Abatement Often and commonly referred to as free rent or early occupancy and may
occur outside or in addition to the primary term of the lease.
Standard Upgraded finishes and specialized designs necessary to accommodate a tenant's
Absorption The net change in space available for lease between two dates,
typically expressed as a percentage of the total square footage.
Ad Valorem According to value. This is a tax imposed on the value of property
(references a general property tax), which is typically based on the local government's
valuation of the property.
Add-On Factor Often referred to as the "loss factor or rentable/usable
(R/U) factor", it represents the tenant's pro-rata share of the building common
areas, such as lobbies, public corridors and restrooms. It is usually expressed as a
percentage which can then be applied to the usable square footage to determine the
rentable square footage upon which the tenant will pay rent.
ALC ALC stands for Accredited Land Consultant and is a professional designation
awarded by the REALTORS® Land Institute, one of nine affiliated groups of the National
Association of Realtors. Members who complete a comprehensive program including required
Land University courses, experience in the field, and who have displayed involvement and
service to the institute, are awarded the Accredited Land Consultant (ALC) designation.
Allowance over Building Shell Most often used in a yet-to-be constructed
property, the tenant has a blank canvas upon which to customize the interior finishes to
their specifications. This arrangement caps the landlord's expenditure at a fixed dollar
amount over the negotiated price of the base building shell. This arrangement is most
successful when both parties agree on a detailed definition of what construction is
included and at what price.
AMO AMO stands for Accredited Management Organization and is a designation
awarded by the Institute of Real Estate Management (IREM) to property management firms
that have met IREM's standards in the areas of education, experience, integrity, insurance
and financial stability.
Anchor Tenant The major or prime tenant in a shopping center, building, etc.
Annual Percentage Rate (APR) The actual cost of borrowing money, expressed in
the form of an annual interest rate. 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.
Appraisal An estimate of opinion and value based upon a factual analysis of a
property by a qualified professional.
Appreciation The increased value of an asset.
ARM ARM stands for Accredited Residential Manager (ARM). It is a professional
designation of the Institute of Real Estate Management (IREM) and is awarded to
residential property managers who demonstrate proven experience, education and ethical
"As-Is" Condition The acceptance by the tenant of the existing
condition of the premises at the time the lease is consummated. This would include any
Assessment A fee imposed on property, usually to pay for public improvements
such as water, sewers, street, improvement districts, etc.
Assignment A transfer by lessee of lessee's entire estate in the property.
Distinguishable from a sublease where the sublessee acquires something less than the
lessee's entire interest.
Attorn To turn over or transfer to another money or goods. To agree to recognize
a new owner of a property and to pay him/her rent. In a lease, when the tenant agrees to
attorn to the purchased, the landlord is given the power to subordinate tenant's interest
to any first mortgage or deed of trust lien subsequently placed upon the leased premises.
[ top ]
Balloon Payment A large principal payment that typically becomes due at the
conclusion of the loan term. Generally, it reflects a loan amortized over a longer period
than that of the term of the loan itself (i.e. payments based on a 25-year-amortization
with the principal balance due at the end of five years.) See "Bullet Loan".
Bankrupt The condition or state of a person (individual, partnership,
corporation, etc.) who is unable to repay its debts as they are, or become, due.
Bankruptcy Proceedings under federal statures to relieve a debtor who is unable
or unwilling to pay its debts. After addressing certain priorities and exemptions, the
bankrupt's property and other assets are distributed by the court to creditors as full
satisfaction for the debt. See also "Chapter 11".
Base Rent A set amount used as a minimum rent in a lease with provisions for
increasing the rent over the term of the lease. See also "Escalation Clause",
"Operating Expense Escalation" and "Percentage Lease."
Base Year Actual taxes and operating expenses for a specified base year, most
often the year in which the lease commences. Once the base year expenses are known, the
lease essentially becomes a dollar stop lease.
Below-grade Any structure or a portion of a structure located underground or
below the surface grade of the surrounding land.
Building Classifications Building classifications in most markets refer to Class
"A", "B", "C" and sometimes "D" properties. While
the rating assigned to a particular building is very subjective, Class "A"
properties are typically newer buildings with superior construction and finish in
excellent locations with easy access, attractive to credit tenants and which offer a
multitude of amenities such as one-site management or covered parking. These buildings, of
course, command the highest rental rates in their sub-market. As the "Class" of
the building decreases (i.e. Class "B", "C" or "D") one
component or another such as age, location or construction of the building becomes less
desirable. Note that a Class "A" building in one sub-market might rank lower if
it were located in a distinctly different sub-market just a few miles away containing a
higher end product.
Building Code The various laws set forth by the ruling municipality as to the
end use of a certain piece of property and that dictate the criteria for design, materials
and type of improvements allowed.
Building or "Core" Factor Represents the percentage of "net
rentable square feet" devoted to the building's common areas (lobbies, restrooms,
corridors, etc.). This factor can be computed for an entire building or a single floor of
a building. Also known as a "Loss Factor or Rentable/Usable (R/U) Factor," it is
calculated by dividing the rentable square footage by the usable square footage. See also
Building Standard A list of construction materials and finishes that represent
what the Tenant Improvement (Finish) Allowance/Work Letter is designed to cover while also
serving to establish the landlord's minimum quality standards with respect to tenant
finish improvements within the building. Examples of standard building items are: Type and
style of doors, lineal feet of partitions, quantity of lights, quality of floor coverings,
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.
See also "Workletter."
Build-out The 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. See also "Tenant Improvement Allowance."
Build-to-Suit An approach taken to lease space by a property owner where a new
building is designed and constructed per the tenant's specifications.
Bullet Loan Any short-term, generally five to seven years, financing option that
requires a balloon payment at the end of the term and anticipates that the loan will be
refinanced in order to meet the balloon payment obligation. Essentially, should the
refinancing not be available, often due to the property not performing as anticipated, the
borrower is "shot" and the property is subject to foreclosure. An example of
this is when a developer borrows to cover the costs of construction and carry-costs for a
new building with the expectation that it would be replaced by long-term (or
"permanent") financing provided by an institutional investor once most of risk
involved in construction and lease-up had been overcome resulting in an income-producing
[ top ]
Capital Expenses This type of expense is most often defined by reference to
generally accepted accounting principles (GAAP), but GAAP does not provide definitive
guidance on all possible expenditures. Accountants will often disagree on whether or not
to include certain items.
