Commercial Real Estate Glossary of Terms

Commercial real estate comes with its own language - from financial terms to leasing jargon and legal concepts. This glossary is designed to help buyers, sellers, landlords, tenants, and investors better understand the terms you’ll encounter in the industry. Whether you’re new to commercial real estate or an experienced professional, this glossary provides clear definitions of key CRE terms, explained in plain language.

Click on a letter below to jump directly to that section of the glossary, or scroll through to explore all terms from A to Z.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

What is A, B, C, D Paper in commercial real estate lending?

A, B, C, and D “paper” classify mortgage loans by borrower credit quality and risk.

A paper loans: Highest quality, lowest risk.
B paper: Borrowers with minor credit issues.
C paper: Borrowers with marginal or poor credit.
D paper: Very high-risk loans.
Lenders use these categories to determine loan terms, interest rates, and approval requirements.

What is an abatement in commercial real estate?

An abatement is a temporary or partial reduction of a financial obligation.
In leasing, it usually refers to reduced or forgiven rent offered by landlords to attract or retain tenants. In taxation, a government may grant a property tax abatement as an incentive for development, job creation, or property improvements.

What is Above Building Standard in commercial leasing?

“Above building standard” refers to tenant improvements that go beyond what the landlord provides in the lease.
These upgrades (such as premium flooring, lighting, or HVAC systems) are not included in the base work letter. Costs are typically negotiated between landlord and tenant.

What does Absorption mean in commercial real estate?

Absorption measures the amount of space leased in a market during a set period.

Positive absorption: More space is leased than vacated, showing strong demand.
Negative absorption: More space is vacated than leased, signaling weaker demand.
It’s a key indicator of market health for office, industrial, and retail sectors.

What is an Abstract of Judgment?

An abstract of judgment is a summary of a court’s decision recorded in the county where the debtor owns property.
Once recorded, it creates a general lien against the debtor’s real estate in that county, allowing the creditor to collect from property sale proceeds.

What is an Abstract of Title in real estate?

An abstract of title is a condensed history of a property’s ownership, liens, and recorded documents.
It discloses grants, transfers, wills, encumbrances, and court proceedings affecting title. While it summarizes public records, it does not guarantee ownership validity. Buyers often combine it with title insurance for protection.

What is an Abstracter?

An abstracter is the professional who prepares an abstract of title.
They research property records (such as deeds, liens, and court filings) and create a chronological summary of documents affecting ownership.

What is Accelerated Depreciation in real estate?

Accelerated depreciation is a method that allows investors to deduct larger amounts in the early years of ownership.
It reduces taxable income sooner compared to straight-line depreciation, improving near-term cash flow. It’s commonly used in tax planning and investment analysis.

What is an Acceleration Clause in a mortgage?

An acceleration clause gives the lender the right to demand immediate repayment of the loan balance.
This clause is triggered by specific events, such as borrower default or property transfer without approval. It protects lenders by allowing early recovery of funds.

What is Acceptance in real estate contracts?

Acceptance means the offeree agrees to the exact terms of an offer.
For it to be valid, the acceptance must be communicated to the offeror. Once accepted, the offer becomes a binding contract.

What are Access Rights in real estate?

Access rights give property owners the legal ability to enter and exit their property.
They may involve easements, driveways, or public roads. Without access rights, property use and value may be limited.

What is Accession in real estate?

Accession occurs when a property owner gains ownership of improvements or additions.
This can happen through annexation (adding fixtures to land) or accretion (natural deposits of soil expanding property boundaries).

What is Accord and Satisfaction?

Accord and satisfaction is a legal settlement where a creditor agrees to accept less than the full amount owed.
The “accord” is the agreement to settle for less, and “satisfaction” occurs when the debtor makes the payment, resolving the obligation.

What does Accounting mean in real estate agency?

Accounting is a fiduciary duty requiring agents to handle client funds responsibly.
Agents must keep accurate records, provide copies of all documents, and deposit client funds (like earnest money) into trust accounts. Mixing client funds with personal funds (commingling) is illegal.

What is Accretion in real estate?

Accretion is the gradual addition of land through natural deposits of soil by water.
Property owners along rivers or streams may gain land as soil builds up over time. This land automatically becomes part of their property and is subject to any existing mortgages.

What is Accrual Accounting in real estate?

Accrual accounting records income and expenses when earned or incurred, not when cash is exchanged.
This method provides a more accurate view of financial performance, especially for property management or investment reporting.

What is an Accrual Interest Rate?

Accrual interest rate is unpaid interest added to the loan balance.
It typically occurs when the stated rate and pay rate differ, causing interest to accrue and compound on both the original balance and the added interest.

What is the Accrual Method in accounting?

The accrual method records income when earned and expenses when payable.
It differs from the cash method, which records transactions only when money changes hands. Most commercial real estate firms use accrual for accuracy in financial reporting.

What is Accrued Interest in real estate finance?

Accrued interest is interest earned but not yet paid.
In property transactions, buyers and sellers often split accrued interest at closing depending on the date of transfer.

What are Accrued Items in real estate closings?

Accrued items are expenses that have been incurred but not yet paid.
Examples include property taxes or mortgage interest. On a closing statement, these are prorated between buyer and seller.

What is an Acknowledgment in real estate documents?

An acknowledgment is a formal declaration before a notary public verifying a signature.
It ensures the signer acted willingly and prevents fraudulent or forged documents from being legally binding.

What are Acquisition Costs in real estate?

Acquisition costs are all expenses involved in acquiring a property.
They include purchase price, closing costs, legal fees, due diligence, and title insurance. They exclude general administrative costs unrelated to a specific deal.

What is an Acre in real estate?

An acre is a unit of land measurement equal to 43,560 square feet.
It can also be expressed as 4,840 square yards or 0.4047 hectares. Acres are a standard way of measuring large land parcels.

What are Actual Damages in real estate disputes?

Actual damages are compensation awarded for real, proven losses.
They are distinct from punitive damages, which are meant to punish. In real estate, they may cover repair costs, lost rent, or reduced property value.

What is Actual Eviction?

Actual eviction occurs when a landlord lawfully removes a tenant from the property.
This typically follows court action and differs from constructive eviction, where a tenant leaves due to unlivable conditions.

What is Actual Notice in real estate?

Actual notice means a party has direct knowledge of a fact.
For example, a buyer has actual notice of a lien if the seller informs them, regardless of whether it appears in public records.

What does Ad Valorem mean?

Ad valorem is Latin for “according to value.”
In real estate, it refers to taxes or fees calculated based on property value, such as property taxes.

What is an Add-On Factor in commercial leasing?

The add-on factor adjusts usable space to account for shared common areas.
Also called “load factor” or “loss factor,” it increases rentable square footage by including a proportion of lobbies, hallways, and restrooms.

What is an Addendum in real estate contracts?

An addendum is an addition to a contract that modifies or supplements its terms.
It must reference the original contract and be signed by all parties to be enforceable. Common addenda include repair agreements or additional disclosures.

What is an Adjusted Basis in real estate taxation?

Adjusted basis is the property’s original cost, adjusted for improvements and depreciation.
It’s used to calculate taxable gain or loss upon sale. For example, improvements increase basis, while depreciation lowers it.

What is Adjusted Sales Price in real estate?

Adjusted sales price is the sale price after accounting for expenses or property differences.
In appraisal, it reflects comparable property adjustments. In taxation, it subtracts selling expenses and other costs from gross sales price.

What is an Adjustment Period in an adjustable-rate mortgage (ARM)?

The adjustment period is the time between interest rate changes.
Common intervals are 1, 3, or 5 years. At each adjustment, the mortgage rate resets based on an index plus a margin.

What is an Administrator in real estate law?

An administrator is a person appointed by the court to settle an estate when someone dies without a will.
They distribute assets, pay debts, and handle legal filings.

What is an Advance Fee in real estate?

An advance fee is money paid upfront to a broker for services such as advertising a property.
These fees must be carefully documented, and in many jurisdictions, misuse is considered improper conduct.

What is Adverse Possession in real estate?

Adverse possession allows someone to claim ownership of property by using it openly and without permission for a statutory period.
To succeed, the possession must be:

Open and obvious.
Exclusive and hostile to the owner’s rights.
Continuous for the legally required period.

What is Aesthetic Zoning?

Aesthetic zoning regulates the appearance of buildings or areas.
It may cover architecture, signage, or colors to preserve community character.

What is an Affidavit in real estate?

An affidavit is a written, sworn statement signed before a notary public.
In real estate, affidavits are often used for title transfers, ownership declarations, or confirming contract details.

What is an Affidavit of Title?

An affidavit of title is a sworn statement from a seller confirming ownership and absence of new liens or claims.
It gives buyers reassurance about the property’s title status before closing.

What is an Affirmative Easement?

An affirmative easement gives one property owner the right to use another’s land.
Examples include rights-of-way for driveways or utility access.

What is After-Acquired Title?

After-acquired title refers to ownership interest obtained by a seller after already transferring property.
In most states, this interest automatically transfers to the buyer under the original deed.

What is After-Tax Cash Flow in real estate?

After-tax cash flow is the net income from a property after accounting for taxes.
It shows the true return available to the investor once tax obligations are applied.

What is Agency in real estate?

Agency is a legal relationship where a broker or agent represents a client in dealings with third parties.
Agents owe fiduciary duties such as loyalty, disclosure, and accounting to their clients.

What is an Agent in commercial real estate?

An agent is a licensed professional who represents landlords, tenants, buyers, or sellers.
In leasing, an agent may represent one or both parties, depending on state laws and disclosure requirements.

What is an Agreement of Sale?

An agreement of sale is a binding contract between buyer and seller to transfer property.
It sets out terms, conditions, and purchase price, and is also called a purchase agreement or contract of sale.

What is an Agricultural Lease?

An agricultural lease allows a farmer to use land for crop production.
Payment can be a fixed cash rent or a share of profits from the crops (sharecropping).

What is Amortization in real estate?

Amortization is the gradual repayment of a loan through scheduled payments of principal and interest.
Some loans fully amortize, while others end with a balloon payment.

What is an Anchor Tenant in a shopping center?

An anchor tenant is a major retailer that draws customers to a property.
Examples include grocery stores in neighborhood centers or department stores in malls. Their presence boosts traffic for smaller tenants.

What is an Appraisal in real estate?

An appraisal is a professional opinion of a property’s market value.
Appraisers use approaches such as sales comparison, cost, and income capitalization to estimate value.

What is Appreciation in real estate?

Appreciation is the increase in a property’s value over time.
It can result from market demand, improvements, or inflation.

What is an Appurtenance in real estate?

An appurtenance is a right or item attached to a property that transfers with it.
Examples include easements, water rights, or improvements like a garage.

What is an Arm’s Length Transaction in real estate?

An arm’s length transaction is one where both parties act in their own interest without undue influence.
Examples of non-arm’s length deals include sales between family members or related companies.

What is an Assessed Valuation?

Assessed valuation is the dollar value assigned to property for tax purposes.
It’s set by local tax assessors and used to calculate property taxes.

What is an Assignment of Lease?

An assignment of lease transfers a tenant’s rights and obligations to a new tenant (assignee).
The original tenant (assignor) may or may not remain liable, depending on the lease terms.

What is an Assumable Mortgage?

An assumable mortgage allows a buyer to take over the seller’s existing loan.
The lender must typically approve the new borrower. Assumable mortgages can be attractive if current rates are higher than the existing loan’s rate.

What is an Auction in real estate?

An auction is a public sale where property goes to the highest bidder.
Auctions are commonly used in foreclosures, estate settlements, or when a seller wants a quick sale.

What are Air Rights in real estate?

Air rights are the rights to use and develop the space above a property.
They may be sold, leased, or transferred and are especially valuable in dense urban markets.

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B

What is Back-End Qualification in commercial real estate?

Back-end qualification measures a borrower’s ability to handle debt. Lenders compare total housing costs plus long-term debt obligations against monthly income. The ratio should not exceed 36% for loan approval.

What is a Backup Offer in real estate?

A backup offer is a secondary purchase offer made after a seller has already accepted another buyer’s contract. It only becomes active if the first sale fails to close. Sellers must handle backup offers carefully to avoid legal issues.

What is Bad Debt Allowance in commercial real estate?

Bad debt allowance estimates the portion of rent that may not be collected from tenants. Property managers use it for financial reporting and forecasting.

What is a Bail Bond Lien in real estate?

A bail bond lien occurs when property is pledged as bail instead of cash. If the defendant fails to appear in court, the lien may be enforced by authorities, potentially leading to sale of the property.

What does Balance mean in real estate appraisal?

Balance is the principle that property value is highest when improvements are proportional to the land. Oversized or undersized improvements may reduce value.

What is Balance Due on Completion?

Balance due on completion is the final payment a buyer owes the seller at closing, after all credits and adjustments are applied.

What is a Balance Sheet in real estate?

A balance sheet is a financial statement listing assets, liabilities, and equity. Assets equal liabilities plus equity, giving a snapshot of financial health.

What is a Balanced Trust?

In California, a balanced trust (also called a combination trust) blends features of land trusts and other trust structures to manage property ownership and benefits.

What is a Balloon Mortgage?

A balloon mortgage has small regular payments followed by one large balloon payment at the end of the loan term. It can lower monthly costs but requires refinancing or a lump-sum payoff.

What is a Balloon Payment in real estate?

A balloon payment is the final large lump-sum payment due at the end of certain loans, typically when the loan has not been fully amortized.

What is the Banker’s Rule in real estate finance?

The Banker’s Rule calculates prorations using a 360-day year instead of 365, simplifying interest and expense allocations.

What is Bankruptcy in real estate?

Bankruptcy is when a person or business cannot pay debts because liabilities exceed assets. It may lead to property liquidation or restructuring under court supervision.

What is a Bargain and Sale Deed?

A bargain and sale deed transfers property without warranties against liens or encumbrances but implies the grantor has ownership rights. Additional warranties can be added.

What is a Base Line in land surveying?

A base line is an east–west reference line used in the government survey system to describe and locate land.

What is Base (Net) Rent in commercial leasing?

Base net rent is the minimum rent set in a lease, excluding operating expenses, taxes, and other charges. It is often used to assess building cash flow.

What is Base Rent in a lease?

Base rent is the fixed minimum rent paid by a tenant. Additional rent may include expenses like maintenance, taxes, or sales-based rent.

What is a Base Rent Increase?

A base rent increase (rent bump) raises tenant rent according to an escalation clause, often tied to inflation, operating costs, or time intervals.

What is a Base Year in a commercial lease?

The base year is the year used to establish operating expenses for a property. Future expense increases beyond the base year are passed on to tenants.

What are Base Year Expenses?

Base year expenses are the actual property operating costs and taxes from the agreed base year, used as the benchmark for future rent escalations.

What is a Basic Form Homeowner’s Policy?

A basic form homeowner’s policy covers property against common risks like fire, theft, vandalism, storms, and smoke damage.

What is a Basic Title Policy?

A basic title policy insures property ownership against recorded claims and liens in public records but excludes unrecorded risks.

What is Basis in real estate taxation?

Basis is the IRS-recognized value of a property for tax purposes. It starts with the purchase price plus improvements, minus depreciation. Adjusted basis is used to calculate taxable gain or loss upon sale.

What is a Bay in real estate construction?

A bay is the open space between structural supports such as columns or walls, often used to measure industrial or parking space.

What is a Bearing Wall in construction?

A bearing wall supports the weight of floors, ceilings, or roofs in addition to its own weight.

What is Before-Tax Cash Flow in real estate?

Before-tax cash flow equals a property’s net operating income (NOI) minus annual debt service.

What is a Benchmark in land surveying?

A benchmark is a fixed marker, often brass or stone, showing official elevation above sea level. Surveyors use it as a reference point for measurements.

What is Beneficial Occupancy in construction?

Beneficial occupancy occurs when an owner can use part of a building before construction is fully complete, usually after essential systems are functional.

What is a Beneficiary in real estate law?

A beneficiary is a person who receives benefits from a trust, will, insurance, or deed of trust. The trustee holds legal title, but the beneficiary has equitable ownership.

What is a Beneficiary Statement?

A beneficiary statement provides the balance due on an existing loan, typically obtained during escrow so a buyer or new lender has accurate payoff details.

What is a Best-Faith Estimate?

A best-faith estimate is the projected settlement cost given to a buyer, including purchase price plus estimated closing costs.

What does BIF stand for?

BIF stands for Bank Insurance Fund, a reserve protecting depositors in banks.

What is a Bilateral Contract in real estate?

A bilateral contract is a mutual agreement where both parties exchange promises. Most real estate purchase agreements are bilateral.

What is a Bill of Sale?

A bill of sale transfers ownership of personal property (like equipment or fixtures) from seller to buyer, sometimes used alongside a real estate transaction.

What is a Biweekly Loan?

A biweekly loan requires payments every two weeks, reducing loan balance faster and saving interest compared to monthly payments.

What is a Blanket Loan?

A blanket loan covers multiple properties with a single mortgage. Parcels can be released individually upon repayment of part of the debt.

What is a Blanket Mortgage?

Similar to a blanket loan, a blanket mortgage is a single mortgage that secures multiple parcels, often used by builders or developers.

What is a Blanket Trust Deed?

A blanket trust deed is a single trust deed securing several properties, often in subdivision development. It may include a “partial release” clause for lot-by-lot sales.

What are Blended Payments in real estate loans?

Blended payments are loan payments combining interest and principal into a constant amount.

What is a Blended Rate Mortgage?

A blended rate is an interest rate combining a borrower’s current loan rate with a new market rate, often used in refinancing.

What is a Blind Ad in real estate?

A blind ad omits the advertiser’s identity, often showing only a phone number. Most states prohibit brokers from using blind ads.

What is Blockbusting in real estate?

Blockbusting (panic selling) is an illegal practice where sellers are pressured to sell quickly due to claims about incoming demographic changes lowering property values.

What is a Blue-Sky Provision?

A blue-sky provision requires full risk disclosure in investment offerings under securities laws to protect investors.

What does Boilerplate mean in contracts?

Boilerplate refers to standard, preprinted contract language. Parties fill in blanks or add terms as needed.

What does Bona Fide mean in real estate?

Bona fide means acting in good faith, honestly and without fraud or deceit.

What is a Bond in real estate?

A bond is a debt instrument. In real estate, it can be:

A corporate or government security.
A written promise accompanying a mortgage.
A certificate financing public projects.

What is a Bonus in real estate finance?

A bonus is extra compensation for a lender, sometimes representing the difference between loan face value and actual funds disbursed.

What is Book Value in real estate accounting?

Book value is the value of a property as recorded in company financial statements, equal to purchase price minus depreciation.

What is Boot in a 1031 exchange?

Boot is money or property not considered like-kind in a tax-deferred exchange. Receiving boot triggers immediate taxable gain.

What is a Branch Office in real estate?

A branch office is a secondary location where a brokerage conducts business. It usually must be supervised by a licensed broker.

What is Breach of Contract in real estate?

A breach of contract occurs when one party fails to perform agreed terms. Remedies include rescission, damages, or specific performance.

What is the Breakeven Point in income property?

The breakeven point is when property rental income equals total expenses and debt service, with no profit or loss.

What is a Bridge Loan in commercial real estate?

A bridge loan (or swing loan) is a short-term loan covering costs until long-term financing or occupancy stabilizes.

What is a Broad-Form Homeowner’s Policy?

A broad-form policy covers basic risks plus additional perils such as falling objects, ice damage, plumbing leaks, and electrical surges.

What is a Broker in commercial real estate?

A broker is a licensed professional authorized to represent parties in real estate transactions. In commercial practice, the term may also include licensed salespersons.

What is Brokerage in real estate?

Brokerage is the business of bringing together buyers, sellers, landlords, and tenants to complete transactions.

What is a Brownfield in commercial real estate?

A brownfield is an abandoned or underused property with real or perceived environmental contamination that complicates redevelopment.

What is a Budget Loan?

A budget loan includes taxes and insurance payments along with principal and interest, spreading costs evenly across payments.

What is Build-to-Suit (BTS) in leasing?

Build-to-suit leasing occurs when a landlord constructs a building tailored to a tenant’s specifications, often under a long-term lease.

What is a Building Capitalization Rate?

The building capitalization rate converts building income into value, factoring in depreciation since buildings are wasting assets.

What is a Build-Up Rate in appraisal?

The build-up rate is the interest or discount rate used when selecting a capitalization rate for valuing income property.

What is a Building Code?

A building code is a local law setting minimum safety and construction standards for buildings, covering structural, electrical, and plumbing requirements.

What are Building Codes?

Building codes collectively refer to the full set of construction safety regulations enforced by local government.

What is a Building Core?

A building core contains essential elements like elevators, stairwells, restrooms, and mechanical shafts.

What is a Building Inspection?

A building inspection is a professional review of a property’s structural and system condition, including roof, plumbing, and electrical.

What is a Building Module?

A building module is a standardized interior dimension dictated by column or window spacing, guiding efficient layout planning.

What is BOMA (Building Owners and Managers Association)?

BOMA is a U.S. organization that publishes widely used standards for measuring office space.

What is a Building Permit?

A building permit is official approval from a public agency required before construction or major improvements.

What are Building Standards in leases?

Building standards are materials and finishes landlords provide for tenant improvements (e.g., flooring, lights, partitions).

What is a Building Standard Plus Allowance?

It’s a tenant improvement arrangement where the landlord covers standard costs and provides an allowance for upgrades beyond standard finishes.

What is a Building Standard Work Letter?

A work letter defines landlord-provided tenant improvements, specifying type, quality, and quantities of materials included in the lease.

What is Building Status in commercial real estate?

Building status categories include:

Under Construction: Ground has been broken.
Planned: Permits and financing secured.
Proposed: Concept stage only.

What is a Buildout in commercial leasing?

Buildout refers to the cost of designing, constructing, and finishing tenant space to make it usable.

What is the Bulk Sales Act?

The Bulk Sales Act requires notice of certain business asset sales to protect creditors from fraud.

What is a Bulk Sales Transfer?

A bulk sales transfer involves selling a large portion of a business’s inventory or assets outside the normal course of business.

What is a Bulk Transfer of Goods?

A bulk transfer of goods is the movement of substantial business inventory or equipment not in ordinary sales.

What is Bulk Zoning?

Bulk zoning regulates property density through restrictions on height, open space, parking, and setbacks.

What is a Bullet Loan?

A bullet loan requires a lump-sum payment (or rollover) before full amortization, often used for short-term financing.

What is the Bundle of Legal Rights in real estate?

The bundle of rights includes property ownership rights: possession, control, enjoyment, exclusion, and disposition.

What is the Burden of Proof in real estate disputes?

The burden of proof is the legal duty to prove facts in court.

What is Business Brokerage in real estate?

Business brokerage involves selling or leasing an existing business, including its assets, goodwill, or stock.

What is a Business Case Analysis in leasing?

A business case analysis summarizes tenant needs, compares properties, and organizes lease terms for decision-making.

What is a Business Park?

A business park is a cluster of low-rise office, light industrial, or R&D buildings, often with supporting amenities.

What is a Buy-Back Agreement?

A buy-back agreement requires a seller to repurchase property under specified conditions, such as job relocation.

What is a Buydown in real estate finance?

A buydown is when a seller or builder pays points to lower a buyer’s loan interest rate for the first few years, reducing monthly payments.

