«GLOSSARY OF TERMS The following Glossary of Terms is not intended to be legal definitions, but rather a lay expression or explanation of how the ...»
The new tenant is the sublessee. The new agreement between sublessor and sublessee is a sublease. The sublessor retains some reversionary interest. Leases normally contain a clause prohibiting subletting without prior consent of the lessor. The lessee (sublessor) remains directly liable to the lessor for the rent, which is usually paid by the sublessee to the lessee (sublessor) and from it to the lessor. The sublessee does not have a contractual obligation to pay rent to the original lessor.
SUBORDINATION: The act, by a party in the transaction, of taking an inferior position with respect to rights to obtain something of value in a transaction. For example, a lender who subordinates his position to that of a new lender will have rights to the property only after the new l d r d b ifl satisfied. As another example, a land owner who leases his land to a e e‟ e t uy ns sl shopping center developer may be required by the first mortgage lender to subordinate his position to that of the first mortgage loan, so that the lender may take not only the improvements but the land upon which they rest in the event of default in the loan.
SUBROGATION: The substitution of one party for another in a claim, lien or cause of action against others. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to recover any claims they have paid. (Lessees frequently require fire insurance companies to waive subrogation against lessee.) SUBSTANTIAL COMPLETION: The point in time in the construction of the premises when the landlord has done all the major construction and the premises are in such a condition that the tenant can use them for its intended purposes with only minor work left to be done to fulfill the Allard Commercial Brokerage –Glossary of Terms Page 78 of 78 l d r‟construction obligation. The phrase has no exact meaning and is a common source of a ld no s disputes and therefore must be defined clearly in a lease.
SUIT FOR SPECIFIC PERFORMANCE: If a seller breaches a real estate contract, the buyer may sue for specific performance. The buyer asks the court to force the seller to go through with the sale and convey the property as previously agreed. The buyer may choose to sue for damages, in which case the buyer asks that the seller pay for costs and hardships suffered as a result of the seller's breach.
SUIT TO QUIET TITLE: A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.
SUMP: A reservoir that collects and holds water or some other liquid, which is subsequently disposed of using a pump.
SUPERFUND: Popular name of the hazardous waste cleanup fund established by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) as amended by the Superfund Amendment and Reauthorization Act of 1986 (SARA). Superfund focuses on the cleanup of releases of hazardous substances on property. It creates significant legal exposure based on strict liability for owners, landlords and sometimes lenders.
SURETY: (1) A person who agrees to be responsible for a debt or obligation of another. (2) The pledge or agreement by which one undertakes responsibility for the debt or obligation of another.
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. In the real estate business a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.
SURRENDER: Giving up of leasehold rights by a tenant in exchange for a release from future obligations under a lease.
SURVEY: The process by which boundaries are measured and land areas are determined; the onsite measurement of lot lines, dimensions and position of a building on a lot, including the determination of any existing encroachments or easements.
SUSPEND: Temporarily make ineffective.
SWING LOAN: A short-term loan used to enable the purchaser of a new property to buy that property on the strength of the equity from the property the purchaser is now selling.
SYNDICATE: A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate the parties own and/or develop property, with the main profit generally arising from the sale of the property.
SYNDICATION: A descriptive term for a group of two or more people united for the purpose of making and operating an investment. A syndication may operate in the form of a REIT, corporation, general partnership, limited partnership or even as tenancy in common.
T-INTERSECTION LOT: A lot that is fronted head-on by a street; noise and glare from headlights may be detractors from this type of lot.
TAKE OUT LOAN: A long-term permanent loan that replaces the interim construction loan. The interim lender normally requires a commitment by a permanent lender to agree to "take out" the interim lender in which the lender pays off the construction loan and leaves the developer with a permanent long-term loan when the building has been completed.
TAX CREDIT: An amount by which tax owed is reduced directly.
TAX DEED: An instrument, similar to a certificate of sale, given to a purchaser at a tax sale or auction.
TAX DEFERRED EXCHANGE (1031 EXCHANGE): Under Section 1031 of the Internal Revenue Code, some or all of the realized gain from the exchange of property may not need to be immediately recognized for tax purposes. Both properties in an exchange must be held for productive use in trade or business or for investment, and must be of a like-kind.
TAX LIABILITY FROM INVESTMENT: Total tax liability less the tax liability from ordinary income.
TAX LIABILITY FROM ORDINARY INCOME: Tax liability based on tax rate schedules as applied to gross income minus deductions and exemptions.
TAX LIEN: A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.
TAX RATE: The tax rate for each taxing body is computed separately. To arrive at a tax rate, the total monies needed for the coming fiscal year are divided by the total assessments of all real estate located within the taxing body's jurisdiction.
TAX SALE: A court-ordered sale of real property to raise money to cover delinquent taxes.
TENANCY AT SUFFERANCE: A tenancy in which a person wrongfully holds or occupies a property after the expiration of a lease without the consent of the landlord. No notice of termination is required for the landlord to evict the tenant.
TENANCY AT WILL--MONTH-TO-MONTH TENANCY: Lease agreement cancelable by either party on short notice –usually 30, 60, or 90 days.
TENANCY FOR YEARS: A tenancy for a definite period of time. The tenant must vacate the property at the end of the lease unless an extension or new lease has been agreed upon.
TENANCY IN PARTNERSHIP: Ownership by two or more persons who unite their property in a lawful business venture.
TENANCY IN SEVERALTY: Ownership of a property by one person, rather than held jointly with others. Also called SOLE TENANCY.