Capitalization A method of determining value of real property by considering net
operating income divided by a predetermined annual rate of return. See
Capitalization Rate The rate that is considered a reasonable return on
investment (on the basis of both the investor's alternative investment possibilities and
the risk of the investment.) Used to determine and value real property through the
capitalization process. Also called "free and clear return." See
Carrying Charges Costs incidental to property ownership, other than interest
(i.e. taxes, insurance costs and maintenance expenses), that must be absorbed by the
landlord during the initial lease-up of a building and thereafter during periods of
CCIM CCIM stands for Certified Commercial Investment Member and is a
professional designation from the Commercial Investment Real Estate Institute, one of nine
affiliated groups of the National Association of Realtors. See Commercial Investment Real
Estate Institute for more details.
Certificate of Occupancy A document presented by a local government agency or
building department certifying that a building and/or the leased premises (tenant's
space), has been satisfactorily inspected and is/are in a condition suitable for
Chapter 7 That portion of the Federal Bankruptcy Code that deals with business
liquidations. Chapter 11 is that part of the Federal Bankruptcy Code that deals with
Chapter 11 That portion of the Federal Bankruptcy Code that deals with business
reorganizations. Chapter 7 is that part of the Federal Bankruptcy Code that deals with
Circulation Factor Interior space required for internal office circulation not
accounted for in the "net square footage." Many in the industry use a
circulation factor of 1.35 x the net square footage for office and fixed drywall areas and
a circulation factor of 1.45 x the net square footage for open area workstations. See also
"Net Square Footage" and "Usable Square Footage."
CIREI Stands for Commercial Investment Real Estate Institute and is one of nine
affiliated groups of the National Association of Realtors. For a further explanation, see
Commercial Investment Real Estate Institute.
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.
Commercial Investment Real Estate Institute (CIREI) The Commercial Investment
Real Estate Institute is one of nine affiliated groups of the National Association of
Realtors. Through an extensive education curriculum, programs, and publications, CIREI
enhances the professional development of those engaged in commercial-investment real
estate. The institute confers the Certified Commercial Investment Member (CCIM)
designation. CCIMs are recognized for an expertise of commercial real estate brokerage,
leasing, asset management, valuation and investment analysis, and uphold the industry's
highest professional and ethical standards. Membership consists of 5,000 candidates and
nearly 5,000 designees throughout North America. Regions and chapters provide designees
and candidates the opportunities to promote business and education goals through local and
regional forums and meetings. The CCIM network includes brokers, leasing professionals,
investment counselors, property managers, appraisers, corporate real estate executives,
developers, attorneys, asset managers, bankers, and other allied professionals.
Common Area There are two components of the term "common area". If
referred to in association with the Rentable/Usable or load factor calculation, the common
areas are those areas within a building that are available for common use by all tenants
or groups of tenants and their invitees (i.e. lobbies, corridors, restrooms, etc.). On the
other hand, the cost of maintaining parking facilities, malls sidewalks, landscaped areas,
public toilets, truck and service facilities, and the like are included in the term
"common area' when calculating the tenant's pro-rata share of building operating
Common Area Maintenance (CAM) This is the amount of additional rent charged to
the tenant, in addition to the Base Rent to maintain the common areas of the property
shared by the tenants and from which all tenants benefit. Examples include: snow removal,
outdoor lighting, parking lost sweeping, insurance, property taxes, etc. Most often, this
does not include any capital improvements (see"Capital Expenses") that are made
to the property.
Comparables Lease rates and terms of properties similar in size, construction
quality, age, use and typically located within the same sub-market and used as comparison
properties to determine the fair market lease rate for another property with similar
Concessions Cash or cash equivalents expended by the landlord in the form of
rental abatement, additional tenant finish allowance, moving expenses, cabling expenses or
other monies expended to influence or persuade the tenant to sign a lease.
Condemnation The process of taking private property, without the consent of the
owner, by a governmental agency for public use through the power of eminent domain. See
also "Eminent Domain".
Construction Management The actual construction process is overseen by a
qualified construction manager who ensures that the various stages of the construction
process are completed in a timely and seamless fashion, from getting the construction
permit to completion of the construction to the final walk-through of the completed leased
premises with the tenant.
Consumer Price Index (CPI) Measure inflation in relation to the change in the
price of a fixed market basket of goods and services purchased by a specified population
during a "base" period of time. It is not a true "cost of living"
factor and bears little direct relation to actual costs of building operation or the value
of real estate. The CPI is commonly used to increase the base rental periodically as a
means of protecting the landlord's rental stream against inflation or to provide a cushion
for operating expense increases for a landlord unwilling to undertake the record keeping
necessary for operating expense escalations.
Contiguous Space (1) Multiple suites/spaces within the same building and on the
same floor which can be combined and rented to a single tenant. (2) A block of space
located on multiple adjoining floors in a building (i.e., a tenant leases floors 6 through
12 in a building).
Contract Documents The complete set of design plans and specifications for the
construction of a building or of a building's interior improvements. Working drawings
specify for the contractor the precise manner in which a project is to be constructed. See
also "Specifications" and "Working Drawings."
Conveyance Most commonly refers to the transfer of title to property between
parties by deed. The term may also include most of the instruments by which an interest in
real estate is created, mortgaged or assigned.
Core Factor Represents the percentage of net rentable square feet devoted to the
building's common areas (lobbies, restrooms, corridtors, etc.) This factor can be computed
for an entire building or a single floor of a building. Also known as a loss factor or
rentable/useable (R/U) factor, it is calculated by dividing the rentable square footage by
the usable square footage.
Cost Approach A method of appraising real property whereby the replacement cost
of a structure is calculated using current costs of construction.
Counselors of Real Estate (CRE) Counselors of Real Estate is one of nine
affiliated groups of the National Association of Realtors. See CRE
Covenant A written agreement inserted into deeds or other legal instruments
stipulating performance or non-performance of certain acts or, uses or non-use of a
property and/or land.
