| A
|
| 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.
|
| B
|
| 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
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.
|
| C
|
| 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.
|
| D
|
| 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.
|
| E
|
| 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.
|
| F
|
| 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.
|
| G
|
| 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.
|
| H
|
| 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
|
| I
|
| 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.
|
| L
|
| 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
FactorLoad
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.
|
| M
|
| 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.
|
| N
|
| NACORE |
International
Association of Corporate Real Estate Executives. One of the
most progressive corporate real estate training and education
programs in the world.
|
| NAIOP |
National
Association of Industrial and Office Parks
|
| Net
Lease |
Type
of lease whereby the Tenant pays for part or all of the operating
expenses which may include utilities, janitorial, property insurance,
property management, sewer, water & garbage.
|
| Net
Net Net (NNN) Lease |
Type of lease where Tenant generally pays for
all operating expenses. May even include responsibility for
roof and structural repair or replacement.
|
| Non-compete
clause |
A
clause that can be inserted into a lease specifying that the
business of the tenant is exclusive in the property and that
no other tenant operating the same or similar type of business
can occupy space in the building.
|
| O
|
| Operating
expenses |
The
actual costs associated with operating a property including
maintenance, repairs, management, utilities, taxes and insurance.
|
| P
|
| Parking
ratio or index |
The number of parking spaces available expressed
in relationship to the rentable square footage. Expressed as
X spaces per 1000 square feet, a building that offered 2 spaces
for every 1000 square feet would show a parking ration of 2:1000.
|
| Percentage
Lease |
Lease
in which all or part of the rental is a specified percentage
of gross income from total sales made upon the premises.
|
| Personal
Guaranty |
The guarantee of someone to be individually responsible
for the obligations of the lease. Generally for Subchapter S
closely held companies and small businesses, a lessor may ask
for a personal guaranty as a way to insure that the lease payments
will be made.
|
| Plat
book |
A
record or recorded subdivisions of land
|
| Preleased |
Refers
to space in a proposed building that has been leased before
the start of construction or in advance of the issuance of a
Certificate of Occupancy.
|
| Prime
rate |
The
interest or discount rate charged by a commercial bank to its
largest and strongest customers.
|
| Property
taxes |
Taxes
that are paid yearly on real property. Property taxes are ad
valorem, based on the assessed value of the real property.
|
| Pro-rata |
Proportionately;
according to measure, interest or liability.
|
| Pro-rate |
To
divide or distribute proportionally. At closing, various expenses
such as taxes insurance, interest, rents etc are prorated between
the seller and the buyer.
|
| Punch
list |
An
itemized list, typically prepared by the architect or construction
manager documenting incomplete or unsatisfactory items after
the contractor has notified the owner that the tenant space
is substantially complete.
|
| Purchase
Option |
Option
to purchase leased property either at the end of the lease term
or if some other specific criteria are met by the lessee.
|
| Q
|
| Quiet
enjoyment |
The
right of a property owner or tenant to enjoy his or her property
without interference.
|
| R
|
| Raw
space |
Unimproved
shell space in a building.
|
| Real
property |
Land,
and generally whatever is erected or affixed to the land, such
as buildings, fences and including light fixtures, plumbing
and heating fixtures or other items which would be personal
property if not attached.
|
| REALTOR¨ |
A
real estate broker or associate who holds active membership
in a local real estate board that is affiliated with the National
Association of Realtors¨.
|
| Receiver |
Court-appointed
custodian who holds property for the court, pending final disposition
of the matter before the court.
|
| Recorded
plat |
A
subdivision map filed with the county recorder's office that
shows the location and boundaries (lot and block number) of
individual parcels of land.
|
| 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 provided
for in the option language.
|
| Rentable
Square Feet |
Usually
the space measurement which incorporates both the "usable square
foot" measurement as well as the common area. The difference
between usable and rentable is generally between 10% - 15%.
|
| Right
of first refusal |
1)
A lease clause giving a tenant the first opportunity to buy
a property at the same price and on the same terms and conditions
as those contained in a third party offer that the owner has
expressed a willingness to accept.
2) A lease clause giving a tenant the first opportunity to lease
additional space that may become a |