What is a Buyer Listing?

A buyer listing agreement commits a buyer to pay commission if the broker finds a property they purchase.

What is a Buyer Representation Agreement?

A buyer representation agreement authorizes a broker to act on behalf of a buyer in purchasing real estate.

What is a Buyer’s Agent?

A buyer’s agent is a licensed professional representing only the buyer’s interests in a real estate transaction.

What is a Buyer’s Broker?

A buyer’s broker represents the buyer in a fiduciary capacity, either exclusively or within agreed agency laws.

What is Buyer’s Remorse in real estate?

Buyer’s remorse is the regret or doubt a buyer may feel after making a large purchase, such as a property.

What is a Buyer-Agency Agreement?

A buyer-agency agreement is a contract establishing the broker’s fiduciary duties to the buyer.

What are Buying Motives in real estate?

Buying motives are the needs or desires driving a purchase, such as comfort, profit, pride, or security.

What does Buying on Contract mean?

Buying on contract means purchasing property where the seller retains legal title until the purchase price is fully paid.

What are Buying Signals?

Buying signals are verbal or nonverbal cues that a prospect is ready to purchase.

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C

What is the Cal-Vet program in real estate?

Cal-Vet is a California program that helps eligible veterans finance the purchase of farms, ranches, and homes. Loans are provided under favorable terms to support veteran homeownership.

What is the California Environmental Quality Act (CEQA)?

CEQA allows local governments to require environmental impact reports for projects that may significantly affect the environment. It ensures potential impacts are evaluated before approval.

What is the California Housing Financial Discrimination Act of 1977?

Also known as the Holden Act, this California law prohibits lenders from discriminating against borrowers for reasons unrelated to their creditworthiness.

What is a Cancellation Option in a lease?

A cancellation option gives one party the right to terminate a lease early. Retail landlords sometimes reserve this option if tenant sales do not meet minimum levels.

What is Capacity of Parties in contract law?

Capacity of parties refers to the legal ability of individuals or entities to enter into binding contracts. A person may have full, limited, or no capacity to contract.

What is a Capital Gain in real estate?

Capital gain is profit earned from selling an asset for more than its adjusted basis. It may be taxable depending on holding period and applicable exemptions.

What is a Capital Loss in real estate?

A capital loss occurs when property is sold for less than its adjusted basis. Losses may offset gains for tax purposes.

What is Capitalization in real estate appraisal?

Capitalization converts a property’s net income into an estimate of value using a capitalization rate. Formula: Income ÷ Rate = Value.

What is a Capitalization Rate (Cap Rate)?

A cap rate is the percentage used to value income property by dividing net operating income by property value. It reflects return expectations and market risk.

What are Capital Markets in real estate?

Capital markets involve the purchase and sale of real estate debt and equity to generate financial returns. They consider cost of capital, expected cash flow, and risk.

What is Capping in real estate?

Capping is the process of covering a landfill with soil and planting vegetation to prevent erosion and improve aesthetics.

What are Caps in adjustable-rate mortgages (ARMs)?

Caps limit how much interest rates can change in a year or over the life of an ARM loan. They protect borrowers from drastic rate increases.

What is Capture Rate in real estate?

Capture rate measures a development’s share of total sales or leasing activity in a market. Example: If a project leases half of all area units in a given month, its capture rate is 50%.

What is a Caravan in real estate?

A caravan is a group property tour by agents from the same office to preview new listings together.

What is Carbon Monoxide (CO) in real estate?

Carbon monoxide is a colorless, odorless gas produced by incomplete fuel combustion. It is hazardous and often regulated in building safety codes.

What does Care mean in real estate agency?

Care is a fiduciary duty requiring agents to use their skill and expertise for the client’s benefit. Agents must know property details, financing, and transaction facts.

What does Carpet and Paint mean in leasing?

“Carpet and paint” describes minimal landlord-provided tenant improvements, usually limited to floor and wall finishes. Common in office leases.

What is Carry-Back Financing?

Carry-back financing, also called a purchase money mortgage, is when a seller finances part of the buyer’s purchase price instead of requiring full cash payment.

What are Carrying Charges in real estate?

Carrying charges are costs of holding property, such as taxes, interest, and insurance on vacant land or property under development.

What is Cash Flow in real estate?

Cash flow is the net income from rental property after operating and financing expenses. It may be before-tax or after-tax cash flow.

What is Cash Flow After Debt Service (CFADS)?

CFADS equals net operating income (NOI) minus loan principal and interest payments, showing the property’s net annual cash return to equity investors.

What does Cash Now mean in real estate investment?

Cash now is the net spendable income after deducting all operating and fixed expenses from gross income. Negative cash flow occurs when expenses exceed income.

What is Cash-on-Cash Return in real estate?

Cash-on-cash return measures investment performance by dividing cash flow after debt service by the buyer’s initial cash investment.

What does Cash-Out mean in property sales?

A cash-out occurs when a seller requires full cash payment for the purchase price without offering financing.

What is Cash Rent in an agricultural lease?

Cash rent is rent paid in money rather than a share of crop profits. It is typically paid upfront to the landowner.

What is Casualty in real estate insurance?

Casualty insurance covers risks such as theft, vandalism, and machinery damage. Policies may be written for specific risks rather than all-inclusive coverage.

What is a Caveat in real estate?

A caveat is a recorded notice warning that a claim has been made against property title, alerting potential buyers or lenders.

What does Caveat Emptor mean?

Caveat emptor is Latin for “let the buyer beware.” Buyers must inspect property and cannot rely solely on the seller’s representations.

What are CC&Rs in real estate?

CC&Rs (covenants, conditions, and restrictions) are recorded land-use limitations that regulate property construction, density, and use within subdivisions.

What does CCA stand for in real estate?

CCA stands for Capital Cost Allowance, a Canadian tax deduction for property depreciation.

What is a Center Core Building?

A center core building places elevators and service areas in the middle of each floor for efficient layout and circulation.

What are Centers of Influence in real estate?

Centers of influence are influential community members who help generate prospects for agents, sometimes called “bird dogs.”

What is a Central Business District (CBD)?

A CBD is the downtown core of a city, typically with retail, office, hotels, government buildings, and high-density housing.

What is CERCLA in real estate?

CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) is a federal law requiring cleanup of hazardous waste sites and assigning liability to responsible parties.

What is a Certificate of Eligibility (COE)?

A COE is a document from the VA proving a veteran’s eligibility for a VA loan. It may also restore entitlement when certain conditions are met.

What is a Certificate of Occupancy?

A certificate of occupancy is issued by local authorities certifying a building is safe and suitable for use after inspection.

What is a Certificate of Reasonable Value (CRV)?

A CRV is a VA-issued appraisal report establishing a property’s market value and setting a loan ceiling for VA-guaranteed mortgages.

What is a Certificate of Sale?

A certificate of sale is given to the buyer at a tax foreclosure auction. It is not full title but may lead to ownership after the redemption period expires.

What is a Certificate of Title?

A certificate of title is an opinion prepared by a title company, attorney, or abstracter about property ownership status. Unlike title insurance, it does not protect against hidden defects.

What is Cessation of Work?

Cessation of work is a 60-day period when no construction work occurs. It may affect lien rights and project timelines.

What is a Chain of Title?

Chain of title is the chronological history of property ownership transfers from the original grant to the present owner.

What is Change in real estate appraisal?

The principle of change holds that no physical or economic condition remains constant, so property value is always subject to change.

What is Chattel in real estate?

Chattel is personal property not classified as real estate, such as furniture, vehicles, or jewelry.

What is a Chattel Mortgage?

A chattel mortgage secures a loan with personal property as collateral instead of real estate.

What is a Civil Action in real estate law?

A civil action is a legal proceeding to enforce or protect private rights, resolve disputes, or seek remedies for wrongs.

What is Civil Law?

Civil law is a codified legal system based on statutes, as opposed to common law based on judicial precedent.

What is the Civil Rights Act of 1866?

The Civil Rights Act of 1866 prohibits racial discrimination in housing sales and rentals.

What is the Civil Rights Act of 1870?

The Civil Rights Act of 1870 reaffirmed protections of the 1866 Act and expanded voting rights enforcement.

What is the Civil Rights Act of 1964?

This landmark act prohibited housing discrimination where federal funds were involved.

What is the Civil Rights Act of 1968?

Also called the Fair Housing Act, this law banned housing discrimination based on race, color, religion, sex, disability, familial status, or national origin.

What is a Class A office building?

Class A offices are top-quality properties with prime locations, superior finishes, modern systems, and professional management.

What is a Class B office building?

Class B offices are well-located and maintained but may lack the prestige or amenities of Class A.

What is a Class C office building?

Class C offices are older properties with functional or economic obsolescence.

What is a Class D office building?

Class D offices are outdated properties needing major renovation due to deterioration.

What are Classes of Construction?

Classes of construction categorize buildings by structural materials (Class A, B, C, D, or S). This differs from office building classifications.

What is Clear Height in industrial real estate?

Clear height is the maximum usable interior height in a warehouse or industrial building where goods can be stacked and equipment can operate freely.

What is Clear Title in real estate?

Clear title means ownership free of liens, claims, or disputes, making it marketable for sale.

Who is a Client in real estate agency?

A client (or principal) is the person who hires an agent to act on their behalf in a transaction.

What is Closing (Close of Escrow)?

Closing is the final step in a real estate transaction when the buyer pays and the seller delivers title.

What is a Closed Mortgage?

A closed mortgage cannot be prepaid in full before the end of its term.

What is a Closed-End Fund in real estate?

A closed-end fund has a fixed lifespan and limited investors. It buys properties, holds them, and liquidates by maturity.

What are Closing Costs?

Closing costs are expenses paid at settlement, including legal fees, taxes, loan fees, and title charges.

What is a Closing Date?

The closing date is when ownership formally transfers, typically when the deed is delivered and payment is made.

What is a Closing Statement?

A closing statement is a detailed accounting of all funds received and disbursed in a real estate transaction.

What is a Cloud on Title?

A cloud on title is any claim, lien, or defect that casts doubt on ownership. It must be cleared before a clean transfer.

What is a CLTA Policy?

A CLTA policy is a California title insurance standard coverage policy protecting against recorded risks.

What is Clustering in land development?

Clustering groups homesites on smaller lots while preserving open land for community use.

What does Co-Brokered mean?

Co-brokered means two separate brokerages share a transaction—one as listing broker and the other as selling broker.

What is Co-Ownership?

Co-ownership is when title is held by two or more people, such as tenants in common, joint tenants, or community property owners.

What is a Code of Ethics in real estate?

A code of ethics is a written standard of professional conduct. Because agents and brokers represent clients and deal with the public, ethical obligations help ensure fairness, honesty, and client-first representation.

What are Code Requirements in real estate?

Code requirements are building standards (electrical, plumbing, safety, accessibility, etc.) that must be met when preparing or constructing property for occupancy.

What is a Codicil in real estate law?

A codicil is a legal supplement or amendment to a will, executed with the same formalities as the will itself.

What is a Coinsurance Clause in property insurance?

A coinsurance clause requires property owners to maintain insurance equal to a certain percentage (often 80%) of the property’s replacement cost.

What is Collateral in real estate finance?

Collateral is property pledged as security for repayment of a loan. In real estate, the mortgaged property itself serves as collateral.

What is a Collection Loss Factor?

The collection loss factor accounts for expected rent losses due to tenant nonpayment. It’s factored into property income valuations.

What is a Combination Trust?

A combination trust (or balanced trust) invests in real estate both as a lender and as an equity owner.

What is a Commercial Bank in real estate?

A commercial bank is a financial institution providing deposits, loans, and credit. In real estate, they commonly issue short-term construction loans or lines of credit.

What is the Commercial Investment Real Estate Institute (CIREI)?

CIREI is a professional organization affiliated with the National Association of REALTORS®. It awards the CCIM designation (Certified Commercial Investment Member).

What is Commercial Leasehold Insurance?

Commercial leasehold insurance covers a tenant’s rent obligations if they are unable to pay due to certain losses.

What is Commercial Real Estate?

Commercial real estate refers to income-producing properties such as offices, retail centers, hotels, warehouses, and multifamily housing.

What are Commingled Funds in real estate investing?

Commingled funds are pooled investment vehicles (trusts, partnerships, or separate accounts) where multiple institutional investors invest together.

What is Commingling in real estate?

Commingling is the illegal act of mixing client trust funds with a broker’s personal or business funds.

What is a Commission in real estate?

A commission is compensation paid to a broker for services, usually as a percentage of the property’s sale or lease price.

What is a Commitment in real estate?

A lender’s pledge to loan funds under specific terms.
A title company’s agreement to issue title insurance upon property acquisition.

What is a Common Area?

Common areas are shared spaces in a property (lobbies, restrooms, parking lots, landscaping) used by all tenants and maintained by the landlord.

What is a Common-Area Factor?

A common-area factor is the percentage of shared space added to usable space to calculate rentable area in multi-tenant buildings.

What is Common-Area Maintenance (CAM)?

CAM charges are additional rent tenants pay to cover maintenance of shared spaces such as parking lots, landscaping, and security.

What are Common Areas in condominiums?

In condos, common areas are shared amenities such as parks, elevators, hallways, and recreational facilities owned collectively by residents.

What are Common Elements in a condominium?

Common elements are structural and shared parts of a condominium (roofs, stairways, utilities) in which all unit owners have an undivided ownership interest.

What is Common Interest in a condominium?

Common interest is the ownership share each condo unit holder has in the property’s common elements.

What is a Common Interest Subdivision?

A common interest subdivision includes private lots or units plus shared ownership in community areas such as parks or recreation facilities.

What is Common Law in real estate?

Common law is case law developed by judicial decisions and customs, as opposed to codified statutes (civil law).

What is Community Property?

Community property is a system where spouses equally share property acquired during marriage, except separate property acquired before marriage or by inheritance/gift.

What is the Community Reinvestment Act of 1977 (CRA)?

The CRA requires banks to meet the credit needs of their local communities, especially low- and moderate-income housing.

What does Company Dollar mean in brokerage?

Company dollar is the revenue a brokerage keeps after paying out commissions to agents.

What are Comparables (Comps) in real estate?

Comps are recent property sales or leases used to evaluate market value or rental rates.

What is a Comparative Market Analysis (CMA)?

A CMA is a broker-prepared report comparing similar properties to help sellers price listings or buyers evaluate offers.

What is the Comparative Method in appraisal?

The comparative method values property by comparing sales prices of similar recently sold properties (also called the Market Method).

What is the Comparative Unit Method in appraisal?

This method values properties by unit type—such as cost per parking space, per apartment unit, or per front foot of land.

What are Compensating Factors in lending?

Compensating factors are positive credit attributes (like stable income or savings) that offset negative items in a borrower’s credit history.

What is Compensation in real estate agency?

Compensation is payment to a broker or agent. Agency relationships can exist regardless of who pays the commission.

What are Compensatory Damages?

Compensatory damages are monetary awards intended to reimburse an injured party for actual losses suffered.

What is Competition in appraisal?

The principle of competition states that excess profits attract new competition, which can affect property values.

What is a Competitive Market Analysis (CMA)?

A CMA compares recently sold properties with a subject property to estimate value or pricing strategy.

What does Completed mean in real estate data?

“Completed” refers to the year a building was first ready for occupancy.

What is a Completion Bond?

A completion bond guarantees that a construction project will be finished as planned and free of liens.

What is Compound Interest?

Compound interest is interest calculated on both the original principal and previously accrued interest.

What is Compounding Frequency?

Compounding frequency is how often interest is calculated and added to the principal (monthly, quarterly, annually, etc.).

What is CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act)?

CERCLA, also known as Superfund, is a federal law assigning liability and funding for cleanup of hazardous waste sites.

What is Comprehensive Zoning?

Comprehensive zoning is a broad zoning plan covering a large area, often part of a city’s general plan.

What is a Computerized Loan Origination (CLO) system?

A CLO system is an electronic platform linking borrowers and lenders to process loan applications remotely.

What is a Concession in leasing?

A concession is a landlord incentive to attract tenants, such as free rent, improvement allowances, or covered relocation costs.

What is Concurrent Ownership?

Concurrent ownership is property held simultaneously by two or more people (joint tenancy, tenants in common, etc.).

What is Concurrent Performance?

Concurrent performance means obligations by both parties (like deed delivery and payment) occur simultaneously.

What is Condemnation in real estate?

Condemnation is the process where government takes private property for public use through eminent domain, with compensation.

What is a Condition Precedent?

A condition precedent is a contract term requiring an event or action to occur before the agreement becomes binding.

What is a Condition Subsequent?

A condition subsequent qualifies ownership by requiring that a certain action not occur. If violated, the former owner can reclaim title.

What are Conditions in real estate contracts?

Conditions are provisions in a contract that may change obligations if certain events occur.

What are Conditions, Covenants, and Restrictions (CC&Rs)?

CC&Rs are recorded rules governing land use, construction, and subdivision operations, often in planned communities.

What is a Conditional Offer?

A conditional offer is a purchase agreement dependent on certain requirements, such as rezoning approval.

What is a Conditional Public Report?

A conditional public report allows developers to sell property before a final report is issued, subject to conditions.

What is a Conditional Sales Contract?

A conditional sales contract transfers property ownership only after the buyer fulfills all contract obligations, with the seller retaining title until then.

What is a Conditional-Use Permit?

A conditional-use permit allows land use that differs from zoning, granted when beneficial for the public (e.g., hospitals in residential zones).

What is Condominium Ownership?

Condominium ownership gives an individual title to a unit plus shared interest in common areas like hallways, elevators, and land.

What is a Confession of Judgment Clause?

A confession of judgment clause allows a creditor to obtain a judgment against a debtor without trial if default occurs.

What is a Conforming Loan?

A conforming loan meets Fannie Mae and Freddie Mac standards for size and underwriting guidelines.

What is Conformity in appraisal?

The principle of conformity states that property value is maximized when surrounding properties are similar in style, use, and quality.

What is a Conservator?

A conservator is a court-appointed guardian managing property and affairs for someone unable to do so themselves.

What is Consideration in real estate contracts?

Consideration is something of value exchanged between parties to form a valid contract, such as money, goods, or a promise.

What is Consolidation in real estate?

Consolidation is merging smaller business locations into a larger, centralized facility.

What is a Constant Payment Loan?

A constant payment loan requires equal periodic payments of principal and interest until fully repaid.

What is Constitutional Law in real estate?

Constitutional law derives from federal and state constitutions, governing rights and limits in property and contracts.

What is a Construction Loan?

A construction loan finances real estate development or improvements. Funds are disbursed as work progresses.

What is Construction Management?

Construction management oversees project planning, permitting, building, and delivery to ensure completion on time and within budget.

What is Constructive Eviction?

Constructive eviction occurs when landlord actions make a property unlivable, forcing the tenant to vacate without liability.

What is Constructive Fraud?

Constructive fraud occurs when a duty is breached in a way that misleads others, even without intent to deceive.

What is Constructive Notice?

Constructive notice is legal notice given by recording documents in public records, making all parties aware of claims on property.

What is the Consumer Price Index (CPI) in real estate?

The CPI measures inflation and is often used to adjust rents in long-term leases.

What is Contiguous Space in leasing?

Contiguous space is adjoining rentable space that can be combined for one tenant, either on one floor or across multiple adjacent floors.

What is a Contingency in contracts?

A contingency is a clause requiring a specific event to occur before the contract is binding (e.g., financing approval).

What is Continuing Education in real estate?

Continuing education requires licensees to complete ongoing coursework for license renewal.

What is a Contract in real estate?

A contract is a legally enforceable agreement between parties. It may be unilateral or bilateral, depending on obligations.

What is a Contract for Deed?

A contract for deed allows buyers to take possession and equitable title while the seller retains legal title until full payment.

What is a Contract of Sale?

A contract of sale is a purchase agreement binding buyer and seller until closing, when title is transferred.

What is Contract Rent?

Contract rent is the rent agreed upon in a lease, also called “face rent.”

What is Contribution in appraisal?

Contribution is the principle that a property feature’s value equals the value it adds to the whole, not its cost.

What is a Control Book in property management?

A control book tracks tenant floor plans, rent rolls, and encumbrances for a building.

What are Controlled Business Arrangements?

Controlled business arrangements occur when a real estate firm refers clients to an affiliated service provider, as allowed under RESPA with disclosure.

What is a Conventional Life Estate?

A conventional life estate is created by deed or will, granting property ownership to a life tenant until their death, after which ownership passes as directed.

What is a Conventional Loan?

A conventional loan is a mortgage not insured or guaranteed by the government (FHA or VA).

What is Conversion in real estate?

Conversion is the unauthorized appropriation of property or funds, such as a broker misusing client money.

What is a Convertible Loan?

A convertible loan is an adjustable-rate loan that allows the borrower to convert to a fixed-rate loan during its term.

What are Converted-Use Properties?

Converted-use properties are buildings repurposed for new uses, such as factories converted into lofts or hotels into apartments.

What is a Convertible Mortgage Note?

A convertible mortgage note allows the lender to convert the loan into an equity interest at a future date.

What is a Conveyance in real estate?

A conveyance is any legal document (like a deed) transferring title from one party to another.

Who is a Cooperating Broker?

A cooperating broker is a broker who assists another broker, often bringing the buyer to a listing broker’s property.

What is a Cooperating Broker Fee Agreement?

It’s a written agreement between brokers outlining commission splits when both are involved in a transaction.

What is a Cooperative in real estate?

A cooperative (co-op) is a building owned by a corporation or trust where residents own shares and hold proprietary leases for their units.

What is a Core in an office building?

A core includes elevators, stairways, and mechanical areas grouped in a central space of a building floor.

What is a Core Factor?

Core factor is another term for load factor, representing the proportion of common space allocated to each tenant.

What does Core Plus mean in investment property?

Core plus describes a quality institutional property with good returns, often requiring light improvements.

What is Core Drilling?

Core drilling is cutting cylindrical holes in building floors or ceilings for wiring, plumbing, or HVAC installations.

What is a Core Property?

A core property is a high-quality institutional-grade asset offering stable income and long-term value.

What is a Corporation in real estate?

A corporation is a legal entity that can own, transfer, and manage property with rights similar to an individual.

What is a Corporation Franchise Tax Lien?

This is a statutory lien against all corporate property for unpaid state franchise taxes.

What are Correction Lines in surveying?

Correction lines adjust for the Earth’s curvature in the government survey system to keep townships aligned.

What are Correlative Water Rights?

Correlative water rights limit riparian owners to a reasonable share of water use from a common source.

What is a Correspondent in real estate finance?

A correspondent is a mortgage banker originating loans for larger lenders or investors.

Who are Cosigners in real estate finance?

Cosigners are additional signers who guarantee repayment of a loan alongside the borrower.

What is the Cost Approach in appraisal?

The cost approach values property as land value plus replacement cost of improvements, minus depreciation.

What is Cost Approach Improvement Value?

It is the reproduction or replacement cost of improvements minus depreciation.

What is Cost Approach Land Value?

It is the estimated value of land as if vacant, based on highest and best use.

What is Cost Basis in real estate?

Cost basis is the original property cost plus closing costs and improvements, used for tax gain/loss calculation.

What is Cost of Goods Sold in business real estate?

Cost of goods sold is the expense of manufacturing or purchasing inventory actually sold.