Covenant of Quiet Enjoyment The old "quiet enjoyment" paragraph, now
more commonly referred to as "warranty of possession," had nothing to do with
notice in and around the leased premises. It provides a warranty by landlord that it has
the legal ability to convey the possession of the premises to tenant; the landlord does
not warrant that he owns the land. This is the essence of the landlord's agreement and the
tenant's obligation to pay rent. This means that if the landlord breaches this warranty,
it constitutes a actual or constructive eviction.
CPM CPM is a professional designation that stands for Certified Property Manager
(CPM) and is awarded by the Institute of Real Estate Management. Today, nearly 9,000
property managers and real estate asset managers hold this designation.
CRB CRB stands for Certified Real Estate Brokerage Manager and is a professional
designation of the Real Estate Brokerage Managers Council, one of nine affiliated groups
of the National Association of Realtors. Recognized industry-wide as the symbol of
excellence, the CRB designation confers upon those who have earned it the highest level of
professional achievement and recognition in the specialized field of brokerage management.
CRS CRS stands for Certified Residential Specialist and is a professional
designation of the Residential Sales Council, one of nine affiliated groups of the
National Association of Realtors. CRS designees are recognized experts in listing, selling
and real estate investment.
CRE CRE stands for Counselor of Real Estate and is a professional designation
from the Counselors of Real Estate, one of nine affiliated groups of the National
Association of Realtors. Members of the Counselors of Real Estate are recognized problem
solvers who provide counseling services, including asset and portfolio management, debt
restructuring, best use of land studies, and economic and market analyses. The
organization's CRE designation is awarded to all members and attests to the practitioner's
expertise, reputation and adherence to a strict Code of Ethics. CREs encompass practicing
counselors or prominent real estate, financial, legal and accounting firms as well as
leaders of government and academia. Membership is selective, extended by invitation on
either a self-initiated or sponsored basis.
Cumulative Discount Rate The interest rate used in finding present values that
when applied to the rental rate takes into account all landlord lease concessions and then
expressed as a percentage of base rent.
[ top ]
Dedicate To appropriate private property to public ownership for a public use.
Deed A legal instrument transferring title to real property from the seller to
the buyer upon the sale of such property.
Deed in Lieu of Foreclosure A deed given by an owner/borrower to a lender to
satisfy a mortgage debt and avoid foreclosure. See also "Foreclosure."
Deed of Trust An instrument used in many states in place of a mortgage by which
real property is transferred to a trustee by the borrower (trustor), in favor of the
lender (beneficiary), to secure repayment of a debt.
Default The general failure to perform a legal or contractual duty or to
discharge an obligation when due. Some specific examples are: 1) Failure to make a payment
of rent when due. 2) The breach or failure to perform any of the terms of a lease
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
Demising Walls The partition wall that separates one tenant's space from another
or from the building's common area such as a public corridor.
Design/Build A system in which a single entity is responsible for both the
design and construction. The term can apply to an entire facility or to individual
components of the construction to be performed by a subcontractor; also referred to as
Depreciation Spreading out the cost of a capital asset over its estimated useful
life or a decrease in the usefulness, and therefore value, of real property improvements
or other assets caused by deterioration or obsolescence.
Distraint The act of seizing (legally or illegally) personal property based on
the right and interest which a landlord has in the property of a tenant in default.
Dollar Stop An agreed dollar amount of taxes and operating expense (expressed
for the building as a whole or on a square foot basis) over which the tenant will pay its
prorated share of increases. May be applied to specific expenses (e.g., property taxes or
[ top ]
Earnest Money The monetary advance by a buyer of part of the purchase price to
indicate the intention and ability of the buyer to carry out the contract.
Easement A right of use over the property of another created by grant,
reservation, agreement, prescription or necessary implication. It is either for the
benefit of adjoining land (Appurtenant), such as the right to cross A to get to B, or for
the benefit of a specific individual (in gross), such as a public utility easement.
Economic Feasibility A building or project's feasibility in terms of costs and
revenue, with excess revenue establishing the degree of viability.
Economic Rent The market rental value of a property at a given point in time,
even though the actual rent may be different.
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.
Efficiency Factor Represents the percentage of net rentable square feet devoted
to the building's common areas (lobbies, restrooms, corridors, etc). This factor can be
computed for an entire building or a single floor of a building. Also known as a core
factor or rentable/usable (R/U) factor, it is calculated by dividing the rentable square
footage by the usable square footage.
Eminent Domain A power of the state, municipalities, and private persons or
corporations authorized to exercise functions of public character to acquire private
property for public use by condemnation, in return for just compensation. See also
Encroachment The intrusion of a structure which extends, without permission,
over a property line, easement boundary or building setback line.
Encumbrance Any right to, or interest in, real property held by someone other
than the owner, but which will not prevent the transfer of fee title (i.e., a claim, lien,
charge or liability attached to and binding real property.)
Environmental Impact Statement Documents which are required by federal and state
laws to accompany proposals for major projects and programs that will likely have an
impact on the surrounding environment.
Equity The fair market value of an asset less any outstanding indebtedness or
Escalation Clause A clause in a lease which provides for the rent to be
increased to reflect changes in expenses paid by the landlord such as real estate taxes,
operating costs, etc. This may be accomplished by several means such as fixed periodic
increases, increases tied to the Consumer Price Index or adjustments based on changes in
expenses paid by the landlord in relation to a dollar stop or base year reference.
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. In the context of a lease, a statement by a
tenant identifying that the lease is in effect and certifying that no rent has been repaid
and that there are no known outstanding defaults by the landlord (except those specified).
Escrow Agreement A written agreement made between the parties to a contract and
an escrow agent. The escrow agreement sets for the basic obligations of the parties,
describes the monies (or other things of value) to be deposited in escrow, and instructs
the escrow agent concerning the disposition of the monies deposited.
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. The broker need not be the
procuring cause of the lease.
Expense Stop An agreed dollar amount of taxes and operating expense (expressed
for the building as a whole or on a square foot basis) over which the tenant will pay its
prorated share of increases. May be applied to specific expenses (e.g.,, property taxes or
[ top ]
Face Rental Rate The "asking" rental rate published by the landlord.
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. Also known as FMV.
Finance Charge The amount paid for the privilege deferring payment of goods or
services purchased, including any charges payable by the purchaser as a condition of the
First Generation Space Generally refers to new space that is currently available
for lease and has never before been occupied by a tenant. See also "Second Generation
First Mortgage The senior mortgage which, by reason of its position, has
priority over all junior encumbrances. The holder of the first or senior mortgage has a
priority right to payment in the event of default.
