Like all established businesses, Real Estate too has its own glossary of terms and terminologies. Confused between ‘Adjustable Rate’ and ‘Adjusted Sales Price’? We bring you a comprehensive list of real estate words and terms along with their meanings. Acquaint yourself with these terms to know real estate and your property purchases better.
Derived from the Latin word battere, “abatement” is a common legal term meaning “the beating down, removal, or diminishment” of something. Abatement usually refers to “Rent Abatement”, the incentive offered by a landlord, including free rent, early occupancy, or reduction of fees.
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby. This is often very useful for buyers so that they can know what the property prices are nearby and whether they have got a good deal or not.
The increase in the value of a property due to changes in market conditions, inflation, or other causes. Appreciation is common with properties, especially in rapidly developing areas where property prices are influenced by upcoming transport facilities and modernization/urbanization. People looking to sell a property in any such area must have a sense of this term.
Amenities are enhancements offered to residents or tenants by the building or the apartment. Amenities include swimming pool, health club, playroom for children, lounge, gymnasium etc. Most modern residential apartments come with a range of amenities and buyers are advised to go through a complete list to see if it covers all their basic needs.
Acquisition fee refers to charges and commissions paid for the acquisition or purchase of property, such as closing costs, real estate commission, and development/construction fees. It could be either paid upfront by the buyer or adjusted with the loan amount, though the buyer must always keep a track of all the payments.
A broker is an individual employed on a fee or commission basis as an agent who brings buyers and sellers together and assists in negotiating real estate contracts between them. While brokers are helpful, one must be vary of their brokerage fees and put a tab on how much they are charging.
Bill of Sale
A written document that transfers the title to personal property. This document announces that the buyer has bought the concerned property and has paid an amount for it, thereby making him/her the legal owner of the property.
Best and Final Offer
In real estate, a prospective buyer’s last and highest offer. A best and final offer is typically submitted in response to a bidding war. A seller who has received several offers will ask either all bidders or the top bidders to submit their best and final offers. This type of offer presents the most favorable terms the buyer is willing to offer the seller for the purchase of the property.
Buyer’s Market is commonly used to describe real estate markets in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. This usually happens when residential properties are in abundance and prices are dictated as per the buyer’s terms.
Beginning Market Value
The valuation at which the property should exchange at the date of origin, and the beginning of each period. The beginning market value at the start of every period is equal to the ending market value of the previous period.
A title that is free of liens or legal questions as to ownership of the property. It is very important that buyers check thoroughly that whether the property they are purchasing is a clear title or not so that there are no legal hassles later.
Closing costs are the expenses incurred in the purchase and sale of real property paid at the time of settlement or closing. Some examples of closing costs are title insurance, attorney fees, appraisal fees, recording fees and taxes.
A contract is a legally binding agreement between two parties, and in order to have a valid Contract of Sale in real estate there must be: an offer, an acceptance, competent parties, consideration, legal purpose, written documentation, description of the property, and signatures of the principals.
The commission is the payment to the broker for his or her efforts on marketing and selling the property, and is usually a percentage of the total purchase price. While there are no fixed commission rates as of yet, buyers must be vary of brokers who charge exorbitantly and should immediately bring it to the seller’s notice.
Complete performance is the execution of a contract by virtue of all parties having fully performed all terms. This signifies that the buyer can now move in happily as all legal and other formalities have been successfully completed.
Declaration is the master deed containing legal description of the condominium facility, a plot of the property, plans and specifications for the building and units, a description of the common areas, and the degree of ownership in the common areas available to each owner.
An act performed by the buyer, seller, tenant or landlord that breaches the contract of sale or lease and permits a claim for damages. Defaults can be costly and illegal, so be wary.
Depreciation is the expensing of the original cost of an asset, plus any qualified improvements, over its scheduled life. Depreciation deductions are permitted only for assets held by the production of income or used in a trade or business.
The down payment is the amount of money a buyer pays upfront in order to purchase a property. It is usually paid at the signing of the contract in the form of a certified check. The amount is typically 10% of the sales price.
A piece of property or asset that has a publicly-recorded encumbrance, such as a lien, mortgage or judgment. Because other parties can lay claim to the property or asset, the title cannot be legally transferred to another party. For example, a homeowner cannot sell a home if there is an outstanding tax lien on the property. That lien would first have to be cleared before any action can be taken on the property.
A situation in real estate where a property owner violates the property rights of his neighbor by building something on the neighbor’s land or by allowing something to hang over onto the neighbor’s property. Encroachment can be a problem along property lines when a property owner is not aware of his property boundaries or intentionally chooses to violate his neighbor’s boundaries.
