Realm Business Solutions Glossary v.1.0 9/16/2003 
Running into legal and technical terminology? Realm has assembled this glossary of key definitions to help professionals and students get to the bottom of all the language used in today’s complex real estate transactions and IT strategies. Of course, we can’t predict every word you might find useful, so send any comments or suggested additions to this list to info@realm.com.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
 A  Top   
 ABANDONMENT
The voluntary release of a claim or right one has in a piece of property with the clear intention of terminating possession or interest and without giving this interest to anyone else. Abandonment includes both the intention to release any claim one has against the property as well as the actual act of "abandoning" the property.

 ABATEMENT
A decrease or reduction in the amount of a charge such as rent. For example, a tenant receives an abatement of rent during the time the leased space cannot be inhabited due to fire or flood damage.

 ABSORPTION RATE
The percentage of a particular type of real estate that can be sold or leased in a particular location during a certain period of time.

 ACCELERATED DEPRECIATION
The method(s) of depreciation for income tax purposes which increases the write-off at a rate higher than under the straight-line method of depreciation.

 ACCELERATION CLAUSE
A clause in a promissory note, mortgage or deed of trust giving the creditor (mortgagee) the legal right to demand immediate payment of all future payments due to the occurrence of some event such as the default on an installment payment or the failure to keep the property adequately insured.

 ACCEPTANCE
A voluntary expression by the person receiving the offer (the offeree, and quite often the seller of the property) to be bound by the exact terms of the offer in the manner requested or authorized by the person making the offer (the offeror, and quite often the potential buyer of the property). An acceptance must be unequivocal and unconditional.

 ACCESS
The right to enter upon and leave property. The owner of land which abuts or adjoins a road or highway normally has a vested right to come and go from his or her land to the highway without obstruction, subject to limitations imposed by the governing body.

 ACCESSIBILITY
The ease with which a person can either enter or exit a particular parcel of land. The accessibility of a particular parcel is a function of many things such as frontage to a road, traffic flow, and topography. Good accessibility will usually result in higher value; likewise, a parcel of land with poor accessibility will normally sell for less in the marketplace.

 ACCESSION
The legal right that entitles the owner of land to all that the soil produces or all that is added to the land either intentionally or by mistake.

 ACCREDITED MANAGEMENT ORGANIZATION (AMO)
A professional designation awarded by the Institute of Real Estate Management to companies involved in the management of property.

 ACCREDITED RESIDENTIAL MANAGER (ARM)
A professional designation awarded by the Institute of Real Estate Management (IREM), an affiliate of the National Association of Realtors. The designation is intended for those persons specializing in the management of residential property.

 ACCRUAL METHOD
A method of accounting based on estimating and accruing expenses each period. Contrast with cash method.

 ACCRUED
An accumulation over a certain period of time, such as accrued depreciation or accrued interest.

 ACCRUED DEPRECIATION
Any diminishment or loss of utility or value of a building from the time of initial construction to the present. Accrued depreciation is calculated as the difference between what it would cost to replace the building new and the current appraised value of the building.

 ACCRUED INTEREST
Unpaid interest that has already been earned.

 ACH or Automated Cash Handling
Automated receipt and deposit of electronic funds directly into the landlord’s bank account. The draft of these funds can be conducted on a recurring or scheduled basis, or truncated from the data represented on a check.

 ACKNOWLEDGMENT
A formal declaration to a public official by a person who has signed (executed) an instrument which states that the signing was voluntary.

 ACQUISITION
The act or process by which property ownership is achieved. The ways in which title to real property is transferred may be classified as (1) voluntary conveyance (deed), (2) transfer by devise (dying with a will) or descent (dying without a will), (3) transfer by adverse possession, (4) transfer by accession and (5) transfer by public action or by operation of law.

 ACQUISITION COST
The total cost of purchasing or acquiring title to real property. In addition to the sales price, additional costs could also include loan origination fees, appraisal fee, credit report fee, title charges, attorney fees and other normal closing costs.

 ACTUAL CASH VALUE
The monetary worth of a structure for insurance purposes. Actual cash value is calculated by taking the replacement cost of the property and then subtracting the value of the physical wear and tear of the property.

 AD VALOREM TAX
A tax levied according to value. Also referred to as real estate tax.

 ADC LOAN
A type of loan intended to cover the three phases of a project: (1) acquisition, (2) development, and (3) construction. Such loans, while considered more risky than some other types of real estate loans, are normally made with a variable interest rate and are expected to be repaid over a reasonably short period of time.

 ADDENDUM
Something that is added and thus made part of a document. Quite often a real estate listing agreement or sales contract is a pre-printed form and thus may not have the space within the document to include specific and detailed information that the parties to the contract wish to include.

 ADJOINING
In lease terms, property in actual contact with another object (i.e., attached). Same as "Contiguous".

 ADJUNCTION
The process of adding or annexing a parcel of land to a larger parcel.