First Refusal Right or Right of First Refusal (Purchase) A lease clause giving a
tenant the first opportunity to buy 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 accept.
First Refusal Right or Right o First Refusal (Adjacent Space) A lease clause
giving a tenant the first opportunity to lease additional space that might become
available 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 accept.
This right is often restricted to specific areas of the building such as adjacent suites
or other suites on the same floor.
Fixed Costs Costs, such as rent, which do not fluctuate in proportion to the
level of sales or production.
Flex Space A building providing its occupants the flexibility of utilizing the
space. Usually provides a configuration allowing a flexible amount of office or showroom
space in combination with manufacturing, laboratory, warehouse distribution etc. Typically
also provides the flexibility to relocate overhead doors. Generally constructed with
little or no common areas, load-bearing floors, loading dock facilities and high ceilings.
Floor Area Ration (FAR) The ratio of the gross square footage of a building to
the land on which it is situated. Calculated by dividing the total square footage in the
building by the square footage of land area.
Force Majeure A force that cannot be controlled by the parties to a contract and
prevents said parties from complying with the provisions of the contract. This includes
acts of G-d such as a flood or a hurricane or, acts of man such as a strike, fire or war.
Foreclosure A procedure by which the mortgagee (lender) either takes title or
forces the sale of the mortgagor's (borrower) property in satisfaction of a debt. See also
"Deed in Lieu of Foreclosure".
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. See also "Pass
Future Proposed Space Space in a proposed commercial development which is not
yet under construction or where no construction start date has been set. Future proposed
projects include all those projects waiting for a lead tenant, financing, zoning,
approvals or any other event necessary to begin construction. Also may refer to the future
phases of a multi-phase project not yet built.
[ top ]
General Contractor The prime contractor who contracts for the construction of an
entire building or project, rather than just a portion of the work. The general contractor
hires subcontractors (e.g., plumbing,, electrical, etc.), coordinates all work, and is
responsible for payment to subcontractors.
General Partner A member of a partnership who has authority to bind the
partnership. A general partner also shares in the profits and losses of the partnership.
See also "limited partnership."
Graduated Lease A lease, generally long term in nature, which provides that the
rent will vary depending upon future contingencies, such as a periodic appraisal, the
tenant's gross income or simply the passage of time.
Grant To bestow or transfer an interest in real property by deed or other
instrument; either the fee or a lesser interest, such as an easement.
Grantee One to whom a grant is made.
Grantor The person making the grant.
Gross Absorption A measure of the total square feet leases over a specified
period of time with no consideration given to space vacated in the same geographic area
during the same time period. See also "Net Absorption".
Gross Building Area The total floor area of the building measuring from the
outer surface of exterior walls and windows and including all vertical penetrations (e/g/
elevator shafts, etc.) and basement space.
Gross Lease A lease in which the tenant pays a flat sum for rent out of which
the landlord must pay all expenses such as taxes, insurance, maintenance, utilities, etc.
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.
Guarantor One who makes a guaranty. See also "Guaranty".
Guaranty Agreement whereby the guarantor undertakes collaterally to assure
satisfaction of the debt of another or perform the obligation of another if and when the
debtor fails to do so. Differs from a surety agreement in that there is a separate and
distinct contract rather than a joint undertaking with the principal. See also
[ top ]
Hard Cost The cost of actually constructing the improvements (i.e. construction
costs). See also "Soft Cost".
Highest and Best Use The use of land or buildings which will bring the greatest
economic return over a given time which is physically possible, appropriately supported,
High Rise In the Central Business District, this could mean a building higher
than 25 stories above ground level but in suburban sub-markets, it generally refers to
buildings higher than seven to eight stories.
Hold over Tenant A tenant retaining possession of the leased premises after the
expiration of a lease.
HVAC The acronym for "Heating, Ventilating and Air Conditioning".
[ top ]
Improvements In the context of leasing, the term typically refers to the
improvements made to or inside a building but may include any permanent structure or other
development, such as a street, sidewalks, utilities, etc. See also "Leasehold
Improvements" and "Tenant Improvements".
Indirect Costs Development costs, other than material and labor costs which are
directly related to the construction of improvements, including administrative and office
expenses, commissions, architectural, engineering and financing costs.
Institute of Real Estate Management (IREM) The Institute of Real Estate
Management is one of nine affiliated groups of the National Association of Realtors. IREM
is committed to enhancing the knowledge and professionalism of the real estate management
industry. It does this primarily through the Certified Property Manager (CPM) designation
program. Today, nearly 9,000 property managers and real estate asset managers hold this
designation. IREM's special recognition programs extends to management firms and site
managers specializing in residential real estate. The Accredited Management Organization
(AMO) designation is awarded to property management firms that have met IREM's standards
in the areas of education, experience, integrity, insurance and financial stability. The
Accredited Residential Manager (ARM) award may be earned by residential property managers
who demonstrate proven experience, education and ethical conduct.
Inventory The total amount of rentable square feet of existing and any forthcoming
space (whether it be a tenant vacating space or new buildings coming on the market), in a
given category, for example, all warehouse space in a specified submarket. Inventory
refers to all space within a certain proscribed market without regard to its availability
or condition, and categories can include all types of leased space such as office, flex an
[ top ]
Judgment The final decision of a court resolving a dispute and determining the
rights and obligations of the parties. Money judgments, when recorded, become a lien on
real property of the defendant.
Judgment Lien An encumbrance that arises by law when a judgment for the recovery
of money attaches to the debtor's real estate. See also "Lien".
Just Compensation Compensation which is fair to both the owner and the public
when property is taken for public use through condemnation (eminent domain). The theory is
that in order to be "just", the property owner should be no richer or poorer
than before the taking.
[ top ]
Landlord's Lien A type of lien that can be created by contract or by operation of
law. Some examples are: ) a contractual landlord's lien as might be found in a lease
agreement; 2) a statutory landlord's lien; and 3) landlord's remedy of distress (or right
of distraint), which is not truly a lien but has a similar effect. See also
Landlord's Lien or 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.
