|
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. |
| |
|
|
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. |
| |
|
|
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. |
|
|
|
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. |
|
|
|
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.
|
|
|
|
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. |
|
|
|
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. |
|
|
|
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 |
|
|
|
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. |
| |
|
|
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.
|
| |
|
|
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. |
|
|
|
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. |
|
|
|
The actual costs associated
with operating a property including maintenance, repairs,
management, utilities, taxes and insurance. |
|
|
|
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. |
|
|
|
The right of a property owner
or tenant to enjoy his or her property without interference.
|
|
|
|
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 available in
a property at the same price and under the same terms
and conditions as those contained in a third party offer
that the owner has expressed willingness to accept. |
|
|
|
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. |
Second
generation space |
Refers to previously occupied
space that becomes available for lease, either directly
from the landlord or as sublease space. |
Security
deposit |
A payment required by a landlord
to ensure that a tenant pays rent on time and keeps the
rental unit in good condition. If the tenant damages the
property or leaves owing rent, the landlord can use the
security deposit to cover what the tenant owes. |
Setback
|
The distance a building must
be set back from the property lines in accordance with
local zoning ordinances or deed restrictions. |
Shadow
Market |
The "unofficial" vacancy
portion of the office market caused by available sublease
space and/or excess space leased but not occupied by office
users. |
SIOR
|
Society of Industrial and Office
Realtor. One of the oldest professional commercial designations
in the United States. Approximately 1,500 members worldwide.
Emphasis on corporate office and industrial real estate.
|
Site
development |
The installation of all necessary
improvements (installment of utilities, grading etc) made
to a site before a building or project can be constructed
on such a 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 zoning ordinances.
|
Slab
|
The exposed wearing surface
laid over the structural support beams of a building to
form one of the floor(s) of the building or laid slab
on grade in the case of non-structural ground level concrete
slab. |
Space
plan |
A graphic representation of
a tenant's space requirements, showing all wall and door
locations, room sizes, and sometimes furniture layout.
|
Special
assessment |
Any special charge levied against
real property for public improvements that benefit the
assessed property. |
Specific
performance |
Carrying out the precise terms
agreed upon in a contract. |
Stacking
Plan |
Schematic illustrating tenancies
on a floor-by-floor basis. Useful in forecasting how to
accommodate growth tenants and identifying larger blocks
of space. |
Sublease
|
A rental agreement or lease
between a tenant and a new tenant (called a sublessee)
who will either share the rental or take over from the
first tenant. The sublessee pays rent directly to the
tenant. The tenant is still completely responsible to
the landlord for the rent and for any damages, including
those caused by the sublessee. Most landlords prohibit
subleases unless they have given prior written consent.
|
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 on the leased
premises. |
Survey
|
The process by which a parcel
of land is measured and its boundaries and contents are
ascertained. |
|
|
|
A list or record containing
the descriptions of all land parcels located within the
county, the names of the owners, the assessed values and
the tax amounts. |
Tenant
improvement (TI) allowance or work letter |
Defines the fixed amount of
money contributed by the landlord towards tenant improvements.
|
Tenant
improvements |
Improvements made to the leased
premises by or for a tenant. |
Time
is of the essence |
A clause, which if included
in a contract, makes failure to perform by a specific
date a material breach or violation of the contract. |
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 policy is issued.
|
Trustee
|
One who as agent for others
handles money or holds title to their land. |
Turn
Key |
Landlord-provided tenant improvements,
usually including everything (walls, doors, floor and
window coverings, electrical) except telecommunications
wiring and tenant furniture. |
| |
|
|
A property for which the seller
has accepted a buyer's offer to purchase is said to be
under contract. During the period of time the property
is under contract, the seller is precluded from entertaining
offers from other buyers. |
Unimproved
land |
Most commonly refers to land
without improvements or buildings but can also mean land
in its natural state. |
UPS
|
Uninterruptible Power Supply.
A special power source which takes over in the event of
a failure in the main power system. |
Usable
Square Feet |
That space measurement actually
contained within the demised premises. If the entire building
is occupied by a single user, the rentable and usable
square foot calculations may be the same. |
| |
|
|
An exception to a zoning ordinance,
usually granted by a local government. |
Virtual
tour |
Any method used to provide internet
users with a graphical presentation of a property or properties.
|
Void
|
Having no legal force or effect.
|
| |
|
|
The intentional or voluntary
relinquishment of a known claim or right. |
Walk
through |
1) Buyer's on-site inspection
of the property being purchased just prior to closing
2) A detailed inspection of a new construction, in which
a punch list and cosmetic items are addressed prior to
final acceptance. |
Work
letter |
A list of the building standard
items that the landlord will contribute as a part of the
tenant improvements. |
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Exercise of police powers of
city in regulating and controlling the character or use
of property. Zoning laws divide cities into different
areas according to use, from single-family residences
to industrial plants. |
Zoning
ordinances |
A set of laws which control
the size, location and use of buildings within these different
areas. |
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