Real Estate Glossary: 1209 Property Terms and Definition – 2020 Edition

The real estate is prevalent in every inch of this globe. In it, contains an extensive amount of terms and its definitions. Yet, it isn’t often universal. For example, “settlement” in one market could be known as “closing” or even “escrow” in another. And so we have put together some commonly used industry terms within the real estate sector – a little pocketbook glossary for the property world.


  • This glossary is not exhaustive and may not be 100 percent accurate in all jurisdictions. 
  • These definitions are for general purposes only and should not be used for legal purposes.
  • Please consult with your local title company, real estate agent or lender to see if these terms apply in your area.

How to use it:

  1. Please bookmark this page so you can always refer to it swiftly, whenever. 
  2. Click on a letter below to jump to the alphabet of your choice for a quicker search:

Abandonment: The voluntary and permanent cessation of use or enjoyment with no intention to resume or reclaim one’s possession or interest. May pertain to an easement of a property.

Abatement: Often 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: Upgraded finishes and specialized designs necessary to accommodate a tenant’s requirements.

Absorption rate: The rate at which rentable space is filled. Gross absorption is a measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period.

Abstract of title: A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.

Abstract: An abbreviation of the cardinal aspects of all recorded deeds, mortgages, leases and other instruments affecting the title to a particular piece of land.

Abstracter: The person or company engaged in making abstracts.

Abstracting: The process of making and compiling an abstract.

Abutting: The joining, reaching, or touching of adjoining land. Abutting pieces of land have a common boundary.

Accelerated depreciation: A method of calculating for tax purposes the depreciation of income property at a faster rate than would be achieved using the straight-line method.

Acceleration clause: A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interest may be declared to be due and payable at once.

Acceptance: An offeree’s consent to enter into a contract and be bound by the terms of the offer.

Accession: Title to improvements or additions to real property is acquired as a result of the accretion of alluvial deposits along the banks of streams or as a result of the annexation of fixtures.

Accretion: An addition to land through natural causes.

Accrued depreciation: The actual depreciation that has occurred to a property at any given date; the difference between the cost of replacement new (as of the date of the appraisal) and the present appraised value.

Acknowledgment: A declaration made by a person to a notary public or other public official authorized to take acknowledgments that an instrument was executed by him or her as a free and voluntary act.

Acre: A measure of land equal to 43,560 square feet.

Actual eviction: The result of legal action originated by a lessor, by which a defaulted tenant is physically ousted from the rental property pursuant to a court order.

Actual notice: Express information or fact; that which is known; actual knowledge.

Ad valorem: Meaning “according to value,” this is a tax imposed on the value of property that is typically based on the local government’s valuation of the property.

Additional principal payment: A payment by a borrower of more than the scheduled principal amount due to reduce the remaining balance on loan.

Adjustable-rate mortgage: There are two types of conventional loans: the fixed-rate and the adjustable-rate mortgage. In an adjustable-rate mortgage, the interest rate can change over the course of the loan at five, seven, or ten-year intervals.

Adjusted basis: The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.

Adjusted funds from operations (AFFO): A measure of REIT performance or ability to pay dividends used by many analysts with concerns about quality of earnings as measured by funds from operations (FFO). The most common adjustment to FFO is an estimate of certain recurring capital expenditures

Adjustment date: The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment period: The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

Adjustments: Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment.

Administrative fee: Usually stated as a percentage of assets under management or as a fixed annual dollar amount.

Administrator/administratrix: A man/woman appointed by a court to settle the estate of a deceased person when there is no will. Contrast with executor/executrix.

Advances: Payments made by the servicer when the borrower fails to make a payment.

Adviser: A broker, consultant or investment banker who represents an investor in a transaction. Advisers may be paid a retainer and/or a performance fee upon the close of a financing or sales transaction.

Affidavit: Written statement signed and sworn to before some person authorized to take an oath.

Agency: The legal relationship between a principal and an agent. In real estate transactions, usually the seller is the principal, and the broker is the agent.

Agent: A person authorized to act for and under the direction of another person when dealing with third parties. The person who appoints an agent is called the principal.

Aggregation risk: Risk associated with warehousing mortgages during the pooling process for future securitization.

Agreement of sale: A written agreement by which the purchaser agrees to buy certain real estate and the seller agrees to sell, on the terms and conditions set forth in the agreement.

Air lot: A designated airspace over a piece of land. Air lots, like surface property, may be transferred.

Air rights: The right to use the open space above one’s property. It can be sold to build a skywalk or for a utility company to erect power lines.

Alienation clause: A clause in a mortgage that gives the lender the right to call the entire loan balance due if the property is sold; due-on-sale clause.

Alienation: The act of transferring property to another. Alienation may be voluntary, such as by sale, or involuntary, such as through eminent domain.

All-inclusive rate: This is a rate that includes the insurance premium, and at least some part of the cost of the title search, examination and the cost of conducting the closing/settlement.

Alluvion: The actual soil increase resulting from accretion.

Alpha: Alpha is a risk adjusted statistical measure of performance. Alpha takes the volatility (price risk) of a managed portfolio of equities or alternative assets and compares its risk-adjusted performance to a benchmark index.

Alternative or specialty investments: Property types that are not considered conventional institutional-grade real estate investments. Examples include congregate care facilities, self-storage facilities, mobile homes, timber, agriculture and parking lots.

Amendment: A modification to an existing contract, mutually agreed to by all parties. Examples might include a change in the purchase price due to a low appraisal, or a change in the closing date.

Amenities: Non-monetary benefits and satisfaction derived from property ownership, such as a pleasant view, pride in homeownership, etc.

Amortization: This is the process of combining both interest and principal in payments, rather than simply paying off interest at the start. This allows you to build more equity in the home early on.

Amortized loan: A loan in which the principal and interest are payable in monthly or other periodic instalments over the term of the loan.

Amortized Mortgage: A mortgage requiring periodic payments that include both interest and principal. Also see self-amortized loan.

Anchor: The tenant that serves as the predominant draw to a commercial property, usually the largest tenant in a shopping center.

Annual Membership: The amount that is charged annually for having a line of credit available. Often charged regardless of whether or not you use the line.

Annual percentage rate (APR): The actual cost of borrowing money. 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.

Annual Percentage Rate: The annual rate charged for borrowing.

Anticipation: An appraising principle created by the expectation of certain future events causing values to either increase or decrease.

Application Fee: Fees that are paid upon application. Charges for property appraisal and a credit report are usually included in the application fee.

Application: An initial statement of personal and financial information, which is required to approve your loan.

Appraisal: In order to get a loan from a bank to buy a home, you first need to get the home appraised so the bank can be sure they are lending the correct amount of money. The appraiser will determine the value of the home based on an examination of the property it

Appraised Value: An estimate of the present worth.

Appreciation return: The portion of the total return generated by the change in the value of the real estate assets during the current quarter, as measured by both appraisals and sales of assets.

Appreciation: An increase in value or worth of property. Opposite of depreciation.

Appurtenant: Belonging to; incident to; annexed to.

APR: Annual Percentage Rate. The yearly interest percentage of a loan as expressed by the actual rate of interest paid.

Arbitrage: Buying securities in one market and then selling them immediately in another market to make a profit on the price discrepancy.

Arbitration: A means of settling a controversy between two parties through the medium of an impartial third party whose decision on the controversy (if agreed upon) will be final and binding.

As-is condition: The acceptance by the tenant of the existing condition of the premises at the time a lease is consummated, including any physical defects.

Asking (List) Price: The price placed on the property for sale.

Assessed value: This is how much a home is worth according to a public tax assessor who makes that determination in order to figure out how much city or state tax the owner owes.

Assessment: A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.

Assessor: A local government official who determines the value of the property for taxation purposes.

Asset management fee: A fee charged to investors based on the amount invested into real estate assets for the fund or account.

Asset management: A system by which these physical assets are catalogued in a single system of record as a means of minimizing losses and maximizing value for existing equipment.

Asset turnover: Calculated as total revenues for the trailing 12 months divided by the average total assets.

Asset: Any item of value which a person owns.

Assets under management: The current market value of real estate assets for which a manager has investment and asset management responsibilities.

Assignee name: The individual or entity to which the obligations of a lease, mortgage or other contract have been transferred.

Assignee: A person to whom a property right is transferred. For example, an assignee may take over a lease from a tenant who wants to permanently move out before the lease expires. The assignee takes control of the property and assumes all the legal rights and res

Assignment: A transfer of property rights from one person to another, called the assignee.

Assumable mortgage: An existing mortgage that can be taken over by the buyer on the same terms given to the original borrower.

Assumption of mortgage: The transfer of title to the property to a grantee wherein he assumes liability for payment of an existing note secured by a mortgage against the property.

Attachment: Method by which a debtor’s property is placed in the custody of the law and held as security pending outcome of a creditor’s suit.

Attorn: To agree to recognize a new owner of a property and to pay him/her rent.

Attorney’s opinion of title: An instrument written and signed by the attorney who examines the abstracts of title, stating his opinion as to whether a seller may convey good title.

Attorney’s opinion: The written statement of an attorney setting forth what he believes to be the condition of a real estate title.

Attorney-in-fact: The holder of a power of attorney.

Attractive nuisance: Something on a piece of property that attracts children but also endangers their safety. For example, unfenced swimming pools, open pits, farm equipment and abandoned refrigerators have all qualified as attractive nuisances.

Auction: A public sale of the property to the highest bidder.

Average common equity: Calculated by adding the common equity for the five most recent quarters and dividing by five.

Average downtime: Expressed in months, the amount of time expected between the expiration of a lease and the commencement of a replacement lease under current market conditions.

Average free rent: Expressed in months, the rent abatement concession expected to be granted to a tenant as part of a lease incentive under current market conditions.

Average occupancy: The average occupancy rate of each of the preceding 12 months.

Average total assets: Calculated by adding the total assets of a company for the five most recent quarters and dividing by five.


Avulsion: A sudden tearing away of land by the action of natural forces.

Balloon mortgage: A mortgage where the final payment is considerably more significant than the precedent payments. Contrast with amortized mortgage.

Balloon risk: The risk that a borrower will not be able to make a balloon (lump sum) payment at maturity due to a lack of funding.

Balloon, or bullet, loan: A loan with a maturity that is shorter than the amortization period.

Bankrupt: The state of an entity that is unable to repay its debts as they become due.

Bankruptcy: Proceedings under law to relieve a debtor who is unable or unwilling to pay its debts.

Bargain and sale deed: A deed that carries with it no warranties against liens or other encumbrances but that does imply the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.

Base fee: A determinable fee estate that may be inherited.

Base line: One of a set of imaginary lines running east and west and crossing a principal meridian at a definite point. Base lines are used by surveyors for reference in locating and describing land under the rectangular survey system (or government survey method).

Base principal balance: The original mortgage amount adjusted for subsequent funding and principal payments without regard to accrued interest or other unpaid debt.

Base rent: A set amount used as a minimum rent with provisions for increasing the rent over the term of the lease.

Base year: Actual taxes and operating expenses for a specified year, most often the year in which a lease commences.

Basic rate: When referring to title insurance, the basic rate is the rate charged to a consumer who does not qualify for a reduced rate.

Basis point: 1/100 of 1 percent.

Below-grade: Any structure or portion of a structure located underground or below the surface grade of the surrounding land.

Benchmark: A permanent reference mark or point established for use by surveyors when measuring differences in elevation.

Beneficiary: An employee covered by an employee benefit plan.

Bequest: A provision in a will providing for the distribution of personal property.

Beta: Also referred to as “the Beta coefficient,” Beta is a statistical term used by money managers operating in the tradable equities securities market.

Bid: An offer, stated as a price or spread, to buy whole loans or securities.

Bidding: The offering of particular prices for something, especially at an auction.

Bilateral contract: A contract in which each party promises to perform an act in exchange for the other party’s promise to perform.

Bill of sale: A written instrument given to pass title to personal property.

Binder: An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction.

Blanket mortgage: One mortgage on a number of parcels of real property.

Blind pool: A commingled fund accepting investor capital without prior specification of property assets.

Blockbusting: The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry, or prospective entry, of minority persons into the neighborhood.

Bond: A written agreement purchased from a bonding company that guarantees a person will properly carry out a specific act, such as managing funds, showing up in court, providing good title to a piece of real estate or completing a construction project.

Bonus to selling agent (BTSA): Compensation, above and beyond the sales commission, offered to the real estate agent who brings the buyer to the transaction. A BTSA is used to provide an extra incentive for real estate agents to show a particular listing.

Book value: Also referred to as common shareholder’s equity, this is the total shareholder’s equity as of the most recent quarterly balance sheet minus preferred stock and redeemable preferred stock.

Boycotting: Two or more businesses conspire against other businesses to reduce competition.

Branch office: A secondary place of business apart from the principal or main office from which real estate business is conducted.

Breach of contract: Failure, without legal excuse, of one of the parties to a contract to perform according to the contract.

Bridge loan: A loan that bridges the sale of property.

Broker: One who acts as an agent for another in negotiating sales or purchases in return for a fee or commission.

Brokerage: For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.

Budget: The sum of money allocated for a project. The term may also refer to a comprehensive list of revenues and expenses.

Buffer zone: A strip of land that separates one land use from another.

Buildable acres: The area of land that is available to be built on after subtracting for roads, setbacks, anticipated open spaces and areas unsuitable for construction.

Building code: The various laws set forth by the ruling municipality as to the end use of a certain piece of property. They dictate the criteria for design, materials and types of improvements allowed.

Building Line: A line fixed at a certain distance from the front and/or sides of a lot beyond which no structure can project.

Building restrictions: The limitations on the size or type of property improvements established by zoning acts or by deed or lease restrictions. Building restrictions are considered encumbrances and violations render the title unmarketable.

Building standard plus allowance: The 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.

Build-out: 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.

Build-to-suit: A method of leasing property whereby the developer/landlord builds to a tenant’s specifications.

Bundle of rights: Ownership in real property implies a group of rights, such as the right of occupancy, use and enjoyment, the right to sell in whole or in part, the right to control the use, the right to bequeath, the right to lease any etc.

Business plan: A three to five-year blueprint for an organization or individual real estate practitioner.

Buydown: A payment made, often by the seller, to help the buyer qualify for the loan.

Buyer’s agent: This is the agent who represents the buyer in the home-buying process. On the other side is the listing agent, who represents the seller.


Buyer’s Broker: A licensee who has declared to represent only the buyer in a transaction, regardless of whether compensation is paid by the buyer or the listing broker through a commission split. Some brokers conduct their business by representing buyers only.

Calendar Year: A year using the actual number of days in each month for a total of 365 days in a year (366 days in a leap year).

Call date: Periodic or continuous rights given to the lender to cause payment of the total principal balance prior to the maturity date.

Canvassing: The practice of making telephone calls or visiting from door to door to seek prospective buyers or sellers; in the real estate business, generally associated with acquired listings in a given area.

Cap: The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.

Capacity of parties: The legal ability of persons to enter into a valid contract. Most persons have fully capacity to contract and are said to be competent parties.

Capital appreciation: The change in market value of a property or portfolio adjusted for capital improvements and partial sales.

Capital Asset Pricing Model (CAPM): Used to help price risky securities (i.e., any securities other than risk-free, or Treasury securities), the Capital Asset Pricing Model is a statistical model that describes the relationship between risk and expected return.

Capital expenditures: Investment of cash or the creation of a liability to acquire or improve an asset, as distinguished from cash outflows for expense items that are considered part of normal operations.

Capital gain: The amount by which the net proceeds from the sale of a capital item exceeds the book value of the asset.

Capital Gains: The profit on the sale of a capital asset, such as stock or real estate. For example, if you sell your primary residence, you can exclude $250,000 in profit from capital gains tax.

Capital improvements: Expenditures that arrest deterioration of property or add new improvements and appreciably prolong its life.

Capital investment: The initial capital and the long-term expenditures made to establish and maintain a business or investment property.

Capital markets: Public and private markets where businesses or individuals can raise or borrow capital.

Capitalization rate: The rate of expected return on an investment property. A ratio of income to value.

Capitalization: The estimation of the value of an income-producing property by dividing the annual net income by the capitalization rate.

Carrying charges: Costs incidental to property ownership that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy.

Cash flow: The revenue remaining after all cash expenses are paid.

Cash out: Receiving money back when refinancing your present mortgage.

Cash over valuation (COV): Commonly used in HDB transactions, the COV refers to the difference between the seller’s asking price and the government’s valuation of the unit. This phenomenon was observed in the rapid ascent of prices post-2007 crisis.

Cash reserves: The cash reserves is the money left over for the buyer after the down payment and the closing costs.

Cash-on-cash yield: The relationship, expressed as a percentage, between the net cash flow of a property and the average amount of invested capital during an operating year.

Casualty insurance: A type of insurance policy that protects a property owner or other person from loss or injury sustained as a result of theft, vandalism, or similar occurrences.

Caveat emptor: A Latin phrase meaning, “let the buyer beware.”