Lease An agreement whereby the owner of real property (i.e., landlord/lessor)
gives the right to possession to another (i.e., tenant/lessee) for a specified period of
time (i.e, term) and for a specified consideration (i.e., rent).
Lease Agreement The formal legal document entered into between a landlord and a
tenant to reflect the terms of the negotiations between them; that is, the leas terms have
been negotiated and agreed upon, and the agreement has been reduced to writing. It
constitutes the entire agreement between the parties and sets forth their basic legal
Lease Commencement Date The date usually constitutes the commencement of the
term of the lease for all purposes, whether or not the tenant has actually taken
possession so long as beneficial occupancy is possible. In reality, there could be other
agreements, such as an early occupancy agreement, which have an impact on this strict
Leasehold Improvements Improvements made to the leased premises by or for a
tenant. Generally, especially in new space, part of the negotiations will include in some
detail the improvements to be made in the leased premises by landlord. See also
Legal Description A geographical description identifying a parcel of land by
government survey, metes and bounds, or lot numbers of a recorded plat, including a
description of any portion thereof that is subject to an easement or reservation.
Legal Owner The term is in technical contrast to equitable owner. The legal
owner has title to the property, although the title may actually carry no rights to the
paroperty other than as a lien. See also "Lien".
Letter of Attornment A letter from the grantor to a tenant, stating that a
property has been sold, and directing rent to be paid to the grantee (buyer). See also
Letter of Credit A commitment by a bank or other person, made at the request of
a customer, 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 in satisfying the security deposit
provisions of a lease.
Letter of Intent A preliminary agreement stating the proposed terms for a final
contract. They can be "binding" or "non-binding". This is the
threshold issue in most litigation concerning letters of interest. The parties should
always consult their respective legal counsel before signing any Letter of Intent.
Lien A claim or encumbrance against property used to secure a debt, charge or
the performance of some act. Includes liens acquired by contract or by operation of law.
Note that all liens are encumbrances but all encumbrances are not liens.
Lien Waiver (Waiver of Liens) A waiver of mechanic's lien rights, signed by a
general contractor and his subcontractors, that is often required before the general
contractor can receive a draw under the payment provisions of a construction contract. May
also be required before the owner can receive a draw on a construction loan.
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
Limited Partnership A type of partnership, created under state law, comprised
of: one or more general partners who manage the business and who are personally liable for
partnership debts; and one or more special or limited partners who contribute capital and
share in profits but who take no part in running the business and incur no liability over
and above the amount contributed. See also "General Partner".
Listing Agreement An agreement between the owner of a property and a real estate
broker giving the broker the authorization to attempt to sell or lease the property at a
certain price and terms in return for a commission, set fee or other form of compensation.
See also "Exclusive Listing Agreement".
Long Term Lease In most markets, this refers to a lease whose term is at least
three years from initial signing until the date of expiration or renewal option.
Lot Generally, one of several contiguous parcels of land making up a fractional
part of subdivision of a block, the boundaries of which are shown on recorded maps and
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.
[ top ]
Maker One who creates or executes a promissory note and promises to pay the note
when it becomes due.
Market Rent The rental income that a property would command on the open market
with a landlord and a tenant ready and willing to consummate a lease in the ordinary
course of business; indicated by the rents that landlords were willing to accept and
tenants were willing to pay in recent lease transactions 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. Also called "Marketability Study."
Marketable Title A title which is free from encumbrances and could be readily
marketed (i.e., sold) to a reasonably intelligent purchaser who is well informed of the
facts and willing to accept such title while exercising ordinary business prudence. See
Market Value The highest price a property would command in a competitive and
open market under all conditions requisite to a fair sale with the buyer and seller each
acting prudently and knowledgeably in the ordinary course of trade.
Master Lease A primary lease that controls subsequent leases and which may cover
more property than subsequent leases. An executive suite operation is a good example in
that a primary lease is signed with the landlord and then individual offices within the
leased premises are leased to other individuals or companies.
Mechanic's Lien A claim created by state statutes 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, and which attaches to
the land as well as to the buildings and improvements thereon.
Meter and Bounds The boundary lines of land with their terminal points and
angles, described by listing the compass directions and distances of the boundaries.
Originally, metes referred to distance and bounds referred to direction.
Mid-Rise A building with between four and eight stories above ground level
although in a central business district, this might extend to buildings up to 24 stories.
Mixed-Use Space within a building or project providing for more than one use
(i.e., a loft or apartment project with retail, an apartment building with office space,
an office building with retail space).
Mortgage A written instrument creating an interest in real estate and that
provides security for the performance of a duty or the payment of a debt. The borrower
(i.e., mortgagor) retains possession and use of the property.
[ top ]
Net Absorption The square feet leased in a specific geographic area over a fixed
period-of -time after deducting space vacated in the same area during the same period. See
also "Gross Absorption".
Net Lease A lease in which there is a provision for the tenant to pay, in
addition to rent, certain costs associated with the operation of the property. These costs
may include property taxes, insurance, repairs, utilities and maintenance. There are also
"NN" (double net) and "NNN" (triple net) leases. The difference
between the three is the degree to which the tenant is responsible for operating costs.
See also "Gross Lease".
Net Rentable Area The floor area of a building that remains after the square
footage represented by vertical penetrations, such as elevator shafts, etc., has been
deducted. Common areas and mechanical rooms are included and there are no deductions made
for necessary columns and projections of the building. (This is by the Building Owner and
Manager Association - BOMA, Standard).
Net Square Footage (SF) The space required for a function. Also see
"Circulation Factor and "Usable Square Footage".
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. This clause
benefits service-oriented businesses desiring exclusive access to the building's
population (i.e. travel agent, deli, etc.)
Non-Recourse Loan A loan which bars a lender from seeking a deficiency judgment
against a borrower in the event of default. The borrower is not personally liable if the
value of the collateral for the laon falls below the amount required to repay the loan.
Normal Wear and Tear The deterioration or loss in value caused by the tenant's
normal and reasonable use. In many leases the tenant is not responsible for "normal
wear and tear".
[ top ]
Open Space An unimproved area of land or water, or containing only such
improvements as are appropriate to the use and enjoyment of the open area. Dedicated for
public or private use or enjoyment or for the use and enjoyment of owners and occupants of
land adjoining or neighboring such open spaces.
