{"id":351,"date":"2020-04-27T11:43:21","date_gmt":"2020-04-27T15:43:21","guid":{"rendered":"https:\/\/www.varshabi.com\/hennessey\/?page_id=351"},"modified":"2020-05-19T17:24:26","modified_gmt":"2020-05-19T21:24:26","slug":"glossary-of-real-estate-terms","status":"publish","type":"page","link":"https:\/\/www.varshabi.com\/hennessey\/glossary-of-real-estate-terms\/","title":{"rendered":"Glossary of Real Estate Terms"},"content":{"rendered":"\t\t
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Glossary of Real Estate Terms<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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A<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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Abatement:<\/strong>\u00a0Often and commonly referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease.<\/p>

Above Building Standard:<\/strong>\u00a0Upgraded finishes and specialized designs necessary to accommodate a tenant\u2019s requirements.<\/p>

Absorption:<\/strong>\u00a0The rate, expressed as a percentage, at which available space in the marketplace is leased during a predetermined period of time. Also referred to as “Market Absorption<\/a>“.<\/p>

Absorption Rate:<\/strong>\u00a0The net change in space available for lease between two dates, typically expressed as a percentage of the total square footage.<\/p>

Ad Valorem:<\/strong>\u00a0According to value. This is a tax imposed on the value of property (references a general property tax), which is typically based on the local government\u2019s valuation of the property.<\/p>

Add-On Factor:<\/strong>\u00a0Often referred to as the Loss Factor or Rentable\/Usable (R\/U) Factor, it represents the tenant\u2019s pro-rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. It is usually expressed as a percentage which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent.<\/p>

Allowance Over Building Shell:<\/strong>\u00a0Most often used in a yet-to-be constructed property, the tenant has a blank canvas upon which to customize the interior finishes to their specifications. This arrangement caps the landlord\u2019s expenditure at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price.<\/p>

Anchor Tenant:<\/strong>\u00a0The major or prime tenant in a shopping center, building, etc.<\/p>

Annual Percentage Rate (APR):<\/strong>\u00a0The actual cost of borrowing money, expressed in the form of an annual interest rate. It may be higher than the note rate because it represents full disclosure of the interest rate, loan origination fees, loan discount points, and other credit costs paid to the lender.<\/p>

Appraisal:<\/strong>\u00a0An estimate of opinion and value based upon a factual analysis of a property by a qualified professional.<\/p>

Appreciation:<\/strong>\u00a0The increased value of an asset.<\/p>

“As-Is” Condition:<\/strong>\u00a0The acceptance by the tenant of the existing condition of the premises at the time the lease is consummated. This would include any physical defects.<\/p>

Assessment:<\/strong>\u00a0A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.<\/p>

Assignment:<\/strong>\u00a0A transfer by lessee of lessee\u2019s entire estate in the property. Distinguishable from a sublease where the sublessee acquires something less than the lessee\u2019s entire interest.<\/p>

Attorn:<\/strong>\u00a0To turn over or transfer to another money or goods. To agree to recognize a new owner of a property and to pay him\/her rent. In a lease, when the tenant agrees to attorn to the purchaser, the landlord is given the power to subordinate tenant’s interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Balloon Payment:<\/strong>\u00a0A large principal payment that typically becomes due at the conclusion of the loan term. Generally, it reflects a loan amortized over a longer period than that of the term of the loan itself (i.e. payments based on a 25 year amortization with the principal balance due at the end of 5 years). See “Bullet Loan<\/a>“.<\/p>

Bankrupt:<\/strong>\u00a0The condition or state of a person (individual, partnership, corporation, etc.) who is unable to repay it’s debts as they are, or become, due.<\/p>

Bankruptcy:<\/strong>\u00a0Proceedings under federal statures to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the bankrupt\u2019s property and other assets are distributed by the court to creditors as full satisfaction for the debt. See also: “Chapter 11<\/a>“.<\/p>

Base Rent:<\/strong>\u00a0A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease. See also “Escalation Clause<\/a>“, “Operating Expense Escalation<\/a>” and “Percentage Lease<\/a>“.<\/p>

Base Year:<\/strong>\u00a0Actual taxes and operating expenses for a specified base year, most often the year in which the lease commences. Once the base year expenses are known, the lease essentially becomes a\u00a0dollar stop<\/a>\u00a0lease.<\/p>

Below-grade:<\/strong>\u00a0Any structure or a portion of a structure located underground or below the surface grade of the surrounding land.<\/p>

Building Classifications:<\/strong>\u00a0Building classifications in most markets refer to Class “A”, “B”, “C” and sometimes “D” properties. While the rating assigned to a particular building is very subjective, Class “A” properties are typically newer buildings with superior construction and finish in excellent locations with easy access, attractive to credit tenants, and which offer a multitude of amenities such as on-site management or covered parking. These buildings, of course, command the highest rental rates in their sub-market. As the “Class” of the building decreases (i.e. Class “B”, “C” or “D”) one component or another such as age, location or construction of the building becomes less desirable. Note that a Class “A” building in one sub-market might rank lower if it were located in a distinctly different sub-market just a few miles away containing a higher end product.<\/p>

Building Code:<\/strong>\u00a0The various laws set forth by the ruling municipality as to the end use of a certain piece of property and that dictate the criteria for design, materials and type of improvements allowed.<\/p>

Building or “Core” Factor:<\/strong>\u00a0Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable\/Usable (R\/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage. See also “Rentable\/Usable Ratio<\/a>“.<\/p>

Building Standard:<\/strong>\u00a0A list of construction materials and finishes that represent what the\u00a0Tenant Improvement (Finish) Allowance<\/a>\/Work Letter<\/a>\u00a0is designed to cover while also serving to establish the landlord’s minimum quality standards with respect to tenant finish improvements within the building. Examples of standard building items are: type and style of doors, lineal feet of partitions, quantity of lights, quality of floor covering, etc.<\/p>

Building Standard Plus Allowance:<\/strong>\u00a0The landlord lists, in detail, the building standard materials and costs necessary to make the premises suitable for occupancy. A negotiated allowance is then provided for the tenant to customize or upgrade materials. See also “Workletter<\/a>“.<\/p>

Build-out:<\/strong>\u00a0The space improvements put in place per the tenant’s specifications. Takes into consideration the amount of Tenant Finish Allowance provided for in the lease agreement. See also “Tenant Improvement Allowance<\/a>“<\/p>

Build-To-Suit:<\/strong>\u00a0An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant\u2019s specifications.<\/p>

Bullet Loan:<\/strong>\u00a0Any short-term, generally five to seven years, financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the\u00a0balloon payment<\/a>obligation. Essentially, should the refinancing not be available, often due to the property not performing as anticipated, the borrower is “shot” and the property is subject to foreclosure. An example of this is when a developer borrows to cover the costs of construction and carry-costs for a new building with the expectation that it would be replaced by long-term (or “permanent”) financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Capital Expenses:<\/strong>\u00a0This type of expense is most often defined by reference to generally accepted accounting principles (GAAP), but GAAP does not provide definitive guidance on all possible expenditures. Accountants will often disagree on whether or not to include certain items.<\/p>

