Glossary of Real Estate Terms
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General lien. A lien on all property, both real and personal, of a debtor. Graduated lease. A lease that provides for specific increases or decreases in rent at definite times during the term of the lease. Grantee. A person to whom an interest in land is conveyed by deed, grant or other written instrument. Grantor. A person who transfers his or her interest in land to another by a written instrument. Gross lease. A lease of property whereby the lessor is to pay all property charges regularly incurred through ownership. Gross rent multiplier. A figure that produces an estimate of the property's value when used as a multiplier of the gross income of a property. Ground lease. A lease (usually of long duration) of land to a tenant who covenants to erect a building on the premises. The building is security for rentals. If the tenant defaults, the landlord may foreclose on the lease (see Subordinated ground lease). Hard construction costs. The costs of constructing a building shell plus most of the covering materials. Hardware. General term that includes the following: (a) hinges, butt or pivot; (b) lever handles, knobs or pulls; (c) latch-set, lockset, magnetic and friction catches; and (d) door closures, door holds, door bumpers. Highest and best use. That possible use of land that will produce the greatest net income and thereby develop the highest land value. High rise. An inexact term, usually denoting a building of steel frame construction regardless of the building height. Hold harmless. (See Save harmless.) Holding over. The act of a tenant retaining possession of the premises longer than the term expressed in the lease. HVAC. An abbreviation for heating, ventilating and air conditioning. Income approach. The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life. Insured. The indemnified person(s) or company(ies) who receive the proceeds of insurance in the event of insurable loss or damage. Interior partitions. All types of interior nonload-bearing partitions that enclose or subdivide tenant space. May be of steel, wood, glass, masonry or combinations of these materials. Such partitions may be either movable or non-movable, prefabricated or built on the job. Joint tenants. Two or more landowners who have been specifically named in one conveyance as joint tenants. Upon the death of a joint tenant, the surviving joint tenant or tenants receive the deceased tenant's interest by the right of survivorship, which is the important element of joint tenancy. Lease. A contract whereby, for a consideration (usually termed rent), one who is entitled to the possession of real property transfers such rights to another for life, for a term of years, month to month or at will. Leasehold. The interest or estate that a lessee of real estate holds under the provisions of a lease. Lessee. The tenant in a lease. Lessor. The landlord in a lease. Letter of Intent. (see Offer to lease.) Levy. To impose or assess a tax on a person or property. The amount of taxes to be imposed in a given district. License. Permission given by the landlord for a person to enter the premises of a tenant for a particular purpose. A license is of temporary character, purely a personal right, and cannot be sold. It is revocable. Lien. A right given by law to a creditor to have a debt or charge satisfied out of the property of the debtor. It applies to a particular piece or pieces of real or personal property. Load Factor. The load factor is the percentage of space on a floor that is not usable plus a pro-rata share of the building common area, expressed as a percent of Usable Area. It is also known as the Common Area Factor or the Loss Factor. See Office Space Measurement Market data approach. The process of estimating the value of property through the examination and comparison of actual sales of comparable properties. Market value. The highest price that a buyer ready, willing and able but not compelled to buy, would pay, and the lowest a seller ready, willing and able but not compelled to sell, would accept. Mechanic's lien. A lien established by law in favor of those who provide labor or material for the improvement of real estate. Month-to-month tenancy. A tenancy from month to month is generally created when no definite lease term is specified by the parties and the rent is payable monthly. Such a lease may be written or oral, and can be terminated by either party at the end of any month. Otherwise, it is renewed automatically from month to month on the same terms. Mullions. Metal strips placed at regular intervals along a window line. They are designed to receive a wall partition in a manner ensuring a smooth, soundproof connection. Net lease. Lease under which the tenant pays the agreed-upon rent plus utilities and taxes. Net-net-net lease. Lease under which the tenant pays the agreed-upon rent plus utilities, taxes, insurance and maintenance. Net operating income (NOI). The effective gross income from a property minus operating expenses. Notary public. An officer appointed by the governor with authority to take the acknowledgment of persons executing documents and to sign the certificate and affix a seal. Obsolescence. Lessening of value due to being out of date (obsolete) as a result of changes in design and use; and element of depreciation. Offer to lease. An agreement that binds the lessor to continuing negotiations in good faith once a qualified tenant has been