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 buildings. During the past 30 years, landlords have developed the custom of
separating the base rent for the occupancy of the leased premises from escalation rent.
This technique enables the landlord to better ensure that the "net" rent to be
received under the lease will not be reduced by the normal costs of operating and
maintaining the property. The landlord's definition of operating expenses is likely to be
broad, covering most costs of operation of the building. Most landlords pass through
proper and customary charges, but in the hands of an overly aggressive landlord, these
clauses can operate to impose obligations which the tenant would not willingly or
Operating Expenses The actual costs associated with operating a property,
including maintenance, repairs, management, utilities, taxes and insurance. A landlord's
definition of operating expenses is likely to be quite broad covering most aspects of
operating the building.
Operating Expense Escalation Although there are many variations of operating
expense 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 buildings.
[ top ]
Parking Ratio or Index The intent of this ratio is to provide a uniform method of
expressing the amount of parking that is available at a given building. 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 (expressed a
1/xxx or 1 per xxx). Dividing 1000 by the previous result provides the ratio of parking
spaces available per each 1000 rentable square feet (expressed as x per 1000).
Partial Taking The taking of part (a portion) of an owner's property under the
laws of eminent domain.
Pass Throughs Refers to the tenant's pro rata share of operating expenses (i.e.,
taxes, utilities, repairs) paid in addition to the base rent.
Percentage Lease Refers to a provision of the lease calling for the landlord to
be paid a percentage of the tenant's gross sales as a component of rent. There is usually
a base rent amount to which "percentage" rent is then added. This type of clause
is most often found in retail 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 nonperformance.
Plat (Plat Map) Map of a specific area, such as a subdivision, which shows the
boundaries of individual parcels of land (e.g. lots) together with streets and easements.
Power of Sale Clause inserted in a mortgage or deed of trust giving the
mortgagee (or trustee) the right and power, on default in the payment of the debt secured,
to advertise and sell the property at public auction.
Precast Concrete Concrete components (i.e. walls) of a building which are
fabricated at a plant site and then shipped to the site of construction.
Preleased Refers to space in a proposed building that h as been leased before
the start of construction or in advance of the issuance of a Certificate of Occupancy.
Prime Space This typically refers to first generation (new) space that is
currently available for lease and which has never before been occupied by a tenant.
Prime Tenant The major tenant in a building or, the major or anchor tenant in a
shopping center serving to attract other, smaller tenants into adjacent space because of
the customer traffic generated.
Pro rata Proportionately; according to measure, interest, or liability. In the
case of a tenant, the proportionate share of expenses for the maintenance and operation of
the property. See also "Common Area" and "Operating Expenses".
Punch List An itemized list, typically prepared by the architect or construction
manager, documenting incomplete or unsatisfactory items after the contractor has notified
the owner that the tenant space is substantially complete.
[ top ]
Quitclaim Deed A deed operating as a release that is intended to pass any title,
interest or claim that the grantor may have in the property, but not containing nay
warranty or professing that such title is valid.
[ top ]
Raw Land Unimproved land that remains in its natural state.
Raw Space Unimproved shell space in a building.
Real Estate Brokerage Managers Council (CRB) The Real Estate Brokerage Managers
Council is one of nine affiliated groups of the National Association of Realtors. It is
recognized throughout the industry as the professional peer organization for brokerage
owners and managers. The council, dedicated to providing its members with quality
education, benefit-oriented services, and products and information, was created to
significantly improve management and leadership skills. The council offers the CRB
(Certified Real Estate Brokerage Manager) designation, recognized industry-wide as the
symbol of excellence. The CRB designation confers upon those who have earned it the
highest level of professional achievement and recognition in the specialized field of
Real Property Land, and generally what ever is erected or affixed to the land,
such as buildings, fences and including light fixtures, plumbing and heating fixtures or
other items which would be personal property if not attached.
REALTORS®Land Institute (RLI) The REALTORS® Land Institute is one of nine
affiliated groups of the National Association of Realtors. Its main objective is to bring
together real estate professionals interested in the improvement of their professional
competence in activities related to land; including, land brokerage, agri-business, land
management, planning and developing, appraising, acquisition, and any other land specialty
areas. This goal is carried out through various programs. As a leading land education
source, the REALTORS® Land Institute has joined forces with Texas A&M University to
offer the only university program for the professional who deals in land. Members who
complete a comprehensive program including required Land University courses, experience in
the field, and who have displayed involvement and service to the institute, are awarded
the Accredited Land Consultant (ALC) designation.
REALTORS® National Marketing Institute (RNMI) The REALTORS® National
Marketing Institute is one of nine affiliated groups of the National Association of
Realtors. Through its two specialized councils and their extensive education and training
programs, RNMI promotes professional competence in real estate sales and brokerage, and
real estate brokerage management. The following professional designations are offered:
Certified Real Estate Brokerage Manager (CRB) and Certified Residential Specialist (CRS).
See also the Real Estate Brokerage Managers Council and the Residential Sales Council for
more information on these designations.
Recapture 1) When the Internal Revenue Service recovers the tax benefit of a
deduction or a credit previously taken by a taxpayer, which is often a factor in
foreclosure since there is a forgiveness of debt. 2) As used in leases, a clause
giving the lessor a percentage of profits above a fixed amount of rent; or in a percentage
lease, a clause granting the landlord a right to terminate the lease if the tenant fails
to realize minimum sales.
Recourse The right of a lender, in the event of a default by the borrower, to
recover against the personal assets of a party who is secondarily liable for the debt
(e.g., endorser or guarantor).
Rehab An extensive renovation of a building or project which is intended to cure
obsolescence of such building or project.
Renewal Option A clause giving a tenant the right to extend the term of a lease,
usually for a stated period of time and at a rent amount as provided for in the option
Rent Compensation or fee paid, usually periodically (i.e. monthly rent payments,
for the occupancy and use of any rental property, land, buildings, equipment, etc.
Rent Commencement Date The date on which a tenant begins paying rent. The
dynamics of a marketplace will dictate whether this date coincides with the lease
commencement date or if it commences months later (i.e., in a weak market, the tenant may
be granted several months free rent). It will never begin before the lease commencement
Rentable Square Footage Rentable square footage equals the usable square footage
plus the tenant's pro rata share of the building common areas, such as lobbies, public
corridors and restrooms. The pro-rata share, often referred to as the rentable/usable
(R/U) factor, will typically fall in a range of 1.10 to 1.16, depending on the particular
building. Typically, a full floor occupancy will have an R/U factor of 1.10 while a
partial floor occupancy will have an R/U factor of 1.12 to 1.16 times the usable area.
