«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 ...»
ASSIGNEE: The person to whom a claim, benefit or right in property is made.
ASSIGNMENT OF RENTS CLAUSE: A clause in a trust deed, which gives the beneficiary the right to collect rents of the secured property in the event of default.
ASSIGNMENT: The transfer in writing of an interest in a lease, mortgage, or other installment.
The assignor, or lessee, transfers the entire remainder of the interest created by the lease, and the assignee becomes liable to the original lessor for rent. Assignor remains contractually liable for performance under the lease unless the lease or other agreement between the landlord and the assignor provides otherwise.
ASSIGNOR: The person transferring a claim, benefit or right in property to another.
ASSUMPTION OF MORTGAGE (or trust deed): Taking over the primary liability for payment of an existing mortgage of trust deed.
ATTORNEY-IN-FACT: A competent and disinterested person who is authorized by another person to act in his or her place in legal matters. The attorney-in-fact should be so authorized by way of a power of attorney.
AVULSION: The sudden washing or tearing away of land by the action of water, earthquake or volcanic action. Affects appraisals because value is based on type and size of improvements in proportion to each other and the land.
BALLOON PAYMENT: A lump sum payment which must be made at a specified point in the loan amortization schedule earlier than the loan would be due if all payments were equal in amount.
For example, a 25 year amortization with a 20 year due date will involve a balloon payment of the remaining principal balance at the end of the 20th year.
BAND OF INVESTMENT: A method of developing an interest or capitalization rate by applying mortgage and equity rates of comparable properties.
BAR OR TRUSS SHAPE: A structural support made of various rolled steel pieces to create a loadbearing girder or joist.
BASE LEASE: A contract stating the minimum established requirements that are applicable to all tenants.
BASE LINE: A survey line running east and west, used as a reference when mapping land.
BASIS, ALLOCATION OF: The cost or other basis of property consisting of land, improvements and personal property must be allocated to the separate units, usually in proportion to the MV of each (reasonable market value).
BASIS, ADJUSTED: Adjusted coast of an asset. An expression of value acceptable for tax purposes, upon acquisition by purchase, gift, bequest, exchange, termination of joint tenancy in common, and so forth. Original cost PLUS allowable additions including capital improvements, certain carrying costs and assessments MINUS allowed depreciation's and partial sales. Book value.
BASIS, OLD ADJUSTED: Owner's adjusted basis in property being disposed of.
BAY DEPTH (office): The distance from the office building window line to building corridors.
BAY DEPTH (industrial): The distance from the front of the building (or end of the office improvement) to the back of the building.
BEARING WALL: One that offers support to second floor or roof.
BENEFICIARY: Lender on the security of a note and deed of trust. The one who receives the income from the trustor.
BENEFICIARY STATEMENT: When an existing loan is to be paid or assumed by a buyer, the escrow agent will obtain a statement of the balance due on the loan so the buyer receives the proper amount of credit.
BERM: Earth sloping from a building to ground level.
BIDS: A competitive system in which each bidder submits a sealed proposal to execute Construction work for a specified sum. The client and architect control the list of bidders (bid list).
BILATERAL RECIPROCAL CONTRACT: A contract in which each party promises to perform an act in exchange for the other party's promise to perform. The usual real estate contract is an example of a bilateral contract in which the buyer and seller exchange reciprocal promises respectively to buy and sell the property. If one party refuses to honor his or her promise and the other party is ready to perform, the nonperforming party is said to be in default.
BILL OF SALE: A written agreement by which one person sells, assigns or transfers to another his or her right to, or interest in, personal property. A bill of sale is sometimes used by a seller of real estate to evidence the transfer of personal property, such as when the owner of a store sells the building and includes the store equipment and trade fixtures.
BLANKET ENCUMBRANCE/TRUST DEED: A trust deed secured by several properties or a number of lots; often used to secure construction financing for proposed subdivisions or condominium development projects. The developer normally seeks to have a "partial release" clause inserted in the mortgage so that he or she can obtain a release from the blanket loan for each lot as it is sold, according to a specified release schedule.
BLANKET LOAN: A loan secured by several properties.
BLOCK REINFORCING: Wire reinforcement laid in mortar between courses (or layers) to reduce cracking.
BOARD OF UNDERWRITERS: An organization that fixes rates for fire insurance and other types of coverage. The organization also maintains a laboratory that tests safety factors of materials, substances, electrical equipment, machinery and other apparatus.
BOMA. STANDARD MEASUREMENT: A way to measure a space defined by the Building Owners and Managers Association (BOMA), a national organization of professionals in the office building industry. Landlords may choose their own method to measure space, normally by increasing the amount of common area added to the usable area.
BOND BEAM: A horizontal reinforced concrete or concrete masonry beam designed to support a wall and protect it from possible cracking.
BOOK DEPRECIATION: An accounting concept which refers to an allowance taken to provide for recovery of invested capital.
BOOK SALE: A sale of real property to the state, in name only, when a taxpayer is delinquent in paying property tax.
BOOT: Money or other property that is not like-kind, which is given to make up any difference in value or equity between exchanged properties. Boot may be in the form of cash, notes, gems, the market value of an asset such as a mortgage, land contract, personal property, goodwill, a service or a patent offered in an exchange. The taxable gain in the like-kind exchange is recognized immediately to the extent of boot, whereas other gain from the exchange may be deferred until subsequent transfer.
BORROWED LIGHT: A partition, containing glass or plastic panels, between an interior dark space and a space illuminated by daylight or high-intensity artificial light.
BOX-ON-BOX: A low-roofed office space attached to factory portion of a building.