Ceiling: The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.

Central Provident Fund (CPF): A government mandated savings/retirement fund scheme affecting all Singaporeans and PRs. 20% is taken out of employee incomes and put into his/her CPF account. It is spread across Ordinary, Special and Medisave accounts, and earns interest every year.

Certificate of occupancy: A document presented by a local government agency or building department certifying that a building and/or the leased area has been satisfactorily inspected and is in a condition suitable for occupancy.

Certificate of sale: The document generally given to a purchaser at a tax foreclosure sale. A certificate of sale does not convey title; generally, it is an instrument certifying that the holder may receive title to the property after the redemption period has passed.

Certificate of Statutory Completion (CSC): The actual completion of the construction of a property. The issuance of CSC means that all requirements are met for building to be stable and fit for occupancy.

Certificate of title: In areas where attorneys examine abstracts or chains of title, a written opinion, executed by the examining attorney stating that title is vested as stated in the abstract.

Chain of title: A history of conveyances and encumbrances of a property from some starting point, whereby the present owner derives title.

Channelling: The illegal practice of directing people to, or away from, certain areas or neighbourhoods because of minority status; Steering.

Charrettes: Community planning tool that welcomes and improves public participation in discussions about a community’s future growth and development.

Chattel: See personal property.

Chattels: Personal property.

Check: Tracts of land located repetitively every 24 miles from a principal meridian and 24 miles from a defined base line.

Circulation factor: Interior space required for internal office circulation not accounted for in the net square footage.

City planning commission: A local government organization designed to direct and control the development of land within a municipality.

Claim of right: Used as a factor in determining adverse possession claims. Adversely occupying another’s real estate for a statutory period of time may create a claim of right.

Claim: A right to assert, or the assertion of, a demand for payment of money due; or the surrender or delivery of possession of property or the recognition or some right. A demand for something as one’s rightful due.

Class “A”: A real estate rating generally assigned to properties that will generate the highest rents per square foot due to their high quality and/or superior location.

Class “B”: Good assets that most tenants would find desirable but lack attributes that would permit owners to charge top dollar.

Class “C”: Buildings that offer few amenities but are otherwise in physically acceptable condition and provide cost-effective space to tenants who are not particularly image-conscious.

Clear title: A land title that doesn’t have any liens (including a mortgage) against it.

Clear-span facility: A building, most often a warehouse or parking garage, with vertical columns on the outside edges of the structure and a clear span between columns.

Closed-end fund: A commingled fund that has a targeted range of investor capital and a finite life.

Closing costs: In addition to the final price of a home, there are also closing costs, which will typically make up about two to five per cent of the purchase price, not including the down payment. Examples of closings costs include loan processing costs and title insurance.

Closing disclosure: The five-page Closing Disclosure must be provided to the consumer three business days before they close on the loan. The Closing Disclosure details all of the costs associated with their mortgage transaction.

Closing statement: A detailed written summary of the financial settlement of a real estate transaction, showing all charges and credits made, and all cash received and paid out.

Closing: In some areas called a “settlement.” The process of completing a real estate transaction during which deeds, mortgages, leases and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed etc.

Cloud on title: A claim or encumbrance that may affect title to land.

Clue: An insurance company repository for reported claim activity and previous property damage. CLUE is an acronym for Comprehensive Loss Underwriting Exchange. Insurers use the report to ascertain patterns of possible future claims and adjust their insurance.

CMBS (commercial mortgage-backed securities): Securities backed by loans on commercial real estate.

CMO (collateralized mortgage obligation): Debt obligations that are collateralized by and have payments linked to a pool of mortgages.

Codicil: A testamentary disposition subsequent to a will that alters, explains, adds to, or confirms the will, but does not revoke it.

Coinsurance clause: A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage that is generally equal to at least 80% of the property’s actual replacement cost.

Co-investment program: An investment partnership or insurance company separate account that enables two or more pension funds to co-invest their capital in a single property or portfolio of properties. The primary appeal for investors is to achieve greater diversification or i

Co-investment: Co-investment occurs when two or more pension funds or groups of funds share ownership of a real estate investment. In co-investment vehicles, relative ownership is always based on the amount of capital contributed.

Collateral: Something of value deposited with a lender as a pledge to secure repayment of a loan.

Color of title: Used as factor in an adverse possession claim when the occupying party actually received title but by a defective or incorrect deed (color of title).

Commercial property: A classification of real estate that includes income-producing property, such as office buildings, restaurants, shopping centers, hotels, and stores.

Commercial real estate: Commercial real estate (CRE) is property used exclusively for business purposes or to provide a workspace rather than a living space. Most often, commercial real estate is leased to tenants to conduct business.

Commingled fund: A pooled fund vehicle that enables qualified employee benefit plans to commingle their capital for the purpose of achieving professional management, greater diversification or investment positions in larger properties.

Commingled property: Property of a married couple that is so mixed or commingled that it is difficult to determine whether it is separate of community property. Commingled property becomes community property.

Commingling: The illegal practice of combining or mixing clients’ funds with the agent’s funds.

Commission: The compensation paid to a licensed real estate broker or by the broker to the salesman for services rendered. Usually a percentage of the selling price of the property.

Commodity Pool Operator (CPO): A CPO is an individual or organization which operates a commodity pool and solicits funds for that commodity pool. A commodity pool is an enterprise in which funds contributed by a number of persons are combined.

Common area maintenance: Rent charged to the tenant in addition to the base rent to maintain the common areas. Examples include snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc.

Common area: Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenets or owners of property nearby. Commonly found in condominium, PUD or office spaces.

Common areas: Areas which are available for use by more than one person.

Common elements: The parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium, or that are normally in common use by all of the condominium residents.

Common law: A body of law based on custom, usage, and court decisions.

Community property: A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage.

Comparables: Properties which are similar to a particular property and are used to compare and establish a value for that property.

Comparative market analysis: Comparative market analysis (CMA) is a report on comparable homes in the area that is used to derive an accurate value for the home in question.

Competent parties: Persons who are recognized by law as being able to contract with others; usually those of legal age and sound mind.

Composite depreciation: A method of determining the depreciation of a multi-building property using the average rate at which all the buildings are depreciating.

Compound Interest: Interest which is computed on the principal and any unpaid accumulated interest. Contrast with simple interest.

Concessions: Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses or other monies expended to influence or persuade a tenant to sign a lease.

Condemnation: The act of taking private property for public use, through the due process under the right of eminent domain, with compensation to the owner.

Conditions: This refers to provisions in deeds and other real estate instruments that make a particular right contingent upon the occurrence of some future event.

Condominium: The absolute ownership of an apartment or a unit, generally in a multi-unit building, based on a legal description of the airspace the unit occupies, plus an undivided interest in the ownership of the common elements, which are owned together.

Conduit: An alliance between mortgage originators and an unaffiliated organization that acts as a funding source by regularly purchasing loans, usually with a goal of pooling and securitizing them.

Conforming mortgages: Securitized mortgages sold on the secondary market that meet certain requirements established by Fannie Mae and Freddie Mac.

Consideration: The price or subject matter, which induces a contract; may be in money, commodity, exchange, or a transfer of personal effort.

Construction loan: Interim financing during the developmental phase of a property.

Construction management: The act of ensuring the various stages of the construction process are completed in a timely and seamless fashion.

Constructive Eviction: The provision of housing that is so substandard that a landlord has evicted the tenant. For example, the landlord may refuse to provide light, heat, water or other essential services, destroy part of the premises or refuse to clean up an environmental he

Constructive notice: Notice given to the world by recorded documents. All persons are charged with knowledge of such documents and their contents, whether or not they have actually examined them.

Consultant: Any company or individual that provides the following services to institutional investors: definition of real estate investment policy; adviser/manager recommendations; analysis of existing real estate portfolios; monitoring of and reporting on property

Consumer price index (CPI): Measures inflation in relation to the change in the price of goods and services purchased by a specified population during a base period of time. The CPI is commonly used to increase the base rent periodically as a means of protecting the landlord’s rent

Consummation: Consummation is not the same thing as closing or settlement. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan.

Contiguous space: Multiple suites/spaces within the same building and on the same floor that can be combined and rented to a single tenant, or a block of space located on multiple adjoining floors in a building.

Contingencies: This term refers to conditions that have to be met in order for the purchase of a home to be finalized. For example, there may be contingencies that the loan must be approved or the appraised value must be near the final sale price.

Contingency: A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event.

Contract documents: The complete set of design plans and specifications for the construction of a building.

Contract for deed: A contract for the sale of real estate where the deed (title) of the property is transferred only after all the payments have been made. Also known as a land contract, agreement of sale, conditional sales contract, or instalment contract.

Contract for exchange of real estate: A contract for the sale of real estate in which the consideration is paid wholly or partly in real property instead of cash.

Contract of sale: The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.

Contract rent: The rental obligation, expressed in dollars, as specified in a lease. Also known as face rent.

Contract: An agreement entered into by two or more legally competent by the terms of which one or more of the parties, for a consideration, undertakes to do or to refrain from doing some legal act or acts.

Contributory value: An appraising principle where the value of a property’s component parts are measured by their effect on the selling price of the whole. Appraisers use sold properties as “paired sales” to isolate component parts and to identify their monetary contributions.

Conventional loan: A loan that is not insured or guaranteed by a government agency.

Convertible debt: A mortgage position that gives the lender the option to convert to a partial or full ownership position in a property within a specified time period.

Convertible preferred stock: Preferred stock that is convertible to common stock under certain formulas and conditions specified by the issuer of the stock.

Conveyance: Written instrument, such as a deed or lease, that evidences transfer of some ownership interest in real property from one person to another.

Cooling measures: A catch-all term referring to a series of government regulations across the period of a few years, to stabilise the Singapore housing prices.

Co-op: See cooperative housing or cooperative sale.

Cooperative housing: A form of real estate, usually a dwelling in which residents own shares, but do not directly own the space they inhabit. Instead, owning a share of the building entitles the shareholder with the right to occupy a certain space within the dwelling.

Cooperative: A residential multi-unit building whose title is held by a trust or corporation that is owned by, and operated for, the benefit of persons living within the building. These persons are the beneficial owners of the trust or the shareholders of the corporation.

Core properties: The major property types – specifically office, retail, industrial and multifamily. Core assets tend to be built within the past five years or recently renovated.

Core: Typically includes the four major property types — specifically office, retail, industrial and multifamily. Core assets are high-quality, multi-tenanted properties typically located in major metropolitan areas and built within the past five years or recent years.

Core-plus: These investments possess similar attributes to core properties — providing moderate risk and moderate returns — but these assets offer an opportunity for modest value enhancement, typically through improved tenancy/occupancy or minor property improvements.

Corporation: A legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses and shields the underlying owners from unlimited liability.

Correction lines: The horizontal provisions in the rectangular survey system made to compensate for the curvature of the earth’s surface. Every fourth township line is used as a correction line on which the intervals between the north and south range lines are remeasured.

Cost approach to value: An estimate of value based on current construction costs, less depreciation, plus the land value. Contrast with the income approach to value and the market data approach to value.

Cost approach: The process of estimating the value of a property by adding the appraiser’s estimate of the reproduction or replacement cost of the building, less depreciation, to the estimated land value.

Cost of capital: The cost of the funds (either through the form of equity or debt) employed as the result of an investment decision.

Cost-approach improvement value: The current cost to construct a reproduction of, or replacement for, the existing structure less an estimate for accrued depreciation.

Cost-approach land value: The estimated value of the fee simple interest in the land as if vacant and available for development to its highest and best use.

Cost-of-sale percentage: An estimate of the costs to sell an investment representing brokerage commissions, closing costs, fees and other necessary disposition expenses.

Co-tenants: Two or more tenants who rent the same property under the same lease or rental agreement. Each co-tenant is 100% responsible for carrying out the rental agreement, which includes paying the entire rent if the other tenant skips town and paying for damage etc.

Counselling: The business of providing people with expert advice on a subject, based on the counsellor’s extensive, expert knowledge of the subject.

Counteroffer: The rejection of an offer to buy or sell that simultaneously makes a different offer, changing the terms in some way. For example, if a Buyer offers $170,000 for a home, and the seller replies that he wants $175,000, the seller has rejected the buyer’s offer and made a counteroffer.

Coupon: The nominal interest rate charged to the borrower on a promissory note or mortgage.

Covenant: A restriction on the use of real estate that governs its use, such as a requirement that the property will be used only for residential purposes. Covenants are found in deeds or in documents that bind everyone who owns land in a particular development.

Covenants, conditions, and restrictions (CC&Rs): Condominium documents that serve as the operational procedures describing the rights and prohibitions of the co-owners in a condominium association.

Credit enhancement: The credit support needed in addition to the mortgage collateral to achieve a desired credit rating on mortgage-backed securities. The forms of credit enhancement most often employed are subordination, over-collateralization and reserve funds etc.

Credit file: See credit report.

Credit insurance: Insurance a lender offers or requires a borrower to purchase to cover the loan. If the borrower dies or becomes disabled before paying off the loan, the policy will pay off the remaining balance.

Credit limit: The maximum amount that you can borrow under a home equity plan.

Credit report: An account of your credit history, prepared by a credit bureau. A credit report will contain both credit history, such as what you owe to whom and whether you make the payments on time, as well as personal history, such as your former addresses and employment status etc.

Credit scoring: A three-digit score that assesses a borrower’s credit risk and the probability of default based on his or her past pay performances, outstanding credit balances, credit mix, time on file, and number of search inquiries.

Creditor: A person or entity (such as a bank) to whom a debt is owed.

Cross-collateralization: A grouping of mortgages or properties that serves to jointly secure one debt obligation.

Cross-defaulting: Allows the trustee to call all loans in a group into default when any single loan is in default.

Cul-De-Sac: A dead-end street which widens sufficiently at the end to permit an automobile to make a “U” turn.

Cumulative discount rate: Expressed as a percentage of base rent, it is the interest rate used in finding present values that takes into account all landlord lease concessions.

Current occupancy: The current leased portion of a building or property expressed as a percentage of its total area or units.

Custodian: A financial institution that maintains and safeguards an individuals, mutual fund’s, or investment company’s assets for them.


Cycle: A recurring sequence of events that regularly follow one another, generally within a fixed interval of time.

Datum: A horizontal plane from which heights and depths are measured.

DBA: Doing Business As. Business names or aliases filed with the county.

Deal structure: With regard to the financing of an acquisition, deals can be unleveraged, leveraged, traditional debt, participating debt, participating/convertible debt or joint ventures.

Debenture: Bonds issued without security.

Debt service coverage ratio (DSCR): The annual net operating income from a property divided by annual cost of debt service. A DSCR below 1 means the property is generating insufficient cash flow to cover debt payments.

Debt service: The total amount of credit card, auto, mortgage or other debt upon which you must pay.

Debt: Something owed to another; an obligation to pay or return something.

Debt-Service Ratio: The measurement of debt payments to gross household income which may include, in addition to the main wage earner’s salary, salaries of other wage earners, commissions, bonuses, overtime, etc.

Declining balance method: An accounting method of calculating depreciation for tax purposes designed to provide large deductions in the early years of ownership.

Dedicate: To appropriate private property to public ownership for a public use.

Deduction: In tax law, an amount that you can subtract from the total amount on which you owe tax.

Deed book: A book among the public records in which deeds are recorded.

Deed In Lieu (Of Foreclosure): A means of escaping an overly burdensome mortgage. If a homeowner can’t make the mortgage payments and can’t find a buyer for the house, many lenders will accept ownership of the property in place of the money owed on the mortgage.

Deed in lieu of foreclosure: A deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure.

Deed of reconveyance: The instrument used to reconvey title to a trustor under a deed of trust once the debt has been satisfied.

Deed of trust: An instrument used in place of a mortgage by which real property is transferred to a trustee to secure repayment of a debt.

Deed restrictions: The clauses in a deed limiting the future users of the property. Deed restrictions may impose a variety of limitations and conditions, such as limiting the density of buildings, dictating the types of structures that can be erected etc.

Deed: A written instrument by which title to land is conveyed.

Default: Non-performance of a duty arising under a contract or otherwise.

Defeasance clause: A clause used in leases or mortgages that cancels a specified right on the occurrence of a certain condition, such as cancellation of a mortgage on repayment of the mortgage loan.

Defeasance: A clause in a deed, lease, will or other legal documents that completely or partially negates the document if a particular condition occurs or fails to occur. Defeasance also means the act of rendering something null and void.

Defect: A blemish, imperfection, or deficiency. A defective title is one that is irregular and faulty.

Deferred maintenance account: An account a borrower is required to fund that provides for maintenance of a property.

Deficiency judgment: Imposition 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.

Defined-benefit plan/ Defined-contribution plan: An employee’s benefits are defined, either as a fixed amount or a percentage of the beneficiary’s salary at the time of retirement. Pension plans, Health and Welfare plans are established as defined benefit plans.

Delinquent taxes: Unpaid taxes that are past due.