What is the Cost of Living Index?

This index measures average price changes in goods and services, often used for rent adjustments.

What is Cost of Sale Percentage?

It is the estimated percentage of property sale proceeds lost to commissions, fees, and closing costs.

What is the Cost Principle in accounting?

The cost principle requires assets to be recorded at historical cost in financial statements.

What is Cost Recovery in real estate taxation?

Cost recovery is another IRS term for depreciation.

What is a Counteroffer?

A counteroffer is a new offer made in response to an original offer, rejecting the first offer.

What is the Court Order Enforcement Act?

This act provides remedies for individuals seeking to enforce judgments awarded by a court.

What is a Covenant in real estate?

A covenant is a promise in deeds, leases, or contracts to do or not do certain actions related to property.

What is a Covenant of Further Assurance?

This covenant requires a grantor to provide additional documents to perfect title if needed.

What is a Covenant of Quiet Enjoyment?

It guarantees a tenant or grantee peaceful possession without interference.

What is a Covenant of Seisin?

It warrants that the grantor owns the property and has the right to convey it.

What is a Covenant Against Encumbrances?

It ensures property is free of liens or claims except those disclosed in the deed.

What is a Covenant of Warranty Forever?

It promises the grantee protection against future claims on title, regardless of when they arose.

What are Covenants in real estate?

Covenants are enforceable promises that restrict or require property use, such as architectural standards or land-use controls.

What is a Crawl Space in construction?

A crawl space is the unfinished space between the ground and first floor (or between the top floor and roof).

What is a Credit in real estate closing?

A credit is money given by one party to another at closing, reducing cash required by the receiving party.

What is a Credit Bureau Report?

A credit bureau report details an individual’s credit history, including debts, payment history, and public records.

What is Credit History?

Credit history is a record of a borrower’s past loans and repayment performance.

What is Credit Life Insurance?

Credit life insurance pays off a borrower’s debt if they die during the loan term.

What is Credit Rating?

A credit rating is an assessment of creditworthiness, either of an individual borrower or a bond issue.

What is a Credit Report?

A credit report is a document summarizing a borrower’s credit accounts, repayment history, and risk profile.

What is a Credit Score?

A credit score is a numerical measure of creditworthiness, often used in loan approvals.

What is a Credit Tenant?

A credit tenant is a tenant with strong financials and credit ratings, reducing landlord risk.

What is a Credit Tenant Lease (CTL)?

A CTL is a lease with a tenant considered so financially stable that the lease income stream is nearly as reliable as a bond.

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D

What is the Date of Valuation?

The specific date on which a property’s value is determined in an appraisal, not to be confused with the appraisal’s completion date.

What is a Datum?

A horizontal reference plane used to measure heights and depths in surveying and construction.

What is a Debenture?

A long-term debt instrument not secured by real property. Fannie Mae issues debentures to finance mortgage purchases.

What is a Debit?

An accounting charge recorded on the left side of a ledger or closing statement, opposite of a credit.

What is a Debt Coverage Ratio (DCR)?

A measure of a property’s ability to cover debt, calculated as Net Operating Income ÷ Annual Debt Service.

What is Debt Financing?

Borrowed funds, typically secured by a mortgage or trust deed, used to purchase property.

What is a Debt Ratio?

The percentage of a borrower’s income used to pay long-term debts.

What is Debt Service?

Scheduled mortgage payments of principal and interest made by a borrower.

What is a Debt Service Constant?

The annual loan payment (principal + interest) divided by the loan amount, shown as a percentage.

What is Debt Service Coverage Ratio (DSCR)?

A lender’s measure of a property’s income ability to cover loan payments, calculated as NOI ÷ Debt Service.

Who is a Debtor?

A person or entity that owes money; a borrower.

What is a Decedent?

A deceased individual.

What is a Declaration of Condominium?

A legal document outlining condo unit boundaries, bylaws, common areas, surveys, drawings, and ownership restrictions.

What is a Declaration of Restrictions?

A recorded statement listing covenants, conditions, and restrictions (CC&Rs) governing land use.

What is a Declaratory Relief Action?

A court action seeking clarification of legal rights before a dispute escalates.

What is Declining Balance Depreciation?

A tax method applying a set rate to a property’s remaining balance to calculate accelerated depreciation.

What is the Declining-Balance Method?

An IRS depreciation method allowing larger deductions in a property’s early years, switching later to straight-line.

What is Dedication?

A property owner’s voluntary transfer of land to the public, often for streets or schools.

What is a Deed?

A written instrument conveying ownership or interest in real estate.

What is a Deed Executed Pursuant to Court Order?

A deed issued under court authority, such as sheriff’s or executor’s deeds.

What is a Deed in Lieu of Foreclosure?

A borrower’s voluntary transfer of property to a lender to avoid foreclosure, though junior liens remain.

What is a Deed in Trust?

A deed granting legal title to a trustee, with the beneficiary controlling use through the trust agreement.

What is a Deed of Reconveyance?

A document transferring title back to the borrower after a trust deed loan is paid.

What is a Deed of Trust and Assignment of Rents?

A loan document conveying property to a trustee and granting rights to collect rents as collateral.

What are Deed Restrictions?

Recorded provisions in a deed that limit property use, often tied to CC&Rs.

What is Default?

Failure to meet legal or financial obligations, such as nonpayment of rent or mortgage.

What is a Defeasance Clause?

A clause in a loan or lease that cancels rights upon a condition being met, such as full repayment.

What is a Defeasible Fee Estate?

A fee simple title that may be lost if a specified condition occurs or fails to occur.

What is a Defect?

A property condition that negatively impacts value or usability.

What is a Defect of Record?

A recorded encumbrance affecting title, such as liens, easements, or judgments.

What is Deferred Capital Gain?

The portion of realized gain postponed from taxation under certain conditions.

What is Deferred Maintenance?

Needed repairs not performed on a property, causing depreciation.

What is a Deficiency?

The shortfall when foreclosure sale proceeds don’t cover the full mortgage debt and expenses.

What is a Deficiency Judgment?

A court ruling making a borrower personally liable for any deficiency after foreclosure.

What does Delinquent mean?

Overdue on a financial obligation, such as a mortgage.

What is Demand in Real Estate?

The quantity of property buyers are willing and able to purchase at a given price.

What are Demised Premises?

The leased space conveyed to a tenant under a lease.

What are Demising Walls?

Walls separating leased tenant spaces from each other or from common areas.

What are Demographics in real estate?

Statistical data about population, income, households, and related factors used in site selection.

What is Demolition?

The destruction and removal of a structure to prepare for redevelopment.

What is Density?

The intensity of land use, typically measured in dwelling units per acre.

What is Density Zoning?

Zoning laws that limit the number of housing units or structures per acre.

What is the Department of Real Estate?

The state agency that regulates licensing, brokers, and compliance with state Real Estate Law in your state.

What is a Deposit in Real Estate?

Earnest money provided by a buyer to show good faith and secure a purchase agreement.

What is Depreciable Basis?

The portion of a property’s cost subject to depreciation, excluding land value.

What is Depreciation?

The reduction in a property’s value over time due to wear, age, or obsolescence.

What is Depreciation (Accounting)?

The allocation of an asset’s cost across its useful life for accounting and tax purposes.

What is Descent?

Transfer of property ownership by law to heirs when someone dies without a will.

What is Design/Build?

Design/Build is a project delivery method where one entity handles both design and construction.

What is a Designated Agent?

A broker-appointed licensee who represents one party exclusively in a transaction.

What is Destruction of Premises?

Damage to a property before closing, with liability depending on contract terms and state law.

Who is a Developer?

A person or company that improves land through construction or subdivision for profit.

What does Devise mean?

The transfer of real property through a will.

What is Direct Capitalization?

An appraisal method valuing property by dividing NOI by a capitalization rate.

What is a Divisible Contract?

A contract with separate parts where the illegality of one does not void the rest.

What is Direct Endorsement?

An FHA program allowing approved lenders to underwrite loans directly following FHA guidelines.

What is a Disability (ADA)?

A physical or mental impairment substantially limiting life activities, protected under the ADA.

What is Discharge of Contract?

The termination of a contract, usually upon full performance or by breach/default.

What does it mean to Disclaim?

To renounce ownership rights to property.

What is a Disclaimer?

A legal statement denying responsibility or limiting liability.

What is Disclosed Dual Agency?

When a broker represents both buyer and seller with written disclosure and consent.

What is Disclosure in Real Estate?

An agent’s duty to inform clients of all relevant material facts affecting a transaction.

What is a Disclosure Statement?

A legally required document where sellers disclose property conditions or interests.

What does Discount mean?

Selling below face value; in lending, the difference between loan value and cash received.

What are Discount Points?

Upfront loan fees (1% of loan amount each) charged to adjust a loan’s effective interest rate.

What is a Discount Rate?

An interest rate used to calculate present value of future cash flows in real estate.

What is Discounted Cash Flow (DCF) Analysis?

A method of valuing property by calculating present value of future income and sale proceeds.

What is Discounting?

The process of reducing future income streams to present value using a discount rate.

What is Discretionary Income?

The amount of income left after necessities and savings, available for investments.

What is Disintermediation?

When investors bypass banks and invest directly in higher-yield securities.

What is Distraint?

A landlord’s legal right to seize tenant property for unpaid rent.

What is Distressed Property?

Real estate under foreclosure threat due to insufficient income to cover debt.

What are Distributions of Net Investment Income?

Profits from investment operations distributed or credited to investors, excluding sales or refinancing proceeds.

What is Dock High Loading?

Loading docks built about 50 inches high to align with truck beds.

What is the Doctrine of Prior Appropriation?

A water law principle granting water rights based on first beneficial use, not landownership.

What is a Domicile?

A person’s fixed, permanent legal home and business location, used for tax and voting purposes.

What is a Dominant Tenement?

The property benefiting from an easement over a servient tenement.

What is Double Taxation?

When corporate profits are taxed at both the corporate and shareholder level.

What is Dower?

A wife’s legal right to a share of her husband’s property during or after marriage.

What is a Down Payment?

The buyer’s upfront cash contribution toward a property purchase price.

What is Down Zoning?

A zoning change that reduces allowable property use or density, often lowering land value.

What are Draws?

Advances of funds, typically under a construction loan, made as work progresses.

What is a Dropped Ceiling?

A suspended ceiling system hung below the structural ceiling.

What is Dual Agency?

When an agent represents both landlord and tenant in a lease transaction.

What is Due Diligence?

The process of verifying property’s physical, financial, and legal details before a transaction closes.

What is a Due-on-Sale Clause?

A loan provision requiring full repayment if the property is sold.

What is a Duplex?

A residential structure divided into two separate living units.

What is Duress?

Unlawful pressure forcing someone to act against their will, making contracts voidable.

What is a Dwelling?

Any building or portion used for human habitation.

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E

What is Earnest Money?

Earnest money is a deposit made by a buyer to show good faith in completing a real estate purchase. It is applied to the price if the deal closes, or forfeited if the buyer defaults.

What is an Earthquake Safety Disclosure?

An earthquake safety disclosure is a California-required “Residential Earthquake Hazards Report” that informs buyers of a home’s earthquake preparedness.

What is an Easement?

An easement is a legal right to use another’s land for a specific purpose, either appurtenant (benefiting land) or in gross (benefiting a person or entity).

What is an Easement by Condemnation?

An easement by condemnation is an easement created through the government’s power of eminent domain.

What is an Easement by Estoppel?

An easement by estoppel is an easement recognized when someone relies on another’s actions or statements suggesting it exists, preventing denial later.

What is an Easement by Necessity?

An easement by necessity is a legal right of access granted when a property is landlocked and requires passage through another’s land.

What is an Easement by Prescription?

An easement by prescription is an easement acquired through continuous, open, and adverse use of another’s property over a statutory period.

What is an Economic Base?

An economic base is the set of industries and activities in a community that support employment and income, forming the foundation of local real estate demand.

What is Economic Life?

Economic life is the period during which a property produces income or is useful, often shorter than its physical life.

What is Economic Obsolescence?

Economic obsolescence is the loss of property value caused by external factors, such as neighborhood decline or new regulations.

What are Effective Gross Income (EGI)?

Effective gross income (EGI) is the total annual income of a property, including base rent, percentage rent, and reimbursements, minus vacancy and collection losses.

What is Effective Interest Rate?

An effective interest rate is the actual rate of interest paid on a loan, reflecting compounding or additional costs, rather than just the stated nominal rate.

What is Effective Rent?

Effective rent is the average rent a landlord receives over a lease term after accounting for concessions, free rent, and tenant improvements.

What is an Ejectment?

Ejectment is a legal action used to remove a trespasser or someone unlawfully occupying real estate.

What is Eminent Domain?

Eminent domain is the government’s right to take private property for public use, provided fair compensation is paid to the owner.

What is an Emblement?

An emblement is a crop that has been planted and cultivated annually by a tenant and is considered personal property, even after lease termination.

What is an Emergency Tenant Protection Act (ETPA)?

The Emergency Tenant Protection Act (ETPA) is New York legislation that authorizes rent stabilization and tenant protections in designated municipalities.

What is an Emption?

Emption is the right to purchase property before others, also called preemption or the right of first refusal.

What is an Encroachment?

An encroachment is an unauthorized intrusion of a structure or improvement onto another’s property, such as a fence crossing the boundary line.

What is an Encumbrance?

An encumbrance is a claim, lien, charge, or liability attached to property that affects its title or use.

What is an Endorsement?

An endorsement is the act of signing the back of a negotiable instrument, such as a check, or adding coverage to an insurance policy.

What is an Environmental Impact Statement (EIS)?

An environmental impact statement (EIS) is a government-required study evaluating the effect of proposed development on the environment.

What is an Equal Credit Opportunity Act (ECOA)?

The Equal Credit Opportunity Act (ECOA) is a federal law prohibiting lenders from discriminating against applicants based on protected classes such as race, sex, or marital status.

What is an Equitable Title?

Equitable title is the right to obtain full ownership of property, typically held by a buyer under contract before the deed is delivered.

What is Equity?

Equity is the difference between a property’s market value and the debts owed against it, representing the owner’s financial interest.

What is an Equity Loan?

An equity loan is a loan secured by the equity in a property, often used for home improvements or personal expenses.

What is an Equity REIT?

An equity REIT is a real estate investment trust that primarily owns and operates income-producing properties.

What is an Escheat?

Escheat is the reversion of property ownership to the state when someone dies without heirs or a valid will.

What is Escrow?

Escrow is the arrangement in which a neutral third party holds funds, documents, or assets until the terms of a real estate transaction are met.

What is an Escrow Account?

An escrow account is a bank account held by a lender or escrow agent to collect and pay property taxes, insurance, and other obligations.

What is an Escrow Closing?

An escrow closing is the completion of a real estate transaction where all documents and funds are held and disbursed by a neutral escrow agent.

What is an Escrow Holder?

An escrow holder is the neutral third party responsible for managing funds and documents in a real estate escrow transaction.

What is an Escrow Instruction?

Escrow instructions are written directions to an escrow holder outlining the terms and conditions for completing a real estate transaction.

What is an Estate?

An estate is the degree, nature, and extent of interest a person has in real property, such as a fee simple estate or a leasehold estate.

What is an Estate at Sufferance?

An estate at sufferance is the interest held by a tenant who remains in possession without the landlord’s consent after a lease has expired.

What is an Estate at Will?

An estate at will is a tenancy that can be ended at any time by either landlord or tenant without prior notice.

What is an Estate for Years?

An estate for years is a leasehold interest for a fixed, definite period of time, with a specified beginning and end date.

What is an Estate from Period to Period?

An estate from period to period, also called a periodic tenancy, is a leasehold that automatically renews for successive periods until terminated by notice.

What is an Estoppel Certificate?

An estoppel certificate is a signed statement by a tenant or borrower confirming lease or loan terms, often required in property sales or financing.

What is an Ethics?

Ethics in real estate are the moral principles and professional standards that guide the conduct of real estate practitioners.

What is an Eviction?

Eviction is the legal process of removing a tenant from rental property, usually for nonpayment or lease violations.

What is an Exchange?

An exchange is a transaction in which property is traded for another property, sometimes with cash to balance values, such as a 1031 exchange.

What is Exclusive Agency Listing?

An exclusive agency listing is a listing agreement in which one broker is authorized to act as the sole agent but the owner may sell the property independently without paying commission.

What is Exclusive Right-to-Sell Listing?

An exclusive right-to-sell listing is a listing agreement giving one broker the right to earn commission regardless of who sells the property during the listing period.

What is an Executor?

An executor is the person named in a will to settle the estate of a deceased individual.

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F

What is a Face Interest Rate?

A face interest rate is the percentage interest shown on a loan document. It differs from the annual percentage rate (APR) or effective rate, since it does not account for points or fees.

What is Face Rent?

Face rent is the rental rate identified in a lease (also called the contract rate), as shown in the lease document.

What is Face Value?

Face value is the dollar amount stated on a document, such as a loan or bond, shown in words and/or numbers, without considering market adjustments.

What is Facility Management?

Facility management is the coordination of the physical workplace with people and operations, integrating business, architecture, behavioral, and engineering principles.

What is Facility Space?

Facility space in hospitality properties is the floor area dedicated to services like restaurants, health clubs, and shops that support guests or the public, but not room occupancy.

What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act is a federal law that gives consumers the right to access and correct their credit reports.

What is the Fair Employment and Housing Act (FEHA)?

The Fair Employment and Housing Act is a California law prohibiting housing discrimination based on factors such as marital status, race, religion, sex, national origin, or ancestry.

What is the Fair Housing Act?

The Fair Housing Act is a federal law prohibiting housing discrimination based on race, color, religion, sex, national origin, handicap, or familial status.

What is the Fair Housing Amendments Act of 1988?

The Fair Housing Amendments Act of 1988 expanded protections under the Civil Rights Act of 1968 to include people with disabilities and families with children.

What is Fair Market Rent?

Fair market rent is the amount a property would command if available for lease in the current market, regardless of contract rent.

What is Fair Market Value?

Fair market value is the price a property would bring in an open market between a willing buyer and seller, commonly used in taxation and eminent domain.

What is Fair Value of an Asset (or Liability)?

Fair value of an asset (or liability) is the price it could be bought, sold, or settled in a current transaction between willing parties, not in a forced sale.

What is Familial Status?

Familial status is the presence of one or more individuals under 18 living with a parent or guardian, or a pregnant individual, and is a protected class under fair housing laws.

What is Fannie Mae?

Fannie Mae is the Federal National Mortgage Association (FNMA), a government-sponsored enterprise that buys mortgages on the secondary market.

What is the Farm Credit System?

The Farm Credit System is a nationwide network of banks that provide financing for farmers and ranchers.

What is the Farm Service Agency (FSA)?

The Farm Service Agency is a U.S. Department of Agriculture agency providing loan programs to farmers and rural residents, including farm and rural housing loans.

What is Farming in Real Estate?

Farming in real estate is the practice of prospecting in a specific area or demographic to generate leads for listings and sales.

What is a Fashion/Specialty Center?

A fashion/specialty center is a retail center focused on upscale apparel, boutiques, and specialty merchandise, often in high-income trade areas.

What is a Feasibility Study?

A feasibility study is an analysis of whether a proposed real estate project will meet investor objectives, including demand, costs, and projected returns.

What is the Federal Deposit Insurance Corporation (FDIC)?

The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures deposits in U.S. commercial banks.

What is the Federal Fair Housing Law?

The Federal Fair Housing Law is Title VIII of the Civil Rights Act of 1968, making housing discrimination based on protected classes illegal.

What is the Federal Funds Rate?

The federal funds rate is the interest rate the Federal Reserve charges member banks for uncollateralized overnight loans.

What is the Federal Home Loan Bank System (FHLB)?

The Federal Home Loan Bank System regulates savings and loan associations, similar to how the Federal Reserve regulates commercial banks.

What is Freddie Mac?

Freddie Mac is the Federal Home Loan Mortgage Corporation (FHLMC), a government-sponsored enterprise created to purchase mortgages in the secondary market.

What is the Federal Housing Administration (FHA)?

The Federal Housing Administration (FHA) is a federal agency that insures housing loans to encourage homeownership and stabilize the housing market.

What is the Federal Reserve System?

The Federal Reserve System is the nation’s central bank, created in 1913 to stabilize the economy by managing money supply and credit.

What is a Fee Appraiser?

A fee appraiser is an independent appraiser who charges a fee for each appraisal assignment performed.

What is Fee Simple?

Fee simple is the highest and most complete ownership interest possible in real property, without limitations on time.

What is Fee Simple Defeasible?

Fee simple defeasible is a fee ownership interest that can be lost if a specific condition is violated, such as use restrictions.

What is Fee Simple Determinable?

Fee simple determinable is an estate that ends automatically if a specified use condition is violated, with ownership reverting to the grantor.

What is Fee Simple Subject to a Condition Subsequent?

Fee simple subject to a condition subsequent is an estate where ownership may revert to the grantor if a condition is violated, but only if the grantor takes legal action.

What is Fee Title?

Fee title is absolute ownership in land, synonymous with fee simple ownership.

What is the Feudal System?

The feudal system is a historical ownership model where the sovereign owned all land and granted use rights to individuals as life estates.

What is a FICO Score?

A FICO score is a credit score generated by Fair, Isaac & Company, widely used by lenders to evaluate borrower creditworthiness.

What is a Fictitious Business Name?

A fictitious business name is a name used for business operations other than the owner’s legal name, often requiring registration.

What is a Fiduciary in real estate?

A fiduciary is a person or entity legally obligated to act in another’s best interest, such as an agent representing a client.

What is Filled Land?

Filled land is property where the ground has been artificially raised by depositing materials like dirt or gravel, requiring disclosure to buyers.

What is a Final Payment?

A final payment is the last installment made on a fully amortized loan, often smaller than prior payments.

What is FIRPTA?

FIRPTA is the Foreign Investment in Real Property Tax Act, requiring buyers to withhold taxes when purchasing U.S. real estate from foreign sellers.

What is First-Generation Space?

First-generation space is newly constructed real estate that has never been occupied.

What is Fiscal Policy?

Fiscal policy is the government’s approach to taxation and spending to influence economic activity.

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage is a loan secured by real estate with an interest rate that remains constant for the entire term.

What are Fixtures?

Fixtures are personal property items permanently attached to real estate, making them part of the property.

What is Flex Space?

Flex space is an industrial building designed for multiple uses, such as offices, warehouses, or showrooms.

What is Foot Traffic?

Foot traffic is the volume of pedestrian movement in an area, an important factor in evaluating retail property locations.

What is Forbearance?

Forbearance is a lender’s agreement to delay foreclosure or legal action, typically in exchange for a repayment plan.

What is Force Majeure?

Force majeure is a contract clause excusing parties from obligations due to uncontrollable events like natural disasters or strikes.

What is Foreclosure?

Foreclosure is the legal process by which a lender takes ownership of a property after borrower default.

What is a Foreclosure Sale?

A foreclosure sale is the public auction of a property after foreclosure, with proceeds applied to the mortgage debt.

What are the Four Unities?

The four unities are possession, interest, time, and title, all required to create a joint tenancy.

What is Fractional Basis?

Fractional basis is a method of allocating special tax assessments proportionally among properties in an improvement district.

What is Fractional Section?