Capitalization:<\/strong>\u00a0A method of determining value of real property by considering net operating income divided by a predetermined annual rate of return. See “Capitalization Rate<\/a>“.<\/p>

Capitalization Rate:<\/strong>\u00a0The rate that is considered a reasonable return on investment (on the basis of both the investor’s alternative investment possibilities and the risk of the investment). Used to determine and value real property through the capitalization process. Also called “free and clear return”. See “Capitalization<\/a>“.<\/p>

Carrying Charges:<\/strong>\u00a0Costs incidental to property ownership, other than interest (i.e. taxes, insurance costs and maintenance expenses), that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy.<\/p>

Certificate of Occupancy:<\/strong>\u00a0A document presented by a local government agency or building department certifying that a building and\/or the leased premises (tenant’s space), has been satisfactorily inspected and is\/are in a condition suitable for occupancy.<\/p>

Chapter 7:<\/strong>\u00a0That portion of the Federal Bankruptcy code that deals with business liquidations. Chapter 11 is that part of the Federal Bankruptcy code that deals with business reorganizations.<\/p>

Chapter 11:<\/strong>\u00a0That portion of the Federal Bankruptcy code that deals with business reorganizations. Chapter 7 is that part of the Federal Bankruptcy code that deals with business liquidations.<\/p>

Clear-Span Facility:<\/strong>\u00a0A building, most often a warehouse or parking garage, with vertical columns on the outside edges of the structure and a clear span between columns.<\/p>

Circulation Factor:<\/strong>\u00a0Interior space required for internal office circulation not accounted for in the Net Square Footage. Based upon our experience, we use a Circulation Factor of 1.35 x the Net Square Footage for office and fixed drywall areas and a Circulation Factor of 1.45 x the Net Square Footage for open area workstations. See also “Net Square Footage<\/a>\u00a0and “Usable Square Footage<\/a>.<\/p>

Common Area:<\/strong>\u00a0There are two components of the term “common area”. If referred to in association with the\u00a0Rentable\/Usable<\/a>\u00a0or Load Factor calculation, the common areas are those areas within a building that are available for common use by all tenants or groups of tenants and their invitees (i.e. lobbies, corridors, restrooms, etc.). On the other hand, the cost of maintaining parking facilities, malls, sidewalks, landscaped areas, public toilets, truck and service facilities, and the like are included in the term “common area” when calculating the tenant’s\u00a0pro-rata share<\/a>\u00a0of building operating expenses.<\/p>

Common Area Maintenance (CAM):<\/strong>\u00a0This is the amount of Additional Rent charged to the tenant, in addition to the\u00a0Base Rent<\/a>, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc. Most often, this does not include any capital improvements (see “Capital Expenses<\/a>“) that are made to the property.<\/p>

Comparables:<\/strong>\u00a0Lease rates and terms of properties similar in size, construction quality, age, use, and typically located within the same sub-market and used as comparison properties to determine the fair market lease rate for another property with similar characteristics.<\/p>

Concessions:<\/strong>\u00a0Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses, cabling expenses or other monies expended to influence or persuade the tenant to sign a lease.<\/p>

Condemnation:<\/strong>\u00a0The process of taking private property, without the consent of the owner, by a governmental agency for public use through the power of eminent domain. See also “Eminent Domain<\/a>“.<\/p>

Construction Management:<\/strong>\u00a0The actual construction process is overseen by a qualified construction manager who ensures that the various stages of the construction process are completed in a timely and seamless fashion, from getting the construction permit to completion of the construction to the final walk-through of the completed leased premises with the tenant.<\/p>

Consumer Price Index (“CPI”):<\/strong>\u00a0Measures inflation in relation to the change in the price of a fixed market basket of goods and services purchased by a specified population during a “base” period of time. It is not a true “cost of living” factor and bears little direct relation to actual costs of building operation or the value of real estate. The CPI is commonly used to increase the base rental periodically as a means of protecting the landlord’s rental stream against inflation or to provide a cushion for operating expense increases for a landlord unwilling to undertake the record keeping necessary for operating expense escalations.<\/p>

Contiguous Space:<\/strong>\u00a0(1) Multiple suites\/spaces within the same building and on the same floor which can be combined and rented to a single tenant. (2) A block of space located on multiple adjoining floors in a building (i.e., a tenant leases floors 6 through 12 in a building).<\/p>

Contract Documents:<\/strong>\u00a0The complete set of design plans and specifications for the construction of a building or of a building\u2019s interior improvements. Working Drawings specify for the contractor the precise manner in which a project is to be constructed. See also “Specifications<\/a>” and “Working Drawings<\/a>“.<\/p>

Conveyance:<\/strong>\u00a0Most commonly refers to the transfer of title to property between parties by deed. The term may also include most of the instruments by which an interest in real estate is created, mortgaged or assigned.<\/p>

Core Factor:<\/strong>\u00a0Represents the percentage of Net Rentable Square Feet devoted to the building\u2019s common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable\/Usable (R\/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage.”<\/p>

Cost Approach:<\/strong>\u00a0A method of appraising real property whereby the replacement cost of a structure is calculated using current costs of construction.<\/p>

Covenant:<\/strong>\u00a0A written agreement inserted into deeds or other legal instruments stipulating performance or non-performance of certain acts or, uses or non-use of a property and\/or land.<\/p>

Covenant of Quiet Enjoyment:<\/strong>\u00a0The old “quiet enjoyment” paragraph, now more commonly referred to as “Warranty of Possession”, had nothing to do with noise in and around the leased premises. It provides a warranty by Landlord that it has the legal ability to convey the possession of the premises to Tenant; the Landlord does not warrant that he owns the land. This is the essence of the landlord’s agreement and the tenant’s obligation to pay rent. This means that if the landlord breaches this warranty, it constitutes an actual or constructive eviction.<\/p>

Cumulative Discount Rate:<\/strong>\u00a0The interest rate used in finding present values that when applied to the rental rate takes into account all landlord lease concessions and then expressed as a percentage of base rent.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Dedicate:<\/strong>\u00a0To appropriate private property to public ownership for a public use.<\/p>

Deed:<\/strong>\u00a0A legal instrument transferring title to real property from the seller to the buyer upon the sale of such property.<\/p>

Deed In Lieu Of Foreclosure:<\/strong>\u00a0A deed given by an owner\/borrower to a lender to satisfy a mortgage debt and avoid foreclosure. See also “Foreclosure<\/a>“.<\/p>

Deed Of Trust:<\/strong>\u00a0An instrument used in many states in place of a mortgage by which real property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), to secure repayment of a debt.<\/p>

Default:<\/strong>\u00a0The general failure to perform a legal or contractual duty or to discharge an obligation when due. Some specific examples are: 1) Failure to make a payment of rent when due. 2) The breach or failure to perform any of the terms of a lease agreement.<\/p>

Deficiency Judgment:<\/strong>\u00a0Imposition of personal liability on a borrower for the unpaid balance of mortgage debt after a foreclosure has failed to yield the full amount of the debt.<\/p>

Demising Walls:<\/strong>\u00a0The partition wall that separates one tenant\u2019s space from another or from the building\u2019s common area such as a public corridor.<\/p>