Deliverable: A final product or product component that must be provided to a client or stakeholder according to contractual stipulations.

Delivery in escrow: Delivery of a deed to a third person until the performance of some act or condition by one of the parties.

Delivery: The actual transfer of the deed, or an act of a seller showing intent to make a deed effective, without which, there is no transfer of title to the property.

Demand: The willingness of persons to buy available goods at a given price; often coupled with supply.

Demising wall: The partition wall that separates one tenant’s space from another or from the building’s common areas.

Density zoning: The zoning ordinances that restrict the average maximum number of houses per acre that may be built within a particular area, generally a subdivision.

Depreciation: A loss in value.

Derivative securities: Securities that are created artificially, i.e., derived from other financial instruments. In the context of CMBS, the most common derivative security is the interest-only strip.

Descent: Acquisition of property through inheritance laws when there is no will (when a person dies intestate).

Design/build: A system in which a single entity is responsible for both the design and construction.

Designed agency: An agency relationship where a client designates a broker to appoint an office agent to singularly represent his or her interest to the exclusion of all of the other agents in the broker’s office.

Determinable fee estate: A fee-simple estate in which the property automatically reverts to the grantor on the occurrence of a specified event or condition.

Devise: A transfer of real estate by will or last testament.

Diminishing returns: The principle that applies when a given parcel of land reaches its maximum percentage return on investment, and further expenditures for improving the property yield a decreasing return.

Diplomatic clause: A clause found in a Tenancy Agreement to protect against undue losses in the event that the tenant’s employment has ceased, transferred overseas, or is unable to stay in Singapore. This is usually for a 2 years lease, with a minimum of 1 year stay.

Disclosure: The making known of a fact that had previously been hidden; a revelation.

Discount points: An added loan free charged by a lender to make the yield on a lower-than-market-value loan competitive with higher-interest loans.

Discount rate: The rate used to convert future income into present value.

Discretion: The level of authority granted to an adviser or manager over the investment and management of a client’s capital. A fully discretionary account typically is defined as one in which the adviser or manager has total ability to invest and manage a client’s capital.

Dispossess: To oust from the land by legal process.

Distraint: The act of seizing personal property of a tenant in default based on the right and interest a landlord has in the property.

Diversification: The process of consummating individual investments in a manner that insulates a portfolio against the risk of reduced yield or capital loss, accomplished by allocating individual investments among a variety of asset types, each with different characterisation.

Dividend yield: The annual dividend rate for a security expressed as a percent of its market price (annual dividend/price = yield).

Dividend: Cash or stock distribution paid to holders of common stock. REITs must pay at least 90 percent of their taxable income in the form of dividends.

Dividend-ex date: The first date on which a person purchasing the stock is no longer eligible to receive the most recently announced dividend.

Dollar stop: An agreed dollar amount of taxes and operating expense each tenant will pay on a prorated basis.

Dominant tenement: Property that carries a right to use a portion of a neighbouring property. For example, property that benefits from a beach access trail across another property is the dominant tenement.

Down payment: An amount of money the buyer pays, which is the difference between the purchase price and the mortgage amount.

DOWNREIT: An organizational structure that makes it possible for REITs to buy properties using partnership units. The effect is the same as an UPREIT, however, the DOWNREIT is subordinate to the REIT itself, hence the name.

Drag-along rights: The right that enables a majority shareholder to force a minority shareholder to join in the sale of a company. The majority owner doing the dragging must give the minority shareholder the same price, terms and conditions as any other seller.

Dual agency: Dual agency is when one agent represents both sides, rather than having both a buyer’s agent and a listing agent.

Due diligence: Activities carried out by a prospective purchaser or mortgager of real property to confirm that the property is as represented by the seller and is not subject to environmental or other problems.

Due on sale: A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.

Duress: Forcing action or inaction against a person’s will.


DVA loan: A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit possible loss by the lender.

Earnest Money Contract (EMC): A contract for the sale or purchase of a real estate in which the purchaser is required to tender earnest money to evidence good faith in completing the contractual obligations.

Earnest money deposit: An amount of money deposited by a buyer under the terms of a contract. In the event that the buyer, for no valid or legal reason, backs out of the transaction, earnest money is sometimes used as liquidated damages.

Earnest money: A deposit made by the buyer as evidence of good faith in offering to purchase real estate and to secure performance of the contract. Earnest money is typically held by a title company, in an escrow account, during the period between acceptance of the contract.

Easement by necessity: An easement allowed by law as necessary for the full enjoyment of a parcel of real estate.

Easement in gross: An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner.

Easement: A right created by grant, reservation, agreement, prescription or necessary implication to use someone else’s property.

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.

Economic feasibility: The feasibility of a building or project in terms of costs and revenue, with excess revenue establishing the degree of viability.

Economic life: The period of time over which an improved property will earn an income adequate to justify its continued existence.

Economic obsolescence: Loss of value of real property due to external forces or events; e.g., a sewer plant is built next door to the subject property.

Economic rent: The market rental value of a property at a given point in time.

Effective date: The date on which a registration statement becomes effective and the sale of securities can commence.

Effective gross income (EGI): The total income from a property generated by rents and other sources, less a vacancy factor estimated to be appropriate for the property. EGI is expressed as collected income before expenses and debt service.

Effective gross rent (EGR): The net rent generated, after adjusting for tenant improvements and other capital costs, lease commissions and other sales expenses.

Effective Interest Rate: The cost of credit yearly expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates.

Effective rent: The 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.

Effluxion of time: The normal expiration of a lease due to the passage of time, rather than due to a specific event that might cause the lease to end, such as destruction of the building.

Egress: An exit, or the act of exiting.

Ejectment: (1) Eviction or dispossession. (2) A law suit to regain possession of real estate held by another.

Electronic authentication: Any of several methods used to provide proof that a particular document received electronically is genuine, has arrived unaltered and came from the source indicated.

Electronic data gathering and retrieval system (EDGAR): The electronic filing system created by the Securities and Exchange Commission (SEC) for the purpose of increasing efficiency and accessibility to corporate filings. This system is used by all publicly traded companies when submitting required documents 

Emblements: Annual crops produced by cultivation. They are deemed to be personal property.

Employee status: The status of one who works as a direct employee of an employer. An employer is obligated to withhold income taxes and Social Security taxes from the compensation of his or her employees.

Employment contract: A document evidencing formal employment between the employer and the employee or between the principal and the agent. In the real estate business, this generally takes the form of a listing or management agreement.

Enbloc: Also known as collective sale. It refers to a process where buyers of a condominium sell all their units at once to a developer.

Enclave Community: Smaller in scope than master-planned communities, enclave communities typically blend different price ranges of residential neighbourhoods with amenities such as public recreation areas and parks, neighbourhood schools and extensive landscaping.

Encroachment: A fixture, or structure, such as a wall or fence, which invades a portion of a property belonging to another. Solutions range from paying the rightful property owner for the use of the property to the court-ordered removal of the structure.

Encumbrance: A cloud against clear, free title to the property which does not prevent conveyance, such as unpaid taxes, easements, deed restrictions, mortgage loans, etc.

Endorsement: Writing one’s name, either with or without additional words, on a negotiable instrument, or on a paper attached to it.

Endowment: A fund that is made up of gifts and bequests, which are subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization.

Ensuite: This refers to a bedroom in a unit. An ensuite bedroom comes with an adjoining bathroom.

Entity investing: An investment in an entity, such as a company or partnership, that controls an investment rather than directly in the underlying assets.

Entity—level direct JV: The investor is investing at the entity level (investing in the securities of the operating company or taking a non-securitized ownership position in the operation company).

Entity—level fund: A fund that invests at the entity level (invests in the securities of the operating company or take an ownership position in the operating company).

Environmental impact statement: Documents required by laws to accompany proposals for major projects and programs that will likely have an impact on the surrounding environment.

Equalization: The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.

Equitable title: The interest held by a vehicle under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name.

Equitization: The process by which the economic benefits of ownership of a tangible asset, such as real estate, are divided amongst numerous investors and characterized in the form of publicly-traded securities.

Equity market capitalization: The market value of all outstanding common stock of a company.

Equity: Equity is ownership. In homeownership, equity refers to how much of your home you own—meaning how much of the principal you’ve paid off.

Erosion: The gradual wearing away of land by water, wind, and general weather conditions; the diminishing of property caused by the elements.

Errors and omissions insurance: Insurance coverage for real estate agents against claims for innocent and negligent misrepresentations.

Escalation clause: A clause in a lease that provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes and operating costs.

Escalator clause: The clause in a contract permitting adjustments of the payments.

Escheat: The reversion of property to the state in the event the owner thereof dies without leaving a will (intestate) and has no heirs to whom the property may pass by lawful descent.

Escrow account: A third-party account that holds money safely while a sale is in progress. (2)  An account used to save monies required for the payment of an eventual debt, often used by lenders to save for property taxes, hazard insurance, homeowner’s dues, etc.

Escrow agreement: A written agreement made between an escrow agent and the parties to a contract setting forth the basic obligations of the parties, describing the money (or other things of value) to be deposited in escrow etc.

Escrow: Escrow is an account that the lender sets up that receives monthly payments from the buyer.

Estate for years: An interest for a certain, exact period of time in property leased for a specified consideration.

Estate in land: The degree, quantity, nature, and extent of interest that a persona has in real property.

Estate in severalty: An estate owned by one person.

Estate: (1) A sizable piece of rural land usually with a large house and other pretentious improvements. (2) The whole of one’s possessions, especially all of the property, assets, debts, and liabilities left by a deceased or bankrupt person.

Estimate of calue: An appraisal; the appraised value.

Estoppel certificate: A 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.

Estovers: Legally allowed necessities, such as the right of a tenant to use timber on leased property to support a minimum need for fuel or repairs.

Et al: Latin, meaning “and others”.

Et ux / Et uxor: Latin, meaning “and wife”.

Et vir: Latin, meaning “and husband”.

Ethical: Conduct conforming to professional standards.

Eviction: Removal of a tenant from rental property by a law enforcement officer. First, the landlord must file and win an eviction lawsuit, also known as an “unlawful detainer”.

Evidence of title: A proof of ownership of property, which is commonly a certificate of title, a title insurance policy, an abstract of title with lawyer’s opinion, or a Torrens registration certificate.

Examination: In title industry terms, to peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.

Examiner: Usually referred to, in title industry terms, as title examiner. One who examines and determines the condition and status of real estate titles.

Exception: As used in the conveyance of real estate, an exception is the exclusion of some part of the property conveyed, with the title of that excepted part remaining with the grantor.

Exceptions: Insurance policies include a list of items excluded from coverage. Items excluded from coverage can be found in section two of Schedule B of the policy.

Exchange: A transaction in which all of part of the consideration for the purchase of real property is the transfer of like-kind property. Ex. Real estate for real estate.

Exclusive agency (EA): A listing agreement which gives the listing agent the right to sell the property for a specified time. The owner reserves the right to sell the property himself without paying a commission to the agent. Brokers run the risk of investing their time, effor

Exclusive agency listing: A 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.

Exclusive right to sell (ERS): A listing agreement which gives the listing agent the right to sell the property for a specified time, with the power to collect a commission if the property is sold by anyone, including the owner, during the listing period.

Exclusive-agency listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owner’s stated terms for a commission.

Exclusive-right-to-sell listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owner’s stated terms and agrees to pay the broker a commission when the property is sold, whe

Executed contract: A contract in which all parties have fulfilled their promises and thus performed the contract.

Execution: The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.

Executive Condominium (EC): A type of semi-private development introduced by the HDB. It is essentially a condominium sold at subsidised pricing under HDB regulations. Foreigners are unable to buy. ECs attain “full” private status after 10 years, but is able to be sold to citizens.

Executor/Executrix: The man/woman appointed in a will to carry out the requests of the will. Contrast with Administrator/Administratrix.

Executor: The person designated in a will to handle the state of the deceased. The probate court must approve any sale of property by the executor.

Executory contract: A contract under which something remains to be done by one of more of the parties.

Exit strategy: Strategy available to investors when they desire to liquidate all or part of their investment.

Expenses: The short-term costs that are deducted from an investment property’s income, such as minor repairs, regular maintenance, and renting costs.

Expressed contract: An oral or written contract in which the parties state their terms and express their intentions in words.


Expropriation: See eminent domain.

Face rental rate: The asking rental rate published by the landlord.

Facility management: The facility management process is a broad discipline that takes a high-level view of an organization’s assets, business resources and employees. From the office building itself to the furniture occupying the rooms therein, the computers on the desks etc.

Facility manager: Facility managers are professionals whose job functions focus on the execution of FM tasks and best practices. These professionals may be responsible for an entire building, including the interior or exterior, or may simply be in charge of FM concerns.

Facility space: The floor area in hospitality properties dedicated to operating departments such as restaurants, health clubs and gift shops that service multiple guests or the general public on an interactive basis not directly related to room occupancy.

FAD (funds available for distribution): Funds from operations less deductions for cash expenditures for leasing commissions and tenant improvement costs.

FAD multiple: Share price of a REIT divided by its funds available for distribution.

Fair market value: The 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.

Fee Simple Estate: The complete form of ownership of the real property; absolute ownership. Commonly used to denote a property where the owner has full title to the land on which the property is situated.

Fee simple interest: When an owners owns all the rights in a real estate parcel.

Fee simple: The highest degree of ownership that a person can have in real estate. An interest in real estate that gives the owner unqualified ownership and full power of disposition.

Fee-simple estate: The maximum possible estate or right of ownership of real property continuing forever.

FFO (funds from operations): A ratio intended to highlight the amount of cash generated by a company’s real estate portfolio relative to its total operating cash flow.

FFO multiple: Share price of a REIT divided by its funds from operations.

Fiduciary relationship: A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, principal and agent.

Fiduciary: The relationship of trust, honesty and confidence between agent and principal; the faithful relationship owed by an agent to the principal.

Finance charge: The amount paid for the privilege of deferring payment of goods or services purchased, including any charges payable by the purchaser as a condition of the loan.

Finder’s fee: A fee charged by real estate brokers and apartment-finding services in exchange for locating a rental property. These fees are permitted by law. Some landlords, however, charge finder’s fees merely for renting a place.

First mortgage: A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances).

First refusal right, or right of first refusal: A lease clause giving a tenant the first opportunity to buy a property or lease additional space 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

First-generation space: Generally refers to new space that is currently available for lease and has never before been occupied by a tenant.

First-loss position: The position in a security that will suffer the first economic loss if the underlying assets lose value or are foreclosed on. The first-loss position carries a higher risk and a higher yield.

Fiscal policy: The government’s policy in regard to taxation and spending programs. The balance between these two areas determines the amount of money the government will withdraw or feed into the economy in an attempt to counter economic peaks and slumps.

Fixed costs: Costs that do not fluctuate in proportion to the level of sales or production.

Fixed rate: An interest rate that remains constant over the term of the loan.

Fixed-rate mortgage: A mortgage with an interest rate and monthly payment that doesn’t vary for the term of the loan.

Fixture: An article that was once personal property but has been so affixed to real estate that it has become real property.

Flat fee: A fee paid to an adviser or manager for managing a portfolio of real estate assets, typically stated as a flat percentage of gross asset value, net asset value or invested capital.

Flex space: A building that provides a configuration allowing occupants a flexible amount of office or showroom space in combination with manufacturing, laboratory, warehouse, distribution, etc.

Float: The number of freely traded shares in the hands of the public.

Floor area ratio (FAR): The ratio of the gross square footage of a building to the square footage of the land on which it is situated.

For sale by owner (FSBO): An individual homeowner who is attempting to sell his property without a real estate broker. The acronym, FSBO is pronounced “fizzbo.”

Force majeure: A force that cannot be controlled by the parties to a contract and prevents them 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.

Forcible entry and detainer: A summary proceeding for restoring to possession of land one who is wrongfully kept out or has been wrongfully deprived of the possession.

Foreclosure: The process by which the trustee or servicer takes over a property from a borrower on behalf of the lender.

Foreign acknowledgment: An acknowledgment taken outside of the state in which the land lies.

Forfeiture: The loss of property or a privilege due to breaking a law. For example, a landlord may forfeit his or her property to the government if the landlord knows it is a drug-dealing site but fails to stop the illegal activity.

Forward commitments: Contractual obligations to perform certain financing activities upon the satisfaction of any stated conditions. Usually used to describe a lender’s obligation to fund a mortgage.

Foundation: A foundation is a nonprofit organization that raises money and invests it to generate income to fund its charitable efforts or donate funds to support other charitable causes. Foundations are often created by a large single primary donation from an individual.

Four quadrants of the real estate capital markets: Private equity – Direct real estate investments acquired privately. Public equity – REITs and other publicly traded real estate operating companies. Private debt – Whole loan mortgages. Public debt – Commercial mortgage-backed securities and other securities.

Franchise: A private contractual agreement to run a business using a designated trade name and operating procedures.