The right of one party to use the property of another party. A fee is paid to the owner of the property in return for the right of easement. Easements are often purchased by public utility companies for the right to erect telephone poles or run pipes either above or beneath private property.
A permanent, long-term loan used to pay off a short-term construction loan or other form of interim financing. Although an end loan can have interest-only or other features that delay the repayment of principal, at some point, an end loan begins to amortize.
The lawful expulsion of an occupant from real property.
A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
Fair Market Value
The fair market value is the price for a property agreed upon between a buyer and seller in a competitive market.
A loan secured by personal property, such as real estate property. The stock and lease of a cooperative corporation also constitute such personal property, and a loan secured by these instruments is referred to as a financing loan.
A fixed lease is when the rental amount remains the same for the entire lease term; also called flat, straight or gross lease.
Personal property that becomes real property when attached in a permanent manner to real estate.
Flashing is a metal material used in parts of the roof or walls to prevent water from penetrating the structure.
A type of commercial lease where the landlord pays for the building’s property taxes, insurance and maintenance. A gross lease can be modified in a number of ways to best meet the needs of a particular building’s tenants (for example, a gross lease may or may not require the tenant to pay utility bills).
A girder is the main beam in a structure that spans the distance from one side of the foundation to the other.
A general agent refers to the entity that has full authority over a property of the principal, such as a property manager.
Ground Rent Arrangement
A situation in which someone owns a structure but not the land the structure is located on. Because she does not own the land, she has to pay rent on it. It is common for hotels and office buildings to be subject to ground rent arrangements; sometimes houses are, too. Ground rent arrangements are more common in some states than others.
A general lien is a lien that attaches to all of the property of a person within the court’s jurisdiction.
An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
A holdover tenant is a tenant that remains in possession of a property after a lease terminates.
House rules are building rules regulating the conduct and responsibilities of homeowners as they affect the building’s common areas and services.
Hypothecate is to pledge property as security for the payment of a debt without giving up possession.
Improvements are changes or additions made to a property. These typically increase the value of the property.
An ingress is the right to enter a parcel of land, usually used as “ingress and egress”, or both entering and leaving.
An installment sale is a property sale in which the purchaser pays the purchase price over a period of years. The seller recognizes gain for tax purposes by the proportion of the profit (determined by the profit divided by the nest sales price of the asset) received on each payment as it is received.
Interim financing is a short-term or temporary loan such as a construction or bridge loan.
Joint tenancy is a form of co-ownership that includes the right of survivorship
A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.
Junior debt is debt that is either unsecured or has a lower priority than of another debt claim on the same asset or property. It is a debt that is lower in repayment priority than other debts in the event of the issuer’s default. Junior debt is usually an unsecured form of debt, meaning there is no collateral behind the debt.
The idea behind junk fees is that at the end of the mortgage signing process, the borrower is already committed to signing the loan and will not walk away from the table. Junk fees, however, may not necessarily be noted in the good faith estimate the borrower receives a few days prior to closing.
A land lease is a situation in which a building and other land improvement are rented for a term of years. At the end of the lease term, the right of possession is extinguished and reverts back to the landowner. At the time, the tenant loses any remaining equity interest in the property.
Landmark status is the designation given to a building or neighborhood that is under government protection for purposes of preservation.
A lease is a written agreement to rent a property or part of a property from an owner
Lien Foreclosure Sale
A lien foreclosure sale is the sale of property without consent of the owner, as ordered by a court or authorized by state law due to a debt resulting in a lien.
The monthly charge levied on owners by a cooperative corporation to cover the building’s operating costs, real estate taxes, and the debt service on the building’s underlying mortgage.
The market value of a property is an estimation of the price for a property in relation to the current real estate market.
A mechanic’s lien is a statutory lien available to anyone supplying labor or material to the construction of an improvement of land that has not been properly compensated.
A multiple dwelling is a structure with two or more residential units.
A net lease refers to a type of lease in which the tenant pays a fixed rent plus the operational costs of the property.
Net worth is your assets less your liabilities.
A nonconforming use refers to the utilization of land that does not conform to the zoning ordinance for the area.
Some legal documents, including certain leases and contracts of sale, are notarized by a certified Notary Public to verify the authenticity of a signature.
A nonrecourse note is a type of note in which the borrower has no personal liability for payment.
Off The Plan
To purchase a property before it is completed after having only seen the plans.
Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.
A loan maintenance fee charged regularly over the life of the loan.
A property purchase transaction in which the property seller provides all or part of the financing.
Land which has not had improvements such as buildings and other structures added to it. Such land is often left in a subdivision by a developer or stipulated by a local authority for recreational use or for personal use by the owner.