A fractional section is a parcel of land less than 160 acres, typically occurring due to survey errors or natural boundaries.

What is a Franchise?

A franchise is a contractual right to operate a business under another company’s brand and system, such as a real estate franchise.

What is Fraud?

Fraud is intentional deception or misrepresentation made to gain unfair advantage, distinguishable from negligence.

What is Free and Clear?

Free and clear means owning property without any debt or liens against it.

What is a Freehold Estate?

A freehold estate is an ownership interest in land of indefinite duration, as opposed to a leasehold estate.

What is Friable Material?

Friable material is a substance, such as asbestos, that easily breaks into airborne particles, creating health risks.

What is Frontage?

Frontage is the linear measurement of land along a street, river, or highway, often used in valuing retail sites.

What is Full Service Gross?

Full service gross is a rental rate that includes property operating expenses and taxes for the first year, with tenants covering increases thereafter.

What is Functional Obsolescence?

Functional obsolescence is a loss in property value caused by outdated or poorly designed features.

What is a Funding Fee?

A funding fee is a charge on VA loans to cover administrative costs, often higher for subsequent uses.

What is a Future Interest?

A future interest is a legal right to property ownership that will begin at a later date, such as a reversionary interest.

What is Future Worth?

Future worth is the projected increase in the value of money or an investment due to compounding over time.

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What is a Gap in Title?

A gap is a defect in the chain of title of a parcel of real estate, such as a missing document or conveyance, that raises doubt about current ownership.

What is a Gap Loan?

A gap loan fills the difference between the floor loan and the permanent loan. For example, if a permanent loan of $1,000,000 funds only once a building is 80% occupied, but initially covers $700,000, a $300,000 gap loan may be used during the rent-up period.

What is the Garn-St. Germain Bill?

The Garn-St. Germain Bill, formally the Depository Institutions Deregulation and Monetary Control Act of 1980, deregulated banks and savings institutions. It allowed savings and loan associations to offer checking-type accounts, issue credit cards, and set loan loss reserves. The follow-on 1982 Act expanded their ability to invest in real estate development, consumer loans, and money market accounts.

What is a General Agent?

A general agent is authorized by a principal to perform all acts related to the ongoing operation of a particular business or job. Property managers often act as general agents. By contrast, most real estate brokers act as special agents.

What is a General Contractor?

A general contractor is the prime contractor hired by a property owner to construct an entire building or project. They coordinate subcontractors, oversee all work, and are responsible for paying subcontractors.

What is a General Index?

A general index is maintained by a county recorder’s office and used by title examiners to research the chain of title. It lists items recorded under a person’s name, such as liens, judgments, or powers of attorney.

What is a General Lien?

A general lien gives a creditor the right to sell all of a debtor’s property, both real and personal, to satisfy a debt.

What is a General Partner?

A general partner in a partnership has unlimited liability. In limited partnerships, at least one general partner is required, often acting as the syndicator who manages operations and assumes liability.

What is a General Partnership?

A general partnership is a business arrangement where all partners share in management and assume full liability for business debts and obligations.

What is a General Plan?

A general plan is a comprehensive zoning plan that cities and counties are required to develop to guide land use and development.

What is a General Real Estate Tax?

A general real estate tax is levied to fund the operations of the governmental agency that imposes the tax.

What is a General Warranty Deed?

A general warranty deed is a deed in which the grantor guarantees good, clear title and provides the greatest protection of any deed.

What is Gentrification?

Gentrification is the process in which higher-income residents move into and rehabilitate older neighborhoods, displacing lower-income residents.

What is Geographic Farming?

Geographic farming is the practice of prospecting in a defined geographic area to generate real estate leads.

What is a Gift Deed?

A gift deed conveys property for consideration of “love and affection.” Because it lacks valuable consideration, the donee may not be able to enforce certain promises against the donor.

What is Ginnie Mae?

Ginnie Mae is the nickname for the Government National Mortgage Association (GNMA), which guarantees securities backed by federally insured or guaranteed loans.

What is a Going-In Capitalization Rate?

The going-in capitalization rate is the cap rate based on the property’s projected first-year net operating income divided by its value.

What is Good and Marketable Title?

Good and marketable title is ownership that can be shown, typically by title search, to be vested in the owner of record and free from claims or liens.

What are Good Funds?

Good funds are cash, cashier’s checks, or personal checks that have cleared the bank and are available for use.

What is a Good-Faith Estimate?

A good-faith estimate is a preliminary accounting of expected closing costs, required by RESPA to be provided by lenders to loan applicants.

What is Goodwill in Real Estate?

Goodwill is an intangible asset reflecting the reputation, trade name, or customer loyalty of a business. It often adds value when a business is sold.

What is a Government Check?

A government check is a 24-mile-square parcel consisting of 16 townships in the rectangular (government) survey system.

What is a Government Lot?

A government lot is a fractional section in the rectangular survey system that is less than a quarter-section, often created by water bodies, borders, or survey errors.

What is the Government National Mortgage Association (GNMA)?

The Government National Mortgage Association, known as Ginnie Mae, was created in 1968. It operates housing assistance programs, manages old FNMA functions, and guarantees mortgage-backed securities.

What is a Grace Period?

A grace period is extra time allowed under a contract for a party to complete an action before being considered in default.

What is a Graduated Lease?

A graduated lease provides for rent increases at specified intervals during the lease term.

What is a Graduated-Payment Mortgage (GPM)?

A graduated-payment mortgage is a loan where monthly payments start lower and increase annually for a set period before leveling off.

What is a Grandfather Clause?

A grandfather clause allows existing activities or rights to continue after new laws or regulations are enacted.

What is a Grant?

A grant in real estate is a conveyance of property, often used in deeds to indicate transfer.

What is a Grant Deed?

A grant deed warrants that the grantor has not previously conveyed the property, has not encumbered it except as noted, and will convey any later-acquired title to the grantee.

What is a Granting Clause?

A granting clause is the part of a deed that states the grantor’s intent to convey property, often using wording like “grant” or “convey and warrant.”

What is a Grantor?

A grantor is the person or entity transferring title or interest in real property.

What is Gross Absorption?

Gross absorption is the total square footage of space leased in a market during a period, without accounting for space vacated.

What is Gross Area of an Entire Office Building (BOMA)?

This is the total area of a building, including all floors and usable spaces within exterior walls, but excluding architectural projections and unroofed areas.

What is Gross Asset Value?

Gross asset value is the market value of an investment without considering debt or ownership percentages.

What is Gross Building Area?

Gross building area is the total square footage of a building, measured to the outer walls, including interior spaces but excluding parking and roof areas.

What is Gross Debt Service Ratio?

The gross debt service ratio is the maximum percentage of gross income that can go toward principal, interest, and taxes.

What is Gross Income?

Gross income is the total amount earned before taxes or deductions. In real estate, it can also refer to income before operating expenses.

What is a Gross Income Multiplier?

A gross income multiplier is used to estimate property value by multiplying the property’s gross annual income by a market-derived factor.

What is Gross Investment in Real Estate (Historical Cost)?

Gross investment in real estate is the total of equity and debt invested, including purchase price, acquisition costs, and improvements, minus any sale proceeds.

What is Gross Leasable Area?

Gross leasable area is the portion of a property designed for tenants’ exclusive use and rental income production.

What is Gross Lease?

A gross lease is one where the landlord pays property expenses such as taxes, insurance, and maintenance.

What is Gross Operating Income?

Gross operating income is the sum of rental income and other income sources before deducting expenses.

What is Gross Potential Annual Rent?

Gross potential annual rent is the total rent possible if a property were fully occupied.

What is Gross Rent Multiplier (GRM)?

A gross rent multiplier is the ratio of a property’s price to its annual gross potential rent, used in valuing multifamily properties.

What is Gross Rentable Area (BOMA)?

Gross rentable area includes all space within exterior walls except for vertical shafts, stairs, and balconies.

What is Gross Scheduled Income?

Gross scheduled income is the maximum rental income a property could generate at 100% occupancy.

What is a Ground Lease?

A ground lease is a long-term lease of land only, often separating land ownership from building ownership.

What is Ground Rent?

Ground rent is rent paid to use land, typically under a long-term lease while retaining title with the lessor.

What are Ground Rents?

Ground rents are perpetual leases where the landowner retains title and the tenant holds possession. Historically common in Maryland and Pennsylvania.

What is Groundwater?

Groundwater is water located beneath the earth’s surface, excluding underground streams with defined channels.

What is a Growing-Equity Mortgage (GEM)?

A growing-equity mortgage has payments that increase annually, with the increases applied directly to principal, shortening the loan term.

What are Growth Rates in Real Estate?

Growth rates are the assumed increases in income and expenses used in discounted cash flow analysis.

What is a Guarantor?

A guarantor is someone who becomes secondarily liable for another person’s debt or obligation.

What is a Guaranty?

A guaranty is a promise that one party will fulfill another’s obligations, often required by lenders for added security.

What is a Guardian?

A guardian is a court-appointed person given legal custody of another individual or their property, such as a minor or incapacitated adult.

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What is a Habendum Clause?

A Habendum Clause is the part of a deed beginning with the words “to have and to hold,” which follows the granting clause and defines the extent of ownership the grantor is conveying.

What is Habitability?

Habitability refers to whether a property is fit for human habitation. (See implied warranty)

What is a Handicap?

A Handicap, as defined in the Fair Housing Act, is a physical or mental impairment that substantially limits one or more major life activities (walking, seeing, learning, working). It also includes a record of having such an impairment or being regarded as having one. Handicap does not include the current, illegal use of or addiction to a controlled substance. (See disability)

What are Handicapped Requirements?

Handicapped Requirements are code-required features designed to accommodate handicapped persons, such as entry ramps, restrooms, restroom fixtures, hardware, and special doors.

What is a Hard Money Loan?

A Hard Money Loan is a loan made in cash, often at higher interest rates and shorter terms, secured by real estate.

What is Hazardous Contamination?

Hazardous Contamination refers to the presence of hazardous materials on a property. (See hazardous materials)

What are Hazardous Materials?

Hazardous Materials are substances considered dangerous to health, safety, or property. Tenants often require landlords to warrant that a building and property are free of hazardous materials. Buyers and lenders typically require a Phase I environmental assessment before a transaction closes.

What is Hazardous Waste?

Hazardous Waste is toxic waste material that threatens the value of real estate. (See asbestos, Environmental Protection Agency, underground storage tanks, urea-formaldehyde)

What is a Hazardous Waste Disclosure?

A Hazardous Waste Disclosure, required under California Health and Safety Code (§25359.7(a)), mandates that owners of nonresidential property disclose the existence of hazardous substances on or beneath the property to prospective buyers or lessees. Tenants must also notify landlords if hazardous substances have been released.

What is a Head Lease?

A Head Lease is a lease granted to an entity that will subsequently sublease the premises to subtenants. It sets out the promises made by the landlord to a superior landlord, and these promises may bind the tenant if known.

What is a Hectare?

A Hectare is a metric land measurement equal to about 2.471 acres or 107,637 square feet.

What is an Heir?

An Heir is a person who inherits property under a will or, if no will exists, succeeds to property under state laws of descent. (See intestate)

What does Heirs and Assigns mean?

Heirs and Assigns is a phrase often used in deeds and wills to grant a fee simple estate.

What are Hereditaments?

Hereditaments are any property—real or personal—that can be inherited.

What is Heterogeneity?

Heterogeneity refers to the state of being different in kind, unlike, or incongruous. In real estate, it often reflects the uniqueness of each parcel of land.

What is a High-Rise?

A High-Rise is generally defined as a building exceeding six stories in height and equipped with elevators.

What is a High-Rise Office Building?

A High-Rise Office Building is typically defined as one that is more than 25 stories above ground level.

What does Highest and Best Use mean?

Highest and Best Use is the reasonably probable and legally permissible use of property that is physically possible, financially feasible, and maximally productive.

What are Highrise Developments?

Highrise Developments, also called mixed-use developments (MUDs), combine residential, office, retail, and entertainment uses in a single vertical community.

What is Historic Cost?

Historic Cost is the original purchase price of an asset or the actual money spent on construction or improvements.

What is a Historic Structure?

A Historic Structure is a building officially recognized for its historic significance and given special status under tax laws that encourage rehabilitation and discourage demolition.

What is a Hold Harmless Clause?

A Hold Harmless Clause is a contract provision in which one party agrees to indemnify and protect the other party from liability or lawsuits arising from the transaction.

What is a Holdback?

A Holdback is money withheld until certain conditions are met, such as completion of construction or fulfillment of loan terms.

What is a Holder in Due Course?

A Holder in Due Course is the legal holder of a negotiable instrument (such as a note or check) acquired under specific conditions, giving them certain rights free of many defenses available against the original payee.

What is a Holding Period?

A Holding Period is the length of time a property is owned and operated, often used in investment analysis (commonly 10 years).

What is a Holdover?

A Holdover occurs when a tenant remains in possession of leased property after the lease has expired.

What is a Holdover Tenant?

A Holdover Tenant is a tenant who continues occupying a property after the lease term ends. (See tenancy at sufferance)

What is a Holographic Will?

A Holographic Will is a handwritten, dated, and signed will that is not witnessed. It is valid in some states.

What is a Home Equity Loan?

A Home Equity Loan is a loan in which the borrower uses their residence as collateral and may draw funds up to a prearranged amount.

What is the Home Mortgage Disclosure Act (HMDA)?

The Home Mortgage Disclosure Act (HMDA), enacted in 1975, requires lenders to disclose loan application and origination data to the Federal Reserve to combat discriminatory practices like redlining.

What is a Home Warranty Insurance Policy?

A Home Warranty Insurance Policy insures homeowners against failures in major systems and appliances, such as plumbing, electrical, and heating.

What are Homeowner Instructions?

Homeowner Instructions are recommendations from a listing broker to a seller on repairs or cleaning that can improve the property’s appearance and market value.

What is a Homeowner's Association?

A Homeowner's Association is a nonprofit entity created under subdivision or condominium covenants to manage and enforce community rules and shared amenities.

What is a Homeowner's Insurance Policy?

A Homeowner's Insurance Policy is a standardized package that covers a homeowner against risks such as fire, theft, and liability.

What is a Homestead?

A Homestead is a statutory protection that exempts a homeowner’s primary residence from certain creditor claims up to a set value.

What is a Homestead Exemption?

A Homestead Exemption is the amount of a homeowner’s property value protected from unsecured creditors.

What does Homogeneous mean?

Homogeneous means composed of similar or identical parts; in real estate, it describes areas where properties are alike in character.

What are Housing Accommodations?

Housing Accommodations are any real property used as a residence or sleeping place, excluding properties operated by certain nonprofit religious, fraternal, or charitable groups.

What is the Housing Affordability Index?

The Housing Affordability Index measures the percentage of households that can qualify to purchase a home based on average income and average home prices.

What is the Housing Financial Discrimination Act of 1977 (Holden Act)?

The Housing Financial Discrimination Act of 1977 prohibits discriminatory lending practices by financial institutions and mortgage professionals.

What is the Howey Test?

The Howey Test is a legal test used to determine whether a transaction constitutes an investment contract (and therefore a security).

What is HUD?

HUD, or the U.S. Department of Housing and Urban Development, is a federal agency that oversees national housing programs, FHA, GNMA, urban renewal, and related initiatives.

What is a HUD-1 Settlement Statement?

A HUD-1 Settlement Statement is a federally mandated document itemizing closing costs for buyers and sellers in real estate transactions.

What does HVAC stand for?

HVAC stands for Heating, Ventilation, and Air Conditioning—the systems that regulate building climate.

What is Hybrid Financing?

Hybrid Financing combines different types of financing structures, such as participation mortgages or convertible loans, to meet borrower and lender needs.

What does it mean to Hypothecate?

To Hypothecate means to pledge property as collateral for a loan without giving up possession.

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What is an Illusory Contract?

An illusory contract is an apparent contract that is not legally binding because the parties have not agreed to be bound.

What is an Imperfect Market?

An imperfect market is a market in which similar properties are traded for either more or less than their actual market value.

What is Implied Agency?

Implied agency is an agency agreement created by the actions of the parties, rather than by a written or verbal agreement.

What is an Implied Agreement/Contract?

An implied agreement, or implied contract, is a contract in which the agreement of the parties is demonstrated by their actions and conduct.

What is Implied Authority?

Implied authority is the authority of an agent to perform acts reasonably necessary to accomplish the purpose of the agency.

What is an Implied Easement?

An implied easement occurs when the owner of two or more adjacent properties sells a part of the property and, by implication, grants all apparent and visible easements necessary for the reasonable use of the property granted.

What is an Implied Warranty?

An implied warranty is a legal theory in landlord-tenant law where the landlord renting property implies that the property is habitable or that the tenant will have quiet enjoyment of the property.

What is an Impound Account?

An impound account is a trust account established to set aside funds for future needs related to a property, such as taxes, insurance, or mortgage insurance. Lenders often require impound accounts to protect their security.

What is Improved Land?

Improved land is land that has been partially or fully developed for use. Examples include landscaping, grading, utility installation, road construction, or building construction.

What is an Improvement?

An improvement is any structure erected on land to enhance its value. This can include privately owned structures such as fences or driveways, or public structures like sidewalks, streets, and sewers.

What is an Improvement Allowance?

An improvement allowance is the estimated dollar value, either as a gross amount or per square foot, that a landlord offers a tenant to cover improvements to leased space.

What is an Improvement Ratio?

An improvement ratio is the relative value of improvements compared to the value of the unimproved land.

What are Improvements?

Improvements are permanent structures added to land, such as buildings, roads, sidewalks, curbs, utilities, and landscaping.

What is Imputed Interest?

Imputed interest is interest that the law assumes in cases where a mortgage or loan states an insufficient interest rate. The IRS may reclassify part of the principal as imputed interest for tax purposes.

What is an In-House Transaction?

An in-house transaction occurs when both the listing and procuring agents in a real estate deal are employed by the same brokerage firm.

What is Incentive Zoning?

Incentive zoning is zoning that offers benefits to developers in exchange for providing public amenities, such as including a public plaza in a commercial development.

What does Inchoate mean?

Inchoate means unfinished or incomplete. In real estate, it often refers to rights, such as dower rights, that exist in principle but are not yet fully vested.

What is Income in real estate?

Income in real estate is money or benefits generated from property, such as rents, fees, royalties, or revenues from business activities on the property.

What is the Income Capitalization Approach?

The income capitalization approach is a property valuation method based on the anticipated economic benefits of ownership, often by capitalizing expected income.

What is Income Capitalization Value?

Income capitalization value is the value derived for an income-producing property by converting its anticipated cash flows into present property value through capitalization or discounting.

What is the Income Method?

The income method, also known as the investment method, is an appraisal method that values property by converting its income stream into market value using a capitalization rate.

What is Income Property?

Income property is real estate that generates rental income, such as apartment buildings, shopping centers, or office buildings.

What is an Income Ratio?

An income ratio is the relationship between a person’s total income and the amount needed to make one month’s mortgage payment.

What is an Income Return?

An income return is the percentage of return from property or portfolio operations during a given analysis period.

What is an Income Statement?

An income statement, also called a profit and loss statement, is a financial statement listing the revenues and expenses of a business for a given period.

What is an Income Stream?

An income stream is a regular flow of money generated by a business or investment, such as rental payments under a lease.

What is Income Tax?

Income tax is the portion of taxable income that a person or corporation must pay to the government.

What is an Incorporeal Right?

An incorporeal right is a non-possessory right in real estate, such as an easement or right-of-way.

What are Increasing and Diminishing Returns?

Increasing and diminishing returns describe the impact of improvements on property value. Additional improvements increase value only up to a point; beyond that, they no longer add value.

What is Incurable Depreciation?

Incurable depreciation is a property defect that cannot be cured or is not financially feasible to correct, such as a poor floor plan.

What does it mean to Indemnify?

To indemnify means to protect another person against loss or damage, or to compensate them for loss or damage.

What is an Indenture?

An indenture is a written agreement between two or more parties with different interests, often used in bonds or trust agreements.

What does Independent mean in real estate?

Independent refers to a brokerage firm operating on its own without affiliation to a regional or national franchise.

What is an Independent Contractor in real estate?

An independent contractor is someone retained to perform a service but who is controlled only as to the result, not how the work is done. Many real estate agents are classified as independent contractors.

What is an Index in real estate finance?

An index is a benchmark used to set interest rates, such as the six-month Treasury bill rate.

What is an Index Lease?

An index lease is a rental agreement where rent is adjusted based on a published cost index, such as the Consumer Price Index (CPI).

What is the Index Method?

The index method is an appraisal technique that estimates building costs by adjusting the original cost with a percentage factor for current costs.

What is an Index Rate?

An index rate is the benchmark interest rate to which an adjustable-rate mortgage is tied.

What is an Indexed Loan?

An indexed loan is a long-term loan where terms such as interest or principal adjust periodically based on a specific index.

What is an Individual Retirement Account (IRA)?

An Individual Retirement Account (IRA) is an IRS-approved tax-deferred savings account that allows individuals to save for retirement.

What is an Industrial Broker?

An industrial broker is a real estate broker who specializes in industrial property transactions.

What are Industrial Development Bonds?

Industrial development bonds are tax-exempt bonds that allow private investors to finance commercial or apartment development.

What is Industrial Gross Rent?

Industrial gross rent, also called modified gross rent, includes some operating expenses in the base rent while excluding others.

What are Industrial Revenue Bonds?

Industrial revenue bonds are bonds issued for the development of industrial parks or buildings for commercial tenants.

What is Inflation in real estate?

Inflation is the loss of purchasing power of money, reflected in rising prices. Real estate is often seen as a hedge against inflation because it tends to hold or increase its value.

What is Infrastructure in real estate?

Infrastructure refers to the public works and systems in a community, including roads, bridges, utilities, and water/sewer systems.

What is Ingress in real estate?

Ingress is the right or ability to enter a property. It is the opposite of egress (exit).

What are Inheritance Taxes?

Inheritance taxes are state taxes imposed on heirs for the right to inherit property, based on the relationship to the decedent.

What is an Initial Rate?

An initial rate is the starting interest rate charged to a borrower during the first adjustment period of an adjustable-rate mortgage.

What is an Injunction in real estate?

An injunction is a court order requiring a party to do or refrain from doing a specific act, such as violating deed restrictions.

What is an Installment Contract?

An installment contract is a contract for the sale of real estate in which the buyer makes periodic payments but the seller retains legal title until the final payment.

What is an Installment Note?

An installment note is a promissory note requiring payments of principal and interest at specified intervals.

What is an Installment Sale?

An installment sale is a tax method for reporting gain from a property sale when payments are received over time rather than in a lump sum.

What are Installments?

Installments are partial payments made at successive intervals to reduce a debt, such as mortgage payments.

What is the Institute of Real Estate Management (IREM)?

The Institute of Real Estate Management (IREM) is a national organization focused on professional property management and confers designations such as Accredited Resident Manager (ARM).

What is an Institutional Lender?

An institutional lender is a financial intermediary, such as a bank or insurance company, that invests in loans or securities and is regulated to limit risk.

What are Institutional Properties?

Institutional properties are high-grade investment properties typically valued at $50 million or more and purchased by large investors like pension funds and REITs.

What is an Instrument in real estate?

An instrument is a written legal document that establishes the rights and liabilities of parties, such as a deed or mortgage.