Design\/Build:<\/strong>\u00a0A system in which a single entity is responsible for both the design and construction. The term can apply to an entire facility or to individual components of the construction to be performed by a subcontractor; also referred to as \u201cdesign\/construct\u201d.<\/p>

Depreciation:<\/strong>\u00a0Spreading out the cost of a capital asset over its estimated useful life or a decrease in the usefulness, and therefore value, of real property improvements or other assets caused by deterioration or obsolescence.<\/p>

Distraint:<\/strong>\u00a0The act of seizing (legally or illegally) personal property based on the right and interest which a landlord has in the property of a tenant in default.<\/p>

Dollar Stop:<\/strong>\u00a0An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its\u00a0prorated share<\/a>\u00a0of increases. May be applied to specific expenses (e.g., property taxes or insurance).<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Earnest Money:<\/strong>\u00a0The monetary advance by a buyer of part of the purchase price to indicate the intention and ability of the buyer to carry out the contract.<\/p>

Easement:<\/strong>\u00a0A right of use over the property of another created by grant, reservation, agreement, prescription or necessary implication. It is either for the benefit of adjoining land (\u201cappurtenant\u201d), such as the right to cross A to get to B., or for the benefit of a specific individual (\u201cin gross\u201d), such as a public utility easement.<\/p>

Economic Feasibility:<\/strong>\u00a0A building or project\u2019s feasibility in terms of costs and revenue, with excess revenue establishing the degree of viability.<\/p>

Economic Rent:<\/strong>\u00a0The market rental value of a property at a given point in time, even though the actual rent may be different.<\/p>

Effective Rent:<\/strong>\u00a0The actual rental rate to be achieved by the landlord after deducting the value of concessions from the base rental rate paid by a tenant, usually expressed as an average rate over the term of the lease.<\/p>

Efficiency Factor:<\/strong>\u00a0Represents the percentage of Net Rentable Square Feet devoted to the building\u2019s common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Core Factor or Rentable\/Usable (R\/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage.<\/p>

Eminent Domain:<\/strong>\u00a0A power of the state, municipalities, and private persons or corporations authorized to exercise functions of public character to acquire private property for public use by condemnation, in return for just compensation. See also \u201cCondemnation<\/a>\u201d.<\/p>

Encroachment:<\/strong>\u00a0The intrusion of a structure which extends, without permission, over a property line, easement boundary or building setback line.<\/p>

Encumbrance:<\/strong>\u00a0Any right to, or interest in, real property held by someone other than the owner, but which will not prevent the transfer of fee title (i.e. a claim, lien, charge or liability attached to and binding real property)..<\/p>

Environmental Impact Statement:<\/strong>\u00a0Documents which are required by federal and state laws to accompany proposals for major projects and programs that will likely have an impact on the surrounding environment.<\/p>

Equity:<\/strong>\u00a0The fair market value of an asset less any outstanding indebtedness or other encumbrances.<\/p>

Escalation Clause:<\/strong>\u00a0A clause in a lease which provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes, operating costs, etc. This may be accomplished by several means such as fixed periodic increases, increases tied to the Consumer Price Index or adjustments based on changes in expenses paid by the landlord in relation to a dollar stop or base year reference.<\/p>

Estoppel Certificate:<\/strong>\u00a0A signed statement certifying that certain statements of fact are correct as of the date of the statement and can be relied upon by a third party, including a prospective lender or purchaser. In the context of a lease, a statement by a tenant identifying that the lease is in effect and certifying that no rent has been prepaid and that there are no known outstanding defaults by the landlord (except those specified).<\/p>

Escrow Agreement:<\/strong>\u00a0A written agreement made between the parties to a contract and an escrow agent. The escrow agreement sets forth the basic obligations of the parties, describes the monies (or other things of value) to be deposited in escrow, and instructs the escrow agent concerning the disposition of the monies deposited.<\/p>

Exclusive Agency Listing:<\/strong>\u00a0A written agreement between a real estate broker and a property owner in which the owner promises to pay a fee or commission to the broker if specified real property is leased during the listing period. The broker need not be the procuring cause of the lease.<\/p>

Expense Stop:<\/strong>\u00a0An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. May be applied to specific expenses (e.g., property taxes or insurance).<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Face Rental Rate:<\/strong>\u00a0The \u201casking\u201d rental rate published by the landlord.<\/p>

Fair Market Value:<\/strong>\u00a0The sale price at which a property would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Also known as FMV.<\/p>

Finance Charge:<\/strong>\u00a0The amount paid for the privilege deferring payment of goods or services purchased, including any charges payable by the purchaser as a condition of the loan.<\/p>

First Generation Space:<\/strong>\u00a0Generally refers to new space that is currently available for lease and has never before been occupied by a tenant. See also “Second Generation Space<\/a>.<\/p>

First Mortgage:<\/strong>\u00a0The senior mortgage which, by reason of its position, has priority over all junior encumbrances. The holder of the first or senior mortgage has a priority right to payment in the event of default.<\/p>

First Refusal Right or Right Of First Refusal (Purchase):<\/strong>\u00a0A lease clause giving a tenant the first opportunity to buy a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept.<\/p>

First Refusal Right or Right Of First Refusal (Adjacent Space):<\/strong>\u00a0A lease clause giving a tenant the first opportunity to lease additional space that might become available in a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept. This right is often restricted to specific areas of the building such as adjacent suites or other suites on the same floor.<\/p>

Fixed Costs:<\/strong>\u00a0Costs, such as rent, which do not fluctuate in proportion to the level of sales or production.<\/p>

Flex Space:<\/strong>\u00a0A building providing its occupants the flexibility of utilizing the space. Usually provides a configuration allowing a flexible amount of office or showroom space in combination with manufacturing, laboratory, warehouse distribution, etc. Typically also provides the flexibility to relocate overhead doors. Generally constructed with little or no common areas, load-bearing floors, loading dock facilities and high ceilings.<\/p>

Floor Area Ratio (FAR):<\/strong>\u00a0The ratio of the gross square footage of a building to the land on which it is situated. Calculated by dividing the total square footage in the building by the square footage of land area.<\/p>

Force Majeure:<\/strong>\u00a0A force that cannot be controlled by the parties to a contract and prevents said parties from complying with the provisions of the contract. This includes acts of God such as a flood or a hurricane or, acts of man such as a strike, fire or war.<\/p>

Foreclosure:<\/strong>\u00a0A procedure by which the mortgagee (\u201clender\u201d) either takes title to or forces the sale of the mortgagor\u2019s (\u201cborrower\u201d) property in satisfaction of a debt. See also “Deed In Lieu Of Foreclosure<\/a>“.<\/p>

Full Recourse:<\/strong>\u00a0A loan on which an endorser or guarantor is liable in the event of default by the borrower.<\/p>

Full Service Rent:<\/strong>\u00a0An all-inclusive rental rate that includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increase in operating expenses over the base year amount. See also “Pass Throughs<\/a>“.<\/p>

