Real Estate Glossary Of Terms A - C

 

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 parcels of 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.

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 a seller wishes to receive 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 Payment: The final payment due under a partially amortized mortgage that is larger than the periodic payments made during the term of the loan.

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: A specific lease term used to compare subsequent years; usually when calculating operating expense pass throughs.

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 utilizing the latest construction technology and finish.. Usualy located in prime locations with easy access, and offering a multitude of amenities fortenants. The class of a building may vary depending on the location of the property. Each market is specific as to classification. What is a class B in one market might be a class C in a different market.

Building Core: The section of a building where the restrooms, ventilation shafts, electrical distribution, elevator shafts, and stairwells are located.

Building Standard: Project specifications set 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.

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 Costs: 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 free of any liens (including a mortgage.)

Closing: The conclusion of a sales transaction when the seller transfers title to the buyer in exchange for consideration.

Closing Costs: Costs a 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, appraisal, prepayments for property taxes, deed recording fee and property insurance.

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 licensee 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.

Comparables: Properties similar to a particular property. Used to compare and establish a value.

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.

Contiguous Space: Multiple suites/spaces within the same building and on the same floor which can be combined and rented as a single unit; Or, a block of space located on multiple adjoining floors in a building.

Contingency: A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event.

Conveyance: 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 changes terms.

CPI (Consumer Price Index): Used to index rent rate escalations.

CPM (Certified Property Manager): Professional designation conferred by Institute of Real Estate Management; requires extensive education and experience.