Fraud: A misstatement of a material fact made with the intent to deceive or made with reckless disregard of the truth, and which does deceive.

Freehold estate: An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

Freehold: A type of tenure for private properties, or the right to hold a property. Also known as Estate in Fee Simple. Freehold tenure means that there is no limit to time of holding; owners technically own the property forever.

Full recourse: A loan on which an endorser or guarantor is liable in the event of default by the borrower.

Full-service rent: An 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.

Fully diluted shares: The number of shares of common stock that would be outstanding if all convertible securities were converted to common shares.

Functional obsolescence: The impairment of functional capacity or efficiency; the inability of a structure to perform adequately the function for which it currently is employed. Functional obsolescence reflects the loss in value brought about by factors that affect the property value.

Funding fee: A fee required by the Department of Veterans Affairs for making a VA guaranteed loan. The funding fee is added in with the loan and then forwarded to the VA to guarantee a veteran’s loan.

Future interest: A person’s present right to an interest in real property that will not result in possession or enjoyment until sometime in the future, such as a reversion or right of reentry.


Future proposed space: Space in a proposed commercial development that is not yet under construction or where no construction start date has been set. It also may refer to the future phases of a multi-phase project not yet built.

GAAP: Generally Accepted Accounting Principles.

Gap: A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.

General contractor: A construction specialist who enters into a formal construction contract with a landowner or master lessee to construct a real estate building or project. The general contractor often contracts with several subcontractors specializing in various aspects.

General Lien: A lien that includes all the property owned by a debtor, rather than a specific property. Contrast with Specific Lien.

General partner: A member of a partnership who has authority to bind the partnership and shares in the profits and losses of the partnership.

General warranty: A warranty provision in a deed or mortgage or other real estate instrument containing all of the common law items of warranty. Also known as a full warranty.

Glide path: The formula in the design of a target date fund that defines the asset allocation mix for the fund, based on the number of years to the target date. The glide path defines an asset allocation that becomes more conservative.

Going-in capitalization rate: The capitalization rate computed by dividing the projected first year’s net operating income by the value of the property.

Good faith estimate: A written estimate of closing costs which a lender must provide you within three days of submitting an application.

Government lots: Fractional sections in the rectangular survey system (government survey method) that are less than one full quarter-section in area.

Grace period: A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.

Graduated lease: A lease, generally long-term in nature, in which rent varies depending upon future contingencies.

Graduated payment mortgage: A mortgage loan for which the initial payments are low but increase over the life of the loan.

Grant deed: A deed containing an implied promise that the person transferring the property owns the title and that it is not encumbered in any way, except as described in the deed. This is the most commonly used type of deed.

Grant: To bestow or transfer an interest in real property by deed or other instrument.

Grantee: A person to whom real estate is conveyed; the buyer.

Grantor: A person conveying real estate by deed; the seller.

Gross building area: The sum of areas at each floor level, including basements, mezzanines and penthouses included within the principal outside faces of the exterior walls and neglecting architectural setbacks or projections.

Gross debt service: The amount of money needed to pay principal, interest and taxes, and sometimes energy costs. If the dwelling unit is a condominium, all or a portion of standard fees are excluded, depending on what expenses are covered.

Gross income: For qualifying purposes, the income of the borrower before taxes or expenses are deducted.

Gross investment in real estate (historic cost): The total amount of equity and debt invested in real estate investments, including the gross purchase price, all acquisition fees and costs, plus subsequent capital improvements, less proceeds from sales and partial sales.

Gross leasable area: The portion of total floor area designed for tenants’ occupancy and exclusive use, including storage areas. It is the total area that produces rental income.

Gross Lease: A commercial real estate lease in which the tenant pays a fixed amount of rent per month or year, regardless of the landlord’s operating costs, such as maintenance, taxes and insurance. A gross lease closely resembles the typical residential lease.

Gross national product (GNP): The total value of all goods and services produced in the Singapore in a year.

Gross real estate asset value: The market value of the total real estate investments under management in a fund or individual accounts. It typically includes the total value of all equity positions, debt positions and joint venture ownership positions, including the amount of any mort

Gross real estate investment value: The market value of real estate investments held in a portfolio without regard to debt, equal to the total of real estate investments as shown on a statement of assets and liabilities on a market-value basis.

Gross rent multiplier (GRM): A figure used as a multiplier of the gross monthly rental income of a property to produce an estimate of the property’s value.

Gross returns: Returns generated from the operation of real estate without dilution for adviser or manager fees.

Ground lease: A lease of land only, on which the tenant usually owns a building or is required to builder her or his own building as specified in the lease. Such leases are usually long-term net leases; a tenant’s rights and obligations continue until the lease expire

Ground rent: Rent 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.

Guaranteed sale plan: An agreement between the broker and the seller that if the seller’s real property is not sold before a certain date, the broker will purchase it for a specified price.

Guarantor: One who makes a guaranty.

Guaranty: Agreement whereby the guarantor assures satisfaction of the debt of another or performs the obligation of another if and when the debtor fails to do so.


Guardian: One who guards or cares for another person’s rights and properties. A guardian has legal custody of the affairs of a minor or a person incapable of taking care of his or her own interests, called a ward.

Habendum clause: The “to have and hold” clause which defines or limits the quantity of the estate granted in the premises of the deed.

Hard cost: The cost of actually constructing property improvements.

Hazard insurance: A contract between a purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium. Most common, lender required feature of homeowners insurance.

Heir: A person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.

Hereditaments: Property, personal and real, capable of being inherited.

Highest And Best Use: The particular use of a real property which will produce the greatest financial return. The optimum use of a site as used in the appraisal. This is often determined by location, neighbouring properties, deed restrictions and local zoning regulations.

High-Rise: A nine-story or taller building containing residential apartments or condominium units. In addition to spectacular views, most high-rises offer their residents a full range of amenities. Building features may include 24-hour concierge service, swimming pools and gym etc.

Holdbacks: A portion of a loan commitment that is not funded until an additional requirement is met, such as completion of construction.

Holding period: The length of time an investor expects to own a property from purchase to sale.

Holdover tenancy: A tenancy by which a lessee retains possession of a leased property after her or his lease has expired and the landlord, by continuing to accept rent from the tenant, agrees to the tenant’s continued occupancy as defined by state law.

Hold-over tenant: A tenant retaining possession of the leased premises after the expiration of a lease.

Holographic will: A will that is written, dated, and signed in the handwriting of the maker.

Home buying: The act of acquiring an interest in real property.

Home equity loan: A fixed or adjustable-rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax-deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment.

Home inspection: A review of the current condition of the property, one that will (hopefully) uncover necessary repairs and potential pitfalls.

Home warranty: A service contract that covers a major housing system for example, plumbing or electrical wiring for a set period of time from the date a house is sold. The warranty guarantees repairs to the covered system and is renewable.

Homeowner’s insurance policy: A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.

Homeowner’s warranty program: An insurance program offered to buyers by some brokerages, warranting the property against certain defects for a specified period of time.

Homeowners’ Insurance: A type of insurance policy designed to protect homeowners from financial losses related to the ownership of real property. In addition to covering losses due to vandalism, fire, hail, etc.(hazard insurance).

Homestead provision: The land and the improvements thereon designated by the owner as his or her homestead and, therefore, protected by state law, either in whole or in part, from forced sale by certain creditors of the owner.

Homestead: The house in which a family lives, plus any adjoining land and other buildings on that land.

House closing: The final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. Also known as just “closing“.

HVAC: The acronym for heating, ventilating and air conditioning.

Hybrid debt: A mortgage position with equity-like participation features in both cash flow and the appreciation of the property at the time of sale or refinance.


Hypothecation: The pledge of property as security of a loan in which the borrower maintains possession of the property while it is pledged as security.

Implied cap rate: Net operating income divided by the sum of a REIT’s equity market capitalization and its total outstanding debt.

Implied contract: A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Implied grant: A method of creating an easement. One party may be using another’s property for the benefit of both parties.

Improvement: Improvements on land: any structure, usually privately owned, erected on a site to enhance the value of the property; 2. Improvements to land: usually a publicly owned structure.

Improvements: Valuable additions to the land, such as buildings, fences, roads, etc., which increase the value of the property.

Incentive fee: Applies to fee structures where the amount of the fee that is charged is determined by the performance of the real estate assets under management.

Inchoate right: Incomplete right, such as a wife’s dower interest in her husband’s property during his life.

Income Approach To Value: An estimate of value based on the monetary returns that a property can be expected to generate; capitalization. Contrast with the cost approach to value and the market data approach to value.

Income approach: The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life.

Income capitalization value: The indication of value derived for an income-producing property by converting its anticipated benefits into property value through direct capitalization of expected income or by discounting the annual cash flows for the holding period at a specified yield.

Income property: Real estate that is owned or operated to produce revenue.

Income return: The percentage of the total return that is generated by the income from operations of a property, fund or account.

Incorporeal right: A nonpossessory right in real estate.

Increasing returns: The principle that applies when increased expenditures for improvements to a given parcel of land yield an increasing percentage return on investment.

Independent contractor: One who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result, and not as to how he or she performs the act.

Index lease: Lease that allows the rent to be increased or decreased periodically, based on changes in the a selected economic index, such as the Consumer Price Index.

Index mutual fund: A passively managed mutual fund that attempts to reduce the risk associated with the selection of specific securities for investment though paralleling the performance of a specific index, for example, S&P REIT Composite Index.

Index: A number, usually a percentage, upon which future interest rates for adjustable-rate mortgages are based.

Indirect costs: Development costs other than direct material and labor costs that are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.

Individual account management: Accounts established for individual plan sponsors or other investors for investment in real estate, where a firm acts as an adviser in acquiring and/or managing a direct real estate portfolio.

Individual retirement account (IRA): A type of retirement investment account whose contributions and interest are tax-deferred until a certain age requirement is reached. An individual is able to contribute pre-tax dollars to this account up to a certain amount each year.

Industrial property: All land and buildings used or suited for use in the production, storage, or distribution of tangible goods.

Inflation hedge: An investment that tends to increase in value at a rate greater than inflation and helps contribute to the preservation of the purchasing power of a portfolio.

Inflation: The annual rate at which consumer prices increase.

Ingress: An entrance, or the act of entering.

Initial public offering (IPO): The first time a private company offers securities for sale to the public.

Inland revenue authority Singapore (IRAS): The tax authority of Singapore. They are responsible for stamp duties, property taxes, and income tax you get from rentals. Detailed records of up to 7 years are to be kept in case of an audit.

In-principle approval (IPA): A non-binding pre-approval given by a bank to a property buyer, indicating the amount that the bank is willing to lend. It is valid for 30 days. Ipas are useful in helping a buyer plan their property purchase.

Inspection clause: A stipulation in an offer to purchase that makes the sale contingent on the findings of a home inspector.

Inspection: Home inspections are required once a potential buyer makes an offer. Typically, they cost a few hundred dollars. The purpose is to check that the house’s plumbing, foundation, appliances, and other features are up to code. Issues that may turn up during

Instalment sale: A method of reporting gain received from the sale of real estate when the sale price is paid in two or more instalments over two or more years.

Institutional-grade property: Various types of real estate properties generally owned or financed by institutional investors. Core investments typically include office, retail, industrial and apartments. Specialty investments include hotels, healthcare facilities and senior housing etc.

Insurable title: A title which a title company will insure.

Insurance company separate account: A real estate investment vehicle that may only be offered by life insurance companies. This ownership arrangement enables an ERISA-governed fund to avoid the creation of unrelated taxable income for certain types of property investments and investment st

Insurance: The indemnification against loss from a specific hazard or peril through a contract (called a policy) and for a consideration (called a premium).

Interest rate: The periodic charge, expressed as a percentage, for the use of credit.

Interest: This is the cost of borrowing money for a home. Interest is combined with the principal to determine monthly mortgage payments. The longer a mortgage is, the more you will pay in interest when you have finally paid off the loan.

Interest-only strip: A derivative security consisting of all or part of the interest portion of the underlying loan or security.

Interim financing: A short-term loan usually made during the construction phase of a building project, often referred to as a construction loan.

Internal rate of return (IRR): A discounted cash-flow analysis calculation used to determine the potential total return of a real estate asset during an anticipated holding period.

Intestate: Legal designation of a person who has died without leaving a valid will.

Intimidation: As defined in the fair housing laws, it is the illegal act of coercing, intimidating, threatening, or interfering with a person in exercising or enjoying any right granted or protected by local fair housing laws.

Invalid: Having no force or effect.

Invalidate: To render null and void.

Inventory: All space within a certain proscribed market without regard to its availability or condition.

Investment advisor: As defined by the Investment Advisors Act of 1940, any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications.

Investment bank: Investment banks do not accept deposits; they are intermediaries only. Investment banks sell products or assist companies with raising capital, typically by underwriting and/or acting as the firm’s agent in the issuance of securities. They also act as a

Investment committee: The governing body overseeing corporate pension investments. Also, the subcommittee of a board of trustees charged with developing investment policy for board approval.

Investment manager: Any company or individual that assumes discretion over a specified amount of real estate capital, invests that capital in assets via a separate account, co-investment program or commingled fund, and provides asset management.

Investment policy: A document that formalizes an institution’s guidelines for investment and asset management. An investment policy typically will contain goals and objectives; core and specialty investment criteria and methodology; and guidelines for asset management, inv

Investment strategy: The investment parameters used by the manager in structuring the portfolio and selecting the real estate assets for a fund or account.

Investment structures: Unleveraged acquisitions, leveraged acquisitions, traditional debt, participating debt, convertible debt, triple-net leases and joint ventures.

Investment: Money directed toward the purchase, improvement, and development of an asset in expectation of income or profits.

Investment-grade CMBS: Commercial mortgage-backed securities with ratings of “AAA,” “AA,” “A” or “BBB”.

Investor status: In reporting to clients and consultants, all investors are divided into two categories: taxable and tax-exempt. The tax-exempt category includes all qualified pension and retirement accounts.

Invitee: A business guest, or someone who enters property held open to members of the public, such as a visitor to a museum. Property owners must protect invitees from dangers on the property.

IoT (Internet of things): The interconnection via the internet of computing devices embedded in everyday objects, enabling them to send and receive data. System of interrelated computing devices, mechanical and digital machines, objects or people with the ability to transfer data.

IPO: Initial Public Offering. The first sale of stock by a company to the public.


ITQ (invitation to quote): An invitation for expressions of interest that a procuring organization extends.

Joint tenancy: A way for two or more people to share ownership of real estate or other property. When two or more people own property as joint tenants and one owner dies, the other owners automatically own the deceased owner’s share.

Joint tenants: Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants.

Joint venture: An investment entity formed by one or more entities to acquire or develop and manage real property and/or other assets.

Judgment clause: A provision that may be included in notes, leases, and contracts by which the debtor, lessee, or obligor authorizes any attorney to go into court to confess a judgment against him or her for a default in payment. Also called a cognovit.

Judgment: The official and authentic decision of a court of justice concerning the respective rights and claims of the parties to an action or suit.


Just compensation: Compensation that is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain).

KPI: KPI stands for Key Performance Indicator. A measurable value that demonstrates how efficiently the company is achieving its key business objectives.

Laches: Delay or negligence in asserting one’s rights.

Land: The earth’s surface extending downward to the center of the earth and upward infinitely into space.

Landlord: The person who owns land or house or real estate, which is rented or leased to an individual or a business organization.

Landlord’s warrant: A warrant from a landlord to levy upon a tenant’s 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.

Latent defect: Hidden structural defects and flaws.

Lead manager: The investment banking firm that handles the principal responsibilities for coordinating the new issuance of securities.

Lease agreement: The formal legal document entered into between a landlord and a tenant to reflect the terms of the negotiations between them.

Lease commencement date: The date usually constitutes the commencement of the term of the lease, whether or not the tenant has actually taken possession, so long as beneficial occupancy is possible.

Lease expiration exposure schedule: A listing of the total square footage of all current leases that expire in each of the next five years, without regard to renewal options.

Lease option: A contract in which an owner leases his house (usually for one to five years) to a tenant for a specific monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance.

Lease purchase: A contract in which an owner leases his house (usually for one to five years) to a tenant for an increased monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance.

Lease: A contract between a landlord (the lessor) and a tenant (the lessee) transferring the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and a stated consideration (rent).

Leasehold estate: A form of real estate in which a tenant is allowed to construct permanent structures upon a parcel of leased land, and derive some use or income from said structures during the period of the lease.

Leasehold interest: The right to hold or use property for a fixed period of time at a given price, without transfer of ownership.

Leasehold: The right to use and have exclusive possession (but not ownership) of real estate for a specified period and subject to the fulfilment of certain conditions as recorded in a lease agreement.

Legacy: A disposition of money or personal property by will.

Legal Description: A description of a specific parcel of real estate which is acceptable to the courts in that state, and which will allow an independent surveyor to locate and identify it.

Legal 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.

Lessee: Tenant leasing property.

Lessor: One who leases property to a tenant.