What is Insurable Value?

Insurable value is the replacement cost of destructible improvements on a property, excluding land value.

What is Insurance in real estate?

Insurance in real estate refers to various types of protection policies, including fire, casualty, and liability insurance.

What are Insurance Companies in real estate finance?

Insurance companies collect premiums from policyholders and invest a portion in long-term loans, often financing commercial and industrial properties.

What is Insurance Coverage?

Insurance coverage is the total amount and type of insurance carried on a property, such as hazard or liability insurance.

What is Mortgage Insurance?

Mortgage insurance is coverage, usually purchased by the borrower, that protects the lender in case of foreclosure losses.

What is Interest in real estate finance?

Interest is the charge a lender imposes for the use of borrowed money.

What is an Interest Factor?

An interest factor is a number, often from financial tables, used to calculate the present or future value of money.

What is an Interest Rate?

An interest rate is the percentage charged for borrowing money or the rate of return on an investment.

What is an Interest-Only Loan?

An interest-only loan is a loan where payments cover only interest, with the principal due in a lump sum at maturity.

What is Interim Financing?

Interim financing is a short-term loan, often used during the construction phase of a project.

What is an Interim Occupancy Agreement?

An interim occupancy agreement allows a buyer to take possession of a property as a tenant before closing escrow.

What is Intermediate Theory?

Intermediate theory is a mortgage principle in some states requiring lenders to foreclose to obtain legal title, blending lien and title theory.

What is Internal Rate of Return (IRR)?

Internal Rate of Return (IRR) is the discount rate that makes the net present value of an investment’s cash flows equal zero, used to evaluate property investments.

What does it mean to Interplead?

To interplead is to require two parties claiming the same rights to litigate against each other instead of against a third party holding the disputed asset.

What is the Interstate Land Sales Full Disclosure Act?

The Interstate Land Sales Full Disclosure Act is a 1968 federal law requiring developers to register certain subdivisions with HUD and disclose property details to buyers.

What does Intestate mean?

Intestate means dying without a valid will, in which case property passes to heirs under state law.

What is Intestate Succession?

Intestate succession is the legal process of transferring property to heirs when a person dies without a will.

What is Intrinsic Value?

Intrinsic value is an appraisal term describing the value of a property based on a person’s personal preferences.

What does Inure mean?

Inure means to come into use, take effect, or become beneficial.

What is Inventory in real estate?

Inventory is the total square footage of a particular property type in a market or submarket.

What is Inverse Condemnation?

Inverse condemnation occurs when a property owner forces the government to take property by eminent domain due to governmental actions limiting its use.

What is Investment in real estate?

Investment is money directed toward purchasing, improving, or developing an asset with the expectation of income or profit.

What are Investment-Grade Properties?

Investment-grade properties are large properties, generally $20 million to $50 million, typically traded by syndicators or institutional investors.

What is Investment Group Financing?

Investment group financing is a method of funding large real estate projects through syndicates, partnerships, or REITs.

What is an Investment Property?

An investment property is a property purchased for its income and appreciation potential rather than for owner occupancy.

What is the Investment Property Rule?

The investment property rule allows for tax-deferred exchanges of like-kind investment properties under the Internal Revenue Code.

What is an Investor?

An investor is someone who owns commercial property for potential income, appreciation, and tax benefits.

What is Involuntary Conversion?

Involuntary conversion occurs when property is taken or destroyed through condemnation or natural events, not through voluntary sale.

What is an Involuntary Lien?

An involuntary lien is a lien placed on property without the owner’s consent, such as a tax lien or judgment lien.

What does Irrevocable mean?

Irrevocable means incapable of being revoked or changed, such as an irrevocable letter of credit issued by a bank.

What is an IRS Tax Lien?

An IRS tax lien is a federal lien placed on all property owned by a taxpayer who fails to pay federal taxes. Its priority depends on the date of recording.

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What is Joint and Several Liability?

Joint and several liability is a situation when more than one party is liable for repayment of a debt or obligation. A creditor can obtain compensation from one or more parties, either individually or jointly.

What is Joint Tenancy?

Joint tenancy is an estate or unit of interest in real estate owned by two or more natural persons with rights of survivorship. Only one title exists, vested in the collective ownership unit, and all owners hold equal shares. When a joint tenant dies, their interest passes automatically to the surviving tenants by right of survivorship, rather than through a will or inheritance. The last surviving tenant takes title in severalty.

What is a Joint Venture?

A joint venture is the joining of two or more people to conduct a specific business enterprise. Similar to a partnership, it is created by agreement between the parties to share profits and losses. Unlike a partnership, a joint venture is limited to a single project rather than an ongoing business relationship.

What is a Judgment?

A judgment is the formal decision of a court on the respective rights and claims of the parties to an action or suit. Once recorded with the county recorder, a judgment usually becomes a general lien on the property of the defendant.

What is a Judgment Creditor?

A judgment creditor is a person or entity that has received a court decree (judgment) for money due from the judgment debtor. For example, to enforce the judgment, the creditor may file a lien against the debtor’s property.

What is a Judgment Debtor?

A judgment debtor is a person against whom a judgment has been issued by a court for money owed and remains unpaid. For example, if Abel fails to pay rent and a judgment is entered against him, Abel is the judgment debtor.

What is a Judgment Decree?

A judgment decree is the formal court order that specifies the award made by the court in a civil case.

What is a Judgment Lien?

A judgment lien is a general lien placed on the property of a judgment debtor, giving the creditor the right to levy the property to satisfy the debt. It arises from a judgment entered in court.

What is Judicial Foreclosure?

Judicial foreclosure is a court-supervised method of foreclosing on real property through a legal process and sale. In judicial foreclosure, an appraisal is conducted, and the court sets a minimum (upset) price below which bids cannot be accepted.

What is Judicial Precedent?

Judicial precedent is the body of legal principles established by prior court decisions that guide future cases.

What is a Jumbo Loan?

A jumbo loan is any loan that exceeds the underwriting limits set by Fannie Mae or Freddie Mac. Because it is larger than conforming loan limits, a jumbo loan is considered a non-conforming loan.

What is a Junior Lien or Junior Mortgage?

A junior lien, or junior mortgage, is an obligation such as a second mortgage that is subordinate in priority to an existing lien (the senior loan) on the same property.

What is Jurisprudence?

Jurisprudence is the collection of legal decisions and case law from which legal principles and rules emerge.

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What is Laches?

Laches is an equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.

What is Land?

Land is the earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.

What is Land Banking?

Land banking is the activity of purchasing land that is not presently needed for use.

What is a Land Contract?

A land contract is a real estate installment selling arrangement whereby the buyer may use, occupy, and enjoy land, but no deed is given by the seller (so no title passes) until a specified part of the sale price has been paid.

What is a Land Lease?

A land lease is a lease covering only the ground, not any structures. It is also called a ground lease.

What is the Land Residual Technique?

The land residual technique is an appraisal method of estimating land value using net operating income (NOI) and the value of improvements.

What are Land Trusts?

Land trusts are trusts in which real estate is the only asset, with title held by a trustee and beneficial interest belonging to the beneficiary.

What is Land Use Intensity?

Land use intensity is a measure of the extent to which a land parcel is developed in conformity with zoning ordinances.

What is Land Use Planning?

Land use planning is the process, typically done by local government, of providing recommendations for land use consistent with community policies and zoning.

What is Land Use Regulation?

Land use regulation refers to government ordinances, codes, and permit requirements intended to regulate private land use and natural resources.

What is Land Use Succession?

Land use succession is the change in the predominant use of a neighborhood or area over time.

What does Land, Tenements, and Hereditaments mean?

Land, tenements, and hereditaments is an old English legal phrase expressing all types of real estate, including all interests in property.

What is a Land/Building Ratio?

A land/building ratio is the ratio of land value to the value of improvements.

What is a Landfill?

A landfill is a large hole, lined to prevent leakage, used for waste disposal through layered compaction of waste and soil.

What is a Landlord?

A landlord is a property owner who rents or leases real estate to another party.

What is Landlord Representation?

Landlord representation is when an agent (the landlord rep agent) represents only the landlord in a lease transaction.

What is a Latent Defect?

A latent defect is a hidden structural defect that cannot be discovered by ordinary inspection and threatens the property’s soundness or safety.

What is Latent Value?

Latent value is the value a property holds due to its potential for redevelopment or use at a higher and better use.

What is Lateral Support?

Lateral support is the right to have land supported by adjoining land or soil beneath.

What is Latitude?

Latitude is the distance measured northward or southward from the equator, expressed in degrees.

What is the Law of Agency?

The law of agency is the fiduciary relationship created when a property owner, as principal, authorizes a licensed broker to act as their agent.

What is Layout Efficiency?

Layout efficiency is the degree to which the usable area of a building meets tenant requirements, influenced by design and building layout.

What is Lead?

Lead is an element formerly used in paint that poses health risks, particularly to the brain, kidneys, and nervous system.

What is Lead-Based Paint?

Lead-based paint is hazardous paint, often found in U.S. homes built before 1978, that contains dangerous levels of lead.

What is Leasable Area?

Leasable area is the actual space occupied by tenants, used as the basis for calculating rent.

What is a Lease?

A lease is the right to occupy real estate in exchange for rent, as agreed in a lease agreement between a landlord and tenant.

What is a Lease Assignment?

A lease assignment is the transfer of lease rights from one tenant to another.

What is a Lease Assumption?

A lease assumption is when a new landlord commits to pay for an existing tenant’s lease to facilitate relocation.

What is a Lease Expiration Exposure Schedule?

A lease expiration exposure schedule is a listing of total leasable space with leases expiring over the next five years.

What is a Lease-Listing Flyer?

A lease-listing flyer is a marketing document describing commercial space for lease to attract prospective tenants.

What is a Lease Option?

A lease option is a lease in which the tenant has the right to purchase the property during or at the end of the lease term.

What is a Lease Over?

A lease over is when a landlord mistakenly leases space that infringes upon the rights of an existing tenant.

What is a Lease Premium?

A lease premium is an upfront payment made by a tenant to a landlord, often to offset landlord costs.

What is a Lease Purchase?

A lease purchase is a transaction where the tenant leases property with the agreement to purchase it later, often for tax or financing benefits.

What is a Lease with Option to Purchase?

A lease with option to purchase is a lease that gives the tenant the right, but not the obligation, to purchase the property under agreed terms.

What is a Leased Area?

A leased area is the portion of a property conveyed for exclusive use and possession by lease.

What is a Leasehold?

A leasehold is the tenant’s interest in real estate under a lease.

What is a Leasehold Estate?

A leasehold estate is a tenant’s right to occupy real estate during the lease term, classified as personal property.

What are Leasehold Improvements?

Leasehold improvements are fixtures or modifications installed by a tenant that may be removed at lease end if no damage is caused.

What is a Leasehold Mortgage?

A leasehold mortgage is a lien on a tenant’s interest in leased property, subordinate to the ground lease.

What is Leasehold Value?

Leasehold value is the tenant’s financial benefit when their lease terms are more favorable than current market rents.

What are Leasing Assumptions?

Leasing assumptions are projected lease terms, tenant retention rates, and leasing costs used in property valuation.

What is a Leasing Commission?

A leasing commission is compensation paid to agents for completing a lease transaction.

What are Leasing Concessions?

Leasing concessions are financial incentives provided by landlords to encourage tenants to sign leases.

What is Leasing Depth?

Leasing depth is the distance from a building’s window line to its corridor.

What is Legacy?

Legacy is a bequest of personal property under a will.

What is Legal Description?

A legal description is a written description of a parcel of land that identifies the property precisely and cannot be misunderstood.

What is Legal Title?

Legal title is ownership of property that is enforceable in a court of law.

What is a Lender?

A lender is a person or financial institution that provides funds to a borrower under agreed repayment terms.

What is Lender Yield?

Lender yield is the return a lender receives from interest and fees charged on a loan.

What are Lending Guidelines?

Lending guidelines are the standards and criteria that financial institutions use to evaluate and approve loans.

What is Lending Value?

Lending value is the value a lender assigns to a property for determining the amount of a mortgage loan.

What is a Lessee?

A lessee is a tenant who leases real estate from a landlord.

What is a Lessor?

A lessor is the landlord or property owner who leases real estate to a tenant.

What is a Letter of Credit?

A letter of credit is a commitment by a bank on behalf of a buyer or tenant that payment will be made to a seller or landlord upon compliance with specified terms.

What is a Letter of Intent (LOI)?

A letter of intent (LOI) is a preliminary agreement that outlines the key terms of a lease or purchase, subject to final contract negotiation.

What is Leverage?

Leverage is the use of borrowed capital to increase the potential return on an investment.

What is a Liability?

A liability is a financial obligation or debt that a person or business owes to another party.

What is a License?

A license is a revocable permission to use another’s land for a specific purpose, without granting an interest in the property.

What is Lien?

A lien is a legal claim or charge against property as security for the payment of a debt or obligation.

What is Lien Theory?

Lien theory is the legal concept in some states where a mortgage gives the lender a lien on the property, but the borrower retains legal title.

What is a Life Estate?

A life estate is an interest in property that lasts for the lifetime of a specified person, after which the property passes to another party.

What is a Life Tenant?

A life tenant is the holder of a life estate who has the right to occupy and use property during their lifetime.

What is a Like-Kind Exchange?

A like-kind exchange is a tax-deferred exchange of real property held for investment or business use for other similar property, under IRS Section 1031.

What is Limited Common Area?

A limited common area is part of a common area in a condominium or planned development reserved for the exclusive use of one or more units.

What is Limited Liability?

Limited liability is a legal principle where an investor or owner is only liable up to the amount invested and is not personally responsible for company debts.

What is a Limited Liability Company (LLC)?

A limited liability company (LLC) is a business structure that provides limited liability protection to its owners while allowing pass-through taxation.

What is a Limited Partnership?

A limited partnership is a partnership with at least one general partner, who manages the business and is personally liable, and one or more limited partners, who contribute capital and have liability only up to their investment.

What is Lineal Foot?

A lineal foot is a measurement of length equal to 12 inches, without regard to width or thickness.

What is Liquidated Damages?

Liquidated damages are a specific amount of money agreed upon in a contract as compensation if one party defaults or breaches the contract.

What is Liquidity?

Liquidity is the ability to quickly convert an asset into cash without significant loss of value.

What is Lis Pendens?

Lis pendens is a recorded legal notice that a lawsuit has been filed concerning a property, warning potential buyers or lenders of pending litigation.

What is Listing?

A listing is a written agreement between a property owner and a real estate broker authorizing the broker to market and arrange for the sale or lease of the property.

What is a Listing Agreement?

A listing agreement is the contract between a property owner and a broker that sets out the terms under which the broker will market the property.

What is a Listing Broker?

A listing broker is the real estate broker who has obtained a listing agreement with the property owner.

What is a Listing Package?

A listing package is a collection of marketing materials and property details used to promote a property for sale or lease.

What is a Loan?

A loan is a sum of money borrowed, typically from a bank or lender, that must be repaid with interest under agreed terms.

What is a Loan Constant?

A loan constant is the annual debt service on a loan expressed as a percentage of the original loan amount.

What is a Loan Commitment?

A loan commitment is a lender’s formal promise to make a loan on specified terms, subject to certain conditions.

What is a Loan-to-Value Ratio (LTV)?

A loan-to-value ratio (LTV) is the ratio of a loan amount to the appraised value or purchase price of a property, expressed as a percentage.

What is a Lock-In Clause?

A lock-in clause is a mortgage provision that prohibits early repayment of the loan for a specified period of time.

What is a Lockbox?

A lockbox is a secure container used by real estate brokers to store property keys for authorized access.

What is a Long-Term Lease?

A long-term lease is a lease with a duration typically exceeding 10 years.

What is a Lot?

A lot is a parcel of land with specific boundaries identified by a legal description.

What is Lot and Block?

Lot and block is a legal description method that identifies parcels of land within a subdivision by lot number and block number.

What is Lot Line?

A lot line is the boundary line of a parcel of land.

What is Lot Size?

Lot size is the total area of a parcel of land, usually expressed in square feet or acres.

What is Loyalty in Real Estate?

Loyalty in real estate refers to the fiduciary duty an agent owes to their client to act in the client’s best interest at all times.

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What are M1, M2, and M3?

M1, M2, and M3 are three measurements of the United States money supply. M1 includes cash in public hands, private checking accounts, credit union share accounts, and demand deposits at thrifts. M2 includes all of M1 plus money market mutual fund shares and savings deposits of less than $100,000. M3 includes M2 plus large time deposits at depository institutions.

What is an MAI?

An MAI is a designation awarded by the Appraisal Institute to certified appraisers who meet strict education, testing, and experience requirements.

Who is the Maker?

The maker is the person who signs a check or promissory note, also known as the drawer.

What is a Mall?

A mall is a shopping center design, typically enclosed, with climate-controlled walkways between two facing strips of stores. It represents the most common form of regional and super-regional shopping centers.

What is Management?

Management refers to the time, effort, and resources—either personal or hired—needed to run a real estate investment.

What is a Management Agreement?

A management agreement is a contract between the owner of income property and a property manager or management firm outlining the manager’s scope of authority and responsibilities.

What is a Management Fee?

A management fee is the cost of professional property management, usually a fixed percentage of total rental income generated by the property.

What is a Manufactured Home?

A manufactured home is a transportable structure built on a permanent chassis and designed as a dwelling. It is at least 8 feet wide or 40 feet long in travel mode, or 320 square feet when erected on-site, and includes plumbing, heating, and electrical systems.

What is Manufacturing Space?

Manufacturing space refers to buildings with ceilings between 10 and 16 feet high, often accommodating overhead cranes and both floor-height and dock-height loading.

What is a Margin?

A margin is the amount added to the index rate in an adjustable-rate loan to cover the lender’s costs, profit, and risk. It generally remains constant during the life of the loan.

What is a Market?

In commercial real estate, a market is a geographic area containing similar properties that compete for tenants or buyers, ranging in size from metropolitan areas to small districts.

What is a Market Analysis?

A market analysis is a study of supply and demand conditions for a specific property type in a given area, often used to guide development decisions and financing.

What is the Market Approach?

The market approach is a method of pricing property using comparable sales data.

What is a Market Area?

A market area is the geographic region from which a property or service can expect to draw its primary demand.

What is the Market Comparison Approach?

The market comparison approach is one of three appraisal methods, estimating value by analyzing sales of comparable properties.

What is the Market Cycle?

The market cycle is the recurring pattern in real estate with six phases: bottom, recovery, growth, peak, downturn, and recession.

What is Market Data?

Market data refers to information such as vacancies, absorption rates, rents, and comparable sales in commercial real estate.

What is Market Delineation?

Market delineation is the process of defining the geographic area from which demand for a property is expected to come.

What is Market Price?

Market price is the actual price paid for a property in a transaction, which may differ from appraised value.

What is Market Rent?

Market rent is the rental income a property would most likely command on the open market based on comparable rents.

What are Market Rental Rates?

Market rental rates are the asking or paid rents for comparable properties, used to indicate a property’s potential rental income.

What is Market Square Footage?

Market square footage is the total space available for a specific property type within a market or submarket, sometimes referred to as inventory.

What is Market Value?

Market value is the most probable price a property should sell for in an open and fair market, with both buyer and seller acting knowledgeably and without undue pressure.

What is a Market Value Reassessment?

A market value reassessment is a municipality’s update of the total assessed value of all properties to reflect more current values.

What is the Market-Data Approach?

The market-data approach is a valuation method comparing a property to similar ones sold recently, also called the direct sales comparison approach.

What is a Marketable Title?

A marketable title is a property title that is clear and reasonably free from risk of litigation over potential defects.

What is a Master Deed?

A master deed is the principal legal document establishing a condominium and conveying ownership rights.

What is a Master Lease?

A master lease is a primary lease that governs subleases, limiting their duration to the term of the master lease.

What is a Master Plan?

A master plan is a narrative and map-based document outlining overall development concepts, used by governments or developers to guide future growth.

What is a Material Fact?

A material fact is any fact relevant to a real estate decision, such as property defects or conditions, that must be disclosed by agents.

What is a Measure Line?

A measure line is the reference line used to calculate industrial space areas, measured to exterior walls or perimeter drip lines.

What is a Mechanics’ Lien?

A mechanics’ lien is a statutory lien securing payment for contractors, architects, or designers who provide labor or materials for property improvements.

What is Mediation?

Mediation is a process in which a neutral third party assists disputing parties in reaching a mutually satisfactory resolution.

What is Meeting Space?

Meeting space refers to rentable areas in hospitality properties for conferences, banquets, or events.

What are Mello-Roos Bonds?

Mello-Roos bonds are special tax assessments in community facilities districts, used to finance infrastructure like streets and sewers before development.

What is a Mentor Program?

A mentor program is a training system in which new real estate agents assist and learn from experienced agents.

What is a Merger?

A merger is the joining of a lesser property right with a greater one, eliminating the lesser right.

What is a Meridian?

A meridian is a north-south line used in the government survey system to describe land locations.

What are Metes and Bounds?

Metes and bounds is a legal land description method that defines property boundaries using directions and distances from a fixed starting point.

What are Mezzanine Loans?

Mezzanine loans are property loans allowing lenders to convert debt positions into equity interests if borrowers default.

What is a Mid-Rise Office Building?

A mid-rise office building is a structure between seven and twenty-five stories tall.

What are Mid-Sized Properties?

Mid-sized properties are investment properties valued between $5 million and $30 million, typically bought by private investors.

What is a Military Ordinance Location?

A military ordinance location is an area near certain California military bases where live ammunition exists; sellers within one mile must disclose this hazard.

What is a Mill?

A mill is one-tenth of a cent, often used to express tax rates (e.g., 10 mills = $10 per $1,000).

What are Mineral Rights?

Mineral rights are ownership rights to subsurface minerals and profits, unless excluded in a property conveyance.

Who is a Minor?

A minor is a person under the age of majority who cannot legally transfer real property title.

What is a Misdemeanor?

A misdemeanor is a criminal offense less serious than a felony, often punishable by fines or local imprisonment.

What is Misrepresentation?

Misrepresentation is a false statement or concealment of a material fact intended to induce another party’s action.

What is a Mistake in Real Estate?

A mistake is an error or misunderstanding that may void a contract if mutual, material, and free from negligence.

What is Mitigation?

Mitigation is the process of reducing the severity of environmental or property hazards.

What are Mixed-Use Developments (MUDs)?

Mixed-use developments (MUDs) combine residential, office, retail, and entertainment uses in one community.

What is a Mobile-Home?

A mobile-home is a prefabricated, semi-permanent housing unit affixed to land and utilities but still transportable.

What is a Mobile-Home Loan?

A mobile-home loan is a mortgage loan secured by a mobile home, typically shorter-term than conventional mortgages.

What is a Mobile-Home Park?

A mobile-home park is an area designed for mobile homes with utilities, streets, and amenities provided.

What is a Modified Gross Lease?

A modified gross lease is a lease where tenants pay base rent plus certain expenses, such as utilities or janitorial costs.

What is Modular Housing?

Modular housing is prefabricated housing built in factory sections and assembled on-site, offering cost and time efficiency.

What is Mold?

Mold is a potentially hazardous substance that may affect properties, though it is not widely regulated.

What is Monetary Policy?

Monetary policy is government regulation of money supply, often managed by the Federal Reserve.