found, until all negotiating points have been covered. In effect, it takes the space off the market during the negotiating period. Open listing. A listing contract under which the broker's commission is contingent upon the broker producing a buyer before the property is sold by the owner or another broker. Option. A contractual agreement giving one party a privilege of demanding, within a specified time, the carrying out of a transaction upon stipulated terms. Pass-through. Expenses or a portion of expenses associated with tenancy that are "passed through" from the landlord to the tenant who then pays them. Percentage lease. Lease under which the tenant pays a fixed minimum monthly rent plus a percentage of his or her gross monthly income in excess of that minimum. Used primarily in retail leases. Personal Property. Items (chattels) that do not fit the definition of realty; movable objects. Prime tenant. A tenant who occupies a great portion of the space available within a given building that may, in addition, be owned by that tenant. Principal. (1) A sum lent or employed as a fund or investment, as distinguished from its income or profits; (2) the original amount (as of a loan) of the total due and payable at a certain date; (3) a party to a transaction, as distinguished from an agent. Principal and agent. The relation created by express or implied contract or by law whereby one party delegates the transaction of some lawful business, with more or less discretionary power, to another who undertakes to manage the affair and render an account thereof. Procuring cause. A broker will be regarded as the 'procuring cause' of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun" Coles versus Pattison, 189 Okl. 160, 114 P. 2d 457, 458. Pro forma. A set of figures projecting costs and income on a proposed new property. Used as a basis for capitalization. Programming. A system in which specific requirements of the client are determined in written form and, when approved by the client, become the basis for all future planning. The effects of successful programming will be felt by the client as long as he or she lives with the facility executed. The client will have a flexible enclosure able to house immediate and long-range needs without disrupting his or her operation during growth periods. Public corridor. The space that leads to different tenants' spaces from a service core. Punch list. A list prepared by the architect, designer and owner and formally submitted to the contractor to note any deficiencies when the check all completed construction, which assures verification that such work has been accomplished in a good, workmanlike manner in respect to the contract documents. Quiet enjoyment. A covenant, usually inserted into leases and conveyances on the part of the grantor, promising that the tenant or grantee shall enjoy possession of the premises in peace and without disturbance. Real estate broker. Any person, co-partnership, association or corporation who, for a compensation or valuable consideration, sells or offers for sale, buys or offers to buy, or negotiates the purchase, sale, or exchange of real estate, or who leases or offers to lease or rents or offers for rent any real estate or the improvements thereon for others. Such a broker must secure a state license. For a license to be issued to a firm, it is usually required that all active partners and officers must be licensed real estate brokers. Real estate salesperson. Any person who, for a compensation or valuable consideration, is employed either directly or indirectly by a real estate broker to sell or offer to sell, or buy or offer to buy or negotiate the purchase, sale or exchange of real estate or to lease, rent or offer for rent any real estate or to negotiate leases thereof or the improvements thereon. Recapture. A clause in a lease agreement providing for lessor's retaking or recovering possession of the premises, usually by cancellation of the lease under certain conditions. Recording. The act of entering a record of documents affecting or conveying interest in real estate in a county recorder's office. Until recorded, a deed or mortgage generally is not effective against subsequent purchasers or mortgages or other third parties (see Constructive notice). Redemption period. A period established by state laws during which the property owner has the right to redeem his or her real estate from a foreclosure or tax sale by paying the sale price, interest and costs. (Many states do not have mortgage-redemption laws.) Rentable area. The generally accepted means of measuring space within an office building is the Building Owners and Managers association (BOMA) standard. From the inside of the outside wall (or in new buildings from the glass line) to the outside of the inside wall (or hall wall) and center to center on the division walls. Columns are included. Replacement cost. The current cost of replacing the subject property with property having exactly the same utility and amenities. Rules and Regulations. Building standards that are binding on the tenants are usually set forth in a part of the lease covering such things as use of common areas, door lettering, signs, noise, odors, moving or installation of equipment, special locks, etc. Save harmless. To indemnify another; to secure another against loss or damage or claims of a third party. Often referred to as hold harmless. Scheduled gross income. The rental rate of a property multiplied by the total