Future Proposed Space:<\/strong>\u00a0Space in a proposed commercial development which is not yet under construction or where no construction start date has been set. Future Proposed projects include all those projects waiting for a lead tenant, financing, zoning, approvals or any other event necessary to begin construction. Also may refer to the future phases of a multi-phase project not yet built.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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General Contractor:<\/strong>\u00a0The prime contractor who contracts for the construction of an entire building or project, rather than just a portion of the work. The general contractor hires subcontractors, (e.g., plumbing, electrical, etc.), coordinates all work, and is responsible for payment to subcontractors.<\/p>

General Partner:<\/strong>\u00a0A member of a partnership who has authority to bind the partnership. A general partner also shares in the profits and losses of the partnership. See also \u201cLimited Partnership<\/a>\u201d.<\/p>

Graduated Lease:<\/strong>\u00a0A lease, generally long term in nature, which provides that the rent will vary depending upon future contingencies, such as a periodic appraisal, the tenant\u2019s gross income or simply the passage of time.<\/p>

Grant:<\/strong>\u00a0To bestow or transfer an interest in real property by deed or other instrument; either the fee or a lesser interest, such as an easement.<\/p>

Grantee:<\/strong>\u00a0One to whom a grant is made.<\/p>

Grantor:<\/strong>\u00a0The person making the grant.<\/p>

Gross Absorption:<\/strong>\u00a0A measure of the total square feet leased over a specified period of time with no consideration given to space vacated in the same geographic area during the same time period. See also \u201cNet Absorption<\/a>\u201d.<\/p>

Gross Building Area:<\/strong>\u00a0The total floor area of the building measuring from the outer surface of exterior walls and windows and including all vertical penetrations (e.g. elevator shafts, etc.) and basement space.<\/p>

Gross Lease:<\/strong>\u00a0A lease in which the tenant pays a flat sum for rent out of which the landlord must pay all expenses such as taxes, insurance, maintenance, utilities, etc.<\/p>

Ground Rent:<\/strong>\u00a0Rent paid to the owner for use of land, normally on which to build a building. Generally, the arrangement is that of a long-term lease (e.g. 99 years) with the lessor retaining title to the land.<\/p>

Guarantor:<\/strong>\u00a0One who makes a guaranty. See also \u201cGuaranty<\/a>\u201d.<\/p>

Guaranty:<\/strong>\u00a0Agreement whereby the guarantor undertakes collaterally to assure satisfaction of the debt of another or perform the obligation of another if and when the debtor fails to do so. Differs from a surety agreement in that there is a separate and distinct contract rather than a joint undertaking with the principal. See also “Guarantor<\/a>“.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Hard Cost:<\/strong>\u00a0The cost of actually constructing the improvements (i.e. construction costs). See also \u201cSoft Cost<\/a>\u201d.<\/p>

Highest and Best Use:<\/strong>\u00a0The use of land or buildings which will bring the greatest economic return over a given time which is physically possible, appropriately supported, financially feasible.<\/p>

High Rise:<\/strong>\u00a0In the Central Business District, this could mean a building higher than 25 stories above ground level but in suburban sub-markets, it generally refers to buildings higher than 7 or 8 stories.<\/p>

Hold Over Tenant:<\/strong>\u00a0A tenant retaining possession of the leased premises after the expiration of a lease.<\/p>

HVAC:<\/strong>\u00a0The acronym for \u201cHeating, Ventilating and Air-Conditioning\u201d.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Improvements:<\/strong>\u00a0In the context of leasing, the term typically refers to the improvements made to or inside a building but may include any permanent structure or other development, such as a street, sidewalks, utilities, etc. See also \u201cLeasehold Improvements\u201d. See also \u201cLeasehold Improvements<\/a>\u201d and “Tenant Improvements<\/a>“.<\/p>

Indirect Costs:<\/strong>\u00a0Development costs, other than material and labor costs which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.<\/p>

Inventory:<\/strong>\u00a0The total amount of rentable square feet of existing and any forthcoming space (whether it be a tenant vacating space or new buildings coming on the market), in a given category, for example, all warehouse space in a specified submarket. Inventory refers to all space within a certain proscribed market without regard to its availability or condition, and categories can include all types of leased space such as office, flex, retail and warehouse space.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Judgment:<\/strong>\u00a0The final decision of a court resolving a dispute and determining the rights and obligations of the parties. Money judgments, when recorded, become a lien on real property of the defendant.<\/p>

Judgment Lien:<\/strong>\u00a0An encumbrance that arises by law when a judgment for the recovery of money attaches to the debtor\u2019s real estate. See also “Lien<\/a>“.<\/p>

Just Compensation:<\/strong>\u00a0Compensation which is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain). The theory is that in order to be \u201cjust\u201d, the property owner should be no richer or poorer than before the taking.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Landlord\u2019s Lien:<\/strong>\u00a0A type of lien that can be created by contract or by operation of law. Some examples are: (1) a contractual landlord\u2019s lien as might be found in a lease agreement; (2) a statutory landlord\u2019s lien; and (3) landlord\u2019s remedy of distress (or right of distraint), which in not truly a lien but has a similar effect. See also “Lien<\/a>“.<\/p>

Landlord\u2019s Lien or Warrant:<\/strong>\u00a0A warrant from a landlord to levy upon a tenant\u2019s personal property (e.g., furniture, etc.) and to sell this property at a public sale to compel payment of the rent or the observance of some other stipulation in the lease.<\/p>

Lease:<\/strong>\u00a0An agreement whereby the owner of real property (i.e., landlord\/lessor) gives the right of possession to another (i.e., tenant\/lessee) for a specified period of time (i.e., term) and for a specified consideration (i.e., rent).<\/p>

Lease Agreement:<\/strong>\u00a0The formal legal document entered into between a Landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights.<\/p>

Lease Commencement Date:<\/strong>\u00a0The date usually constitutes the commencement of the term of the Lease for all purposes, whether or not the tenant has actually taken possession so long as beneficial occupancy is possible. In reality, there could be other agreements, such as an Early Occupancy Agreement, which have an impact on this strict definition.<\/p>

Leasehold Improvements:<\/strong>\u00a0Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by Landlord. See also \u201cTenant Improvements<\/a>\u201d.<\/p>

Legal Description:<\/strong>\u00a0A geographical description identifying a parcel of land by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion thereof that is subject to an easement or reservation.<\/p>

Legal Owner:<\/strong>\u00a0The term is in technical contrast to equitable owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien. See also \u201cLien<\/a>\u201d.<\/p>

Letter Of Attornment:<\/strong>\u00a0A letter from the\u00a0grantor<\/a>\u00a0to a tenant, stating that a property has been sold, and directing rent to be paid to the\u00a0grantee<\/a>\u00a0(buyer). See also \u201cAttorn<\/a>\u201d.<\/p>

Letter Of Credit:<\/strong>\u00a0A commitment by a bank or other person, made at the request of a customer, that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Letters of credit are often used in place of cash deposited with the landlord in satisfying the security deposit provisions of a lease.<\/p>

Letter Of Intent:<\/strong>\u00a0A preliminary agreement stating the proposed terms for a final contract. They can be “binding” or “non-binding”. This is the threshold issue in most litigation concerning letters of intent. The parties should always consult their respective legal counsel before signing any Letter of Intent.<\/p>