What is a Month-to-Month Tenancy?

A month-to-month tenancy is a rental agreement without a fixed term, renewed monthly until terminated.

What is a Monument in Real Estate?

A monument is a fixed object, natural or artificial, used to establish property boundaries.

What is a Moratorium?

A moratorium is a temporary suspension, either of debt payments to aid distressed borrowers or of issuing building permits.

What is a Mortgage?

A mortgage is a legal document securing a loan with real property as collateral until the debt is repaid.

What is a Mortgage Banker?

A mortgage banker is a firm or individual providing mortgage financing with its own funds, often specializing in short-term or interim loans.

What is a Mortgage Broker or Company?

A mortgage broker is an intermediary between borrower and lender who arranges loans for a fee but does not lend its own funds.

What is a Mortgage Discount?

A mortgage discount is the amount lenders deduct upfront from the loan principal, typically expressed in discount points.

What is Mortgage Insurance?

Mortgage insurance is a policy that pays off a mortgage balance in the event of the borrower’s death or disability.

What are Mortgage Insurance Premiums (MIP)?

Mortgage insurance premiums are fees required for most FHA loans, including an upfront and annual premium.

What is a Mortgage Lien?

A mortgage lien is a legal claim against a property securing loan repayment, prioritized by recording order.

What are Mortgage Revenue Bonds?

Mortgage revenue bonds are tax-exempt bonds issued by local governments to fund housing development.

What is a Mortgage-Backed Security (MBS)?

A mortgage-backed security is a financial instrument backed by a pool of mortgages, sold to investors.

Who is the Mortgagee?

The mortgagee is the lender who receives the mortgage as security for the loan.

What is Mortgagee’s Title Insurance?

Mortgagee’s title insurance protects lenders against losses from title disputes affecting the property.

Who is the Mortgagor?

The mortgagor is the borrower who signs the promissory note and mortgage to secure a real estate loan.

What is a Moving Allowance?

A moving allowance is a landlord’s offer to pay part or all of a tenant’s moving expenses.

What is Mrs. Murphy’s Exemption?

Mrs. Murphy’s exemption allows owner-occupied buildings with four or fewer units to be exempt from certain federal fair housing laws.

What is a Mullion?

A mullion is a vertical strip separating window panes or panels.

What are Multiclass Mortgage Securities?

Multiclass mortgage securities are short- and long-term mortgage securities that may include pass-through features.

What is Multifamily Housing?

Multifamily housing is residential property with more than one dwelling unit, such as duplexes, triplexes, or apartment buildings.

What are Multiperil Policies?

Multiperil policies are insurance packages covering fire, hazard, liability, and casualty risks for apartment or commercial buildings.

What is a Multiple Listing?

A multiple listing is an arrangement among brokers to share property listings and split commissions.

What is a Multiple-Listing Clause?

A multiple-listing clause authorizes brokers to distribute a listing to other brokers within a multiple-listing service.

What is a Multiple-Listing Service (MLS)?

A multiple-listing service (MLS) is a cooperative organization of brokers who share listings to reach buyers more efficiently.

What is a Multiplier in Real Estate?

A multiplier is a factor applied to derive property values, such as the gross rent multiplier.

What are Municipal Bonds?

Municipal bonds are debt securities issued by local governments to finance public projects like parks, schools, and infrastructure.

Who are Must-Buy Buyers?

Must-buy buyers are purchasers urgently seeking properties that meet specific needs.

Who are Must-Sell Sellers?

Must-sell sellers are highly motivated sellers eager or desperate to sell.

What is Mutual Consent?

Mutual consent is the agreement between parties, often called a “meeting of the minds,” required to form a valid contract.

What is Mutual Mortgage Insurance?

Mutual mortgage insurance is the FHA program where premiums are pooled to cover losses from foreclosures.

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What is Naked Title?

Naked title is bare title to the property, lacking the usual rights and privileges of ownership. For example, a trustee in a deed of trust may hold naked title only to carry out the terms of the lien.

What is the National Association of Independent Fee Appraisers (NAIFA)?

The National Association of Independent Fee Appraisers (NAIFA) is a professional association of appraisers with more than 2,000 members nationally. NAIFA offers specialty designations including IFA (member), IFAS (senior member), and IFAC (appraiser-counselor).

What is the National Association of REALTORS® (NAR)?

The National Association of REALTORS® (NAR) is the largest real estate organization in the world. Members include REALTORS® and REALTOR-ASSOCIATES® who subscribe to a strict Code of Ethics. Active brokers admitted to state and local boards may use the trademark REALTOR®.

What is the National Bank Act of 1863?

The National Bank Act of 1863 established a national banking system and a uniform national currency. Signed by President Abraham Lincoln, it required national banks to purchase U.S. government securities to back their notes.

What is the National Environmental Policy Act?

The National Environmental Policy Act requires an environmental impact statement for federal actions that significantly affect the quality of the environment.

What are Natural Hazards?

Natural hazards are elements of the physical environment harmful to property, such as earthquakes, floods, fires, and wind. These hazards carry disclosure and insurance implications for buyers and sellers.

What is the Natural Vacancy Rate?

The natural vacancy rate is the average rental vacancy level in a balanced market, serving as a benchmark to assess whether current vacancy rates are high or low.

What are Necessaries?

Necessaries are articles indispensable or proper for human sustenance, such as food, clothing, shelter, and medical attention.

What is Negative Amortization?

Negative amortization is a loan arrangement where monthly payments are less than the interest due, causing the loan balance to increase rather than decrease.

What is Negative Cash Flow?

Negative cash flow occurs when a property’s operating expenses exceed its income, requiring the owner to cover the shortfall.

What is a Negative Declaration?

A negative declaration is a developer’s statement that a project will not have an adverse environmental impact.

What is a Negative Easement?

A negative easement prohibits the servient property owner from doing something otherwise lawful because it would affect the dominant property.

What is Negative Leverage?

Negative leverage occurs when a property’s capitalization rate is lower than the cost of debt service, reducing investment returns.

What is Negligence?

Negligence is the failure to exercise reasonable care under given circumstances.

What is Negligent Misrepresentation?

Negligent misrepresentation occurs when a broker makes a false statement about a material fact that they should have known was untrue.

What is a Negotiable Instrument?

A negotiable instrument is a written promise or order to pay a specific sum of money that can be transferred by endorsement or delivery.

What is Negotiation?

Negotiation is the process of bargaining between parties that typically results in a contract or agreement.

What is a Neighborhood Center?

A neighborhood center is a retail development designed for day-to-day convenience shopping, typically anchored by a supermarket or drugstore.

What is a Neighborhood Information Request?

A neighborhood information request is a questionnaire brokers use to gather details about local schools, recreation, shopping, and other features that may help market a property.

What is Net Absorption?

Net absorption is the measure of leased space in a market area, accounting for new leases minus vacated space over a given time.

What are Net Assets?

Net assets are total assets minus total liabilities, calculated on a market value basis.

What is Net Income?

Net income is the amount by which revenues exceed expenses during a given time period.

What is the Net Income Approach?

The net income approach is a method of valuing rental properties based on their ability to generate cash flow and profit.

What is a Net Income Multiplier?

A net income multiplier is a factor applied to a property’s net operating income to estimate its value.

What is Net Investment in Real Estate?

Net investment in real estate is gross real estate investment minus outstanding debt.

What is Net Investment Income?

Net investment income is portfolio income or loss after expenses, but before gains and losses on investments.

What is Net Leasable Area?

Net leasable area is the floor space in a building available for tenants to rent, excluding common and mechanical areas.

What is a Net Lease?

A net lease is a rental agreement where the tenant pays base rent plus some or all property expenses, such as taxes, insurance, and maintenance.

What is a Net Listing?

A net listing is a contract in which the broker’s commission equals the amount of the sale price above a minimum set by the seller.

What is Net Net Net Rent (Triple Net)?

Net net net rent, or triple net rent, requires the tenant to pay rent plus all property expenses, including taxes, insurance, and maintenance.

What is Net New Construction (Supply)?

Net new construction is the square footage of new buildings completed minus the square footage of buildings demolished or deemed obsolete.

What is Net New Supply?

Net new supply is new construction, both speculative and build-to-suit, minus demolitions.

What is Net Operating Income (in appraisal)?

Net operating income in appraisal is gross potential revenue minus vacancies, bad debts, and expenses, before taxes and financing.

What is Net Operating Income (NOI)?

Net operating income (NOI) is effective gross income minus operating expenses, a key figure in real estate valuation.

What is Net Present Value (NPV)?

Net present value is an analysis method that discounts future cash flows to compare investment or lease alternatives based on today’s value.

What are Net Proceeds?

Net proceeds are the cash received from a sale after paying liens, commissions, and expenses.

What is Net Purchase Price?

Net purchase price is the gross purchase price minus debt financing.

What is Net Real Estate Investment Value?

Net real estate investment value is the market value of all real estate minus property-level debt.

What is Net Rentable Area?

Net rentable area is the tenant-usable space in a building, excluding common and mechanical areas.

What is Net Rentable Area (BOMA)?

Net rentable area under BOMA standards is measured inside permanent walls, excluding shafts, stairways, and service areas, but including columns.

What are Net Sales Proceeds?

Net sales proceeds are the cash received from the sale of an asset after deducting commissions, closing costs, and marketing expenses.

What is Net Worth?

Net worth is the value of assets minus liabilities.

What is Net Yield?

Net yield is the return on an investment after deducting all expenses.

What is Networking?

Networking is generating prospects through a real estate professional’s relationships and communications.

What is New Construction?

New construction refers to speculative or build-to-suit buildings newly completed and available for occupancy.

What does NNN mean?

NNN refers to a triple net lease, where the tenant pays rent plus all operating expenses.

What is No Capacity to Contract?

No capacity to contract means a person is legally unable to enter into a binding agreement, such as someone adjudicated insane.

What is a No Disturbance Clause?

A no disturbance clause is an agreement that protects a tenant’s lease rights if the property goes through foreclosure.

What is No Loan, No Commission?

No loan, no commission is a listing agreement stating the broker is only paid if escrow closes and title transfers.

What is the No-Choice Rule?

The no-choice rule requires that a qualifying exchange under tax law must be treated as an exchange, with no gain or loss recognized.

What is the No-Loss Rule?

The no-loss rule states that in a qualifying exchange, no loss may be recognized for tax purposes.

What are Nominal Damages?

Nominal damages are token monetary awards given for a wrongful act when no actual loss occurred.

What is the Nominal Interest Rate?

The nominal interest rate is the stated rate in a loan note or contract, which may differ from the effective interest rate.

What is a Non-Agent?

A non-agent is a neutral facilitator in a real estate transaction who assists both parties without representing either.

What is a Non-Assumable Loan?

A non-assumable loan is one that cannot be transferred to a new buyer, often due to a due-on-sale clause.

What is a Non-Compete Clause?

A non-compete clause in a lease prohibits landlords from renting to competing businesses in the same property.

What is a Non-Conforming Loan?

A non-conforming loan is a mortgage that does not meet Fannie Mae or Freddie Mac guidelines.

What is a Nonconforming Use?

A nonconforming use is a property use that continues even though zoning laws have since prohibited it.

What is Non-Core Real Estate?

Non-core real estate is an investment property that does not fit within an institutional investor’s strategy.

What is Noncumulative Zoning?

Noncumulative zoning permits only the stated use of property, not more restrictive uses.

What is Non-Disturbance?

Non-disturbance is a lease provision ensuring tenants can remain undisturbed in occupancy even after property foreclosure or sale.

What is Nongeographic Farming?

Nongeographic farming is prospecting a specific market segment, such as an ethnic or lifestyle group, rather than a geographic area.

What is Nonhomogeneity?

Nonhomogeneity refers to the uniqueness of land — no two parcels are exactly alike.

What are Noninstitutional Lenders?

Noninstitutional lenders include credit unions, pension funds, REITs, and private individuals.

What is Nonjudicial Foreclosure?

Nonjudicial foreclosure is a process where property is sold under a power of sale in a mortgage or trust deed, without court supervision.

What is a Nonparticipating Mortgage Note?

A nonparticipating mortgage note is a loan secured by real estate, payable at a stated interest rate, without profit participation.

What is Non-Recourse Financing?

Non-recourse financing is a loan secured only by the property, with no claim on the borrower’s other assets in default.

What is Normal Wear and Tear?

Normal wear and tear is the natural deterioration from customary use of a property, for which tenants are not usually responsible.

What does it mean to Notarize?

To notarize means to have a notary public attest to the genuineness of a signature on a legal document.

What is a Notary Public?

A notary public is an officer authorized to witness signatures and administer oaths for legal documents.

What is a Note?

A note is a signed document that evidences a loan, including repayment terms, interest, and borrower obligation.

What is a Notice of Cessation?

A notice of cessation gives subcontractors 30 days and prime contractors 60 days to file liens after work on a project stops.

What is a Notice of Completion?

A notice of completion is recorded to provide legal notice that a construction project has finished.

What is a Notice of Default?

A notice of default informs a borrower that they are in default and typically provides a grace period to cure it.

What is a Notice of Delinquency?

A notice of delinquency authorizes a senior lender to notify a junior lender if the borrower defaults.

What is a Notice of Nonresponsibility?

A notice of nonresponsibility relieves a property owner from liability for improvements ordered by someone else, such as a tenant.

What is Novation?

Novation is the replacement of an old lease or contract with a new one, often substituting tenants.

What is a Nuisance?

A nuisance is anything that interferes with the use and enjoyment of property, making it physically uncomfortable.

What does Null and Void mean?

Null and void means unenforceable by law, as with a contract provision that violates constitutional rights.

What is a Nuncupative Will?

A nuncupative will is an oral will declared by someone in their final illness before witnesses, later reduced to writing.

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What is OAR?

OAR stands for “overall rate” or “overall capitalization rate.” It is another way of referring to the capitalization rate used in real estate valuation.

What is Obedience?

Obedience is a fiduciary duty that obligates an agent to act in good faith at all times, following the principal’s lawful instructions under the contract. However, obedience is not absolute — an agent may not follow instructions that are unlawful or unethical, as doing so would violate the duty of loyalty.

What are Obligatory Advances?

Obligatory advances are funds a lender is required to disburse to a borrower under the terms of a loan agreement.

Who is an Obligee?

An obligee is the person in whose favor an obligation is entered into. For example, if Jackson promises to manage the property of Kindall, an out-of-town investor, then Kindall is the obligee.

Who is an Obligor?

An obligor is the person who makes a lawful promise or obligation to another (the obligee). For example, the maker of a promissory note is an obligor. In a performance bond, the contractor is the obligor.

What is Obsolescence?

Obsolescence is the loss of property value due to factors that make it outmoded or less useful. Obsolescence can be functional (related to design or layout) or economic (related to external factors).

What is an Occupancy Date?

An occupancy date is the date a space will become available for use. If listed as “immediate,” it means the space is currently available.

What is an Occupancy Permit?

An occupancy permit is a document issued by a local authority confirming that a property meets safety and health standards and is suitable for habitation or use.

What is Occupancy Rate?

Occupancy rate is the percentage of available space that is physically occupied, calculated by dividing the occupied space by the total inventory.

What is Occupied Space?

Occupied space is the amount of space currently in use for people, equipment, supplies, or storage. It is calculated by subtracting vacant space from the total existing space.

What is an Offer?

An offer is a promise made by one party, requesting something in exchange, with the intention of being bound to the terms if accepted. To be valid, an offer must be definite, specific, and communicated to the offeree.

What is Offer and Acceptance?

Offer and acceptance are the two essential components of a valid contract, also known as a “meeting of the minds.”

Who is an Offeree?

An offeree is the party who receives an offer. For example, if a buyer offers a purchase contract to a seller, the seller is the offeree.

What is an Offering Memorandum?

An offering memorandum is a sales package prepared by a listing agent that contains detailed property and investment information, typically for marketing larger commercial properties.

Who is an Offeror?

An offeror is the party who makes or extends an offer to another. For example, if Brewster offers Smithson $120,000 for a property, Brewster is the offeror.

What is an Offer to Lease?

An offer to lease is a tenant’s proposal to a landlord to rent space under specific terms and conditions.

What are Office Building Types (BOMA)?

According to BOMA standards, office buildings are classified as low-rise (fewer than 7 stories), mid-rise (7–25 stories), or high-rise (more than 25 stories).

What is the Office of Thrift Supervision (OTS)?

The Office of Thrift Supervision (OTS) was created by FIRREA to regulate and monitor the savings and loan industry.

What is an Office Park?

An office park is a development consisting of multiple office buildings, often with supporting amenities like restaurants or hotels.

What is an Office Showroom?

An office showroom is a single-story or mezzanine building with both office and warehouse functions, typically less than 15% office space, with loading access on one side.

What is an Offset Core?

An offset core is a building design where the service core (elevators, utilities, etc.) is located between the center and the outer wall, rather than in the exact middle.

What are Offsite Improvements?

Offsite improvements are infrastructure improvements made outside a property’s boundaries, such as sidewalks, roads, or utility lines.

What is an Oil and Gas Lease?

An oil and gas lease grants the right to extract oil and/or gas from beneath the surface of land, usually for a set term, with royalty payments if production occurs.

What is a One-Hundred-Percent Commission Plan?

A one-hundred-percent commission plan is a brokerage arrangement where agents keep all of their earned commissions but pay a monthly service fee to the broker to cover office and administrative costs.

What is an Online Listing Service?

An online listing service is an internet-based platform containing information about commercial properties available for sale or lease.

What is an Open House?

An open house is a scheduled event where a property is made available for public viewing, typically without an appointment.

What is an Open Listing?

An open listing is a nonexclusive listing agreement where the seller agrees to pay commission only to the agent who produces a ready buyer.

What is an Open-Buyer-Agency Agreement?

An open-buyer-agency agreement is a nonexclusive contract between a buyer and a broker, allowing the buyer to work with multiple brokers and only compensating the one who secures the purchase.

What is an Open-End Fund?

An open-end fund is a real estate investment fund with no set termination date, allowing continuous entry and exit of investors.

What is an Open-End Loan?

An open-end loan is a mortgage loan that allows additional borrowing up to a specified maximum, secured by the original mortgage.

What is an Open-End Mortgage?

An open-end mortgage is a loan agreement that permits the borrower to obtain additional funds under the same mortgage, up to a specified ceiling.

What is an Open-End Trust Deed?

An open-end trust deed is a loan secured by a trust deed that allows the borrower to take additional advances up to a set limit.

What are Open-Market Operations?

Open-market operations are actions by the Federal Reserve to buy or sell government securities in order to control money supply.

What is Operating Cash Flow?

Operating cash flow is the annual net operating income minus non-operating costs required to keep a property producing income.

What is Operating Cost Escalation?

Operating cost escalation is a lease clause that allows rent adjustments based on increases in operating expenses.

What is an Operating Expense Ratio?

An operating expense ratio is the percentage derived by dividing operating expenses by potential gross income.

What are Operating Expenses?

Operating expenses are the actual costs of operating an investment property, including taxes, utilities, insurance, maintenance, and reserves.

What is an Operating Lease?

An operating lease is a lease agreement between the lessee and a sublessee who occupies and uses the property.

What is an Operating Statement?

An operating statement is a projection or report of income and expenses for an investment property.

What is an Opinion of Title?

An opinion of title is a statement, often by an attorney, regarding the validity of property ownership.

What is an Opportunity Buyer?

An opportunity buyer is a commercial property investor who purchases properties for their potential to generate high profit or yield.

What is Opportunity Cost?

Opportunity cost is the potential return or earnings lost when choosing one investment over an alternative.

What is an Option?

An option is a contractual right granted to a tenant or landlord to take a specific action, such as renewing a lease, within a set time period.

What is an Option Listing?

An option listing is a listing agreement where the broker also retains the right to purchase the property for themselves, requiring full disclosure to the seller.

What is an Option to Purchase?

An option to purchase is a contract giving the holder the right, but not the obligation, to buy a property within a specified time and under certain conditions.

What are Ordinances?

Ordinances are municipal laws governing land use, building standards, nuisances, subdivisions, and rental practices.

What is an Original Basis?

An original basis is the purchase price of a property plus acquisition costs.

What is an Ostensible Agency?

An ostensible agency is an implied agency relationship created by the actions of the parties rather than a written agreement.

What are Other Income and Expense Recoveries?

Other income and expense recoveries are additional revenues, such as non-rent income or tenant reimbursements, included in a property’s operating statement.

What is an Outlet Center?

An outlet center is a retail development, often in rural or tourist areas, consisting primarily of manufacturer outlet stores selling at a discount.

What is Overage Rent?

Overage rent is additional rent paid by a retail tenant based on a percentage of sales above a set threshold.

What is an Overall Rate?

An overall rate, also called a capitalization rate, is used in real estate valuation to estimate the return on investment.

What is an Override?

An override can refer to (1) a fee paid to a manager or higher-level broker from a salesperson’s commissions, or (2) an overriding royalty interest carved out of an oil and gas lease.

What is an Overriding Trust Deed?

An overriding trust deed is another term for a wraparound mortgage.

What does Owner-Occupied mean?

Owner-occupied refers to a property where the owner physically occupies the space.

What is Owner’s Title Insurance?

Owner’s title insurance is a policy that protects a buyer against losses from future title disputes, covering up to the purchase price.

What is Ownership?

Ownership is the legal right to use, possess, transfer, and dispose of property to the exclusion of others.

What is an Owner-User?

An owner-user is someone who both owns and occupies property for their own use, such as an office, retail, or industrial building.

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What is a Package Loan?

A package loan is a real estate loan used to finance both real property and personal property, such as a home that includes appliances, carpeting, and window coverings.

What is a Pad Site?

A pad site is a freestanding retail site, often located next to a larger shopping center.

What does Par mean?

Par refers to the face value of a bond or security.

What is a Parcel?

A parcel is a piece of property under one ownership, often described as a lot in a subdivision.

What is Parking (in real estate)?

Parking refers to the number of spaces available for tenants, usually stated as a ratio (e.g., 1:1,500 means one space for every 1,500 square feet leased) or as a monthly charge per car.

What is a Parking Ratio?

A parking ratio is the number of parking spaces available per 1,000 square feet of rentable or leasable area.

What is the Parol Evidence Rule?

The parol evidence rule states that a written agreement is the final expression of the parties’ agreement and cannot be altered by prior or contemporaneous oral or written statements.

What is a Partial Release Clause?

A partial release clause is a mortgage provision where the lender agrees to release certain parcels from a blanket mortgage when the borrower pays a specified amount.

What are Partial Sales?

Partial sales are sales of less than an entire property interest, such as selling easement rights, a pad site, or one building in a multi-building investment.

What is Partial Zoning?

Partial zoning is zoning that is applied without considering its impact on surrounding areas.

What is a Participating Mortgage Note?

A participating mortgage note is a loan secured by real estate where the lender receives interest plus a share of the property’s cash flow, resale gains, or refinancing proceeds.

What is Participation Financing?

Participation financing occurs when a lender not only loans money but also becomes a partner in the development.

What is a Participation Mortgage?

A participation mortgage is a loan in which the lender receives a share of the property’s income or equity, in addition to loan repayment.

What is Partition?

Partition is a legal process that allows co-owners to dissolve their shared ownership of property, either by dividing the land or selling it and dividing the proceeds.

What is a Partnership?