Rentable/Usable Ratio That number obtained when the total rentable area in a
building i s divided by the usable area in the building. The inverse of this ratio
describes the proportion of space that an occupant can expect to actually
Rental Concession Concessions a landlord may offer a tenant in order to secure
their tenancy. While rental abatement is one form of a concession, there are many others
such as: increased tenant improvement allowance, signage, lower than market rental rates
and moving allowances are only a few of the many. See also "Abatement."
Rent-Up Period That period of time, following construction of a new building,
when tenants are actively being sought and the project is approaching its stabilized
REO (Real Estate Owned) Real estate that has come to be owned by a lender,
including real estate taken to satisfy a debt. Includes real estate acquired by lenders
through foreclosure or, in settlement of some other obligation.
Representation Agreement An agreement between the owner of a property and a real
estate broker giving the broker the authorization to attempt to sell or lease the property
at a certain price and terms in return for a commission, set fee or other form of
compensation. See "Exclusive Listing Agreement."
Request for Proposal (RFP) The formalized Request for Proposal represents a
compilation of the many considerations that a tenant might have and should be customized
to reflect their specific needs. Just as the building's standard form lease document
represents the landlord's "wish list", the RFP serves in that same capacity for
Residential Sales Council The Residential Sales Council serves the real estate
industry's top producing residential specialists. By offering state-of-the-art education
courses leading to the Certified Residential Specialist (CRS) designation, the council
strengthens its members' ability to operate a "business within a business"
successfully and profitably. Approximately 30,000 of the council's 35,000 members have
earned the right to use the prestigious CRS designation. Designees are recognized experts
in listing, selling, and real estate investment.
Right of First Refusal See "First Refusal Right."
RLU See REALTORS® Land Institute.
[ top ]
Sale-Leaseback An arrangement by which the owner occupant of a property agrees to
sell all or part of the property to an investor and then lease it back and continue to
occupy space as a tenant. Although the lease technically follows the sale, both will have
been agreed to as part of the same transaction.
Second Mortgage A mortgage on property that ranks below a first mortgage in
priority. Properties may have two, three or more mortgages, deeds of trust, or land
contracts as lens at the same time. Legal sequence priority, indicated by the date of
recording, determines the designation first, second, third, etc.
Second Generation or Secondary Space Refers to previously occupied space that
becomes available for lease, either directly from the landlord or as sublease space. See
also "First Generation Space".
Security Deposit A deposit of money by a tenant to a landlord to secure
performance of a lease. This deposit can also take the form of a Letter of Credit or other
Seisen (Seizen) Posession of real property under claim of freehold estate. This
term originally referred to the completion of feudal investiture by which a tenant was
admitted into the feud and performed the rights of homage and fealty. Presently, it has
come to mean possession under a legal right (usually a fee interest). As the old doctrine
of corporeal investiture is no longer in force, the delivery of a deed gives seisin in
Setback The distance from a curb, property line or other reference point, within
which building is prohibited.
Setback Ordinance Setback requirements are normally provided for by ordinances
or building codes. Provisions of a zoning ordinance regulate the distance from the lot
line to the point where improvements may be constructed.
Shell Space Setback requirements are normally provided for by ordinances or
building codes. Provisions of a zoning ordinance regulate the distance from the lot line
to the point where improvements may be constructed.
SIOR Stands for Society of Industrial and Office Realtors. See Society of
Industrial and Office Realtors for more details.
Site Analysis The study of a specific parcel of land which takes into account
the surrounding area and is meant to determine its suitability for a specific use or
Site Development The installation of all neccessary improvements (i.e.,
installment of utilities, grading, etc.), made to a site before a building or project can
be constructed upon such site.
Site Plan A detailed plan which depicts the location of improvements on a parcel
of land which also contains all the information required by the zoning ordinance.
Slab The exposed wearing surface laid over the structural support beams of a
building to form the floor(s) of the building or laid slab-on-grade in the case of a
non-structural, ground level concrete slab.
Soft Cost That portion of an equity investment other than the actual cost of the
improvements themselves (i.e. architectural and engineering fees, commissions, etc.) and
which may be tax-deductible in the first year. See also "Hard Cost".
Society of Industrial and Office REALTORS®(SIOR) The Society of Industrial and
Office REALTORS® is an international organization whose 1,700 members specialize in a
variety of commercial real estate activities, including the marketing of industrial and
office properties. SIOR is dedicated to maintaining high professional standards in the
fields of industrial and office real estate. SIOR is one of nine affiliated groups of the
National Association of Realtors.
Space Plan A graphic representation of a tenant's space requirements, showing
wall and door locations, room sizes and sometimes includes furniture layouts. A
preliminary space plan will be prepared for a prospective tenant at any number of
different properties and this serves as a "test-fit" to help the tenant
determine which property will best meet its requirements. When the tenant has selected a
building of choice, a final space plan is prepared which speaks to all of the landlord and
tenant objectives and then approved by both parties. It must be sufficiently detailed to
allow an accurate estimate of the construction costs. This final space plan will often
become an exhibit to any lease negotiated between the parties.
Special Assessment Any special charge levied against real property for public
improvements (e.g., sidewalks, streets, water and sewer, etc.) that benefit the assessed
Specific Performance A requirement compelling one of the parties to perform or
carry out the provisions of a contract into which he/she has entered.
Speculative Space Any tenant space that has not been leased before the start of
construction on a new building. See also "First Generation Space".
Step-Up Lease (Graded Lease) A lease specifying set increases in rent at set
intervals during the term of the lease.
Straight Lease (Flat Lease) A lease specifying the same, a fixed amount, of rent
that is to be paid periodically during the entire term of the lease. This is typically
paid out in monthly installments.
Strip Center Any shopping area, generally with common parking, comprised of a
row of stores but smaller than the neighborhood center anchored by a grocery store.