Lien:<\/strong>\u00a0A claim or\u00a0encumbrance<\/a>\u00a0against property used to secure a debt, charge or the performance of some act. Includes liens acquired by contract or by operation of law. Note that all liens are encumbrances but all encumbrances are not liens.<\/p>

Lien Waiver (Waiver of Liens):<\/strong>\u00a0A waiver of\u00a0mechanic\u2019s lien<\/a>\u00a0rights, signed by a\u00a0general contractor<\/a>\u00a0and his\u00a0subcontractors<\/a>, that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. May also be required before the owner can receive a draw on a construction loan.<\/p>

Like-Kind Property:<\/strong>\u00a0A term used in an exchange of property held for productive use in a trade or business or for investment. Unless cash is received, the tax consequences of the exchange are postponed pursuant to Section 1031 of the Internal Revenue Code.<\/p>

Limited Partnership:<\/strong>\u00a0A type of partnership, created under state law, comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more special or limited partners who contribute capital and share in profits but who take no part in running the business and incur no liability over and above the amount contributed. See also “General Partner<\/a>“.<\/p>

Listing Agreement:<\/strong>\u00a0An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also \u201cExclusive Listing Agreement<\/a>\u201d.<\/p>

Long Term Lease:<\/strong>\u00a0In most markets, this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option.<\/p>

Lot:<\/strong>\u00a0Generally, one of several contiguous parcels of land making up a fractional part or subdivision of a block, the boundaries of which are shown on recorded maps and \u201cplats<\/a>\u201d.<\/p>

Low Rise:<\/strong>\u00a0A building with fewer than 4 stories above ground level.<\/p>

Lump-Sum Contract:<\/strong>\u00a0A type of construction contract requiring the general contractor to complete a building or project for a fixed cost normally established by competitive bidding. The contractor absorbs any loss or retains any profit.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Maker:<\/strong>\u00a0One who creates or executes a promissory note and promises to pay the note when it becomes due..<\/p>

Market Rent:<\/strong>\u00a0The rental income that a property would command on the open market with a landlord and a tenant ready and willing to consummate a lease in the ordinary course of business; indicated by the rents that landlords were willing to accept and tenants were willing to pay in recent lease transactions for comparable space.<\/p>

Market Study:<\/strong>\u00a0A forecast of future demand for a certain type of real estate project that includes an estimate of the square footage that can be absorbed and the rents that can be charged. Also called \u201cMarketability Study\u201d.<\/p>

Marketable Title:<\/strong>\u00a0A title which is free from encumbrances and could be readily marketed (i.e., sold) to a reasonably intelligent purchaser who is well informed of the facts and willing to accept such title while exercising ordinary business prudence. See also \u201cEncumbrance<\/a>\u201d.<\/p>

Market Value:<\/strong>\u00a0The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale with the buyer and seller each acting prudently and knowledgeably in the ordinary course of trade.<\/p>

Master Lease:<\/strong>\u00a0A primary lease that controls subsequent leases and which may cover more property than subsequent leases. An Executive Suite operation is a good example in that a primary lease is signed with the landlord and then individual offices within the leased premises are leased to other individuals or companies.<\/p>

Mechanic\u2019s Lien:<\/strong>\u00a0A claim created by state statutes for the purpose of securing priority of payment of the price and value of work performed and materials furnished in constructing, repairing or improving a building or other structure, and which attaches to the land as well as to the buildings and improvements thereon.<\/p>

Metes and Bounds:<\/strong>\u00a0The boundary lines of land, with their terminal points and angles, described by listing the compass directions and distances of the boundaries. Originally, metes referred to distance and bounds referred to direction.<\/p>

Mid-Rise:<\/strong>\u00a0A building with between four and eight stories above ground level although in a Central Business District, this might extend to buildings up to twenty-five stories.<\/p>

Mixed-Use:<\/strong>\u00a0Space within a building or project providing for more than one use (i.e., a loft or apartment project with retail, an apartment building with office space, an office building with retail space).<\/p>

Mortgage:<\/strong>\u00a0A written instrument creating an interest in real estate and that provides security for the performance of a duty or the payment of a debt. The borrower (i.e., mortgagor) retains possession and use of the property.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Net Absorption:<\/strong>\u00a0The square feet leased in a specific geographic area over a fixed period-of-time after deducting space vacated in the same area during the same period. See also \u201cGross Absorption<\/a>\u201d.<\/p>

Net Lease:<\/strong>\u00a0A lease in which there is a provision for the tenant to pay, in addition to rent, certain costs associated with the operation of the property. These costs may include property taxes, insurance, repairs, utilities, and maintenance. There are also \u201cNN\u201d (double net) and \u201cNNN\u201d (triple net) leases. The difference between the three is the degree to which the tenant is responsible for operating costs. See also \u201cGross Lease<\/a>\u201d.<\/p>

Net Rentable Area:<\/strong>\u00a0The floor area of a building that remains after the square footage represented by vertical penetrations, such as elevator shafts, etc., has been deducted. Common areas and mechanical rooms are included and there are no deductions made for necessary columns and projections of the building. (This is by the Building Owner and Manager Association – BOMA, Standard).<\/p>

Net Square Footage (S.F.):<\/strong>\u00a0The space required for a function or staff position. Also see “Circulation Factor<\/a>\u00a0and “Usable Square Footage<\/a>“.<\/p>

Non-Compete Clause:<\/strong>\u00a0A clause that can be inserted into a lease specifying that the business of the tenant is exclusive in the property and that no other tenant operating the same or similar type of business can occupy space in the building. This clause benefits service-oriented businesses desiring exclusive access to the building\u2019s population (i.e. travel agent, deli, etc.).<\/p>

Non-Recourse Loan:<\/strong>\u00a0A loan which bars a lender from seeking a deficiency judgment against a borrower in the event of default. The borrower is not personally liable if the value of the collateral for the loan falls below the amount required to repay the loan.<\/p>

Normal Wear and Tear:<\/strong>\u00a0The deterioration or loss in value caused by the tenant\u2019s normal and reasonable use. In many leases the tenant is not responsible for \u201cnormal wear and tear\u201d.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Open Space:<\/strong>\u00a0An unimproved area of land or water, or containing only such improvements as are appropriate to the use and enjoyment of the open area, and dedicated for public or private use or enjoyment or for the use and enjoyment of owners and occupants of land adjoining or neighboring such open spaces.<\/p>

Operating Cost Escalation:<\/strong>\u00a0Although there are many variations of escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings. During the past thirty years, Landlords have developed the custom of separating the base rent for the occupancy of the leased premises from escalation rent. This technique enables the landlord to better ensure that the \u201cnet\u201d rent to be received under the lease will not be reduced by the normal costs of operating and maintaining the property. The landlord\u2019s definition of Operating Expenses is likely to be broad, covering most costs of operation of the building. Most landlords pass through proper and customary charges, but in the hands of an overly aggressive landlord, these clauses can operate to impose obligations which the tenant would not willingly or knowingly accept.<\/p>