Letter of credit: A commitment by a bank or other person 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.

Letter of intent: A preliminary agreement stating the proposed terms for a final contract.

Letter of offer (LO): A bank will sign this contract with you when they offer you a loan.

Leverage: The use of borrowed funds to finance an investment and to magnify the rate of return.

Levy: To assess, seize, or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to seize officially the property of a person to satisfy an obligation.

License: A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. 2. The revocable permission for a temporary use of land – a personal right that cannot be sold.

Licensee: A person licensed by a state real estate commission to engage in real estate brokerage, either as a broker or as a salesman.

Lien waiver: Waiver of a mechanic’s lien rights that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. It may also be required before the owner can receive a draw on a construction loan.

Lien: A monetary claim against a property. These should be settled before the sale is finalized.

Life estate: An interest in property only for the duration of someone’s life.

Life tenant: One who has a life estate in real property.

Lifecycle: The various developmental stages of a property: pre-development, development, leasing, operating and redevelopment (or rehab).

Like-kind property: A 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.

Limited equity housing: An arrangement designed to encourage low-and moderate-income families to purchase housing, in which the housing is offered at an extremely favourable price with a low down payment.

Limited partnership: A type of partnership comprised of one or more general partners who manage the business and are personally liable for partnership debts, and one or more limited partners who contribute capital and share in profits but who take no part in running the business.

Liquidate: To convert assets into cash.

Liquidated damages: Liquidated damages occur when, by contractual agreement, defaulted earnest money becomes the personal property of the seller.

Liquidity: The ease with which assets can be bought or sold without affecting the price.

Lis pendens: A pending lawsuit. A lis pendens notice is legal notice to the world that a lawsuit is pending.

Listed: Being included and traded on a given exchange.

Listing agent: This is the agent who represents the seller in the home-buying process. On the other side is the buyer’s agent, who represents the buyer.

Listing agreement: The legal agreement between the listing agent/broker and the vendor, setting out the services to be rendered, describing the property for sale, and stating the terms of payment.

Listing broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the selling broker, from whose office negotiations leading to a sale are initiated.

Listing: A listing is essentially a home that is for sale. The term gets its name from the fact that these homes are often “listed” on a website or in a publication.

Littoral rights: A landowner’s claim to use water in large lakes and oceans adjacent to her or his property. 2. The ownership rights to land bordering these bodies of water up to the high-water mark.

Loan estimate: A three-page Loan Estimate must be provided to the consumers no later than three business days after they submit a loan application for most mortgages. The Loan Estimate provides information about key features, costs and risks of the mortgage loan for wh

Loan policy: A policy of title insurance issued to the mortgage lender insuring against loss by defects in, liens against, or unmarketability of title.

Loan-to-value ratio (LTV): The ratio of the amount being loaned in respect to the appraised value of the property, usually expressed as a percentage.

Lock/lock-In: A commitment you obtain from a lender assuring you a particular interest rate or feature or a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan.

Lock-box structure: A structure whereby the rental or debt-service payments are sent directly from the tenant or mortgagor to the trustee.

Lockout: The period during which a loan may not be prepaid.

Long-term lease: In most markets, this refers to a lease whose term is at least three years from initial signing to the date of expiration or renewal.

Loss severity: The percentage of principal lost when a loan is foreclosed.

Lot and block description: A description of real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as identified on a subdivided plat duly recorded in the county recorder’s office.

Lot: Generally 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 plats.

Low-rise: A building with fewer than four stories above ground level.


Lump-sum contract: A 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.

Magic page: Included in the offering prospectus, the magic page is a projected growth story, describing how a new REIT will accomplish its future expectations for funds from operations or funds available for distribution.

Maintenance charges: Charges payable by the owners or occupants of a development complex ( residential/commercial / plotted) towards the upkeep of all common areas and facilities. It is generally a monthly charge.

Maker: One who creates or executes a promissory note and promises to pay the note when it becomes due.

Management agreement: A contract between the owner of income property and a management firm or individual property manager outlining the scope of the manager’s authority.

Mandate: A mandate is an authorization or directive to carry out a policy or course of action. For example, an investment manager could receive a mandate from an investor to use an allocation of funds for a specific purpose or strategy.

Manufactured Home: A structure built in a factory, that is later shipped to, and placed on, the homesite. The term can apply to both mobile homes and pre-fab homes.

Margin: An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable-rate mortgages.

Marginal Land: Property which is barely profitable to use.

Marginal lease: A lease agreement that barely covers the costs of operation for the property.

Marginal real estate: Land that barely covers the costs of operation.

Mark to market: The process of increasing or decreasing the original investment cost or value of a property asset or portfolio to a level estimated to be the current market value.

Market Approach To Value: An estimate of value based on the actual sales prices of comparable properties. Contrast with cost approach to value and income approach to value.

Market capitalization: One measure of the value of a company; it is calculated by multiplying the current share price by the current number of shares outstanding.

Market price: The actual selling price of a property.

Market rental rates: The rental income that a property most likely would command in the open market, indicated by the current rents asked and paid for comparable space.

Market study: A 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.

Market Value: The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Also known as Fair Market Value.

Market/data approach: A method of appraising or evaluating real property based on the proposition that an informed purchaser would pay no more for a property than the cost to him or her of acquiring an existing property with the same utility.

Marketable title: A title free from encumbrances that could be readily marketed to a willing purchaser.

Marketplace: The system of buying and selling in competitive conditions.

Master lease: A primary lease that controls subsequent leases and may cover more property than subsequent leases.

Master limited partnership – MLP: A type of limited partnership that is publicly traded. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP’s

Master servicer: An institution that acts on behalf of a trustee for the benefit of security holders in collecting funds from a borrower, advancing funds in the event of delinquencies and, in the event of default, taking a property through foreclosure.

Master-planned community: A large scale, mixed-use, real estate development that follows a long term, comprehensive plan. Master-planned communities typically blend different price ranges of residential neighbourhoods with some commercial properties designed to serve the resident

Maturity date: The date when the total principal balance comes due.

Mechanic’s lien: A claim created 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.

Mediation: A dispute resolution method designed to help warring parties resolve their dispute without going to court. In mediation, a neutral third party (the mediator) meets with the opposing sides to help them find a mutually satisfactory solution. Unlike a judge

Meeting space: In hotels, space made available to the public to rent for meeting, conference or banquet uses.

Metes and bounds: A system of land description using distance (metes) and angles/compass directions (bounds), beginning and ending at the same point.

Mezzanine financing: Mezzanine financing is somewhere between equity and debt. It is that piece of the capital structure that has senior debt above it and equity below it. There is both equity and debt mezzanine financing, and it can be done at the asset or company level.

Mid-rise: A 4-story to 8-story tall building that contains residential apartment or condominium units. While not offering the panoramic views of a high-rise, mid-rise buildings can offer comparable levels of amenities and services.

Mill: A tax rate used by municipalities to compute property tax.

Millage rate: A property tax rate obtained by dividing the total assessed value of all the property in the tax district into the total amount of revenue needed by the taxing district. This millage rate then is applied to the taxable value of each property in the district.

Mineral rights: An ownership interest in the minerals contained in a particular parcel of land, with or without ownership of the surface of the land. The owner of mineral rights is usually entitled to either take the minerals from the land himself.

Minimum occupation period (MOP): This is introduced by the HDB for all purchasers of a HDB residential property. It is the length of time that the owner has to stay in the property before it can be sold or fully rented. Room rentals are still allowed within the MOP.

Minimum payment: The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be “interest only” (simple interest). In other plans, the minimum payment may include principal and interest.

Misrepresentation: A false statement, or concealment, of material fact with the intention of inducing action of another.

Mixed-use: A building or project that provides more than one use, such as office/retail or retail/residential.

MLS (Multiple Listing Service): A service created for the use of displaying listings across many brokers and brokerages.

Modern portfolio theory (MPT): An approach to quantifying risk and return in a portfolio of assets. Developed in 1959 by Harry Markowitz, MPT is the foundation for present-day principles of investment diversification. It emphasizes the portfolio rather than individual assets, and how

Modified Funds from Operations (MFFO): The standard measure of MFFO varies depending on agency and accounting principles but generally is a measure that takes net income in accordance with GAAP, excluding gains and losses from sales of depreciable property and adds depreciation and amortization.

Monetary policy: The government regulation of the amount of money in circulation through.

Money judgment: A court judgment ordering payment of money rather than specific performance of a certain action.

Money Market Fund: A mutual fund that invests only in money markets while maintaining a Net Asset Value (NAV) of $1.00.

Monthly Mortgage: The monthly principal and interest that is due on the loan.

Monument: A fixed object or point, either natural or man-made, used in making a survey.

Mortgage banker: Originates mortgage loans, loaning you their funds and closing the loan in their name.

Mortgage broker: The broker is an individual or company that is responsible for taking care of all aspects of the deal between borrowers and lenders, whether that be originating the loan or placing it with a funding source such as a bank.

Mortgage constant: The ratio of an amortizing mortgage payment to the outstanding mortgage balance.

Mortgage lender: An entity that loans money, acquiring a security interest in the property.

Mortgage lien: A lien or charge on a mortgagor’s property that secures the underlying debt obligations.

Mortgage Loan: A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or deed of trust is your agreement to pledge your home or other real estates as security.

Mortgage Payments: The total amount of payments due over the life of the loan.

Mortgage Servicing Ratio (MSR): MSR is the proportion of your gross monthly income spent on your mortgage repayment. According to current policy, it should not exceed 30%. This is used in calculating your loan eligibility for HDB, DBSS, and ECs.

Mortgage: A contract providing security for the repayment of a loan, registered against the property, with stated rights and remedies in the event of default.

Mortgagee: The lender in a mortgage loan transaction.

Mortgagor: The borrower in a mortgage loan transaction.

Multiple Listing Service (MLS): A system by which several real estate firms share information about homes that are for sale. Membership usually provides a monthly book and/or computer service that provides Realtors® with detailed listings of most homes currently on the market.

Multiple listing: An exclusive listing (generally an exclusive right to sell) with the additional authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.

Municipal ordinances: The laws, regulations, and codes enacted by the governing body of a municipality.

Mutual fund: A fund operated by an investment firm that raises money from shareholders and invests in a group of assets, in accordance with the prospectus’s stated set of objectives. Typically highly diversified.


Mutual rescission: The act of putting an end to a contract by mutual agreement of the parties.

NAREIT (National Association of Real Estate Investment Trusts): The national, not-for-profit trade organization that represents the real estate investment trust industry.

NASD: National Association of Securities Dealers – consolidated with NYSE Member Regulation in 2007 to form FINRA, the Financial Industry Regulatory Authority.

Negative Amortization: Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling.

Negligence: Carelessness and inattentiveness resulting in violation of trust. Failure to do what is required.

Negotiation: Dialogue between two or more people/parties intended to reach a joint agreement.

Net asset value (NAV): The value of an individual asset or portfolio of real estate properties net of leveraging or joint venture interests.

Net asset value per share: The current value of a REIT’s assets divided by shares outstanding.

Net assets: Total assets less total liabilities on a market-value basis.

Net cash flow: Generally determined by net income plus depreciation less principal payments on long-term mortgages.

Net income: The amount of money remaining after subtracting total expenses from total revenue.

Net investment in real estate: Gross investment in real estate less the outstanding debt balance.

Net investment income: The income or loss of a portfolio or entity resulting after deducting all expenses, including portfolio and asset management fees, but before realized and unrealized gains and losses on investments.

Net lease: A commercial real estate lease in which the tenant regularly pays not only for the space (as he does with a gross lease) but for a portion of the landlord’s operating costs as well.

Net listing: A price, which must be expressly agreed upon, below which the owner will not sell the property and at which the broker will not receive a commission; the broker receives the excess over and above the net listing price as commission. The broker in this ty

Net operating income (NOI): A before-tax computation of gross revenue less operating expenses and an allowance for anticipated vacancy. It is a key indicator of financial strength.

Net operating income: The gross income of the property minus vacancy, collection losses, and operating expenses (not including debt service).

Net present value (NPV): Net present value usually is employed to evaluate the relative merits of two or more investment alternatives. It is calculated as the sum of the total present value of incremental future cash flows plus the present value of estimated proceeds from sale.

Net purchase price: Gross purchase price less associated debt financing.

Net real estate investment value: The market value of all real estate less property-level debt.

Net returns: Returns to investors net of fees to advisers or managers.

Net sales proceeds: Proceeds from the sale of an asset or part of an asset less brokerage commissions, closing costs and market expenses.

Net square footage: The space required for a function or staff position.

Net worth: Total assets minus total liabilities of an individual or company.

Nominal yield: The yield to investors before adjustments for fees, inflation or risk.

Non-compete clause: A 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.

Nonconforming use: A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

Non-discretionary funds: Funds allocated to an investment manager requiring the investor’s approval on each transaction.

Non-Escrowing Loan: Typically, mortgage lenders require escrow accounts for property taxes, hazard insurance, and sometimes, homeowner’s association dues. Monthly contributions to these accounts are rolled into a lender’s mortgage payment.

Non-homogeneity: A lack of uniformity; dissimilarity. Because no two parcels of land are geographically alike, real estate is said to be nonhomogeneous, or heterogeneous.

Non-investment-grade CMBS: Securities rated “BB” or “B,” also referred to as high-yield CMBS.

Non-performing loan: A loan that is unable to meet its contractual principal and interest payments.

Non-recourse debt: A loan that, in the event of a default by the borrower, limits the lender’s remedies to a foreclosure of the mortgage, realization on its assignment of leases and rents, and acquisition of the real estate.

Notarize: To certify or attest to a document, as by a notary public.

Notary public: A public official authorized to certify and attest to documents, take affidavits, take acknowledgments, administer oaths, and perform other such acts.

Note: A written instrument of credit attesting to a debt and promise to pay.

Novation: Acceptance by parties to an agreement to replace an old debtor with a new one. A novation releases liability.


Nuisance: Something that interferes with the use of property by being irritating, offensive, obstructive or dangerous. Nuisances include a wide range of conditions, everything from a chemical plant’s noxious odours to a neighbour’s dog barking.

Obsolescence: A loss in value of real property caused by changes, either internal or external, to the property. See economic obsolescence, functional obsolescence, and physical deterioration.

Offer and notification of acceptance: The two components of a valid contract; a “meeting of the minds.”

Offer: A proposal to enter into an agreement with another person. An offer must express the intent of the person making the offer to form a contract, must contain some essential terms including the price and subject matter of the contract and must be communicated.

Officer’s deed: A deed by sheriffs, trustees, guardians, etc.

One hundred percent commission plan: A salesperson compensation plan by which the salesperson pays his or her broker a monthly service charge to cover the costs of office expenses and receives 100% of the commissions from the sales that he or she negotiates.

Open House: An opportunity for prospective buyers to view a house in a low-pressure environment.

Open Listing: A listing under which the principal (owner) reserves the right to list his property with other brokers.

Open space: An area of land or water dedicated for public or private use or enjoyment.

Open-end fund: A commingled fund that does not have a finite life, continually accepts new investor capital and makes new property investments.

Open-end mortgage: A mortgage loan expandable by increments up to maximum dollar amount, all of which is secured by the same original mortgage.

Operating cost escalation: Although 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 a building.

Operating costs: The actual costs associated with operating a property, including maintenance, repairs, management, utilities, taxes and insurance.

Operating expense: The actual costs associated with operating a property, including maintenance, repairs, management, utilities, taxes and insurance.

Opinion: In title industry terms, referred to as title opinion. The conclusion and judgment of a skilled person as to the status of a title, based upon a title examination.

Opportunistic: A phrase generally used by advisers and managers to describe investments in underperforming and/or undermanaged assets that hold the expectation of near-term increases in cash flow and value through “turnaround” strategies.

Option: The right to purchase property within a definite time at a specified price. There is no obligation to purchase, but the seller is obligated to sell if the option holder exercise the right to purchase.

Optionee: The party that receives and holds an option.

Optionor: The party that grants or gives an option.

Option-to-purchase (OTP): An OTP is a right given by the seller of a property to the buyer to buy at a specified price within a specified period of time (the validity period of the option).

Ordinary income: Income received that is taxed at the highest rates. Ordinary income is composed generally of wages, salaries, commissions and interest income.

Origination fee: A fee charged by lenders, in addition to interest, for services in connection with granting of a loan. Usually a percentage of the loan amount.

Originator: A company that sources and underwrites commercial and/or multifamily mortgage loans.

Out-parcel: Individual retail sites in a shopping center.

Overallotment: A practice through which underwriters offer and sell more shares than they have agreed to buy from the issuer.

Owner’s policy: This policy is purchased for a one-time fee and protects a homeowner’s investment in a property for as long as they or their heirs have an interest in the property.


Ownership: The exclusive right to hold, possess or control, and dispose of a tangible or intangible thing. Ownerships may be held by a person, corporation, or governmental entity.

"Knowledge is power. Information is liberating. . ."