BRADLEY SINK: A round industrial lavatory capable of handling more than one person at a time by means of several soap dispensers and multiple water jets operated by a foot pedal.
BREACH OF CONTRACT: Violation of any of the terms or conditions of a contract without legal excuse; default; nonperformance. The non-breaching party can usually seek one of three alternative remedies upon a material breach of the contract: rescission of the contract, action for money damages, or an action for specific performance.
BREAKEVEN POINT: In income property, the figure at which rental income is equal to expenses and debt service.
BRICK COURSE: See Concrete Block.
BRIDGE LOAN: A short-term loan made to cover the period between the termination of one loan, such as an interim construction loan, and the beginning of another loan, such as a permanent takeout loan.
BROKER: One who acts as an intermediary on behalf of others for a fee or commission.
BROKERAGE: The bringing together of parties interested in making a real estate transaction.
The business of a broker in acting as a third party agent to a transaction.
BROOM CLEAN: Premises delivered free of debris and floors swept clean.
BTU: British Thermal Unit. The quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit.
BUILDING CODE: A state, city or county ordinance, which sets forth minimum construction standards. These ordinances are enforced for the protection of public safety and health.
BUILDING MODULE: A unit of length and width by which the plan of a building can be standardized and which facilitates the design and layout of office space. The module places constraints on the size and shape of many of the elements of the physical systems. In contrast,
BUILDING MODULE (office): Standard dimensions within leased areas dictated by spacing of window mullions or columns, i.e. a 5 foot module dictates offices in multiples of 5 feet dimensions.
BUILDING STANDARDS: The specific construction standards that have been established by the owner and architect to achieve a uniform element of design throughout the building and to establish a cost basis for fitting up charges and/or allowances. Such items may be changed only with the approval of the building owner or the managing representative. Examples of building standards would be a certain type of carpet, wall and window coverings.
BUILDING SANITARY SEWER OUTLET: An outlet generally built adjacent to the fresh air vent pipe near the building wall.
BULK SALES ACT: An act that requires the recording and publication of a sale that is not in the normal course of business; intended to give notice to the creditors of the seller so they can protect their interests.
BULLET LOAN: A loan that includes a call date earlier than its normal amortization period; also called a renegotiable rate loan or a rollover loan.
BUMPERS: Protective, replaceable timbers placed around loading docks to absorb the shock and prevent damage when trucks pull in to unload.
BUNDLE OF RIGHTS: The rights or interests that a person has in a thing; the exclusive right of a person to own, possess, use, enjoy and dispose of real or personal property.
BUS DUCT: A metal clad enclosure containing electrical wiring designed for random plug-in electrical drops to machinery at desired location.
BUSINESS OPPORTUNITY: Any type of business that is for lease or sale. The sale or lease of the business and goodwill of an existing business, enterprise or opportunity, including a sale of all or substantially all of the assets or stock of a corporation, or assets of partnership or sole proprietorship.
BUY-SELL AGREEMENT: An agreement between the long term lender, the interim lender, and the borrower regarding the method by which the interim lender will be paid off by the long term lender. Essential parts of a buy-sell arrangement are that the interim loan is documented on the long term l d r d c me t a dw e tel n is ready for long term funding, the long term e e‟ o u ns n h n h o ns a lender purchases the loan by assignment of the loan documents securing the loan, with the purchase price being the balance of the loan.
CALENDAR YEAR: Starts on January 1 and continues through December 31 of the same year.
Allard Commercial Brokerage –Glossary of Terms Page 10 of 10 CAM: CAM (Common Area Maintenance) refers to any and all areas that are for the convenience of all tenants. The costs associated therewith may be paid by landlord by incorporation in the rent structure with a base year established and increases passed on to the tenants, or by a formula in which all costs including management thereof are directly passed on to the tenant.
CANCELLATION CLAUSE: A provision in a lease that confers upon one or both of the parties to lease the right to terminate the lease upon the occurrence of a condition or contingency set forth in the said clause.
CANTILEVER FRAMING: A structural steel design that is balanced to provide support by reducing steel weight or size.
CAP RATE: A term sometimes used when referring to capitalization rate.
CAPACITY OF PARTIES: The legal ability of people or organizations to enter into a valid contract. A person entering into a contract will have full, limited or no capacity to contract.
CAPITAL GAIN: The gain received on the sale of real or personal property, other than property sold as stock-in-trade.
CAPITALIZATION: The mathematical process of converting net income into an indication of value, commonly used in the income approach to value. The net income is divided by a capitalization rate of return to give the indicated value. (Income ÷ Rate = Value) Calculating the present worth of a property on the basis of its capacity to continue to produce an income stream.
CARE: The agent must exercise a reasonable degree of care while transacting the business entrusted to him or her by the principal. The principal expects the agent's skill and expertise in real estate matters to be superior to that of the average person. The most fundamental way in which the agent exercises care is to use that skill and knowledge in the principal's behalf. The agent should know all facts pertinent to the principal's affairs, such as the physical characteristics of the property being transferred and the type of financing being used.
CASH SPENDABLE (INCOME): Net cash spendable, or cash remaining, after all operating costs, including loan payments, capital costs and income taxes attributable to the particular investment, have been paid. Net operating income less loan payments less capital costs equals net spendable income.
CAVITY WALL CONSTRUCTION: A type of construction that provides air space between building facing and block to allow for insulation and prevent water penetration.
Allard Commercial Brokerage –Glossary of Terms Page 11 of 11 CC&Rs: Covenants, conditions and restrictions of record concerning a particular property.
Includes items such as set backs, easements and property oriented restrictions, which are used to regulate building construction, density and use. Usually uncovered in investigation of public records (Title Report).