Operating Expenses:<\/strong>\u00a0The actual costs associated with operating a property including maintenance, repairs, management, utilities, taxes and insurance. A landlord\u2019s definition of operating expenses is likely to be quite broad, covering most aspects of operating the building.<\/p>

Operating Expense Escalation:<\/strong>\u00a0Although there are many variations of operating expense escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Parking Ratio or Index:<\/strong>\u00a0The intent of this ratio is to provide a uniform method of expressing the amount of parking that is available at a given building. Dividing the total rentable square footage of a building by the building\u2019s total number of parking spaces provides the amount of rentable square feet per each individual parking space (expressed as 1\/xxx or 1 per xxx). Dividing 1000 by the previous result provides the ratio of parking spaces available per each 1000 rentable square feet (expressed as x per 1000).<\/p>

Partial Taking:<\/strong>\u00a0The taking of part (a portion) of an owner\u2019s property under the laws of\u00a0eminent domain<\/a>.<\/p>

Pass Throughs:<\/strong>\u00a0Refers to the tenant’s\u00a0pro rata share<\/a>\u00a0of\u00a0operating expenses<\/a>\u00a0(i.e. taxes, utilities, repairs) paid in addition to the base rent.<\/p>

Percentage Lease:<\/strong>\u00a0Refers to a provision of the lease calling for the landlord to be paid a percentage of the tenant’s gross sales as a component of rent. There is usually a base rent amount to which “percentage” rent is then added. This type of clause is most often found in retail leases.<\/p>

Performance Bond:<\/strong>\u00a0A surety bond posted by a contractor guaranteeing full performance of a contract with the proceeds to be used to complete the contract or compensate for the owner\u2019s loss in the event of nonperformance.<\/p>

Plat (Plat Map):<\/strong>\u00a0Map of a specific area, such as a subdivision, which shows the boundaries of individual parcels of land (e.g. lots) together with streets and easements.<\/p>

Power Of Sale:<\/strong>\u00a0Clause inserted in a mortgage or\u00a0deed of trust<\/a>\u00a0giving the mortgagee (or trustee) the right and power, on\u00a0default<\/a>\u00a0in the payment of the debt secured, to advertise and sell the property at public auction.<\/p>

Precast Concrete:<\/strong>\u00a0Concrete components (i.e. walls) of a building which are fabricated at a plant site and then shipped to the site of construction.<\/p>

Preleased:<\/strong>\u00a0Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of a\u00a0Certificate of Occupancy<\/a>.<\/p>

Prime Space:<\/strong>\u00a0This typically refers to\u00a0first generation<\/a>\u00a0(new) space that is currently available for lease and which has never before been occupied by a tenant.<\/p>

Prime Tenant:<\/strong>\u00a0The major tenant in a building or, the major or\u00a0anchor tenant<\/a>\u00a0in a shopping center serving to attract other, smaller tenants into adjacent space because of the customer traffic generated.<\/p>

Pro rata:<\/strong>\u00a0Proportionately; according to measure, interest, or liability. In the case of a tenant, the proportionate share of expenses for the maintainenance and operation of the property. See also “Common Area<\/a>” and “Operating Expenses<\/a>“.<\/p>

Punch List:<\/strong>\u00a0An itemized list, typically prepared by the architect or construction manager, documenting incomplete or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially complete.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Quitclaim Deed:<\/strong>\u00a0A deed operating as a release that is intended to pass any title, interest, or claim that the\u00a0grantor<\/a>\u00a0may have in the property, but not containing any warranty or professing that such title is valid.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Raw Land:<\/strong>\u00a0Unimproved land that remains in its natural state.<\/p>

Raw Space:<\/strong>\u00a0Unimproved “shell space<\/a>” in a building.<\/p>

REO (Real Estate Owned):<\/strong>\u00a0Real estate that has come to be owned by a lender, including real estate taken to satisfy a debt. Includes real estate acquired by lenders through\u00a0foreclosure<\/a>\u00a0or, in settlement of some other obligation.<\/p>

Real Property:<\/strong>\u00a0Land, and generally whatever is erected or affixed to the land, such as buildings, fences, and including light fixtures, plumbing and heating fixtures, or other items which would be personal property if not attached.<\/p>

Recapture:<\/strong>\u00a0(1) When the IRS recovers the tax benefit of a deduction or a credit previously taken by a taxpayer, which is often a factor in foreclosure since there is a forgiveness of debt. (2) As used in leases, a clause giving the lessor a percentage of profits above a fixed amount of rent; or in a percentage lease, a clause granting the landlord a right to terminate the lease if the tenant fails to realize minimum sales.<\/p>

Recourse:<\/strong>\u00a0The right of a lender, in the event of a default by the borrower, to recover against the personal assets of a party who is secondarily liable for the debt (e.g. endorser or guarantor).<\/p>

Rehab:<\/strong>\u00a0An extensive renovation of a building or project which is intended to cure obsolescence of such building or project.<\/p>

Renewal Option:<\/strong>\u00a0A clause giving a tenant the right to extend the term of a lease, usually for a stated period of time and at a rent amount as provided for in the option language.<\/p>

Rent:<\/strong>\u00a0Compensation or fee paid, usually periodically (i.e. monthly rent payments, for the occupancy and use of any rental property, land, buildings, equipment, etc.<\/p>

Rent Commencement Date:<\/strong>\u00a0The date on which a tenant begins paying rent. The dynamics of a marketplace will dictate whether this date coincides with the lease commencement date or if it commences months later (i.e., in a weak market, the tenant may be granted several months free rent). It will never begin before the lease commencement date.<\/p>

Rentable Square Footage:<\/strong>\u00a0Rentable Square Footage equals the Usable Square Footage plus the tenant\u2019s pro rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. The pro-rata share, often referred to as the Rentable\/Usable (R\/U) Factor, will typically fall in a range of 1.10 to 1.16, depending on the particular building. Typically, a full floor occupancy will have an R\/U Factor of 1.10 while a partial floor occupancy will have an R\/U Factor of 1.12 to 1.16 times the Usable Area.<\/p>

Rentable\/Usable Ratio:<\/strong>\u00a0That number obtained when the Total Rentable Area in a building is divided by the Usable Area in the building. The inverse of this ratio describes the proportion of space that an occupant can expect to actually utilize\/physically occupy.<\/p>

Rental Concession:<\/strong>\u00a0Concessions a landlord may offer a tenant in order to secure their tenancy. While rental abatement is one form of a concession, there are many others such as: increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many. See also “Abatement<\/a>“.<\/p>

Rent-Up Period:<\/strong>\u00a0That period of time, following construction of a new building, when tenants are actively being sought and the project is approaching its stabilized occupancy.<\/p>

Representation Agreement:<\/strong>\u00a0An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also \u201cExclusive Listing Agreement<\/a>\u201d.<\/p>

Request for Proposal (\u201cRFP\u201d):<\/strong>\u00a0The formalized Request for Proposal represents a compilation of the many considerations that a tenant might have and should be customized to reflect their specific needs. Just as the building\u2019s standard form lease document represents the landlord\u2019s \u201cwish list\u201d, the RFP serves in that same capacity for the tenant.<\/p>