Package mortgage: A method of financing in which the purchase of the land also finances the purchase of certain personal property items.

Parking ratio: Dividing the total rentable square footage of a building by the building’s total number of parking spaces provides the amount of rentable square feet per each individual parking space.

Parol evidence rule: A law that states that no prior or contemporary oral or extraneously written agreement can change the terms of a contract.

Partial eviction: A case in which the landlord’s negligence deprives the tenant of the use of all or part of the premises.

Partial sales: The sale of an interest in real estate that is less than the whole property. This may include a sale of easement rights, parcel of land or retail pad, or a single building of a multi-building investment.

Partial taking: The taking of part of an owner’s property under the laws of eminent domain.

Participating debt: In addition to collecting a contract interest rate, participating debt allows the lender to have participatory equity rights through a share of increases in income and/or increases in residual value over the loan balance.

Participation financing: A mortgage in which the lender participates in the income of the mortgaged venture beyond a fixed return, or receives a yield on the loan in addition to the straight interest rate.

Partition: The division of cotenants’ interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.

Partnership: An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law, a partnership is regarded as a group of individuals rather than as a single entity. A general partnership is a typical form of joint venture.

Party wall easement: A wall that is located on or at a boundary line between two adjoining parcels for the use of the owners of both properties.

Party wall: Wall erected on the line between adjoining properties for the use of both properties.

Passive income: Income derived from business investments in which the individual is not actively involved, such as a real estate investment.

Pass-through certificate: Payments of principal and interest from the underlying pool of mortgages are passed through to the holders of the certificates.

Patio Home: A single-family home that sits on a small lot, often with one outside wall of the structure sitting on the property line.

Payee: The party that receives payment.

Payor: The party that makes payment to another.

Payout ratio: The percentage of the primary earnings per share, excluding extraordinary items, paid to common stockholders in the form of cash dividends during the trailing 12 months.

Pension fund: A fund established by an employer to facilitate and organize the investment of employees’ retirement funds contributed by the employer and employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide

Pension liability: The total amount of capital required to fund vested pension fund benefits.

Per square foot (PSF): Used as a quick way to judge the value of a property. It is calculated by dividing the price of the property over the area in square feet.

Percentage lease: Lease in which all or part of the rental is a specified percentage of gross income from total sales made upon the premises.

Percentage rent: Rent payable under a lease that is equal to a percentage of gross sales or gross revenues received by the tenant. It is commonly used in retail center leases.

Performance bond: A 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’s loss in the event of non-performance.

Performance measurement: The process of measuring an investor’s real estate performance in terms of individual assets, advisers/managers and portfolios. The scope of performance measurement reports varies among managers, consultants and plan sponsors.

Performance: The quarterly changes in fund or account values attributable to investment income, realized or unrealized appreciation, and the total gross return to the investors both before and after investment management fees.

Performance-based fees: Fees paid to advisers or managers based on returns to investors, often packaged with a modest acquisition and asset-management fee structure.

Periodic estate: An interest in leased property that continues from period to period – week to week, month to month, or year to year.

Permanent loan: The long-term mortgage on a property.

Permanent reference marker: Referred to as a PRM, it is a fixed object that leads the surveyor to the point of beginning (POB). In most surveys, two different PRMs are used to locate the POB.

Person: An individual, a partnership, or a corporation, foreign or domestic.

Personal assistant: An individual working for a broker or salesperson who handles non-sales-related aspects of real estate transactions. However, if the personal assistant is licensed, then he or she can also handle the sales-related aspects of the transaction.

Personal property: Property which is tangible, movable, and not fixed to the land. Also called chattel and personalty.

Personalty: Personal property; chattel. Contrast with Realty.

Physical Deterioration: The loss of value to real property from all causes due to the action of the elements and old age. Physical deterioration can be either curable or incurable.

PITI: Principal, Interest, Taxes and Insurance.

Placement agent: A firm that acts as an intermediary between a fund manager seeking to raise capital and various investors who may be interested in investing in such a fund. Examples of such firms include Park Hill Real Estate, Probitas Partners, Park Madison Partners an

Plan assets: The assets of a pension plan.

Plan sponsor: The entity that establishes, contributes to and is responsible for the administration of an employee benefit plan, often used interchangeably to describe staff who administer the plan and trustees or investment board members who govern it.

Planned Unit Development (PUD): In a PUD, the planned unit development association owns and maintains property in a real property development project for the benefit of its members, who are owners of individual parcels of real property in the development and are members of the associat

Plat Book: A record of recorded subdivisions of land.

Plat: Map of a specific area, such as a subdivision, that shows the boundaries of individual lots together with streets and easements.

Point of beginning: The starting point of the survey situated in one corner of the parcel in a metes-and-bounds description. All metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning.

Points: Fees paid to induce lenders to make mortgage loans at a particular interest rate. Each point is equal to one per cent (1%) of the loan principal. Same as discount points.

Police power: The authority of a government to adopt and enforce law governing the use of real estate based on the need to promote public safety, health, and general welfare.

Portfolio management: The portfolio management process involves formulating, modifying and implementing a real estate investment strategy in light of an investor’s broader overall investment objectives. It also can be defined as the management of several properties owned by a

Portfolio turnover: The average time from the funding of an investment until it is repaid or sold.

Positive spread investing (PSI): The ability to raise funds (both equity and debt) at a cost significantly less than the initial returns that can be obtained on real estate (or other) investments.

Power of attorney (POA): A written authorization by a person to another person to act for him on his behalf.

Power of sale: Clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power, upon default in the payment of the debt secured, to advertise and sell the property at public auction.

Pre-approval letter: Before buying a home, a buyer can obtain a pre-approval letter from a bank, which provides an estimate of how much the bank will lend that person. This letter will help determine what the buyer can afford.

Pre-approval: A statement from a lender that you possess enough means to secure a loan. It is not a commitment to lend you money.

Preferred shares: Stocks that have prior claim on distributions (and/or assets in the event of dissolution) up to a definite amount before the common shareholders are entitled to anything. As a form of ownership, preferred shareholders fall behind all creditors in dissolu

Preleased: Space in a proposed building that has been leased before the start of construction or in advance of the issuance of a certificate of occupancy.

Preliminary title report: A report prepared prior to issuing a title insurance policy that shows the ownership of a specific parcel of land. It includes information about liens and encumbrances that will not be covered under a title insurance policy.

Premises: The specific section of a deed that states the names of the parties, recital of consideration, operative words of conveyance, legal property description, and appurtenance provisions.

Premium: The amount payable for an insurance policy.

Prepayment clause in a mortgage: Statement of the terms upon which the mortgagor (borrower) may pay the entire or stated amount on the mortgage principal at some time prior to the due date.

Prepayment clause: In a mortgage, the statement of the terms on which the mortgagor may pay the entire or stated amount of the mortgage principal at some time prior to the due date.

Prepayment penalty: A fee paid to the lending institution for paying a loan before the scheduled maturity date.

Prepayment rights: Rights given to the borrower to make partial or full payment of the total principal balance prior to the maturity date without penalty.

Prepayment: Paying off all or part of the mortgage before the scheduled date.

Price to earnings ratio: This ratio is calculated by dividing the current share price by the sum of the primary earnings per share from continuing operations, before extraordinary items and accounting changes, over the past four quarters.

Primary issuance: The initial financing of an issuer.

Primary mortgage market: Lenders who originate loans and makes funds available directly to the borrowers.

Prime rate: The interest, or the discount rate charged by a commercial bank to its largest and strongest customers.

Prime space: Typically refers to first-generation space that is available for lease.

Prime tenant: The major tenant in a building, or the major or anchor tenant in a shopping center.

Principal payments: The return of invested capital to the lender.

Principal: The principal is the amount of money borrowed to purchase a home. Paying off the principal allows a buyer to build equity in a home. A principal is combined with interest to determine the monthly mortgage payment.

Principle of conformity: An appraisal principle which holds that the maximum value is realized when a reasonable degree of homogeneity (sameness) exists in a neighbourhood.

Priority: The order of position or time. The priority of liens generally is determined by the chronological order in which the lien documents are recorded; tax liens (like special assessments), however, have priority, even over previously recorded liens.

Private debt real estate: One of the four quadrants of the real estate capital markets. Also known as “mortgages” or “whole loan mortgages,” but also can refer to participating mortgages, loan participations and loan syndications. Typically refers to commercial loans, but also ca

Private equity real estate fund (Private Equity Fund): A pooled fund vehicle targeting institutional investors, individual investors, or both, typically structured as a private real estate investment trust (REIT), or other form of real estate operating company, or through some form of commingling arrangement.

Private equity real estate manager (Private Equity Manager): A manager of direct investments in real estate, either for the benefit of the private equity manager’s own account, for the benefit of the manager’s third party investment management investor clients, or both.

Private equity real estate: One of the four quadrants of the real estate capital markets. Also known as “equity real estate” or “direct real estate.” Typically refers to commercial real estate investments, but also could include private equity market investments.

Private mortgage insurance (PMI): Default insurance on conventional loans, normally insuring the top 20%-25% of the loan and not the whole loan.

Private mortgage insurance: Private mortgage insurance (PMI) is an insurance premium that the buyer pays to the lender in order to protect the lender from default on a mortgage. These insurance payments typically end once the buyer builds up 20% equity in a home.

Private placement: A sale of a security in a manner that is exempt from the registration rules and requirements of the Securities and Exchange Commission. An example would be a REIT directly placing an issue of stock with a pension fund.

Private REIT: An infinite- or finite-life real estate investment company structured as a real estate investment trust. Shares are placed and held privately rather than sold and traded publicly.

Pro rata: In the case of a tenant, the proportionate share of expenses for the maintenance and operation of the property.

Probate: A legal procedure in which the validity and probity of a document, such as a will, is proven.

Procurement: All aspects of acquiring and delivering goods, services and works. It starts with identifying a need and finishes with either the end of a service contract or the end of the useful life and disposal of an asset.

Procuring cause: The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.

Production acres: The area of land that can be used in agriculture or timber operations to produce income, not including areas used for crop or machinery storage, or other support areas.

Programmatic: When a joint venture is formed to acquire multiple assets, some of which may not yet be identified. Multiple assets may be developed or acquired under a single joint venture agreement, or multiple assets may be developed or acquired under a series of joint ventures.

Project management: A management process that encompasses all phases of a project, from initiation to the meeting of objectives.

Project manager: The person tasked with initiating, planning, executing, and closing a project, and with managing all aspects of project performance through these phases. The term is typically used for project management professional.

Promissory note: A written promise to pay or repay a specified sum of money at a stated time, or on demand, to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest.

Promulgated contracts: Some state real estate commissions have prepared and authorized various standard contracts that must be used by all licensees when acting as agents in real estate transactions with limited exceptions.

Property disclosure acts: State mandated seller’s property disclosure reports. These reports place the burden of defect disclosure on the seller. Agents are not required to discover property defects but are required to disclose them if they are known.

Property management: The operation of the property of another for compensation. Includes marketing space; advertising and rental activities; collecting, recording, and remitting rents; maintaining the property; tenant relations; hiring employees and keeping proper accounts etc.

Property manager: A third party specialist responsible for managing a rental property. PM services include: Periodic documented inspections and maintenance recommendations, advertising for tenants, vetting prospective tenant applications, the first point of contact for tenants.

Property taxes: Taxes that are paid yearly on real property. Property taxes are ad valorem, based on the assessed value of the real estate.

Proptech: Property technology (proptech) is the use of information technology (IT) concerning information provision, transactions, management and related to all types of real estate including residential, commercial, hotel, logistics and land.

Pro-rate: To divide or distribute proportionally. At closing, various expenses such as taxes, insurance, interest, rents, etc. Are prorated between the seller and buyer.

Proration: The proportional division or distribution of expenses of property ownership between two or more parties. Closing statement prorations generally include taxes, rents, insurance, interest charges, and assessments.

Prospectus: A formal legal document, which is required by and filed with the Securities and Exchange Commission. The document provides the details about an investment offering for sale. A prospectus should contain the facts that an investor needs to make an informed decision.

Proxy: A formal power of attorney document that authorizes another shareholder, a representative of the shareholder or the company’s management, to vote on behalf of the shareholder at the annual meeting.

Prudent man rule: The standard to which a fiduciary is held accountable under ERISA.

Public debt real estate: One of the four quadrants of the real estate capital markets. Typically refers to Commercial Mortgage Backed Securities (CMBS) and Residential Mortgage Backed Securities (RMS), but also can include public bond issues from public and private companies.

Public equity real estate: One of the four quadrants of the real estate capital markets. Typically refers to investments in the securities of publicly traded real estate investment trusts (reits) and other non-REIT publicly traded real estate operating companies.

Public records: The transcriptions in a recorder’s office of instruments that have been recorded, including the indexes pertaining to them.

Public utility easement: A right granted by a property owner to a public utility company to erect and maintain poles, wires, and conduits on, across, or under her or his land for telephone, electric power, gas, water, or sewer installation.

Public-private partnership (P3): According to the National Council for Public Private Partnerships, a Public-Private Partnership (P3) is a contractual agreement between a public agency and a private sector entity.

Puffing: Non-factual or extravagant statements and opinions made to enhance the perceived desirability of a property. The is a fine line between legal puffing and illegal misrepresentation, and puffing is best avoided.

Punch list: An itemized list documenting incomplete or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially complete.

Pur autre vie: Latin, meaning “for the life of another.” A life estate pur autre vie is a life estate measured by the life of a person other than the grantee.

Purchase offer: A document that lists the price, terms and conditions under which a buyer is willing to purchase a property.


Purchase-money mortgage: A note secured by a mortgage or deed of trust given by a buyer, as a mortgagor, to a seller, as a mortgagee, as part of the purchase price of the real estate.

Qualified plan: Any employee benefit plan that is qualified by the IRS as a tax-exempt plan. Among other requirements, the plan’s assets must be placed in trust for the sole benefit of the employees covered by the plan.

Qualify: To meet a mortgage lender’s approval requirements.

Qualifying ratios: Comparisons of a borrower’s debts and gross monthly income.

Qualifying: The act of determining a prospect’s motivation, then matching his or her needs with the available inventory.

Quiet enjoyment: The right of a property owner or tenant to enjoy his or her property without interference. Disruption of quiet enjoyment may constitute a nuisance.

Quiet title suit: A lawsuit brought by an owner of real estate for the purpose of cancelling, wiping out, and putting a quietus upon supposedly immaterial, inconsequential, and unenforceable claims and interests that cloud the owner’s title.


Quitclaim deed: A deed that transfers whatever ownership interest the transferor has in a particular property. The deed does not guarantee anything about what is being transferred, including an actual ownership interest. 

Range: A six-mile strip of land measured east and west from the meridian lines.

Rating agencies: Independent firms engaged to rate the creditworthiness of securities for the benefit of investors. The major rating agencies are Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.

Rating: Grade, assigned by a rating agency, designating the credit quality or creditworthiness of the underlying assets.

Raw land: Unimproved land that remains in its natural state.

Raw space: Unimproved shell space in a building.

Real assets: Real assets are often defined as physical or tangible assets that have intrinsic value and tend to provide a “real return”, often linked to inflation.

Real estate agent: A real estate agent is a professional with a real estate license who works under a broker and assists both buyers and sellers in the home-buying process.

Real estate appraiser, licensed: A person licensed to legally appraise real estate property for a fee.

Real estate broker: A real estate broker is a real estate agent who has passed a state broker’s exam and met a minimum number of transactions. These brokers can work on their own or hire their agents.

Real estate fundamentals: The factors driving the value of real property (i.e., the supply, demand and pricing for land and/or developed space in a given geographic or economic region or market).

Real estate investment trust (REIT): A REIT is a corporation or business trust that combines the capital of many investors to acquire or provide financing for all forms of income-producing real estate.

Real estate: Land; a portion of the earth’s surface extending downward to the centre of the earth and upward infinitely into space, including all things permanently attached thereto, whether by nature or by man.

Real property: Refers to the right to own land and improvements. Commonly used interchangeably with Real Estate and Realty. Contrast with personal property.

Real rate of return: Yield to investors net of an inflationary factor. The formula for calculating the real rate of return is [(1 + nominal yield) / (1 + inflation rate)] – 1.

Reality of consent: An element of all valid contracts. Offer and acceptance in a contract usually are taken to mean that reality of consent also is present. This is not the case, however, if any of the following are present: mistake, misrepresentation, fraud, undue influence.

Realtor: A Realtor is a real estate agent who is explicitly a member of the National Association of Realtors. NAR has a code of standards and ethics that members must adhere to.

Realty: Refers to land and buildings and other improvements from a physical standpoint. Real Estate and Real Property tend to be used interchangeably with Realty in everyday usage. Contrast with personalty.

Recapture: 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 because there is a forgiveness of debt.

Receiver: Court-appointed custodian who holds property for the court, pending final disposition of the matter before the court.

Recission: The termination of a contract by mutual agreement of the parties.

