied by the tenant) to rentable
square foot calculations. Usually
includes a pro rata share of restrooms,
lobby and common hallways. |
|
| Market rent |
The
rental income that a property would
command on the open market with
a landlord and a tenant ready and
willing to consummate a lease in
the ordinary course of business;
indicated by the rents that landlords
are willing to accept and tenants
are willing to pay in recent lease
transactions for comparable space.
|
| Mechanic's lien |
A
legal claim placed on real estate
by someone who is owed money for
labor, services or supplies contributed
to the property for the purpose
of improving it. |
| Metes and bounds |
A
system of land description using
distance (metes) and angles/compass
directions (bounds) beginning and
ending at the same point. |
| Mixed-use |
Space
within a building or project providing
for more than one use (i.e. a loft
or apartment project with retail,
an apartment building with office
space). |
| Month-to-month tenancy |
A
rental agreement that provides for
a one month tenancy that is automatically
renewed each month unless either
tenant or landlord gives the other
the proper amount of notice (usually
30 days) to terminate the agreement.
|
| Mortgage |
A
contract providing security for
repayment of a loan, registered
against property with stated rights
and remedies in the event of default.
|
|
Useful
TIP Center 