Right Of First Refusal:<\/strong>\u00a0See \u201cFirst Refusal Right<\/a>\u201d.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Sale-Leaseback:<\/strong>\u00a0An arrangement by which the owner occupant of a property agrees to sell all or part of the property to an investor and then lease it back and continue to occupy space as a tenant. Although the lease technically follows the sale, both will have been agreed to as part of the same transaction.<\/p>

Second Mortgage:<\/strong>\u00a0A mortgage on property that ranks below a first mortgage in priority. Properties may have two, three, or more mortgages, deeds of trust, or land contracts as liens at the same time. Legal sequence priority, indicated by the date of recording, determines the designation first, second, third, etc.<\/p>

Second Generation or Secondary Space:<\/strong>\u00a0Refers to previously occupied space that becomes available for lease, either directly from the landlord or as sublease space. See also “First Generation Space<\/a>.<\/p>

Security Deposit:<\/strong>\u00a0A deposit of money by a tenant to a landlord to secure performance of a lease. This deposit can also take the form of a\u00a0Letter of Credit<\/a>\u00a0or other financial instrument.<\/p>

Seisen (Seizen):<\/strong>\u00a0Possession of real property under claim of freehold estate. This term originally referred to the completion of feudal investiture by which a tenant was admitted into the feud and performed the rights of homage and fealty. Presently it has come to mean possession under a legal right (usually a fee interest). As the old doctrine of corporeal investiture is no longer in force, the delivery of a deed gives seisin in law.<\/p>

Setback:<\/strong>\u00a0The distance from a curb, property line or other reference point, within which building is prohibited.<\/p>

Setback Ordinance:<\/strong>\u00a0Setback requirements are normally provided for by ordinances or building codes. Provisions of a zoning ordinance regulate the distance from the lot line to the point where improvements may be constructed.<\/p>

Shell Space:<\/strong>\u00a0The interior condition of the tenant’s\u00a0usable square footage<\/a>\u00a0when it is without improvements or finishes. While existing improvements and finishes can be removed, thus returning space in an older building to its “shell” condition, the term most commonly refers to the condition of the usable square footage after completion of the building’s “shell” construction but prior to the build out of the tenant’s space. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVAC, electrical or plumbing improvements but not demising walls or interior space partitioning. In a new multi-tenant building, the common area improvements, such as lobbies, restrooms and exit corridors may also be included in the shell construction. With a newly constructed office building, there will often be a distinction between improvements above and below the ceiling grid. In a retail project, all or a portion of the floor slab is often installed along with the tenant improvements so as to better accommodate tenant specific under-floor plumbing requirements.<\/p>

Site Analysis:<\/strong>\u00a0The study of a specific parcel of land which takes into account the surrounding area and is meant to determine its suitability for a specific use or purpose.<\/p>

Site Development:<\/strong>\u00a0The installation of all necessary improvements, (i.e. installment of utilities, grading, etc.), made to a site before a building or project can be constructed upon such site.<\/p>

Site Plan:<\/strong>\u00a0A detailed plan which depicts the location of improvements on a parcel of land which also contains all the information required by the zoning ordinance.<\/p>

Slab:<\/strong>\u00a0The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building or laid slab-on-grade in the case of a non-structural, ground level concrete slab.<\/p>

Soft Cost:<\/strong>\u00a0That portion of an equity investment other than the actual cost of the improvements themselves (i.e. architectural and engineering fees, commissions, etc.) and which may be tax-deductible in the first year. See also \u201cHard Cost<\/a>\u201d.<\/p>

Space Plan:<\/strong>\u00a0A graphic representation of a tenant\u2019s space requirements, showing wall and door locations, room sizes, and sometimes includes furniture layouts. A preliminary space plan will be prepared for a prospective tenant at any number of different properties and this serves as a \u201ctest-fit\u201d to help the tenant determine which property will best meet its requirements. When the tenant has selected a building of choice, a final space plan is prepared which speaks to all of the landlord and tenant objectives and then approved by both parties. It must be sufficiently detailed to allow an accurate estimate of the construction costs. This final space plan will often become an exhibit to any lease negotiated between the parties.<\/p>

Special Assessment:<\/strong>\u00a0Any special charge levied against real property for public improvements (e.g., sidewalks, streets, water and sewer, etc.) that benefit the assessed property.<\/p>

Specific Performance:<\/strong>\u00a0A requirement compelling one of the parties to perform or carry out the provisions of a contract into which he has entered.<\/p>

Speculative Space:<\/strong>\u00a0Any tenant space that has not been leased before the start of construction on a new building. See also “First Generation Space<\/a>“.<\/p>

Step-Up Lease (Graded Lease):<\/strong>\u00a0A lease specifying set increases in rent at set intervals during the term of the lease.<\/p>

Straight Lease (Flat Lease):<\/strong>\u00a0A lease specifying the same, a fixed amount, of rent that is to be paid periodically during the entire term of the lease. This is typically paid out in monthly installments.<\/p>

Strip Center:<\/strong>\u00a0Any shopping area, generally with common parking, comprised of a row of stores but smaller than the neighborhood center anchored by a grocery store.<\/p>

Subcontractor:<\/strong>\u00a0A contractor working under and being paid by the\u00a0general contractor<\/a>. Often a specialist in nature, such as an electrical contractor, cement contractor, etc.<\/p>

Subdivision Plat:<\/strong>\u00a0A detailed drawing which depicts the manner in which a parcel of land has been divided into two or more lots. It contains engineering considerations and other information required by the local authority.<\/p>

Subordination Agreement:<\/strong>\u00a0As used in a lease, the tenant generally accepts the leased premises subject to any recorded mortgage or deed of trust lien and all existing recorded restrictions, and the landlord is often given the power to subordinate the tenant’s interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.<\/p>

Surety:<\/strong>\u00a0One who at the request of another, and for the purpose of securing to him a benefit, voluntarily binds himself to be obligated for the debt or obligation of another. Although the term includes\u00a0guarantor<\/a>\u00a0and the terms are commonly, though mistakenly, used interchangeably, surety differs from guarantor in a variety of respects.<\/p>

Surface Rights:<\/strong>\u00a0A right or easement granted with mineral rights, enabling the possessor of the mineral rights to drill or mine through the surface.<\/p>

Survey:<\/strong>\u00a0The process by which a parcel of land is measured and its boundaries and contents ascertained.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Taking:<\/strong>\u00a0A common synonym for\u00a0condemnation<\/a>\u00a0or any actual or material interference with private property rights but it is not essential that there be physical seizure or appropriation.<\/p>

Tax Base:<\/strong>\u00a0The assessed valuation of all the real property that lies within the jurisdiction of a taxing authority, which is then multiplied by the tax rate or mill levy to determine the amount of tax due.<\/p>

Tax Lien:<\/strong>\u00a0A statutory lien, existing in favor of the state or municipality, for nonpayment of property taxes which attaches only to the property upon which the taxes are unpaid.<\/p>

Tax roll:<\/strong>\u00a0A list or record containing the descriptions of all land parcels located within the county, the names of the owners or those receiving the tax bill, assessed values and tax amounts.<\/p>

Tenant (Lessee):<\/strong>\u00a0One who rents real estate from another and holds an estate by virtue of a lease.<\/p>