Reconciliation: The final step in the appraisal process in which the appraiser reconciles the estimates of value received from the market/data, cost, and income approaches to arrive at a final estimate of market value for the subject property.

Record title: The aspects of a title that appear in the public records as distinguished from unrecorded title aspects and interests.

Recorded plat: A subdivision map filed with the county recorder’s office that shows the location and boundaries (lot and block number) of individual parcels of land. Contrast with government survey method and metes and bounds.

Recording: The act of entering the public records, the written record of title to real property, thereby giving constructive notice to the public.

Recourse: The right of a lender, in the event of default by the borrower, to recover against the personal assets of a party who is secondarily liable for the debt.

Red herring: The preliminary prospectus for an initial public offering. Before the registration statement becomes effective, underwriters may use the preliminary prospectus to market the offering. The preliminary prospectus, however, must bear a legend printed in red

Redlining: The illegal practise of refusing to originate mortgage loans, or limiting their number, in specific neighbourhoods based on racial or ethnic composition.

Refinance rate: When referring to title insurance, the refinance rate is the reduced rate for a loan policy issued on the new loan in a refinance transaction, in which the original loan was previously insured within some period of years.

Refinance: The act of acquiring a new mortgage to replace the old mortgage, oftentimes advantageous to the borrower.

Refinancing: Refinancing is when you restructure your home loan, replacing your old loan with an entirely new loan that has different rates and payment structures. The main reason people refinance their home loans is to get a lower interest rate on their mortgage, an

Regional diversification: Definitions for what constitute various regions, for diversification purposes, vary among managers, consultants and plan sponsors. Some boundaries are defined based purely on geography; others have attempted to define boundaries along economic lines.

Registration statement: Forms filed with the Securities and Exchange Commission (or the appropriate state regulatory agency) in connection with a proposed offering of new securities or the listing of outstanding securities on a national exchange.

Rehab: Extensive renovation intended to cure obsolescence of a building or project.

Release: To relinquish an interest or claim to a piece of property.

Relocation service: An organization that aids a person in selling a property in one area and buying another property in another area.

Remainder: The future interest in an estate which takes effect after the termination of another estate, such as a life estate; what is left at the termination of a life estate.

Renegotiable rate mortgage: A mortgage loan that is granted for a term of 3 to 5 years and secured by a long-term mortgage of up to 30 years with the interest rate being renegotiated or adjusted each period.

Renewal option: A clause giving a tenant the right to extend the term of a lease.

Renewal probability: Used to estimate leasing-related costs and downtime, it is the average percentage of tenants in a building that are expected to renew at market rental rates upon the expiration of their leases.

Rent commencement date: The date on which a tenant begins paying rent.

Rent schedule: A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building’s estimated expenses, market supply and demand, and the owner’s long-range goals for the property.

Rent: Compensation or fee paid for the occupancy and use of any rental property, land, buildings, equipment, etc.

Rentable/usable ratio: A building’s total rentable area divided by its usable area. It represents the tenant’s pro-rata share of the building’s common areas and can determine the square footage upon which the tenant will pay rent.

Rental concession: What landlords offer tenants to secure their tenancy. While rental abatement is one form of a concession, there are many others such as increased tenant improvement allowance, signage, below-market rental rates and moving allowances.

Rental growth rate: The expected trend in market rental rates over the period of analysis, expressed as an annual percentage increase.

Rent-up period: The period following construction of a new building when tenants are actively being sought and the project is approaching its stabilized occupancy.

Replacement cost: The estimated current cost to construct a building with utility equivalent to the building being appraised, using modern materials and current standards, design and layout.

Replacement reserves: An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the building’s economic life.

Reproduction cost: The cost of construction at current prices of an exact duplicate or replica using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, superadequacies, and obsolescence of the subject.

Request for proposal (RFP): A formal request, issued by a plan sponsor or its consultant, inviting investment managers to submit information on their firms’ investment strategy, historical investment performance, current investment opportunities, investment management fees, other p

Reservation in a deed: The creation by a deed to property of a new right in favor of the grantor. Usually involves an easement, a life estate, or a mineral interest.

Reservation: A right reserved by a grantor in the sale or lease of a property. In a sale, the title of all property passes to the grantee, but the use may be reserved for the grantor.

Reserve account: An account that a borrower has to fund to protect the lender. Examples include capital expenditure accounts and deferred maintenance accounts.

Reserves: Amounts of money set aside by a mortgage company to assure payment of property taxes, homeowners’ association dues, and insurance premiums. The money is kept in an escrow account.

Residential real estate: Residential real estate is property made up of land and the buildings on it. It can be houses, condominiums, and townhouses. The structures may be single-family or multi-family dwellings and may be owner-occupied or rental properties.

Restriction: A limitation on the use of real property, generally originated by the owner or subdivider in a deed.

Restrictions: Limitations on the use or occupancy of real estate contained in a deed or local ordinances pertaining to land use.

Retail investor: When used to describe an investor, retail refers to the nature of the distribution channel and the market for the services – selling interests directly to consumers.

Retention rate: The percent of trailing 12-month earnings that have been ploughed back into the company. It is calculated as 100 minus the trailing 12-month payout ratio.

Return on assets: The income after taxes for the trailing 12 months divided by the average total assets, expressed as a percentage.

Return on equity: The income available to common stockholders for the trailing 12 months divided by the average common equity, expressed as a percentage.

Return on investments: The trailing 12-month income after taxes divided by the average total long-term debt, other long-term liabilities and shareholders equity, expressed as a percentage.

Reverse annuity mortgage: A mortgage loan that allows the owner to receive periodic payments based on the equity in the home.

Reversion capitalization rate: The capitalization rate used to determine reversion value.

Reversion value: A lump-sum benefit that an investor receives or expects to receive at the termination of an investment.

Reversion: The remnant of an estate that the grantor holds after he or she has granted a life estate to another person; the estate will return or revert to the grantor. Also called a reverter.

Reversionary right: An owner’s right to regain possession of leased property on termination of the lease agreement.

Revpar (Revenue per available room): Total room revenue for the period divided by the average number of available rooms in a hospitality facility.

Rezoning: The process involved in changing the existing zoning of a property or area.

RFP (request for proposal): A formal invitation for expressions of interest that is extended by an organization looking to procure goods or services.

RFQ (request for quote): Upon receipt of proposals after issuing a request for proposal, an organization will issue a request for quotations to shortlisted proposers, asking for detailed cost estimations for specific goods or services.

Right of first refusal: A person’s right to have the first opportunity to either lease or purchase real property.

Right Of Survivorship: The right of a surviving joint tenant to take ownership of a deceased joint tenant’s share of the property. See joint tenancy.

Right of way: (1) The right to pass over property owned by another, usually based upon an easement. (2) A path or thoroughfare over which passage is made. (3) A strip of land over which facilities such as highways, railroads, or power lines are built.

Riparian Owner: One who owns land bounding upon a river or watercourse (stream, creek, bayou, etc.).

Riparian rights: The many rights of a person in, to, and over the banks, bed, shallows, shore, and water of a stream or body of water upon which his land borders.

Risk management: A systematic approach to identifying and separating insurable risks from non-insurable risks, and evaluating the availability and costs of purchasing third-party insurance.

Risk rate: When referring to title insurance, the risk rate is a rate that does not include the cost of researching the title or the cost of conducting the closing.

Risk-adjusted rate of return: Used to identify investment alternatives that can be expected to deliver a positive premium, after taking into consideration the expected volatility. The risk-adjusted rate of return is defined as the expected rate of return of a given asset.

Road show: A tour made by executives of a company that plans to go public, where they travel to various cities to meet with underwriters and analysts and make presentations regarding their company and IPO.

Roll-over risk: The risk that a tenant’s lease will not be renewed.


Running with the land: A phrase used in property law to describe a right or duty that remains with a piece of property no matter who owns it.

Sale-leaseback: An arrangement by which the owner-occupant of a property agrees to sell all or part of the property to an investor, then lease it back and continue to occupy space as a tenant.

Sales and Purchase Agreement: S&P Agreement refers to a private contract between the seller and the buyer for the sale and purchase of a property.

Sales comparison value: A value indication derived by comparing the property being appraised to similar properties that have been sold recently.

Sales Contract: A written agreement stating the terms of the sale agreed to by both buyer and seller.

Salesperson: A person who performs real estate activities while employed by or associated with a licensed real estate broker.

Satisfaction: A document acknowledging the payment of a debt. Once filed, the collateral pledged (mortgage) is returned to the mortgagor for a “mortgage burning party.”

Search: A careful exploration and inspection of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Second mortgage: A mortgage ranking in priority immediately below a first mortgage.

Secondary financing: A loan on real property secured by a lien junior to an existing first mortgage loan.

Secondary market: A market where existing mortgage loans are securitized and then bought and sold to other investors.

Secondary mortgage market: Buying and selling of existing mortgage loans, designed to provide additional liquidity for lenders.

Secondary, or follow-on, offering: A stock offering made by an existing public company.

Second-generation or secondary space: Previously occupied space that becomes available for lease, either directly from the landlord or as sublease space.

Section: A portion of a township under the rectangular survey system (government survey method). A township is divided into 36 sections numbered 1 to 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres.

Securitization: The process of converting an illiquid asset, such as a mortgage loan, into a tradable form, such as mortgage-backed securities.

Security deposit: A payment required by a landlord to ensure that a tenant pays rent on time and keeps the rental unit in good condition. If the tenant damages the property or leaves owing rent, the landlord can use the security deposit to cover what the tenant owes.

Security Interest: An interest that a lender takes in the borrower’s property to assure repayment of a debt.

Seisen (seizen): Possession of real property under claim of freehold estate.

Self amortized Loan: A loan which will retire the debt by systematic payments of principal and interest, so that at the end of the loan period, the balance will be zero.

Self-administered REIT: When members of the management are employees of the REIT or an entity having essentially the same economic ownership as the REIT.

Self-proving will: A will in which the witnesses give their testimony at the time of signing. This testimony is preserved in a notarized affidavit to eliminate the problem of finding the witnesses at the maker’s death and to assist in the probating procedure.

Seller stamp duty (SSD): Introduced by the Internal Revenue Authority Singapore (IRAS), SSD rates are imposed on private property sellers as a form of cooling measure.  They prevent ‘flipping’, or the buying then selling of properties quickly.

Senior classes: With regard to securities, describes the classes with the highest priority to receive the payments from the underlying mortgage loans.

Separate account: A relationship where an investment manager or adviser is retained by a single pension plan sponsor to source real estate product under a stated investment policy exclusively for that sponsor.

Separate property: The real property owned by a husband and wife prior to their marriage.

Servicer: An organization that acts on behalf of a trustee for the benefit of security holders.

Servicing A Loan: The ongoing process of collecting your monthly mortgage payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills.

Servient Tenement: Property that is subject to use by another for a specific purpose. For example, a beachfront house that has a public walkway to the beach on its premises would be a servient tenement.

Setback: The distance from a curb, property line or other reference point, within which building is prohibited.

Settlement: In some areas called a “closing.” The process of completing a real estate transaction during which deeds, mortgages, leases and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed.

Severalty: The ownership of real property by one person only; also called sole ownership.

Shared equity mortgage: A home loan in which the lender gets a share of the equity of the home in exchange for providing a portion of the down payment. When the home is later sold, the lender is entitled to a portion of the proceeds.

Shares outstanding: The number of shares of common stock currently outstanding, less the shares held in treasury.

Short sale (of house): A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage p

Sidecar fund or investment: A sidecar or over-allocation fund is a blind-pool co-investment vehicle under common sponsorship with a private equity fund. The sidecar fund has a right of second opportunity to participate in larger investments.

Simple interest: Interest computed only on the principal balance. Contrast with compound interest.

Simultaneous issue rate: When referring to title insurance, the simultaneous issue rate is the reduced rate for a loan policy or owner’s policy issued on the same property or loan at the same time as another policy. The term usually refers to a loan policy issued at the same time.

Singapore inter-bank offer rate (SIBOR): This refers to the rate that financial institutions in Singapore borrow and lend unsecured funds to and from each other. Most mortgage loans peg their interest rates to SIBOR, plus a bank margin.

Single REOC fund: A fund offered by a fully or partially vertically integrated real estate operating company. The fund doesn’t enter into joint ventures with third party operators, because the REOC sponsoring the fund IS the operator of the assets.

Single-family home: A free-standing, residential structure, designed to accommodate one family. Single-family homes include traditional houses, as well as patio homes.

Site analysis: Determines the suitability of a specific parcel of land for a specific use.

Site development: The installation of all necessary improvements made to a site before a building or project can be constructed on the site.

Site plan: A detailed plan that depicts the location of improvements on a parcel.

Situs: The personal preference of people for one area of land over another, not necessarily based on objective facts and knowledge.

Slab: The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building.

Smart building: Any structure that uses automated processes to automatically control the building’s operations including heating, ventilation, air conditioning, lighting, security and other systems. This infrastructure helps owners, operators and facility managers improve efficiency.

Smart city: A city that implements information and communication technologies (ICT) to improve the quality and performance of urban services such as energy, transportation and utilities in order to reduce resource consumption, wastage and overall costs.

Smart home: A smart home is a residence that uses internet-connected devices to enable remote monitoring and management go appliances and systems, such as lighting and heating.

Social investing: Investments driven in whole or in part by social or political (non-real estate) objectives. Under ERISA, social investing is economically justified only if proper real estate fundamentals are considered first.

Socialize: To place under government or group ownership or control (to “socialize” the nation’s debt); To make fit for companionship with others (to make something or someone “sociable”); To convert or adapt to the needs of society (to “socialize” the approach).

Soft cost: The portion of an equity investment other than the actual cost of the improvements themselves that may be tax-deductible in the first year.

Sovereign wealth fund (SWF): A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals, or other financial instruments. Sovereign wealth funds invest globally. Most SWFs are funded by foreign exchange

Sovereignty of the soil: The beginning of the record of ownership of land by conveyance from the sovereign or the state. Historically, this is known also as a patent.

Space plan: A graphic representation of a tenant’s space requirements, showing wall and door locations, room sizes and sometimes furniture layouts.

Space-as-a-service (Saas): There are two ways to understand space as a service. It is space that is obtained on-demand for a specific purpose, although these purposes can be very wide-ranging.

Special assessment: Special charges levied against real property for public improvements that benefit the assessed property.

Special servicer: A firm that is employed to work out mortgages that are either delinquent or in default.

Special warranty deed: A warranty deed which, instead of warranting the title from sovereignty of the soil to the last grantee, merely warrants the title against every person whomsoever lawfully claiming or to claim the same.

Specific lien: A claim that only applies to or affects a certain property or group of properties.

Specific performance suit: A legal action brought in a court of equity in special cases to compel a party to carry out the terms of a contract.

Specific performance: Carrying out of the precise terms agreed upon in a contract.

Specified assets: When a joint venture is formed specifically to acquire or develop a pre-defined asset. Example: Investor A or Investment Manager B forms a joint venture with OPCO C to acquire, own and operate a multifamily property in Atlanta.

Specified investing: Investment in individually specified properties or portfolios, or investment in commingled funds whose real estate assets are fully or partially specified prior to the commitment of investor capital.

Speculative space: Any tenant space that has not been leased before the start of construction on a new building.

Spite fence: An unsightly fence erected for no other purpose than to irritate a neighbour. Such a fence may be illegal under local fence height and appearance regulations or state laws that specifically bar spite fences.

Sponsoring broker: A duly licensed real estate broker who employs a salesperson. Under law, the broker is responsible for the acts of her or his salespeople.

Squatter’s rights: Those rights acquired through adverse possession. By “squatting” on land for a certain statutory period under prescribed conditions, one may acquire title by limitations.

Stabilized net operating income: Projected income less expenses that are subject to change but have been adjusted to reflect equivalent, stable property operations.

Stabilized occupancy: The optimum range of long-term occupancy that an income-producing real estate project is expected to achieve after exposure for leasing in the open market for a reasonable period of time at terms and conditions comparable to competitive offerings.

Stakeholder: A client, investor, sometimes a user of the product or all of them. Stakeholders are interested in the final version of the product; they can influence product development and management, participate in decision-making processes.

Statute of frauds: The part of a state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases to be in writing to be legally enforceable.

Statute of limitations: That law pertaining to the period of time within which certain actions must be brought to court.

Statutory lien: A lien imposed on property by statute, for example, a tax lien; in contrast to a voluntary lien, which an owner places on his or her own real estate, for example, a mortgage lien.

Statutory year: A year composed of twelve months, each with thirty (30) days, for a total of 360 days in a statutory year. Also known as a banker’s year.

Steering: The illegal practice of channeling home seekers to particular areas or avoiding specific areas, either to maintain or to change the character of an area, or to create a speculative situation.

Step-up lease (graded lease): A lease specifying set increases in rent at set intervals during the term of the lease.

Stigmatized property: A property regarded by some as undesirable because of events that have occurred on the property, like murder or suicide, or present paranormal activities. Sometimes, proximity to undesirable property causes a property to become stigmatized, too.

