|
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 |
|
Acre |
A measure of
land equal to 43,560 square feet. |
|
Ad Valorem |
According to
value. |
|
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. |
|
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. |
|
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. |
|
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). |
|
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. |
|
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. |
|
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. |
|
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. |
|
Operating
Expenses |
The actual costs associated with operating a property
including maintenance, repairs, management, utilities, taxes
and insurance. |
|
Parking Ratio |
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 |
|
Pre-leased |
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. |
|
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. |
|
Quiet Enjoyment |
The right of a property owner or tenant to enjoy his or her
property without interference. |
|
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. |
|
Sale-leaseback |
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. |
|
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. |
|
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. |
|
Tax Roll |
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
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. |
|
Under Contract |
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. |
|
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. |
|
Variance |
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. |
|
Waiver |
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. |
|
Zoning |
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. |