Tenant At Will:<\/strong>\u00a0One who holds possession of premises by permission of the owner or landlord, the characteristics of which are an uncertain duration (i.e. without a fixed term) and the right of either party to terminate on proper notice.<\/p>

Tenant Improvements:<\/strong>\u00a0Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord. See also \u201cLeasehold Improvements<\/a>\u201d, \u201cWorkletter<\/a>\u201d.<\/p>

Tenant Improvement (\u201cTI\u201d) Allowance or Work Letter:<\/strong>\u00a0Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount. Also commonly referred to as “Tenant Finish Allowance.<\/p>

\u201cTime Is Of The Essence\u201d:<\/strong>\u00a0Means that performance by one party within the period specified in the contract is essential to require performance by the other party.<\/p>

Title:<\/strong>\u00a0The means whereby the owner of lands has the just and full possession of\u00a0real property<\/a>.<\/p>

Title Insurance:<\/strong>\u00a0A policy issued by a title company after searching the title and which insures against loss resulting from defects of title to a specifically described parcel of real property, or from the enforcement of\u00a0liens<\/a>existing against it at the time the title policy is issued.<\/p>

Title Search:<\/strong>\u00a0A review of all recorded documents affecting a specific piece of property to determine the present condition of title.<\/p>

Total Inventory:<\/strong>\u00a0The total amount of square footage of a type of property (i.e. office, industrial, retail, etc.) within a geographical area, whether vacant or occupied. This normally includes owner-occupied space.<\/p>

Trade Fixtures:<\/strong>\u00a0Personal property that is attached to a structure (i.e. the walls of the leased premises) that are used in the business. Since this property is part of the business and not deemed to be part of the real estate, it is typically removable upon lease termination.<\/p>

Triple Net (NNN) Rent:<\/strong>\u00a0A lease in which the tenant pays, in addition to rent, certain costs associated with a leased property, which may include property taxes, insurance premiums, repairs, utilities, and maintenances. There are also \u201cNet Leases<\/a>” and \u201cNN\u201d (double net) leases, depending upon the degree to which the tenant is responsible for operating costs. See also \u201cGross Lease<\/a>\u201d.<\/p>

Turn Key Project:<\/strong>\u00a0The construction of a project in which a third party, usually a developer or general contractor, is responsible for the total completion of a building (including construction and interior design) or, the construction of\u00a0tenant improvements<\/a>\u00a0to the customized requirements and specifications of a future owner or tenant.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Under Construction:<\/strong>\u00a0When construction has started but the\u00a0Certificate of Occupancy<\/a>\u00a0has not yet been issued.<\/p>

Under Contract:<\/strong>\u00a0A property for which the seller has accepted the buyer\u2019s offer to purchase is referred to as being \u201cunder contract\u201d. Generally, the prospective buyer is given a certain period of time in which to perform its due diligence and finalize financing arrangements. During the period of time the property is under contract, the seller is precluded from entertaining offers from other buyers.<\/p>

Unencumbered:<\/strong>\u00a0Describes title to property that is free of liens and any other encumbrances. Free and clear. See also “Encumbrances<\/a>.<\/p>

Unimproved Land:<\/strong>\u00a0Most commonly refers to land without improvements or buildings but can also mean land in its natural state. See also, \u201cRaw Land<\/a>\u201d.<\/p>

Use:<\/strong>\u00a0The specific purpose for which a parcel of land or a building is intended to be used or for which it has been designed or arranged.<\/p>

Usable Square Footage:<\/strong>\u00a0Usable Square Footage is the area contained within the demising walls of the tenant space. Total Usable Square Footage equals the Net Square Footage x the Circulation Factor. Also see:Circulation Factor<\/a>\u00a0and\u00a0Net Square Footage<\/a>.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Vacancy Factor:<\/strong>\u00a0The amount of gross revenue that pro forma income statements anticipate will be lost because of vacancies, often expressed as a percentage of the total rentable square footage available in a building or project.<\/p>

Vacancy Rate:<\/strong>\u00a0The total amount of available space compared to the total inventory of space and expressed as a percentage. This is calculated by multiplying the vacant space times 100 and then dividing it by the total inventory.<\/p>

Vacant Space:<\/strong>\u00a0Refers to existing tenant space currently being marketed for lease. This excludes space available for sublease.<\/p>

Variance:<\/strong>\u00a0Refers to permission that allows a property owner to depart from the literal requirements of a\u00a0zoning ordinance<\/a>\u00a0that, because of special circumstances, cause a unique hardship. Included would be such things as the particular physical surroundings, shape or topographical condition of the property and when compliance would result in a practical difficulty and would deprive the owner of the reasonable use of the property.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Warranty of Possession:<\/strong>\u00a0This is the old “quiet enjoyment” paragraph, which of course had nothing to do with noise in and around the leased premises. It provides a warranty by Landlord that it has the legal ability to convey the possession of the premises to Tenant; the Landlord does not warrant that he owns the land. This is the essence of the landlord\u2019s agreement and the tenant\u2019s obligation to pay rent. This means that if the landlord breaches this warranty, it constitutes an actual or constructive eviction.<\/p>

Weighted Average Rental Rates:<\/strong>\u00a0The mean proportion or medial sum made out of the unequal rental rates in two or more buildings within a market area.<\/p>

Workletter:<\/strong>\u00a0A list of the building standard items that the landlord will contribute as part of the tenant improvements. Examples of the building standard items typically identified include: style and type of doors, lineal feet of partitions, type and quantity of lights, quality of floor coverings, number of telephone and electrical outlets, etc. The Workletter often carries a dollar value but is contrasted with a fixed dollar tenant improvement allowance that can be used at the tenant\u2019s discretion. See also\u00a0Leasehold Improvements<\/a>\u00a0and “Tenant Improvements<\/a>.<\/p>

Working Drawings:<\/strong>\u00a0The set of plans for a building or project that comprise the\u00a0contract documents<\/a>\u00a0that indicate the precise manner in which a project is to be built. This set of plans includes a set of specifications for the building or project.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Zoning:<\/strong>\u00a0The division of a city or town into zones and the application of regulations having to do with the structural, architectural design and intended use of buildings within such designated zone (i.e. a tenant needing manufacturing space would look for a building located within an area zoned for manufacturing).<\/p>

Zoning Ordinance:<\/strong>\u00a0Refers to the set of laws and regulations, generally, at the city or county level, controlling the use of land and construction of improvements in a given area or zone.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Glossary of Real Estate Terms A Abatement:\u00a0Often and commonly referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease. Above Building Standard:\u00a0Upgraded finishes and specialized designs necessary to accommodate a tenant\u2019s requirements. Absorption:\u00a0The rate, expressed as a percentage, at which available space in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"class_list":["post-351","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/pages\/351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/comments?post=351"}],"version-history":[{"count":10,"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/pages\/351\/revisions"}],"predecessor-version":[{"id":573,"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/pages\/351\/revisions\/573"}],"wp:attachment":[{"href":"https:\/\/www.varshabi.com\/hennessey\/wp-json\/wp\/v2\/media?parent=351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}