Stock: A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. There are two main types of stock: common and preferred.

Straight lease (flat lease): A lease specifying a fixed amount of rent that is to be paid periodically, typically monthly, during the entire term of the lease.

Straight-line method: A method of calculating depreciation for tax purposes computed by dividing the adjusted basis of a property less its estimated salvage value by the estimated number of years of remaining useful life.

Strata title: A type of property ownership where each owner has rights of ownership to designated parts of a building, but still retains joint rights over common areas on the property. This usually applies to unit blocks.

Strip center: Any shopping area comprised of a row of stores but smaller than a neighborhood center anchored by a grocery store.

Subagency: An agent appoints a subagent to help the agent in a specified transaction and to act on the principal’s behalf.

Subcontractor: A contractor working under and being paid by the general contractor, often a specialist in nature, such as an electrical contractor, cement contractor, etc.

Subdivision: An area of land divided into lots, blocks and building sites, and in which public facilities are laid out, such as streets, alleys, parks and easements for public utilities.

Subject to mortgage: The buyer of an already mortgaged property makes the payments, but does not take personal responsibility for the loan. Should the mortgage be foreclosed, and the property sold for a lesser amount than is owed, the grantee-buyer is not personally liable.

Sublease: A rental agreement or lease between a tenant and a new tenant (called a sublessee) who will either share the rental or take over from the first tenant. The sublessee pays rent directly to the tenant. The tenant is still completely responsible to the land

Sublessee: A person or identity to whom the rights of use and occupancy under a lease have been conveyed, while the original lessee retains primary responsibility for the obligations of the lease.

Subletting: The leasing of premises by a lessee to a third party for part of the lessee’s remaining term.

Subordinated classes: With regard to CMBS, describes those classes with the lowest priority to receive payments from the underlying mortgage loans.

Subordination agreement: An agreement that changes the order of priority of liens between two creditors.

Subordination: The process of sharing the risk of credit losses disproportionately among two or more classes of securities.

Subpoena: A legal process ordering a witness to appear and give testimony or to present documents under penalty of law.

Subrogation: The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire the right the sue from the injured party to recover any claims.

Substitution: An appraisal principle stating that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.

Succession: The passing of property or legal rights after death. The word commonly refers to the distribution of property under a state’s intestate succession laws, which determine who inherits property when someone dies without a valid will.

Suit for possession: A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the expiration of the lease.

Suit for specific performance: A legal action brought by either a buyer or a seller to enforce performance of the terms of a contract.

Suit to quiet title: A legal action intended to establish or settle the title to a particular property, especially when there is cloud on the title.

Summation appraisal: An approach under which value equals estimated land value plus reproduction costs of any improvements after depreciation has been subtracted.

Supply: The amount of goods available in the market to be sold at given price. The term often is coupled with demand.

Surety bond: An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations contracted for by an insured party; in essence, a policy insuring one’s personal and/or financial integrity.

Surety: One who voluntarily binds himself to be obligated for the debt or obligation of another.

Surface rights: A right or easement granted with mineral rights, enabling the possessor of the mineral rights to drill or mine through the surface.

Survey: The process by which a parcel is measured and its boundaries and contents ascertained.

Syndicate: A combination of two or more persons or firms to accomplish a joint venture of mutual interest. Syndicates dissolve when the specific purpose for which they were created has been accomplished.


Synthetic lease: A transaction that appears as a lease from an accounting standpoint but as a loan from a tax standpoint.

Tag-along rights: A contractual obligation used to protect a minority shareholder. If a majority shareholder sells his or her stake, then the minority shareholder has the right to join the transaction and sell his or her minority stake in the company.

Taking: A common synonym for condemnation, or any interference with private property rights, but it is not essential that there be physical seizure or appropriation.

Target date fund: Target date funds are based on the premise that the younger the investor, the longer the time horizon he or she has to retirement (or some other goal) and the greater the risk he or she can take to potentially increase returns.

Tax base: The assessed valuation of all real property that lies within a taxing authority’s jurisdiction. When multiplied by the tax rate, it determines the amount of tax due.

Tax lien: A statutory lien for non-payment of property taxes that attaches only to the property upon which the taxes are unpaid.

Tax rate: The rate at which real property is taxed in a tax district or county.

Tax roll: A 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.

Tax sale: A court-ordered sale of real property to raise money to cover delinquent taxes.

Taxation: The process by which a government or municipal quasi-public body raises monies to fund its operation.

Technical risk ratios: There are five statistical measures or technical risk ratios used in applying modern portfolio theory (MPT): alpha, beta, standard deviation, R-squared, and the Sharpe ratio.

Temporary occupation permit (TOP): The time when the construction of a property has completed. Owners are able to collect their keys and move into their units. It is only temporary because the actual completion requires a Certificate of Statutory Completion (CSC) to be issued.

Tenancy agreement: A legally binding contract signed between the landlord and tenant in Singapore to formalise a rental arrangement. The agreement has to be stamped, and stamp fee paid, with IRAS.

Tenancy at sufferance: The tenancy of a lessee who lawfully comes into possession of a landlord’s real estate but who continues to occupy the premises improperly after her or his lease rights have expired.

Tenancy at will: An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.

Tenancy by entireties: An estate or interest in real estate predicated upon the legal fiction that a husband and wife are one person. A conveyance or devise to them (unless contrary intent is expressed) vests title in them as one person.

Tenancy in common: A type of ownership in which two or more people have an undivided interest in the property, without the right of survivorship. Upon the death of one of the owners, his/her interest passes to his/her heirs or devises. Contrast with joint tenancy.

Tenant (lessee): One who rents real estate from another and holds an estate by virtue of a lease.

Tenant at will: One who holds possession of premises by permission of the owner or landlord. The characteristics of the lease are an uncertain duration and the right of either party to terminate on proper notice.

Tenant improvement (TI) allowance: Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount.

Tenant mix: A phrase used to describe the quality of a property’s income stream. In multi-tenanted properties, institutional investors typically prefer a mixture of national credit tenants, regional credit tenants and local non-credit tenants.

Tenant: Anyone, including a corporation, who rents real property, with or without a house or structure, from the owner (called the landlord). The tenant may also be called the “lessee.”

Tenants in common: Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property.

Tender: A offer or proposal to purchase a specified quantity of a commodity for a specified price. See tender proposal.

Tenement: Everything that may be occupied under a lease by a tenant.

Term: The actual life of a mortgage, at the end of which the mortgage becomes due and payable unless the lender renews the mortgage.

Termination (lease): The cancellation of a lease by the action of either party. A lease may be terminated by expiration of the term, surrender and acceptance, constructive eviction by lessor, or option, when provided in the lease for breach of covenants.

Termination (listing): The cancellation of a broker-principal employment contract. A listing may be terminated by death or insanity of either party, expiration of listing period, mutual agreement, sufficient written notice, or the completion of performance under the agreement.

Testate: Having made and left a valid will.


Testator: A will maker.

Third party: A term usually applied to persons who are not principal parties to a contract or other instrument, but who have some right, interest or duty that such contract or instrument affects.

Timeshare: An arrangement under which a purchaser receives an interest in real property and the right to use an accommodation or amenities, or both, for a specified period and on a recurring basis. Mainly used for selling vacation properties.

Time-weighted average annual rate of return: The constant annual return over a series of years that would compound to the same return as compounding the actual annual returns for each year in the series.

Title commitment: An offer to issue a title insurance policy. The title commitment will describe the various conditions, exclusions and exceptions that will apply to that particular policy.

Title company: A company that provides title insurance policies. Title companies may also act as escrow agents, conduct title searches, and hold closings.

Title covenants: Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received.

Title defect: (1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.

Title examination: To peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.

Title insurance: Title insurance is often required as part of the closing costs. It covers research into public records to ensure that the title is free and clear, and ready for sale.

Title plant: (1) In many areas, synonymous with abstract plant. (2) A geographically filed assemblage of title information which is to help in expediting title examinations.

Title search: Checks all the records relating to the property to determine whether the seller can sell the property, and can do so free of liens.

Title searcher: One who searches titles.

Title: A combination of all the elements that constitute the highest legal right to own, possess, use, control, enjoy, and dispose of real estate or an inheritable right or interest therein.

Torrens system: A method of evidencing title by registration with the proper public authority, generally called the registrar.

Total acres: All land area contained within a real estate investment.

Total assets: The sum of all gross investments, cash and equivalents, receivables, and other assets presented on the balance sheet.

Total commitment: The full mortgage loan amount that is obligated to be funded if all stated conditions are met.

Total debt servicing ratio (TDSR): TDSR is the proportion of your gross monthly income spent on debt obligations. The includes mortgage loans, credit card balance, car loans, personal loans etc. It is used in calculating your loan eligibility for a private condominium.

Total inventory: The total square footage of a type of property within a geographical area, whether vacant or occupied.

Total market cap: The total value of a company’s capital, including the market value equity and all debt.

Total principal balance: The total amount of debt, including the original mortgage amount adjusted for subsequent fundings, principal payments and other unpaid items (e.g., interest) that are allowed to be added to the principal balance by the mortgage note or by law.

Total retail area: Total floor area of a retail center less common areas. It is the area from which sales are generated and includes any department stores or other areas (such as banks, restaurants or service stations) not owned by the center.

Total return: The sum of quarterly income and appreciation returns.

Townhouse: A dwelling unit usually with two, three or four floors, and shared structural walls. It can be individually owned, a condominium, a cooperative, a planned unit development or a rental property.

Township lines: The horizontal lines running at six-mile intervals parallel to the base lines in the rectangular survey system.

Township: The principal unit of the rectangular survey system. A township is a square with six-mile sides and an area of 36 square miles.

Trade fixtures: Personal property that is attached to a structure that is used in the business. Because this property is part of the business and not deemed to be part of the real estate, it is typically removable upon lease termination.

Tranche: A class of securities. CMBS offerings are generally divided into rated and unrated classes, or tranches, according to seniority and risk. Higher-rated tranches allow for internal credit enhancements; lower-rated classes offer higher yields.

Transaction Fee: A fee which may be charged each time you draw on a home equity credit line.

Triple Net Lease: See net lease.

Trust: A fiduciary arrangement by which property is conveyed to a person or institution, called a trustee, and held and administered on behalf of another person, called a beneficiary.

Trustee: One who, as agent for others, handles money or holds title to their land.

Trustee’s deed: A deed executed by a trustee conveying land held in a trust to the beneficiary.


Turn key project: The construction of a project in which a third party is responsible for the total completion of a building, or for the construction of tenant improvements to the customized requirements and specifications of a future owner or tenant.

Under construction: The period of time after construction has started but before the certificate of occupancy has been issued.

Under contract: The period of time after a seller has accepted a buyer’s offer to purchase a property and during which the buyer is able to perform its due diligence and finalize financing arrangements.

Underwriter: A company, usually an investment banking firm, that guarantees or participates in a guarantee that an entire issue of stocks or bonds will be purchased.

Underwriting: The process of verifying data and approving a loan.

Unearned increment: An increase in the value of a property caused by increased population, development, or demand for which the owner is not responsible.

Unencumbered: Property that is free of liens and other encumbrances.

Uniform Residential Appraisal Report (URAR): Standard Fannie Mae Form 1004 used by appraisers.

Uniform residential loan application report (URLA): Standard Fannie Mae Form 1003 used by loan originators.

Unilateral contract: A one-sided contract by which one party makes a promise to induce a second party to do something. The second party is not legally bound to perform; if the second party does comply, however, the first party is obligated to keep the promise.

Unimproved land: Most commonly refers to land without improvements or buildings but also can mean land in its natural state.

Unity of ownership: The four unities traditionally needed to create a joint tenancy – unity of title, time, interest, and possession.

Unlawful detainer: An eviction lawsuit.

Unrated classes: Typically the most subordinated classes of CMBS.

UPREIT (umbrella partnership real estate investment trust): Organizational structure where a REIT’s assets are owned by a holding company for tax purposes.

Urban renewal: The acquisition of run-down city areas for purposes of redevelopment.

Usable square footage: The area contained within the demising walls of the tenant space that equals the net square footage multiplied by the circulation factor.

Use: The specific purpose for which a parcel or a building is intended to be used or for which it has been designed or arranged.

Useful life: In real estate investment, the number of years a property will be useful to the investors.

Usufruct: The right to use property—or income from property—that is owned by another.


Usury: Charging more than the rate of interest allowed by law.

Vacancy factor: The 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.

Vacancy rate: The total amount of available space compared to the total inventory of space and expressed as a percentage.

Vacant space: Existing tenant space currently being marketed for lease excluding space available for sublease.

Valid contract: A contract that complies with all the essential elements on a contract and is binding and enforceable on all parties to it.

Valid lease: An enforceable lease that has the following essential parts: lessor and lessee with contractual capacity, offer and acceptance, legality of object, description of the premises, consideration, signatures, and delivery.

Value: The present worth of future benefits arising from the ownership of real property. To have value, a property must have utility, scarcity, effective demand, and transferability.

Value-added: A phrase generally used by advisers and managers to describe investments in underperforming and/or undermanaged assets that possess upside potential. NOI and property value can be positively affected through a change in marketing or operating.

Vara: A measurement of the length of 33 1/3 inches.

Variable rate mortgage: A mortgage loan that contains an interest rate provision related to a selected index. Under this provision, the interest rate may be adjusted annually either up or down.

Variable Rate: An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.

Variable-rate: A loan interest rate that varies over the term of the loan, usually tied to a predetermined index. Also called adjustable-rate.

Variance: An exception to a zoning ordinance, usually granted by a local government.

Vendee: Purchaser.

Vendor: Seller.

Vesting: How ownership of title is taken. Common methods of holding title include sole ownership (such as a single man or woman) or co-ownership (such as community property, community property with right of survivorship, joint tenancy or tenancy in common).

View ordinance: A law adopted by some cities or towns with desirable vistas–such as those in the mountains or overlooking the ocean–that protects a property owner from having his or her view obstructed by growing trees.

Village acre: A lot size used in the Houston area to denote a 40,000 square foot parcel. In the Memorial Villages of Bunker Hill, Hedwig, Hillshire, Hunter’s Creek, Piney Point and Spring Valley, lot sizes are often expressed in village acres.

Virtual home tour: Any method used to provide internet users with a graphical presentation of a home, or homes. Presentations may include web pages, java applets, streaming video, panoramic images and bubble views.

Virtual storefront: An online business presence for sales.

Void: Having no legal force or effect; legally invalid.

Voidable: A contract which appears valid and enforceable on the surface, but may be declared invalid by one of the parties, such as a contract entered into by a minor.


Volatility: The rate at which the price of a security or asset moves up and down.

Waiting period: The time between the initial filing of a registration statement and its effective date.

Waiver: The intentional or voluntary relinquishment of a known claim or right.

Walk through: (1)  A Buyer’s on-site inspection of the property being purchased, just prior to closing. (2)  A detailed inspection of a new construction home, in which punch list and cosmetic items are addressed, prior to final acceptance”.

Warrants: An instrument that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame.

Warranty deed: A type of deed that contains express assurances about the legal validity of the title being transferred. See general warranty deed and special warranty deed.

Weighted-average coupon: The weighted average of the gross interest rates of the mortgages underlying a pool as of the issue date, with the balance of each mortgage used as the weighting factor.

Weighted-average equity: The denominator of the fraction used to calculate investment-level income, appreciation and total returns on a quarterly basis, consisting of net assets at the beginning of the period adjusted for weighted contributions and distributions.

Weighted-average rental rates: The average proportion of unequal rental rates in two or more buildings within a market.

Working drawings: The set of plans for a building or project that comprise the contract documents that indicate the precise manner in which a project is to be built.

Workout: The process by which a borrower attempts to negotiate with a lender to restructure the borrower’s debt rather than go through foreclosure proceedings.

Writ of attachment: The method by which a debtor’s property is placed in the custody of the law and held as security, pending the outcome of a creditor’s suit.

Writ of execution: A court order which authorizes and directs the proper officer of the court (usually the sheriff) to carry into effect the judgment or decree of the court.

Write-down: The accounting procedure used when the book value of an asset is adjusted downward to better reflect current market value.


Write-off: The accounting procedure used when an asset has been determined to be uncollectible and is therefore charged as a loss.

Yield maintenance premium: A penalty, paid by the borrower, designed to make investors whole in the event of early redemption of principal.


Yield: The effective return on an investment, as paid in dividends or interest.

Zoning ordinance: The set of laws and regulations controlling the use of land and construction of improvements in a given area or zone.


Zoning: The division of a city or town into zones and the application of regulations having to do with the architectural design and structural and intended uses of buildings within such zones.

We hope that this list is as comprehensive as it can get. Don’t forget to bookmark this page so you can always refer to it, whenever needed. If you can’t find a term that you were searching for, or disagree with our definition, please leave us a comment below, and we’ll see to it that it gets update it or addressed. 

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