A partnership is an association of two or more persons or entities who join together to conduct business or investment for profit, sharing both profits and losses.

What is a Party Wall?

A party wall is a wall located on the boundary between two properties that is used by both owners.

What is a Party Wall Easement?

A party wall easement is the shared ownership and maintenance agreement for a wall or driveway located across two adjoining properties.

What are Pass-Throughs?

Pass-throughs are building and operating expenses paid initially by the landlord but reimbursed by tenants under lease terms.

What is a Pass-Through Security?

A pass-through security is a mortgage-backed security, such as those issued by Ginnie Mae, where cash flows from pooled mortgages are passed through to investors.

What is Passive Income?

Passive income is income earned from investments in which the investor is not actively involved, such as rental income or limited partnerships.

Who is a Passive Investor?

A passive investor is someone who contributes money to a business or property investment but does not participate in management.

What are Passive Losses?

Passive losses are losses that occur when property expenses exceed rental income. They can only offset passive income for tax purposes.

What is a Patent (in real estate)?

A patent is an instrument that conveys land from the state or federal government to an individual.

What is a Patent Defect?

A patent defect is an obvious problem with a property that could be identified through a reasonable inspection.

What is a Pay Interest Rate?

A pay interest rate is the effective rate used to calculate mortgage payments, which may differ from the stated rate.

What is a Payback Period?

A payback period is the time required for an investment’s income to equal the original investment amount.

Who is a Payee?

A payee is the person or entity to whom a payment or debt instrument is made payable.

What is a Payment (in real estate)?

A payment is a scheduled installment made to reduce debt, typically consisting of principal and/or interest.

What is a Payment Cap?

A payment cap is the maximum limit that monthly payments can increase on an adjustable-rate mortgage.

What is a Payoff Statement?

A payoff statement, also called a reduction certificate, is a lender’s written statement of the remaining loan balance, interest, and fees needed to pay off a loan.

Who is a Payor?

A payor is the person or entity responsible for making payment on a debt or promissory note.

What are PCBs?

PCBs (polychlorinated biphenyls) are hazardous materials once commonly used in construction, particularly before 1979.

What are Pension Funds (in real estate)?

Pension funds are large institutional investors that often finance real estate projects due to their need for stable, long-term returns.

What does Per Stirpes mean?

Per stirpes is a method of estate distribution in which descendants of a deceased heir receive that heir’s share of an estate.

What is a Percentage Increase to Rent?

A percentage increase to rent is a scheduled rent increase during a lease term, often tied to CPI or fixed amounts.

What is a Percentage Lease?

A percentage lease is a retail lease where rent is based partly on a tenant’s sales, usually with a minimum rent required.

What is Percentage Rent?

Percentage rent is rent calculated as a percentage of retail sales, common in mall leases.

What is a Percolation Test?

A percolation test evaluates soil’s ability to absorb water, typically for septic system suitability.

What is a Periodic Rate?

A periodic rate is the interest rate charged per compounding period, such as monthly or daily.

What is a Periodic Tenancy?

A periodic tenancy is a lease that automatically renews for successive terms until terminated by either party.

What is Personal Income?

Personal income is an individual’s gross income, including wages, interest, and business profits.

What is Personal Property?

Personal property is movable property not attached to real estate, such as furniture, equipment, or vehicles.

What is a Phase 1 Environmental Assessment?

A Phase 1 environmental assessment is an evaluation of a property’s likelihood of hazardous contamination, usually based on past usage.

What is Physical Deterioration?

Physical deterioration is loss of value due to wear and tear or damage to a property’s structures.

What is a Physical Unit of Comparison?

A physical unit of comparison is a metric used in property valuation, such as price per square foot or per unit.

What is a Piggyback Loan?

A piggyback loan is a financing arrangement that combines a construction loan with permanent financing, or one loan split between multiple lenders.

What does PITI stand for?

PITI stands for principal, interest, taxes, and insurance — the four components of most mortgage payments.

What is Planned Unit Development (PUD)?

A planned unit development (PUD) is a designed grouping of varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, within one contained development or subdivision.

What is Plat?

A plat is a map of a subdivision showing the location and boundaries of individual lots, streets, and other elements.

What is a Platform Frame?

A platform frame is a method of building construction in which each floor is built separately and forms a platform for the next.

What is Plottage?

Plottage is the increase in value that occurs when two or more adjacent parcels are combined into one larger parcel under single ownership.

What is Point of Beginning (POB)?

The point of beginning (POB) is the starting point in a metes-and-bounds legal property description.

What are Points (in real estate financing)?

Points are upfront fees paid to a lender at closing, calculated as a percentage of the loan amount (one point equals 1%).

What is Police Power?

Police power is the government’s right to regulate property for the health, safety, and welfare of the public, such as through zoning or building codes.

What is a Political Risk?

Political risk is the potential for losses in real estate or investments due to changes in government policy or political instability.

What is a Portfolio Loan?

A portfolio loan is a loan that is kept in a lender’s own portfolio rather than being sold to secondary markets like Fannie Mae or Freddie Mac.

What is Positive Leverage?

Positive leverage occurs when borrowed funds are invested at a rate of return higher than the interest rate on the borrowed funds.

What is Possession?

Possession is the right to use and occupy property, whether or not the person has legal title.

What is a Power Center?

A power center is a large retail center anchored by big-box stores, such as discount chains, category-dominant retailers, or warehouse clubs.

What is Power of Attorney?

Power of attorney is a legal document that authorizes one person to act on behalf of another in financial or legal matters.

What is Pre-Leasing?

Pre-leasing is the practice of securing tenants for a building before construction is completed.

What is a Pre-Sale?

A pre-sale is the sale of property, typically condos or homes, before construction has been completed.

What is Prepayment?

Prepayment is the act of paying off all or part of a loan before it is due.

What is a Prepayment Clause?

A prepayment clause is a mortgage provision that allows or restricts a borrower’s right to pay off a loan early.

What is a Prepayment Penalty?

A prepayment penalty is a fee charged by a lender if the borrower pays off a loan early, intended to compensate the lender for lost interest.

What is a Prepayment Privilege?

A prepayment privilege is a mortgage provision that allows the borrower to pay off part or all of the loan early without penalty.

What is Present Value?

Present value is the current value of a future cash flow or income stream, discounted at an appropriate interest rate.

What is a Preservation Easement?

A preservation easement is a voluntary legal agreement that protects a historic building or property by restricting alterations.

What is a Price Index?

A price index measures changes in property values over time, usually as an average for a specific area.

What is Price per Square Foot?

Price per square foot is a unit of comparison used to determine property value by dividing the sales price by the property’s square footage.

What is Primary Financing?

Primary financing is the first mortgage loan placed on a property, as opposed to secondary or junior financing.

What is a Prime Tenant?

A prime tenant is a major tenant, often referred to as an anchor tenant, who attracts additional tenants and customers to a property.

What is Principal (in real estate)?

Principal can mean (1) the person who authorizes an agent to act on their behalf, (2) the amount of a loan balance, or (3) one of the parties in a real estate transaction.

What is Principal Balance?

Principal balance is the amount of money owed on a loan, excluding interest.

What is Principal Broker?

A principal broker is the licensed broker responsible for supervising a brokerage office and its agents.

What is a Principle of Contribution?

The principle of contribution is the appraisal concept that the value of a component part of property depends on how much it contributes to the value of the whole.

What is the Principle of Regression?

The principle of regression states that the value of a property is negatively affected if it is surrounded by lower-value properties.

What is the Principle of Progression?

The principle of progression states that the value of a property is positively influenced by being surrounded by higher-value properties.

What is a Private Mortgage Insurance (PMI)?

Private mortgage insurance (PMI) is insurance that protects the lender if a borrower defaults on a loan, typically required when a borrower makes a down payment of less than 20%.

What is a Private Placement?

A private placement is the sale of securities, such as real estate syndication shares, directly to a select group of investors rather than through a public offering.

What is a Probate Sale?

A probate sale is the sale of property from the estate of a deceased person, usually requiring court approval.

What is a Pro Forma Statement?

A pro forma statement is a financial projection of income and expenses for a property, often used to evaluate investment potential.

What is a Progress Payment?

A progress payment is a payment made at specific stages of construction, based on the completion of defined work milestones.

What is a Promissory Note?

A promissory note is a written promise to repay a specific sum of money under agreed terms.

What is a Property?

Property refers to the rights of ownership, including the ability to use, enjoy, lease, sell, or dispose of land or personal items.

What is Property Management?

Property management is the operation, control, and oversight of real estate on behalf of the owner.

What is a Property Manager?

A property manager is a person or firm hired to handle the daily operations of a property, including leasing, maintenance, and tenant relations.

What is Property Tax?

Property tax is a tax assessed by local government on the value of real property.

What is Proprietary Lease?

A proprietary lease is a lease given to shareholders of a cooperative corporation, allowing them to occupy specific units in the cooperative building.

What is Proration?

Proration is the process of dividing property expenses, such as taxes or rent, proportionally between buyer and seller at closing.

What is a Prospectus?

A prospectus is a formal disclosure document issued to potential investors outlining the details of an investment offering.

What is a Public Offering Statement?

A public offering statement is a document required by law in some states for condominium or cooperative developments, disclosing essential information to prospective buyers.

What is a Public-Private Partnership (PPP)?

A public-private partnership (PPP) is a collaboration between a government entity and a private company to finance, build, and operate projects such as infrastructure or real estate developments.

What is Puffing?

Puffing is an exaggerated or subjective statement about a property’s quality, not considered a misrepresentation (e.g., “This is the best view in town!”).

What is a Purchase Agreement?

A purchase agreement is a written contract between a buyer and seller outlining the terms of a property sale.

What is a Purchase Money Mortgage?

A purchase money mortgage is financing provided by the seller to the buyer as part of the purchase transaction.

What is a Purchaser?

A purchaser is the buyer in a real estate transaction.

What is a Put Option?

A put option is the right, but not the obligation, to sell a property or security at a specified price within a certain time.

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What is Quality of Construction?

Quality of construction is the classification of the level of excellence of a structure. Irrespective of age, condition, or construction type, commercial construction may be categorized as low, average, good, or excellent in quality.

What is the Quantity-Survey Method?

The quantity-survey method is an appraisal approach for estimating building costs by calculating the cost of all the physical components of the improvements, adding the assembly costs, and then including the indirect costs associated with such construction.

What is a Quasi Contract?

A quasi contract is a contract implied by law, as a matter of equity, when no actual contract exists.

What is Quiet Title?

Quiet title is a court action taken to remove a cloud or claim on the title of real estate.

What is a Quitclaim Deed?

A quitclaim deed is a conveyance by which the grantor transfers whatever interest they have in real estate, without warranties or obligations.

What are Quoted Lease Rates?

Quoted lease rates are landlords’ asking rental rates, typically shown on listing flyers or quoted on listing services. These dollar-per-square-foot figures may be annual or monthly, depending on local market custom.

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What is Radon?

Radon is a naturally occurring gas that is suspected of causing lung cancer.

What is a Rail Spur?

A rail spur is an offshoot of an active railway line that an industrial property user can access.

What is a Range?

A range is a strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system.

What is a Rate?

A rate refers to rental pricing, which may be quoted as “net” or “gross.” Net rental excludes realty tax and operating costs, while gross rental includes them.

What is a Rate Cap?

A rate cap is the limit on how much the interest rate can increase at each adjustment period in an adjustable-rate loan. It may also set the maximum rate that can be charged during the life of the loan.

What is a Rate Factor?

A rate factor is the number of dollars required to pay off each $1,000 of a mortgage loan.

What is a Rate of Return?

A rate of return is the percentage relationship between the earnings and the cost of an investment.

What is Ratification?

Ratification is the method of creating an agency relationship when a principal accepts the conduct of someone who acted without prior authorization as their agent.

What is Raw Land?

Raw land is acreage with no added improvements, such as landscaping, drainage, streets, utilities, or structures.

What is a Ready, Willing, and Able Buyer?

A ready, willing, and able buyer is someone prepared to buy property on the seller’s terms and ready to complete the transaction.

What is Real Estate?

Real estate is the physical land at, above, and below the earth’s surface, including all appurtenances and structures, as well as any interest in land.

What is a Real Estate Assistant?

A real estate assistant is someone who supports a broker or agent as an office manager, marketer, organizer, and facilitator, with a working knowledge of the real estate industry.

What is a Real Estate Brokerage?

A real estate brokerage is a business in which licensed real estate activities are performed under the authority of a broker.

What is a Real Estate Dealer?

A real estate dealer is someone who holds property primarily for resale in the course of business, unlike an investor who holds for long-term personal investment.

What is a Real Estate Investment Trust (REIT)?

A real estate investment trust (REIT) is a trust entity that pools investment money to buy and operate real estate, offering tax advantages if certain conditions are met.

What is a Real Estate Investor?

A real estate investor holds property for personal investment purposes, in contrast to a dealer who holds property for resale.

What is Real Estate License Law?

Real estate license law is state law enacted to protect the public from fraud, dishonesty, and incompetence in real estate transactions.

What is a Real Estate Mortgage Investment Conduit (REMIC)?

A real estate mortgage investment conduit (REMIC) is a tax entity that issues classes of investor securities backed by pools of mortgages.

What is Real Estate Owned (REO)?

Real estate owned (REO) is property acquired by a lender through foreclosure.

What is a Real Estate Recovery Fund?

A real estate recovery fund is a state-established fund that compensates parties who suffer monetary damages due to the actions of a licensed real estate professional.

What is the Real Estate Settlement Procedures Act (RESPA)?

The Real Estate Settlement Procedures Act (RESPA) is a federal law requiring disclosure of all settlement costs in residential transactions financed by federally related mortgage loans.

What is Real Property?

Real property includes the land itself (surface, air, subsurface) and all improvements and appurtenances, as well as the rights and benefits of ownership.

What is Reality of Consent?

Reality of consent is the legal requirement that contracts be entered into freely and voluntarily, without mistake, fraud, duress, or undue influence.

What is a Realized Capital Gain?

A realized capital gain is the profit or loss recognized when a property is sold.

What is a Realtor?

A Realtor is a licensed real estate professional who is a member of the National Association of Realtors® and subscribes to its Code of Ethics.

What is a Realtor’s® Code of Ethics?

A Realtor’s® Code of Ethics is the written system of professional standards governing the conduct of members of the National Association of Realtors®.

What are Realty Taxes and Operating Costs?

Realty taxes and operating costs are expenses associated with property use that may be included in gross rent or charged separately in net rent agreements.

What is a Rebate Law?

A rebate law prohibits escrow and title insurance companies from giving rebates or favorable treatment in exchange for referrals.

What is a Recapture Clause?

A recapture clause is a provision in percentage leases giving the landlord the right to terminate the lease if the tenant does not meet a specified sales volume.

What is Recourse Financing?

Recourse financing is a type of loan where the lender can pursue the borrower’s other assets, beyond the property, in the event of default.

What is Redemption?

Redemption is the right of a defaulted property owner to reclaim their property by curing the default or paying what is owed.

What is Redlining?

Redlining is the discriminatory practice of denying loans or limiting lending in certain neighborhoods or areas.

What is Rent?

Rent is the compensation paid, usually monthly, for the occupancy and use of real property.

What is Rent Abatement?

Rent abatement is a temporary reduction or suspension of rent, often granted as an incentive by landlords.

What is Rentable Area?

Rentable area is the space a tenant pays rent on, including usable area plus a share of building common areas.

What is Rent Control?

Rent control is a government regulation that limits how much rent a landlord may charge tenants.

What is a Restrictive Covenant?

A restrictive covenant is a clause in a deed limiting the way the property may be used.

What does Run With the Land mean?

Run with the land refers to rights or covenants that pass automatically to successive owners of a property, such as easements or deed restrictions.

What does Rural mean?

Rural describes areas outside large or moderate-sized cities, often characterized by farms, ranches, and small towns.

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What is a Safety Clause?

A safety clause is a provision in a listing agreement that entitles a broker to a commission for a set period after the listing expires if the property is sold to a prospect introduced by the broker during the listing term.

What is a Sale-Leaseback?

A sale-leaseback is an arrangement in which a property owner sells the property to an investor and then leases it back, continuing to occupy the space as a tenant.

What is a Sales Commission?

A sales commission is the compensation paid to real estate agents for performing duties in a commercial sales transaction, typically paid from the sale proceeds at closing.

What is the Sales Comparison Approach?

The sales comparison approach is a property valuation method that estimates value by comparing the subject property with recently sold comparable properties.

What is a Sales Contract?

A sales contract is a written agreement between a buyer and seller that contains the complete terms of a real estate transaction.

What is Sales Per Square Foot?

Sales per square foot measures retail sales by dividing total tenant sales (excluding certain anchors) by the leasable square footage they occupy.

What is a Sales Price?

A sales price is the agreed amount paid for real estate, including cash, financing, or assumptions of mortgages.

What is a Salesperson?

A salesperson is a licensed individual employed by a broker to sell, lease, or negotiate real estate transactions for compensation.

What is a Sandwich Lease?

A sandwich lease is a leasehold position where the lessee leases from one party and then subleases to another, occupying a middle position between the fee owner and the end tenant.

What is a Satisfaction of Mortgage?

A satisfaction of mortgage is a document confirming that all mortgage loan payments have been made and the borrower has regained full ownership of the property.

What is a Savings and Loan Association (S&L)?

A savings and loan association (S&L) is a financial institution that promotes thrift and homeownership by investing deposits into residential mortgage loans.

What is Second-Generation Space?

Second-generation space refers to previously occupied commercial space that becomes available for lease, either directly or via sublease.

What is a Second Mortgage?

A second mortgage is a loan secured by real estate that is subordinate to a first mortgage, typically carrying a higher interest rate and shorter term.

What is the Secondary Mortgage Market?

The secondary mortgage market is where existing mortgages are bought and sold to provide liquidity for lenders.

What is a Secret Profit?

A secret profit occurs when a broker makes an undisclosed financial gain at a client’s expense, such as reselling property without disclosure.

What is a Section in the Government Survey System?

A section is a one-square-mile area (640 acres) used in the government survey system, with each township divided into 36 sections.

What is Securitization?

Securitization is the pooling of mortgages or trust deeds as collateral for the sale of securities to investors.

What is a Security?

A security is evidence of financial obligation or ownership rights, such as stocks, bonds, or real estate-backed instruments.

What is a Security Deposit?

A security deposit is money given by a tenant to a landlord to secure performance of lease obligations, refundable if conditions are met.

What is a See-Through Building?

A see-through building is a vacant building, often glass-fronted, where the lack of tenants or furnishings makes it appear transparent.

What is Seller Carryback Financing?

Seller carryback financing occurs when the seller finances part of the buyer’s purchase through a note secured by the property.

What is Seller Representation?

Seller representation means an agent (the seller’s agent or listing agent) exclusively represents the seller’s interests in a transaction.

What is a Senior Loan?

A senior loan is a real estate loan with first priority for repayment, superior to junior liens.

What is Separate Property?

Separate property is property owned by a spouse before marriage, or acquired after marriage by gift, inheritance, or purchase with separate funds.

What is a Setback?

A setback is the minimum distance required by zoning between a building and the property line.

What is Severalty Ownership?

Severalty ownership is sole ownership of real property by one person.

What is a Shared-Appreciation Mortgage (SAM)?

A shared-appreciation mortgage (SAM) is a loan where the lender shares in property appreciation in exchange for a lower interest rate.

What is a Sheriff’s Deed?

A sheriff’s deed is a deed issued after a property is sold at a sheriff’s foreclosure sale.

What is Signage?

Signage refers to tenant or property identification signs on a building, monument, or storefront, often critical in retail leasing.

What is a Shopping Center?

A shopping center is a group of retail and commercial establishments planned, owned, and managed as a single property with shared parking.

What is Simple Interest?

Simple interest is interest calculated only on the loan principal, not on accrued interest.

What is Single Agency?

Single agency is a real estate practice where an agent represents only one party in a transaction—either buyer or seller.

What is Site Development?

Site development is the installation of infrastructure such as utilities, grading, and curbs before building construction.

What is a Site Plan?

A site plan is a document showing the proposed improvements on a parcel, including structures, driveways, landscaping, and utilities.

What is Situs?

Situs is the personal preference for one property location over another, based on subjective desirability.

What is Soil Contamination?

Soil contamination is the presence of hazardous materials in the ground, often requiring environmental assessment.

What is a Sole Proprietorship?

A sole proprietorship is a business owned by one individual who assumes full liability and reports profits on their personal tax return.

What is a Special Agent?

A special agent is authorized to perform one specific act or transaction for a principal, such as a broker listing a property.

What is a Special Assessment?

A special assessment is a tax levied only on properties that benefit from a public improvement, such as sidewalks or sewers.

What is a Special Warranty Deed?

A special warranty deed is a deed in which the grantor guarantees title only against defects during their ownership, not before.

What is Specific Performance?

Specific performance is a legal remedy requiring a party to fulfill contractual obligations, often used in real estate sales.

What is a Speculative Building?

A speculative building is constructed without pre-lease commitments, built in anticipation of future tenant demand.

What is Spot Zoning?

Spot zoning is the rezoning of a single parcel in a way that is inconsistent with surrounding land uses.

What is a Squatter’s Right?

Squatter’s rights are the legal ability to occupy property without permission, which may lead to ownership through adverse possession.

What is Stabilized Net Operating Income?

Stabilized net operating income is projected property income adjusted to reflect typical, long-term operating conditions.

What is a Standard Coverage Policy?

A standard coverage policy is a title insurance policy that protects against defects discoverable in public records and certain hidden risks.

What is Statute of Frauds?

The statute of frauds is a law requiring certain contracts, such as real estate contracts, to be in writing and signed to be enforceable.

What is Statutory Redemption?

Statutory redemption is the right of a defaulted property owner to reclaim property after foreclosure by paying required fees.

What is Steering?

Steering is the illegal practice of directing buyers toward or away from certain neighborhoods based on race or other protected classes.

What is a Stepped-Up Basis?

A stepped-up basis is an adjustment in property value for tax purposes upon inheritance, resetting basis to market value at death.

What is a Stigmatized Property?

A stigmatized property is one that is undesirable due to past events, such as crime or tragedy, regardless of physical condition.

What is Sublease?

A sublease is a lease in which a tenant leases space to another tenant (sublessee) while retaining responsibility to the landlord.

What is Subordination?

Subordination is the act of making one claim or lien junior to another in repayment priority.

What is Subsurface Rights?

Subsurface rights are ownership rights to resources beneath land, such as oil, minerals, and gas.

What is Survivorship?

Survivorship is the right of surviving joint tenants to inherit the deceased tenant’s interest automatically.

What is Sweat Equity?

Sweat equity is the value added to property through improvements made personally by the owner’s labor.

What is a Syndicate in Real Estate?

A syndicate is a group formed to pool resources for real estate investment or development.

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What is Tacking?

Tacking is the legal concept of combining successive periods of continuous occupation of real property by adverse possessors, enabling someone who has not occupied for the full statutory period to establish a claim of adverse possession.

What is Take-Out Financing?

Take-out financing is long-term permanent financing that replaces a short-term construction or interim loan once a project is completed.

What is a Taking?

A taking refers to the government’s action of acquiring private property for public use under eminent domain, requiring just compensation under the Fifth Amendment.

