«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 ...»
ESTIMATED SELLER'S PROCEEDS: An estimate of the net amount an owner will receive from the sale of their property. An "Estimated Seller's Proceeds" form is filled out by the listing broker and calculates the proceeds based on the listing price and seller's costs.
ESTOPPEL CERTIFICATE: A certificate stating that the lease is unmodified and in full force and Allard Commercial Brokerage –Glossary of Terms Page 28 of 28 effect, or in full force and effect as modified, and stating the modifications. The certificate will also state the amount of minimum monthly rent, the dates to which the rent has been paid in advance, and the amount of any security deposit or prepaid rent. Before a landlord can obtain a loan secured by a deed of trust on the premises, or the building and other improvements in which the premises are located, or sell the premises, the building and other improvements, the lender or the purchaser might require the landlord to obtain from the tenant a written certificate, stating the present status of the lease. Landlords should insist on a clause like the one above in order to assure their ability to obtain such a certificate when necessary. These certificates are usually referred to as estoppel certificates o “f e s tme t.
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ETHICS: A set of principles or values by which an individual guides his or her own behavior and judges that of others. The system of moral principles and rules that become standards for conduct.
EXCEPTION: A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.
EXCLUSIVE RIGHT TO SELL OR LEASE LISTING: A listing contract in which the owner appoints a real estate broker as the exclusive agent for a designated term. The owner agrees to pay the broker a commission when the sale or lease is consummated, whether the buyer or tenant is procured by the owner, the broker, or anyone else.
Allard Commercial Brokerage –Glossary of Terms Page 29 of 29 EXCULPATORY CLAUSE: A clause included in loan documents specifically stating that the borrower and/or other parties will be excluded from personal liability for repayment of the real estate loan. Generally, an exculpatory clause provides that the lender will look only to the real estate for satisfaction of the debt.
EXECUTE: The act of making a document legally valid, such as formalizing a contract by signing, or acknowledging and delivering a deed. In some cases, execution of a document may refer solely to the act of signing; in other cases it may refer to complete performance of the document's terms.
EXECUTION: Completion of an act or process, such as an escrow.
EXPANSION JOINT: A flexible vertical joint that permits wall expansion and movement independent of the structural steel.
EXPEDIENTES: Land grants recorded by the Mexican government in California.
EXPENSE STOP: An identified dollar amount, either on a dollar per square foot per year basis or a pro rata share basis of total operation expense cost that the landlord is responsible to pay. Any increase over the stop will be allocated to the tenant.
EXPLORATORY COSTS: The cost figures collected on the basis of a discussion of possible needs and reviewed with an interested individual. (see Preliminary Estimates) EXPRESS CONTRACT: The parties declare the terms and put their intentions in words, either oral or written. This includes express agency agreements.
EXTENSION (LEASE): An agreement by which a lease is made effective for an additional period of years on specified terms.
Allard Commercial Brokerage –Glossary of Terms Page 30 of 30 EXTERIOR ROOF DRAINAGE: Roof drainage from the perimeter of a roof. Leaders on the exterior walls carry water to the pavement or storm system.
EXTERIOR-PAR INCANDESCENT BULB: Used in industrial lighting, the PAR (parabolic) incandescent has a 2,000-hour life and is the least expensive lamp, although it gives less footcandles than a HID (high intensity discharge) fixture, which has a 25,000-hour life. A quartz, the brightest and most concentrated lamp, can serve as a heater (it will even melt snow). Street type poles are not as effective as the more expensive, but decorative, architectural poles.
EXTERNAL DEPRECIATION: Reduction in a property's value caused by outside factors which are off the subject property, such as environmental, social or economic forces. If the loss in value is incurable and cannot be reversed by spending money on the property, it is known as external obsolescence.
F.A.R. (Floor Area Ratio): A formula which is the relationship between "the total amount of building built on a piece of land and the total amount of square feet of land". For example, if there are 200,000 sf of building constructed on 11.50 acres (11.50 acs x 43,560 sf per acre = 500,940 sf of land) the FAR would be: 200,000 sf of building divided by 500,940 sf of land for a ratio of.399 or.40 FAR.
FEE APPRAISER: A non-salaried appraiser who is paid a fee for the appraisal assignments he or she performs.
FEE SIMPLE ABSOLUTE: The maximum possible estate or right of ownership of real property, continuing forever.
FEE SIMPLE DEFEASIBLE: An estate in land in which the holder has a fee simple title subject to being divested upon the happening of a specified condition; also called a qualified fee or a defeasible fee. There are two categories of fee defeasible estates--fee simple determinable and fee simple subject to a condition subsequent. The term fee simple determinable implies that the duration of the estate can be determined from the deed itself. This is not true of a fee simple subject to a condition subsequent, in which case the estate's duration depends on the grantor's independent choice of whether to terminate the estate. (see Fee Simple Determinable, Fee Simple Subject to a Condition Subsequent) FEE SIMPLE DETERMINABLE: A fee simple determinable is an estate in real property that exists "so long as," "while" or "during the period" that a certain prescribed use continues. Such use is described in the grant of conveyance. For example, a conveyance to the University of Knowitall "so long as" the real estate is used for educational purposes would give the university title provided the granted land is used as prescribed. If, at some future time, the university were to stop using the property for educational purposes, title would revert to the original grantor if living or to his or her heirs if the grantor is deceased. A fee simple determinable automatically ends when the purpose for which it has been prescribed terminates. Upon the grant of a fee simple determinable, there remains in the grantor a possibility of reverter.
FEE SIMPLE QUALIFIED: An estate in which the holder has a fee simple title, subject to return to the grantor if a specified condition occurs.