rentable space. Schematic design. (1) A design concerning the building program resulting from inspection of the site and conferences with the client. The client's needs and requirements are carefully analyzed. Zoning regulations and codes affecting the work are studied. Sketches and statements of probable construction costs are prepared for the owner's approval. (2) A suggested plan, design or program of action. Space analysis. An analysis of an existing office situation to locate problem areas and to provide a basis for judgment in evaluating major changes. Also, it can be in the form of planning tools that will be used by the client in developing a planning decision. This includes space standards, adjacency requirements and space requirements. Space planning. Architecturally designing any space with all the amenities and mechanical gadgets to make it more functional for the occupants. Besides amenities, gadgets and good communication systems, it includes better sound and light control within the space. Space standards. The standard-size spaces for particular functions--a necessary tool in planning for any growing organization. The absence of standards leads to a situation where space is allocated to offices in a haphazard, nonfunctional manner. Statute of frauds. A state law that requires certain classes of contracts, engagements and/or transfers of interest in real estate to be made in writing in order to be enforceable in a court of law. Details of this law vary from one state to another. (The original Statute of Frauds was passed in England in 1677.) Sublease. A lease executed by the lessee of an estate to a third person that conveys the same estate for a shorter term, or a portion of the estate for the same or a shorter term, is a sublease. When the entire estate is sublet for the entire remainder of the term, it is call an assignment. Subordinated ground lease. A ground lease in which the lessor (owner) places his right in relation to the structure behind that of others, such as the holder of the construction loan or permanent mortgage (see Ground lease). Subordination. An agreement by which a lien-holder, a lessee or one having an interest or claim in or against personal or real property places the interest behind that of another. Task lighting. Overhead lighting systems that provide each workspace with individual overhead lighting controls. Designed to conserve energy by lighting only work areas that are occupied at any given time. Tenancy at sufferance. A tenancy that exists when, after expiration of a lease, the tenant remains in possession without the consent of the landlord or the person entitled to possession. No notice is required to terminate this tenancy. Tenancy at will. One wherein the landlord agrees that the tenant may stay in possession after expiration of the lease and pay rent for the time the space is occupied, until either landlord or tenant desires to terminate the tenancy. Tenant representation agreement. A contract under which a client agrees to work through no salesperson except the one designated in the agreement. Thermopane. A brand name (now used generally) for a window-glass construction that has insulating qualities. Two layers of glass are separated by an air space. Also called double-glazing insulating glass. Thermostat. A device actuated by temperatures that regulates and controls dampers, valves, switches or other mechanisms. Trade fixtures. Articles installed by a tenant under terms of a lease and removable by the tenant before the lease expires. These remain personal property; they are not true fixtures. Triple net lease. (See Net-net-net lease.) Turn-key. Refers to an office that is prepared for the tenant to turn the key and get to work. It can refer to tenant improvements in which all of the improvements are made by the landlord and allows the tenant to move their furniture and equipment in without having to do any improvements themselves. It also refers to executive suites where an office includes furniture, phones and internet access. Unit office space. Fully enclosed or semi-enclosed space, providing workspace for a single occupant and involving a circulation provision required to access the space. Usable area. Any area in a given floor that could be used by the tenant. This area includes a point from the perimeter glass line to demising walls; it also includes column areas within such a space. Value. The power of a thing to command other goods in exchange; the present worth of future rights to income and benefits arising from ownership. Wall base. A defined material applied to the base of walls for general protection and finish. Although it can be provided in various materials, the primary material is vinyl or rubber. The base is available in various heights and colors. It is also available as a straight or flat base, for carpeted areas, or a cove base, which is normally used for tile floors as a maintenance and finish advantage. Water closet (W.C.). A toilet. Wet columns. Columns where provisions are made to have a plumbing fixture for drinking fountains, sink, etc.; the pipes are taken through the small enclosure (chase) against the column. Working drawings. Detailed floor-space plans that diagram all improvements to be made. They are designed as instructions to the various contractors involved. Work letter. That part of the lease stated in detail pertaining to all work that is to be done for a tenant by a landlord. |
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