What is a Tandem Plan?

A tandem plan is a mortgage subsidy program where the Government National Mortgage Association (GNMA) purchases certain below-market loans and resells them on the secondary market at a discount.

What is a Tax and Insurance Escrow?

A tax and insurance escrow is an account required by lenders to hold funds for property taxes and insurance, funded through monthly borrower payments.

What is a Tax Base?

A tax base is the collective assessed value of taxable property, income, or assets against which a tax rate is applied.

What are Tax Benefits?

Tax benefits are financial advantages, such as depreciation deductions, that property owners may use to reduce taxable income.

What is a Tax Bill?

A tax bill is the amount owed by a property owner, calculated by applying the tax rate to the property’s assessed valuation.

What is a Tax Credit?

A tax credit directly reduces the amount of tax owed by a taxpayer.

What is a Tax Deed?

A tax deed is an instrument given to the purchaser of property sold at a tax sale, transferring ownership due to unpaid taxes.

What is a Tax-Deferred Exchange?

A tax-deferred exchange, also known as a 1031 exchange, allows the trade of one investment property for another to defer capital gains taxes.

What is a Tax Foreclosure?

A tax foreclosure is the enforcement of a lien for unpaid property taxes, often resulting in a court-ordered sale of the property.

What is a Tax Levy?

A tax levy is the formal action of imposing a property tax, usually voted on by a taxing authority’s governing body.

What is a Tax Lien?

A tax lien is a legal claim against property for unpaid taxes, which takes priority over other liens.

What is a Tax Rate?

A tax rate is the percentage applied to assessed property value to calculate taxes owed by property owners.

What is the Tax Reform Act of 1986 (TRA 86)?

The Tax Reform Act of 1986 (TRA 86) was legislation that overhauled federal income tax laws, lowering rates and eliminating many tax shelters.

What is the Tax Relief Act of 1997 (TRA 97)?

The Tax Relief Act of 1997 (TRA 97) expanded capital gains exemptions on the sale of personal residences, replacing the previous one-time exemption.

What is a Tax Roll?

A tax roll is the official list of all taxable properties within a jurisdiction, including their assessed values.

What is a Tax Sale?

A tax sale is a court-ordered sale of property to recover unpaid property taxes.

What is a Tax Shelter?

A tax shelter refers to legal strategies, such as real estate depreciation, that reduce taxable income and liability.

What is Taxable Income?

Taxable income is income reported for tax purposes after allowable deductions, used to determine tax liability.

What is Taxable Value?

Taxable value is the assessed property value on which taxes are calculated.

What is Tenancy?

Tenancy is the right to occupy or possess real property, which may arise from ownership or leasing.

What is a Tenancy at Sufferance?

A tenancy at sufferance occurs when a tenant wrongfully holds possession after lease expiration without the landlord’s consent.

What is a Tenancy at Will?

A tenancy at will allows a tenant to occupy property with the landlord’s consent but without a fixed term.

What is Tenancy by the Entirety?

Tenancy by the entirety is a form of joint property ownership available to married couples, treating them as a single legal entity.

What is a Tenancy for Years?

A tenancy for years is a leasehold with a fixed start and end date.

What is Tenancy in Common?

Tenancy in common is a form of ownership where two or more parties hold undivided interests in property, without survivorship rights.

What is Tenancy in Severalty?

Tenancy in severalty is ownership of property by a single individual, also called sole ownership.

What are Tenant Improvements?

Tenant improvements are modifications or build-outs to leased space made to meet the tenant’s needs, often negotiated in lease agreements.

What is a Tenant Improvement Allowance?

A tenant improvement allowance is money provided by a landlord to a tenant to fund build-outs or renovations, usually calculated per square foot.

What is Tenant Representation?

Tenant representation is when an agent exclusively represents a tenant in lease negotiations, advocating for the tenant’s best interests.

What is a Term Loan?

A term loan is a loan with a set maturity date, often requiring a lump-sum principal repayment at the end.

What is a Termite Inspection?

A termite inspection is a professional evaluation of property for termite presence, often required in sales contracts or loans.

What does “Time is of the Essence” mean in a contract?

“Time is of the essence” is a contract clause that makes timely performance a critical obligation, with failure constituting default.

What is the Time Value of Money?

The time value of money is the principle that money today is worth more than the same amount in the future due to earning potential.

What is Time-Sharing in Real Estate?

Time-sharing is a form of ownership where multiple buyers purchase rights to use property, often a resort unit, for specific time periods.

What is a Title?

Title refers to the legal rights of ownership in property, including the ability to possess, use, and transfer.

What is a Title Defect?

A title defect is an unresolved claim or issue that prevents a property from having clear, marketable title.

What is Title Insurance?

Title insurance is a policy that protects property buyers and lenders against financial loss from title defects or claims.

What is a Title Search?

A title search is the examination of public records to verify ownership and discover liens, easements, or other encumbrances.

What is Title Theory?

Title theory is a legal doctrine in some states that considers the lender the property owner under a mortgage until full repayment.

What is Topography?

Topography refers to the physical surface features of land, such as being flat, rolling, or hilly.

What is the Torrens System?

The Torrens system is a land registration method where ownership and encumbrances are recorded with a public registrar, providing conclusive title.

What is a Tort?

A tort is a wrongful act, not arising from contract, that causes harm and may result in legal liability, such as negligence or trespass.

What is Triple Net Rent (NNN)?

Triple net rent is rent where the tenant pays base rent plus property taxes, insurance, and operating expenses.

What is a Triplex?

A triplex is a residential building containing three separate dwelling units.

What is a Trust in Real Estate?

A trust is a legal arrangement where property is transferred to a trustee to manage for the benefit of a beneficiary.

What is a Trust Deed?

A trust deed is a legal document transferring property title to a trustee as security for a loan between a borrower (trustor) and lender (beneficiary).

What is a Trustee?

A trustee is a fiduciary who holds property in trust for another, ensuring it is managed according to trust terms.

What is a Trustor?

A trustor is the person who creates a trust and transfers property to a trustee.

What is the Truth-in-Lending Law?

The Truth-in-Lending Law, part of the Consumer Credit Protection Act, requires lenders to disclose the true cost of credit, enabling borrowers to compare loan terms.

What is a Turnkey Project?

A turnkey project is a development delivered fully complete and ready for occupancy, often tailored to an owner’s or tenant’s specifications.

What is a Two-Step Mortgage?

A two-step mortgage is a hybrid loan with a fixed rate for an initial period (often seven years) followed by one adjustment for the remainder of the term.

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What is Uncollected Rent?

Uncollected rent is the amount of rent not received, often due to vacancy or default, and is subtracted from gross scheduled income. It is typically estimated as a percentage and converted to dollars.

What is Undepreciated Capital Cost (UCC)?

Undepreciated capital cost (UCC) is an account that records the purchase price of all assets in a class minus the accumulated capital cost allowance (CCA) taken over time for that class.

What are Underground Storage Tanks (USTs)?

Underground storage tanks (USTs) are tanks used to store petroleum products, chemicals, or waste. Over time, neglected USTs can leak hazardous substances into the environment, leading to strict state and federal regulations to prevent groundwater contamination.

What is an Undertaking?

An undertaking is a legal promise given during proceedings by a party or their lawyer, often as a condition for obtaining a concession from the opposing party.

What is an Underwriter?

An underwriter is the professional who evaluates a mortgage applicant’s risk and decides whether to approve or deny the loan.

What is Underwriting?

Underwriting is the process of evaluating a loan applicant’s creditworthiness, collateral value, and overall risk before approving a mortgage.

What is Undisclosed Dual Agency?

Undisclosed dual agency occurs when a broker inadvertently represents both buyer and seller without proper disclosure or consent, often by providing advice that makes a buyer believe the agent also represents their interests.

What is an Undivided Interest?

An undivided interest is shared ownership in property where no co-owner has exclusive rights to any portion. All decisions must be made collectively, and each owner has rights to use the entire property.

What is Undue Influence?

Undue influence is excessive persuasion that overpowers someone’s free will, often in relationships of trust, causing them to make decisions they otherwise wouldn’t, such as signing a contract under pressure.

What is an Unearned Increment?

An unearned increment is an increase in real estate value that occurs without owner effort, often due to external factors like population growth or infrastructure improvements.

What does Unencumbered mean in real estate?

Unencumbered describes property with clear title, free of liens or claims. It can also mean lease space without third-party rights like expansion or renewal options.

What is an Unenforceable Contract?

An unenforceable contract is a contract that was valid when made but cannot be enforced by a court, often because it is not in writing as required by law or the statute of limitations has expired.

What does Unequivocal mean?

Unequivocal means clear, unambiguous, and open to only one interpretation.

What is the Uniform Building Code?

The Uniform Building Code is a national building code published by the International Conference of Building Officials, widely adopted in the western U.S. to regulate construction standards.

What is the Uniform Commercial Code (UCC)?

The Uniform Commercial Code (UCC) is a set of standardized laws adopted by most states to govern commercial transactions, including mortgages on personal property and bulk sales.

What is the Uniform Condominium Act (UCA)?

The Uniform Condominium Act (UCA) provides guidelines for creating condominiums by recording a declaration of condominium, and has been adopted in many states.

What is the Uniform Partnership Act (UPA)?

The Uniform Partnership Act (UPA) permits partnerships to hold real estate in the partnership’s name. Most states have adopted the UPA and its counterpart, the Uniform Limited Partnership Act (ULPA).

What is the Uniform Residential Landlord and Tenant Act (URLTA)?

The Uniform Residential Landlord and Tenant Act (URLTA) is a model law designed to standardize landlord-tenant relationships in residential leases. Some states have adopted all or parts of it.

What is a Uniform Settlement Statement?

A uniform settlement statement, also known as HUD-1, is a standard form required under RESPA that discloses settlement costs to buyers, sellers, and lenders at or before closing.

What is a Unilateral Contract?

A unilateral contract is a one-sided contract where one party makes a promise in exchange for performance by another. The second party is not obligated to act, but if they do, the first party must fulfill the promise.

What is Unimproved Property?

Unimproved property is land that has not been developed or prepared for construction, also referred to as raw land.

What is the Unit-In-Place Method?

The unit-in-place method is a cost appraisal technique where the costs of individual building components (walls, plumbing, etc.) are estimated and totaled to determine reproduction cost.

What is Unity of Ownership?

Unity of ownership refers to the four unities required for joint tenancy: title, time, interest, and possession.

What is Unity of Possession?

Unity of possession means all joint tenants or co-owners have equal rights to possess the entire property.

What is a Universal Agent?

A universal agent is a person authorized to act on behalf of a principal in virtually all matters, with broad authority similar to that of the principal themselves.

What is an Unlawful Detainer Action?

An unlawful detainer action is a legal proceeding landlords use to evict tenants who default on lease terms or unlawfully retain possession of property.

What is Unleveraged Equity?

Unleveraged equity is direct ownership in property without the use of borrowed funds.

What is Unlimited Liability?

Unlimited liability means an owner is personally responsible for all company debts, exposing personal assets if the business cannot pay its obligations.

What is an Unrecorded Deed?

An unrecorded deed is a transfer of property ownership not filed in public records, making it legally valid between parties but unprotected against third-party claims.

What is the Unruh Civil Rights Act?

The Unruh Civil Rights Act prohibits discrimination in business establishments and housing based on sex, race, religion, ancestry, or national origin.

What does Unsecured mean?

Unsecured refers to debt that is not backed by collateral, relying solely on the borrower’s promise to repay.

What is Urea-Formaldehyde?

Urea-formaldehyde is a chemical once used in insulation materials; it releases gases that may become trapped indoors, creating health concerns.

What is Usable Area?

Usable area is the actual space a tenant occupies, excluding shared or common areas, and is sometimes referred to as tenant’s area or gross leasable area.

What is Useful Life in real estate?

Useful life is the expected period a building provides economic returns, forming the basis for allowable depreciation deductions.

What is a Use Type?

A use type categorizes properties within commercial real estate, such as multi-tenant office, warehouse, or retail strip center.

What are Usufructuary Rights?

Usufructuary rights grant the ability to use property belonging to another, such as a landowner’s right to use water from a natural stream.

What is a Utility Easement?

A utility easement is the right to use part of another’s property for installing or maintaining utility lines such as water, gas, or electric.

What are Utility Liens?

Utility liens are specific liens municipalities place on property when owners fail to pay for municipal utility services.

What is Utility Value?

Utility value is the value of a property based on its use to the owner or user, often called subjective value.

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What is a VA Loan?

A VA loan is a government-sponsored mortgage program administered by the Department of Veterans Affairs. It allows eligible veterans, and unremarried surviving spouses of veterans who died in service or from service-related causes, to obtain partially guaranteed loans for buying, building, or refinancing a home.

What is a Vacancy and Credit Loss Factor?

A vacancy and credit loss factor is a deduction from gross potential annual rent used to account for less than 100% occupancy and possible tenant defaults. It is part of the operating statement in the income capitalization approach to value.

What is a Vacancy Rate?

A vacancy rate is the percentage of total available space in a market or property that is unoccupied at a given time. It is a key indicator of market health.

What is Vacant Inventory?

Vacant inventory is the total square footage of unoccupied office, industrial, or retail space in a market or submarket, or the number of vacant units in a multifamily property market.

What is Vacant Land?

Vacant land is land not currently in use, though it may have utilities or off-site improvements. It differs from raw land, which is completely undeveloped.

What is Vacant Space?

Vacant space is the square footage of a property that is physically empty, even if still under lease. It includes leased but unoccupied space, and affects both perception and analysis of property demand.

What does it mean to Vacate?

To vacate means to move out of a property, such as when a tenant ends occupancy and removes their possessions.

What is a Valid Contract?

A valid contract is a legally binding agreement that includes all essential elements of a contract and is enforceable on all parties.

What is Value in real estate?

Value is the worth of a property, based on the present worth of future benefits of ownership. The four essential elements of value are utility, scarcity, demand, and transferability. The most common type of value in transactions is market value.

What is a Value-Add Opportunity?

A value-add opportunity is a property that requires improvements or repositioning, often referred to as a “fixer-upper,” to increase its value or performance.

What is Value in Use?

Value in use is the value of a property based on its use for a specific purpose, rather than its market value.

What is a Vanilla Shell?

A vanilla shell is a commercial space delivered by a landlord in basic condition, typically with walls, ceiling, lighting, HVAC, and minimal finishes, ready for tenant build-out.

What are Variable Expenses?

Variable expenses are operating costs that fluctuate depending on occupancy levels, such as utilities or janitorial services.

What is a Variable Interest Rate?

A variable interest rate is a loan rate that fluctuates over time, usually tied to an index. Payments may rise or fall depending on changes in the index.

What is a Variable Lease?

A variable lease is a lease that allows rent adjustments during the lease term, often based on preset increases (graduated lease) or tied to an index such as the consumer price index.

What is a Variable-Maturity Mortgage?

A variable-maturity mortgage is a loan where the interest rate may adjust periodically, but payments remain constant. The loan term is lengthened or shortened to reflect the new rate.

What is a Variable-Payment Plan?

A variable-payment plan is a loan repayment schedule where monthly payments change over time, often due to interest rate adjustments or scheduled increases in principal payments.

What is a Variable-Rate Mortgage?

A variable-rate mortgage is a residential loan with an interest rate that adjusts periodically, subject to caps on how much the rate can change annually or over the life of the loan.

What is a Variance in real estate?

A variance is a permit allowing a property owner to deviate from zoning requirements due to special circumstances or hardships, enabling reasonable use of the property.

What is a Vendee?

A vendee is the purchaser or buyer of real estate, often under a land contract.

What is a Vendee’s Lien?

A vendee’s lien is a buyer’s lien on a property under a contract of sale, typically to secure a deposit if the seller attempts to sell to another before closing.

What is a Vendor?

A vendor is the seller of real estate, often in a land contract.

What is a Vendor Take-Back Mortgage?

A vendor take-back mortgage is a loan provided by the seller to the buyer as part of a real estate transaction, with the seller acting as the lender.

What is a Vendor’s Statement of Adjustment?

A vendor’s statement of adjustment is a closing statement showing the net proceeds the seller will receive after accounting for adjustments at settlement.

What is Verification in real estate?

Verification is confirmation under oath of the truthfulness of a statement, often in legal or contractual contexts.

What is Vertical Support?

Vertical support is the right of land to be supported by the ground beneath it.

What is the Veteran’s Administration (VA)?

The Veteran’s Administration (VA) is a federal agency that provides services to veterans, including guaranteeing VA loans.

What is a Veteran’s Exemption?

A veteran’s exemption is a property tax exemption for eligible veterans. For example, in California, qualifying veterans may receive a $4,000 exemption on the assessed value of their home.

What is Visibility in real estate?

Visibility refers to the exposure of a building, storefront, or signage to traffic and potential customers. It is a key factor in retail site selection.

What does Void mean in real estate contracts?

Void means a contract has no legal force or effect. A void contract is unenforceable from the beginning, such as contracts for illegal purposes.

What is a Void Contract?

A void contract is an agreement that never had legal effect and cannot be enforced.

What does Voidable mean in contracts?

Voidable describes a contract that is valid but may be legally rejected by one party, such as a lease signed by a minor.

What is a Voidable Contract?

A voidable contract appears valid but can be disaffirmed by one or both parties.

What is a Voluntary Conveyance?

A voluntary conveyance is when a borrower voluntarily transfers property to a lender to satisfy a loan, also known as a deed in lieu of foreclosure.

What is a Voluntary Lien?

A voluntary lien is a lien placed on property with the owner’s consent, such as a mortgage.

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What is a Waiver?

A waiver is the voluntary giving up of a legal right. In real estate, a waiver may occur when a party intentionally relinquishes a contractual or legal right.

What is a Walk-Through?

A walk-through is a final inspection of a property before closing. It ensures the property is vacant, undamaged, and in compliance with the sales agreement.

What is a Warehouse in real estate?

A warehouse is a large building, generally 50,000 square feet or more, with high ceilings (18–30 feet) and up to 15% office space. Loading is typically dock-height.

What is Warehousing in real estate finance?

Warehousing is the process of pooling mortgage loans into groups and selling securities backed by those loans to investors. Agencies like Fannie Mae and Ginnie Mae are major players in mortgage warehousing.

What is a Warranty in real estate?

A warranty is a seller’s promise that certain conditions or facts about a property are true. A warranty provides legal assurance regarding title or physical condition of the property.

What is a Warranty Deed?

A warranty deed is a deed in which the grantor guarantees clear title to the property. It offers the highest level of protection to the buyer and includes covenants such as seisin, quiet enjoyment, and freedom from encumbrances.

What is a Warranty of Authority?

A warranty of authority is an agent’s guarantee to third parties that their actions fall within the scope of authority granted by their principal. Acting outside that scope breaches the warranty.

What is a Warranty of Habitability?

A warranty of habitability is a landlord’s implied legal obligation that a rental property is safe and fit for living, free from health and safety hazards.

What is Waste in real estate?

Waste is the improper or abusive use of a property by a tenant, mortgagor, or other possessor that reduces its value or harms the interest of the titleholder.

What is a Water Table?

A water table is the natural level at which groundwater exists beneath the earth’s surface.

What is a Weekly Activity Report in real estate?

A weekly activity report is a written update from a listing broker to a property owner, summarizing marketing efforts and sales activities conducted for the listing.

What are Wetlands in real estate?

Wetlands are areas saturated by water often enough to support vegetation adapted to wet conditions. Examples include swamps, marshes, and bogs.

What is a Will in real estate?

A will is a written document, properly executed and witnessed, that directs how a deceased person’s property (the testator’s) will be distributed.

What are Will-Buy Buyers?

Will-buy buyers are bargain-hunters who seek motivated sellers willing to sell quickly, often at below-market prices.

What are Will-Sell Sellers?

Will-sell sellers are property owners who list at above-market prices and are not motivated to sell unless the right price is offered.

What is a Window in construction?

A window is an opening in a building wall designed to admit light and air, typically made of transparent materials and operable for ventilation.

What are Window Mullions?

Window mullions are the vertical or horizontal divisions within or between window panes that help separate sections of glass and facilitate design or partitioning.

What does Without Recourse mean in real estate finance?

Without recourse means a lender or note holder cannot seek repayment from the borrower personally if the debt is unpaid. The lender’s recourse is limited to the property itself.

What are Workers’ Compensation Acts?

Workers’ Compensation Acts are laws requiring employers to provide insurance to cover employees injured while performing job duties.

What is Working Capital?

Working capital is the difference between current assets and current liabilities, measuring a company’s short-term financial health.

What are Working Drawings?

Working drawings are detailed construction plans that, along with specifications, guide contractors in building tenant improvements or other projects.

What is a Workletter?

A workletter is an attachment to a lease defining which tenant improvements will be provided by the landlord. It may specify dollar amounts or describe the work in detail.

What is a Workout in real estate?

A workout is an alternative arrangement made to avoid foreclosure, such as loan modification, forbearance, or negotiated repayment.

What is a Wraparound Mortgage?

A wraparound mortgage is a financing arrangement where a new mortgage “wraps” around an existing one. The borrower makes one payment to the wraparound lender, who continues paying the first mortgage.

What is a Writ of Execution?

A writ of execution is a court order directing a sheriff or officer to seize and sell a debtor’s property to satisfy a judgment.

What is a Write-Down?

A write-down is the reduction of an asset’s book value to reflect its market value, often recorded as a loss or bad-debt expense.

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What is Yield in real estate?

Yield is the annual rate of return on an investment. In real estate, yield is typically calculated using discounted cash flow analysis to evaluate the profitability of an income-producing property.

What is Yield to Maturity in real estate?

Yield to maturity is the internal rate of return (IRR) on an investment, considering all cash inflows and outflows along with their timing. For example, if an income property requires a $10,000 investment and produces $1,000 annually for 5 years, plus $15,000 in resale proceeds, the yield to maturity is 17.1%.

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What are Zero Coupon Bonds in real estate?

Zero coupon bonds are single-payment bonds that grow to their face value over a prescribed time period at a specific interest rate. All compound interest is tax-deferred until the bond is cashed.

What is a Zero Lot Line?

A zero lot line is a form of cluster housing development in which individual dwelling units are placed on separately platted lots. They may be attached to one another, but not necessarily.

What is Zoning?

Zoning is a locally enacted law that regulates and controls land use, lot sizes, building heights, and other property characteristics within designated areas.

What is a Zoning Bylaw?

A zoning bylaw is a municipal regulation that prohibits the use of land in certain areas for any purpose other than those specified in the bylaw. In the Planning Act, it is also called a Restricted Area bylaw.

What is a Zoning Department?

A zoning department is the division of a city or county government responsible for enforcing zoning regulations, designating zones, and specifying allowable uses for real property within those zones.

What is a Zoning Map?

A zoning map is an official map of a jurisdiction that indicates the current zoning designations and permitted uses of land within the area.

What is a Zoning Ordinance?

A zoning ordinance is an act of city, county, or other authority specifying the types of land use permitted in specific areas. A typical zoning ordinance defines the purpose of zoning, classifications, permitted uses, restrictions (such as height limits), procedures for nonconforming uses, variances, amendments, appeals, and penalties for violations.

What is a Zoning Variance?

A zoning variance is official permission to deviate from the zoning ordinance requirements, allowing a property to be used or developed in a way that differs from standard zoning specifications.

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