Definitions Flashcards
1
Q
Estoppel
A
Principal does not stop an individual from representing their interests
2
Q
Fee Simple
A
owns property unconditionally and passed down in family
3
Q
Ownership in Severalty
A
Title in only 1 person’s name
4
Q
Joint Tenancy
A
co-ownership by 2+ people with the “right of survivorship”
5
Q
Tenancy in Common
A
co-ownership by 2+ people without the “right of survivorship”
6
Q
Tenancy by Entirety
A
co-ownership limited to married couples
7
Q
Leaseholds Estates: right of possession but not the title
A
- Estate for years: fixed period of time. when lease term ends, rental agreement is terminated. Most residential leases are this
- periodic estate: automatically renews itself, unless otherwise stated before lease ends.
- estate at will: unknown period of time. open-ended estate
8
Q
Easement in Gross
A
right of use in the land of another without requirement of the holder of the right own that land
- AKA: commercial easement in gross
- commonly used by utility companies
9
Q
Conveyance
A
Transfer of title of land from one to another
10
Q
Abstract of Title
A
a summary of all links in chain of title
11
Q
Proration
A
settlement costs between seller and buyer.
ex: RE taxes, fuel, sewage, survey, water, rent, security deposits
12
Q
Mortgagor
A
Borrower
13
Q
Mortgagee
A
Lender
14
Q
Gross Lease
A
Landlord pays all expenses (residential lease)
15
Q
Net Lease
A
Tenant pays some or all expenses.
ex: Triple Net Lease
- Commonly Commercial leases: large company→Triple Net Lease
16
Q
Percentage Lease
A
rent based on volume or percentage of sales. Used in retail spaces.
17
Q
Ground Lease (AKA: Land Lease)
A
Long term lease on unimproved land.
-Used for construction purposes
18
Q
Loft Lease
A
- Open unfinished space
- rental of floor space - not divided into rooms
19
Q
Graduated Lease
A
- Rent changes over the lease term
- Stair step fashion
20
Q
Usable Square Footage
A
Area actually occupied by commercial tenant
21
Q
Rentable Square Footage
A
Total area of space, some that cannot be used.
22
Q
Loss Factor
A
Difference between Rentable Square Footage and Usable Square Footage
23
Q
Net Operating Income (NOI)
A
Gross Income minus operating expenses
24
Q
Capitalization Rate
A
Annual return investor expects from commercial property
25
Portfolio Income
Interest, Annuities, Dividends, Royalties
26
Straight Line Depreciation
- Residential ↓ 27.5 years
| - Commercial ↓ 39 years
27
Capital Gain
Profit realized from sale of any capital investment in real estate
28
Real Property
land and fixtures permanently attached
29
Personal Property
Not permanently fixed property
30
Uni-Lateral Contract
one-sided agreement
| example: open listing contract
31
Novation
Replacing an obligation with a new obligation
32
Reformation
a doctrine that permits the court to rewrite a contract
33
Negative Amortization
monthly payment is less than full interest and does not pay any principal. The amount you owe will still go up because you are not paying enough to cover the interest
34
Buydown (Discount Points)
allows borrower to obtain a lower interest rate by paying additional points to the lender
35
Zoning Board of Appeals
- Maintain essential character of neighborhoods
- Interprets zoning ordinances
- responsible for granting variances
36
Eminent Domain
The Right to take land for public use by the government. The property owner must receive a fair compensation.
37
Condemnation
the Act of taking land
38
Market Value
Probable price
39
Market Price
Actual selling price
40
Direct Costs
Labor and Materials
41
Municipal's Engineers Office
Estimate cost of paving, sewers, and sidewalks
42
Actual Cash Value
Replacement cost minus depreciation
43
Replacement Cost
Replacement cost in total for new item
44
Escalation Clause
Allows landlord to raise rent during lease term
45
Pro-forma
Accounting statement that forecasts income and expenses
| -used by investors to estimate rate of return for a property
46
Tax Shelters
Reducing payments to tax collecting entities
47
Condominiums
Real Property
- receive deed at closing
- considered freehold estate
48
Cooperatives (Co-Op)
| Board of Directors
NOT Real Property
- receives preprietary lease at closing - personal property
- considered leasehold estate
49
Right of First Refusal
Opportunity to buy condominium when it goes up for sale
50
Attorney General
Prosecutes criminal actions for violations of real property law
51
Vicarious Liability
A party is held accountable for a third party's mistake
| EX: Broker and salesperson
52
1 Acre
43,560 Sq. Feet
53
1 Hectare
3.47 Acres
54
Exclusive Right to Sell Agreement
The seller must work exclusively with the broker to sell their property. The broker is entitled to a commission even if the seller finds a buyer themselves.
