Contracts, regulations, compliance, entity structures, zoning, permits, and landlord-tenant law.
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Foundation terms you need to know first (89 terms)
Development costs are all the expenses incurred during the process of acquiring land, designing, constructing, and preparing a real estate project for use or sale, from start to finish.
Base rent is the fixed, minimum rent amount paid by a tenant to a landlord for the use of a property, excluding additional charges like operating expenses, taxes, or utilities.
An absolute auction is a type of real estate auction where the property is sold to the highest bidder, regardless of the price, with no minimum bid or reserve price set by the seller.
The Lease Commencement Date is the official date specified in a lease agreement when the tenant's rights and obligations, including rent payments and property responsibilities, legally begin.
An application fee is a non-refundable charge paid by a prospective tenant to a landlord or property manager to cover the costs associated with processing a rental application, including background and credit checks.
Complex strategies and professional concepts (117 terms)
An Equity-for-Property Swap is an advanced real estate investment strategy where an investor exchanges equity in one or more properties or entities for direct ownership of another property, often to achieve tax deferral, portfolio restructuring, or strategic asset acquisition.
The accounting process of recognizing the estimated cost of an Asset Retirement Obligation (ARO) as a liability and capitalizing a corresponding asset, which is then depreciated over its useful life, reflecting the future costs associated with retiring a long-lived asset.
A legally binding contract that alters the priority of liens on a property, allowing a senior lienholder to voluntarily place their claim in a junior position to another, typically to facilitate new financing or complex transactions.
Unrelated Business Income Tax (UBIT) is a tax levied on the net income of a tax-exempt organization, including certain real estate investment vehicles, derived from a trade or business regularly carried on and not substantially related to its exempt purpose.
Inverse condemnation is a legal action initiated by a private property owner against a government entity to recover "just compensation" for a taking of their property, where the government has not formally exercised its power of eminent domain but has effectively deprived the owner of beneficial use or value.
An appurtenant easement is a right that benefits one parcel of land (the dominant estate) and burdens another adjacent or nearby parcel (the servient estate), typically for access or utility purposes, and runs with the land.
An arm's length transaction is a business deal between two independent, unrelated parties, ensuring fair market value and no undue influence.
Articles of Association (AoA) are a legal document outlining a company's internal management, governance, and the rights and responsibilities of its shareholders or members. They are crucial for structuring real estate investment entities.
An "As-Is Sale" in real estate refers to a property being sold in its current condition, meaning the seller will not make any repairs or improvements, and the buyer accepts all existing defects.
Assessed value is the dollar value assigned to a property by a public tax assessor for the purpose of levying property taxes, typically a percentage of its market value.
The Asset Coverage Ratio (ACR) is a financial metric that assesses a company's or an investor's ability to cover its liabilities with its assets, providing insight into solvency and debt capacity, particularly crucial for real estate investment firms and large portfolios.
Asset misappropriation is the fraudulent theft or misuse of an organization's assets by employees, often involving cash, inventory, or property, and is a significant risk in real estate operations.
Asset protection involves legal strategies and structures designed to safeguard an individual's or entity's wealth from potential claims by creditors, lawsuits, and other liabilities, particularly crucial for real estate investors.
Asset protection through life insurance involves strategically using life insurance policies, particularly those with cash value, to shield wealth from creditors, lawsuits, and estate taxes, enhancing financial security for real estate investors.
An Asset Retirement Obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset, recognized as a liability in financial statements at its fair value, typically the present value of estimated future costs.
Asset revaluation is the process of adjusting the book value of an asset to reflect its current fair market value, typically performed by real estate companies to provide a more accurate representation of their financial position.
Asset segregation is a legal and financial strategy for real estate investors to separate personal assets from investment assets, or to segregate different investment properties from each other, primarily for liability protection and risk management.
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