TENANT: In general, one who exclusively holds or possesses property, such as a life tenant or a tenant for years; commonly used to refer to a lessee under a lease. A tenant's occupancy, although exclusive, is always subordinate to the rights of the owner. Tenant refers to an occupant, not necessarily a renter.
TENANT CONTRIBUTIONS: All costs which are the responsibility of the tenant(s) over and above the contract rent specified in the lease. Examples are: (a) common area maintenance, (b) snow removal, (c) excess over tax stop, (d) percentage rent above fixed minimum, (e) escalator provisions, (f) janitorial, (g) etc.
TENANTS IN COMMON: A form of concurrent ownership of property between two or more persons, in which each has an undivided interest in the whole property. This form is frequently found when the parties acquire title by descent or by will. Each co-tenant is entitled to the undivided possession of the property, according to his or her proportionate share and subject to the rights of possession of the other tenants. No cotenant can exclude another cotenant, or claim ownership of a specific portion of the property. Each cotenant holds an estate in land by separate and distinct titles, but with unity of possession. Their interests may be equal, as in joint tenancy, or unequal. Where the conveyance document does not specify the extent of interest of each cotenant, there is a rebuttable presumption that the shares are equal. Unlike a joint tenancy, there is no right of survivorship in a tenancy in common. Therefore when one of the cotenants dies, the interest passes to his or her heirs or beneficiaries and not to the surviving tenants in common. The property interest of a tenant in common is thus subject to probate. Also, unlike joint tenancy, dower rights may exist in property held in common.
TENDER: An offer by one of the parties to a contract to carry out his or her part of the contract.
TERM LOAN: A short-term loan requiring interest-only payments until maturity, at which time the entire principal is due and payable.
TESTAMENTARY TRUST: A trust established by a valid will.
TESTATOR: A person who has made a valid will. A woman is often referred to as a testatrix, although testator can be used for either gender.
THREE-DAY NOTICE: Notice to quit, quit or cure, or quit or pay rent. Three-day notice must be given before an unlawful detainer action. (See Unlawful Detainer Action) THREE PHASE POWER: A three-wire electrical service used to power machinery.
TIGHT MONEY: An economic situation in which the supply of money is limited, and the demand for money is high, as evidenced by high interest rates.
TIME: Duration of loan.
TIME IS OF THE ESSENCE: A contract clause that emphasizes punctual performance as an essential requirement of the contract. Thus, if any party to the instrument does not perform within the specified time period (the drop-dead date), that party is in default, provided the non-defaulting party has made a valid tender of performance. If no tender is made, then the clause may be waived. The clause may also be waived by the subsequent acts of the parties such as accepting tardy payments or signing escrow instructions that allow for extensions of time in which to perform.
TIMELY MANNER: An act must be performed within certain time limits described in a contract.
TIMING: Refers to the length of time one must wait to receive cash flow from an investment.
TITLE: (1) A combination of all the elements that constitute the highest legal right to own, ossess, use, control, enjoy and dispose of real estate or an inheritable right or interest therein. (2) The rights of ownership recognized and protected by the law.
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 INSURANCE POLICY: Standard Coverage Title Insurance Policy insures risks against imperfect title (except matters disclosed from search of public records), lack of capacity of parties (forgers, minors, incompetents), lack of authority of parties and lack of delivery of instruments of title. (e “tn adC v rg ” oc a d“....P ly.
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TITLE SEARCH: The examination of public records relating to real estate to determine the current state of the ownership.
Allard Commercial Brokerage –Glossary of Terms Page 82 of 82 TON OF REFRIGERATION: Refrigerating effect equal to the melting of one ton of ice in 24 hours.
One ton of cooling is equal to 12,000 btu/hr and roughly equal to 400 cfm.
TOPOGRAPHY: Nature of contours and elevation of the surface of land.
TORT: A negligent or intentional wrongful act arising from breach of duty created by law and not contract.
TOTAL RATE: Equity rate plus growth rate.
TOWNSHIP: A land description used in the U.S. government survey system consisting of a sixby-six mile area containing 36 sections, each one mile square and consists of 23,040 acres.
TRADE: Reciprocal transfer of property (single family residential).
TRADE ASSOCIATION: A voluntary nonprofit organization of independent and competing business units engaged in the same industry or trade, formed to help solve industry problems, promote progress and enhance service Trade Fixture.
TRADE FIXTURE: An article of personal property annexed or affixed to leased property by the tenant as a necessary part of business; may be removed by tenant as personal property upon termination of the lease, unless it is a replacement fixture. The tenant is responsible for any damages caused by their removal. If the tenant fails to remove trade fixtures within a reasonable time of lease expiration, the fixtures are considered abandoned and become the property of the landlord.
TRANSFER TAX: A state tax imposed on the transfer or conveyance of realty or any realty interest by means of deed, lease, sublease, assignment, contract for deed or similar instrument.
One purpose of the tax is to acquire reliable data on the fair market value of the property to help establish more accurate real property tax assessments.
TRESPASS: Unlawful entry of or injury to the property of another.
TRI-PARTY AGREEMENT: An agreement by and between the interim lender, the long term lender and the borrower relating to the payoff of a short term loan by a long term lender. The agreement includes the following: 1. The long term le d r ge s op y ftei ei l d r n e a re t a ofh n r e e‟ tm n s loan when certain conditions are satisfied. 2. The interim lender agrees that he will not accept repayment of the interim loan from any source other than the long term lender. 3. The borrower agrees to the agreement between the other two parties.