Allard Commercial Brokerage –Glossary of Terms Page 31 of 31 FEE SIMPLE SUBJECT TO A CONDITION SUBSEQUENT: A fee simple subject to a condition subsequent is an estate conveyed "provided that," "on the condition that" or "if" it is used for a specific purpose. If it is no longer used for that purpose, it reverts to the original grantor or his heirs. This type of estate is much the same as a fee determinable, except that in a fee determinable conveyance the words are of duration while a fee condition subsequent refers strictly to a specific condition. In addition, unlike a fee determinable, when fee condition subsequent property is no longer used for its prescribed purpose, the original grantor (or heirs) must physically retake possession of the property within a reasonable period of time after the breach (i.e., the grantor must exercise his or her right of reentry).
FEE SIMPLE TITLE: The maximum possible estate one can possess in real property. A fee simple estate is the least limited interest and the most complete and absolute ownership in land; it is of indefinite duration, freely transferable and inheritable. Fee simple title is sometimes referred to as "the fee."
FEEDER: Large-sized cables that distribute electricity within the building to the local panels.
FIDUCIARY: A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another. The term fiduciary describes the faithful relationship owed by an attorney to a client or by a broker (and salesperson) to a principal. The fiduciary owes complete allegiance to the client. Among the obligations that a fiduciary owes to his or her principal and the duties of loyalty, obedience and full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies.
FILLED LAND: An area of a property where the grade has been raised by depositing dirt, gravel or rock. Under most circumstances a seller (broker) has a duty to disclose to a buyer the fact that a property is on filled land.
FINANCIAL INTERMEDIARY: An organization that obtains funds through deposits and then lends those funds to earn a return-such as savings banks, commercial banks, credit unions and mutual savings banks.
FINANCIAL MANAGEMENT RATE OF RETURN (FMRR): A multi-year analysis of rate of return.
Used by investors in medium and large properties (occasionally on small properties). Multi-year cash flows and net sale proceeds are analyzed using discounted cash flow techniques to solve for the Financial Management Rate of Return (FMRR). FMRRs are the best rate of return indicator, because they require an analysis of the investor's entire holding period, not just a single year. The discounting process takes into consideration the time value of money and thereby produces a more realistic rate of return. (See IRR.) FINANCIAL STATEMENT: A brief summary of a person's assets, liabilities and earnings records.
FIN TUBE RADIATION SYSTEM: A heating convection system that transmits heat through a series of sheet-metal plates spaced at close intervals on a center pipe. The energy of heat transmission is usually provided by hot water or steam.
FIRE CORRIDORS: Special corridors with special partitioning designed to create escape routes in time of fire.
FIRE DOOR: An insulated door that closes automatically to prevent the spread of fire between areas. It has an Underwriter hourly rating.
FIRE PUMP: An electric or diesel engine driven pump to boost sprinkler pressure within a building.
FIRE RATED: Special building materials, such as partitioning and doors, which have greater fire resistance than normal building standard materials.
FIRE RATING: A rating of the length of time it takes a fire to penetrate a barrier, it designates the ability of a material to contain a fire in a carefully controlled test setting for a specified period of time. A material tested in a laboratory that adequately contains a fire for two hours and meets other requirements during the laboratory fire test is given a two-hour fire resistance rating. Fireresistance ratings are based on full-scale tests under controlled conditions and are generally recognized by building code authorities and fire insurance rating bureaus. Requirements for fireresistance ratings are usually set by local building code officials based on the expected occupancy of the building.
FIRE RATING BUREAU: An agency whose functions include maintaining a complete set of records with state insurance departments, covering not only ratings schedules, basis or key rates, and charges or credits applicable, but also rules and clauses affecting the rates and the grading of the value of public fire protection.
FIRE SPRINKLER SYSTEM: An automatic fire-protection system that provides a flow of pressurized water from overhead nozzles when the temperature exceeds a predetermined level.
The nozzles are fitted with plugs that melt at relatively low temperatures. There are two types of sprinkler systems (ordinary hazard and calculated system): the dry system, where the watersupply pipes are filled with compressed air to hold the water behind the dry valve to prevent freezing; and the wet system, where the water supply pipes are filled with water up to the nozzles.
FIRE WALL: A wall constructed of fireproof material, which is installed to check the spread of fire into other areas of a building or adjacent properties for one, two or four hours (see FIRE RATING).
FIRE YARD: A side yard, which must be kept clear to facilitate the passage of fire equipment. It is required by certain building codes and its length is determined by building size.
FISCAL YEAR: Starts on July 1 and runs through June 30 of the following year; used for real property tax purposes.
FIXED OPERATING EXPENSE: Those recurring expenses that have to be paid regardless of whether the property is occupied, for example, real property taxes, hazard insurance and debt service. These expenses contrast with operating expenses necessary to maintain the production of income from the operation of a property.
FIXTURE: Personal property so attached to the land or improvements as to become part of the real property. The right of the tenant to remove fixtures may be given by stipulation in the lease or by separate written agreement between the parties.
FLASHING: An impervious material used in roof and wall construction as a barrier to water seepage.
FLAT LEASE: One in which the rental is a fixed sum paid periodically throughout the entire lease term.
FLOOD HAZARD AREAS: Locations specified on Federal Emergency Management Agency (FEMA) maps indicating areas that are subject to flooding. The seller's agent is required to inform potential buyers if the agent has knowledge that a property is located in such an area.
FLOOR DRAINS: Drains in floor for collection of water or waste. (May be connected to sanitary sewer or clarifier.)