55
Exclusive Agency Agreement
The seller must work exclusively with the broker to sell their property, BUT the seller does not have to pay the broker commission if they find a buyer themselves
56
Open Listing Contract
The seller is allowed to work with any broker who brings them a buyer. Only the broker who brings a buyer is entitled to commission. (unilateral contract)
57
Net Listing
method of establishing the listing broker's commission as all money above a specified net amount to the seller. Illegal in New York
58
Easement (right of way)
The right to cross or use another persons property for a specified purpose
59
Easement by Necessity
when a property owner is landlocked and needs to cross and adjacent property to get access to their property
60
Easement by Prescription
Obtained by use of land without the owners permission for a legally prescribed length of time
61
Easement by implication
Arises by implication from the conduct of parties.
Ex: If a landowner sells mineral rights to a company, that company has an easement by implication to go onto the property to do mining.
62
Encroachments
a building, or part of a building, or obstruction which intrudes upon the property of another.
Ex: A fence that crosses onto the neighbors property line or a tree that has grown over the property line
63
Liens
A claim or charge against the property of another.
64
Usury Laws
Governs the amount of interest that can be charged on a loan.
65
Non-Conforming Use
Pre-existing use of a property that no longer complies with the current zoning regulations. The non-confirming use is "grandfathered" in.
66
Escheat
When the property owner died with no will or heirs, the property reverts to the state
67
Percolation
The movement of water through soil
68
Comparative Market Analysis (CMA)
Determines property value by comparing other properties currently on the market. NOT an appraisal, more an opinion of value.
69
Indirect Costs
Costs that support the project such as engineering fees, attorney fees, etc.
70
Obsolescence
Cause of depreciation due to new inventions, changes in design, etc.
71
Assessed Value
Used to calculate property taxes. A percentage of the market value.
72
Ad Valorem
Property is taxed according to value. In NY, the real property tax is based on the Fair Market Value of real property
73
Assessor
Calculates property taxes
74
Condop
A building that includes condominium and cooperative ownership in the same structure. The building is part condo, part co-op
75
Offering Plan
Developer of a new condominium or co-op building must file an offering plan with the NY Attorney General's office.
76
Prospectus (Red Herring)
The first part of the Attorney Generals review of the offering plan. The attorney general can suggest any changes to the project. Once the attorney general accepts the prospectus, it is known as a black book or offering plan.
77
CPS-1 (Cooperative Policy Statement)
Used by real estate developers to test the market before building a condominium or Co-Op.
- must be filed with attorney general
- statement includes rules on how the development may be advertised. The developer cannot declare a firm price.
- period lasts 120 days from the date of acceptance of the CPS statement by the attorney general, but can extend up to an additional 60 days. developers can advertise and take names of people who are interested but cannot take deposits or sell the properties.
78
Leverage
Use of borrowed capital (mortgage) to increase the potential return of an investment. also known as "other people's money"
79
Adjusted Basis
The original cost or other basis plus certain additions and minus certain deductions such as depreciation and casualty losses
80
Permitted Tax Deductions
Property Taxes
| Mortgage interest
81
Non-Tax Deductible Closing Costs
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Appraisal fees
Notary fees
Preparation costs for the mortgage
Mortgage insurance premiums
VA Funding fees
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82
Operating Statement
used by property managers to project the net operating income for the property. Defines all income and expenses for the property.
83
Stabilized Budget
Forecast of income and expenses projected over a short period of time
84
Capital Reserve Budget
Money set aside by a property owner for long-term capital expenditures to a property. also knows as a replacement reserve.