Subcontractor A contractor working under and being paid by the general
contractor. Often a specialist in nature, such as an electrical contractor, cement
Subdivision Plat A detailed drawing which depicts the manner in which a parcel
of land has been divided into two or more lots. It contains engineering considerations and
other information required by the local authority.
Subordination Agreement As used in a lease, the tenant generally accepts the
leased premises subject to any recorded mortgage or deed of trust lien and all existing
recorded restrictuions and the landlord is often given the power to subordinate the
tenant's interest to any first mortgage or deed of trust lien subsequently placed upon the
Surety One who at the request of another, and for the purpose of securing to
him/her a benefit, voluntarily binds himself/herself to be obligated for the debt or
obligation of another. Although the term includes guarantor and the terms are commonly,
though mistakenly, used interchangeably, surety differs from guarantor in a variety of
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 of land is measured and its boundaries and
[ top ]
Taking A common synonym for condemnation or any actual or material interference
with private property rights but it is not essential that there be physical seizure or
Tax Base The assessed valuation of all the real property that lies within the
jurisdiction of a taxing authority, which is then multiplied by the tax rate or mill levy
to determine the amount of tax due.
Tax Lien A statutory lien, existing in favor of the state or municipality, for
nonpayment of property taxes which attaches only to the property upon which the taxes are
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.
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 which are an uncertain duration (i.e. without a fixed
term) and the right of either party to terminate on proper notice.
Tenant Improvements Improvements made to the leased premises by or for a tenant.
Generally, especially in new space, part of the negotiations will include in some detail
the improvements to be made in the leased premises by the landlord. See also
"Leasehold Improvements", "Workletter".
Tenant Improvement (TI) Allowance or Work Letter Defines the fixed amount of
money contributed by the landlord toward tenant improvements. The tenant pays any of the
costs that exceed this amount. Also commonly referred to as "Tenant Finish
"Time is of the Essence" Means that performance by one party within
the period specified in the contract is essential to require performance by the other
Title The means whereby the owner of lands has the just and full possession of
Title Insurance A policy issued by a title company after searching the title and
which insures against loss resulting from defects of title to a specifically described
parcel of real property, or from the enforcement of liens existing against it at the time
the title policy is issued.
Title Search A review of all recorded documents affecting a specific piece of
property to determine the present condition of title.
Total Inventory The total amount of square footage of a type of property (i.e.
office, industrial, retail, etc.) within a geographical area, whether vacant or occupied.
This normally includes owner-occupied space.
Trade Fixtures Personal property that is attached to a structure (i.e. the walls
of the leased premises) that are used in the business. Since this property is part of the
business and not deemed to be part of the real estate, it is typically removable upon
Triple Net (NNN) Rent A lease in which the tenant pays, in addition to rent,
certain costs associated with a leased property, which may include property taxes,
insurance premiums, repairs, utilities, and maintenance. There are also "Net
Leases" and "NN" (double net) leases, depending upon the degree to which
the tenant is responsible for operating costs. See also "Gross Lease".
Turn Key Project The construction of a project in which a third party, usually a
developer or general contractor, is responsible for the total completion of a building
(including construction and interior design) or, the construction of tenant improvements
to the customized requirements and specifications of a future owner or tenant.
[ top ]
Under Construction When construction has started but the Certificate of Occupancy
has not yet been issued.
Under Contract A property for which the seller has accepted the buyer's offer to
purchase is referred to as being "under contract". Generally, the prospective
buyer is given a certain period of time in which to perform its due diligence and finalize
financing arrangements. During the period of time the property is under contract, the
seller is precluded from entertaining offers from other buyers.
Unencumbered Describes title to property that is free of liens and any other
encumbrances. Free and clear. See also "Encumbrances".
Unimproved Land Most commonly refers to land without improvements or buildings
but can also mean land in its natural state. See also, "Raw Land".
Use The specific purpose for which a parcel of land or a building is intended to
be used or for which it has been designed or arranged.
Usable Square Footage Usable square footage is the area contained within the
demising walls of the tenant space. Total usable square footage equals the net square
footage x the circulation factor. Also see: Circulation Factor and Net Square Footage.
[ top ]
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. This is calculated by multiplying the vacant space
times 100 and then dividing it by the total inventory.
Vacant Space Refers to existing tenant space currently being marketed for lease.
This excludes space available for sublease.
Variance Refers to permission that allows a property owner to depart from the
literal requirements of a zoning ordinance that, because of special circumstances, cause a
unique hardship. Included would be such things as the particular physical surroundings,
shape or topographical condition of the property and when compliance would result in a
practical difficulty and would deprive the owner of the reasonable use of the property.
[ top ]
Warranty of Possession This is the old "quiet enjoyment" paragraph, which
of course had nothing to do with noise in and around the leased premises. It provides a
warranty by landlord that is has the legal ability to convey the possession of the
premises to tenant; the landlord does not warrant that he owns the land. This is the
essence of the landlord's agreement and the tenant's obligation to pay rent. This means
that if the landlord breaches this warranty, it constitutes an actual or constructive
Weighted Average Rental Rates The mean proportion or medial sum made out of the
unequal rental rates in two or more buildings within a market area.
Women's Council of REALTORS®(WCR) The Women's Council of REALTORS® provides an
extensive referral network and education programs for personal and career growth as well
as opportunities for increasing productivity and financial security. WCR offers the
Leadership Training Graduate (LTG) designation and the Referral and Relocation
Certification (RRC). WCR has more than 14,000 members in 300 local chapters and 38 state
Workletter A list of the building standard items that the landlord will contribute
as part of the tenant improvements. Examples of the building standard items typically
identified include: style and type of doors, lineal feet of partitions, type and quantity
of lights, quality of floor coverings, number of telephone and electrical outlets, etc.
The Workletter often carries a dollar value but is contrasted with a fixed dollar tenant
improvement allowance that can be used at the tenant's discretion. See also
"Leasehold Improvements" and "Tenant Improvements".
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.
This set of plans includes a set of specifications for the building or project.
[ top ]
Zoning The division of a city or town into zones and the application of regulations
having to do with the structural, architectural design and intended use of buildings
within such designated zone (i.e., a tenant needing manufacturing space would like for a
building located within an area zoned for manufacturing).
Zoning Ordinance Refers to the set of laws and regulations, generally, at the
city or county level, controlling the use of land and construction of improvements in a
given area or zone.
[ top ]