 ADJUSTABLE RATE MORTGAGE (ARM)
A type of real estate loan in which either the interest rate charged or the length of the loan, or both, can change. Adjustable rate mortgages became very popular during the 1980s due primarily to the reluctance of lenders to quote a fixed interest rate loan to potential borrowers. By using an ARM, a lender is able to pass on the uncertainty of changes in interest rates to the borrower if rates change during the life of the loan. ARMs are normally tied to some index such as government securities.

 ADJUSTED COST BASIS
The value of property for accounting purposes used to determine the amount of gain or loss realized by the owner upon the sale of the property.

 ADJUSTED SALES PRICE
The estimated sales price of a comparable property after additions and/or subtractions have been made to the actual sales price for improvements and deficiencies when compared to the subject property being appraised.

 AFFIDAVIT OF TITLE
A sworn statement by the seller of real estate that no defects of title other than those stated in the sales contract or deed exist in the title being conveyed.

 AFTER-TAX CASH FLOW
The spendable cash from an income- producing asset, such as an office building or apartment complex, calculated by taking gross income and subtracting fixed and variable costs, replacement for reserves, debt service plus tax savings or minus tax liability.

 AFTER-TAX EQUITY YIELD RATE
The internal rate of return on the equity investment after considering federal income taxes.

 AGENT
An individual/entity who transacts, represents, or manages business for another individual/entity. Permission is provided by the individual/entity being represented. In real estate this is usually the Leasing Agent who finds customers (tenants) for the space.

 ALIENATION CLAUSE
A provision often included in a mortgage or deed of trust that legally permits the lender (mortgagee) to demand payment of all the outstanding principal if the property is sold or transferred by the borrower (mortgagor). Such a provision is also commonly known as a due-on-sale clause.

 ALLOWANCE OVER BUILDING SHELL
Tenant build-out specifications, usually for a new property. 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.

 AMENITY
A feature or benefit received from a particular parcel of property which increases the satisfaction received by the owner or user of that property. Amenities may be both natural, for example, location or scenic view, and manmade, such as a swimming pool or tennis courts. Both material and manmade amenities increase the desirability of a certain location or parcel of land and thus that particular land will normally have a higher value than a parcel of land without the amenities.

 AMERICAN INSTITUTE OF ARCHITECTS (AIA)
A professional association of registered architects. The construction contract forms they publish are an industry standard in real estate.

 AMORTIZATION
The repayment of a financial obligation over a period of time in a series of periodic installments. Specifically, this is the payback of the principal owed to the lender. The effect of amortization is to build up the paper value of the investor's (owner's) equity and to reduce the debt obligation. It should be noted that a portion of each payment consists of a blend of interest and amortization of principal. The interest portion is tax deductible, whereas the amortization is not.

 AMORTIZATION RATE
The percentage of a periodic payment that is applied to the reduction of the principal; in a level- payment mortgage this corresponds to the sinking fund factor.

 AMORTIZATION TERM
The time period over which the principal amount would be retired on the basis of the periodic installments paid.

 AMORTIZED LOAN
A financial obligation that is repaid over a period of time by a series of periodic payments.

 ANCHOR, or Anchor Tenant
A well-known commercial retail business such as a national chain store or regional department store strategically placed in a shopping center so as to generate the most amount of customers for all of the stores located in the shopping center. The anchor tenant often receives favorable leasing terms in exchange for the business it brings to the retail center.

 ANNEXATION
The act of adding, joining and attaching one thing to another. With respect to the annexing of land, from time to time municipalities legally incorporate into the existing town or city limits a certain amount of land or territory outside their legal boundary. This may be done to consolidate two governments into one or perhaps to increase property tax revenue for the municipality.

 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.

 APPRECIATION
An increase in an asset's market value over its value at some previous point in time. The increase can be a result of inflation, increased demand or some other related cause. The term denotes the opposite of depreciation.

 APPURTENANCE
That which belongs to something else and thus passes with the property. Examples would include riparian rights, easements, barns and other outbuildings, gardens and orchards.

 ARGUS
Software from Realm that models all aspects of the real estate life cycle - from initial acquisition or development, to lease up and disposition. ARGUS can also be used to analyze partnership structures and debt financing. ARGUS is the commercial real estate industry's most popular valuation tool with more than 15,000 users in 39 countries.

 ARREARS
Money which is not paid on time, as for example, if a tenant has not paid the rental payments, he or she is said to be in arrears.

 ASP, or Application Service Provider
Deployment option where the customer basically rents a hosted instance of software from the solution provider. They do not have to install the software locally or purchase their own hardware to do this. The solution provider or vendor runs, maintains and updates the installed software, and the customer simply logs in over the Internet to their own instance of the software.

 ASSESSED VALUE
The worth or value of a piece of property as determined by the taxing authority for the purpose of levying an ad valorem (property) tax. The assessed value of property is normally based on some percentage of market value. Property may be assessed at full market value or, as is more commonly the case, assessed at something less.

 ASSESSMENT
(1) A determination of the value of a parcel for the purpose of levying a property tax on that parcel. (2) The term also is used to denote the means by which local governments raise the money to pay for certain improvements which directly benefit property owners adjoining or adjacent to the improvements. For example, the cost of paving a previously unpaved road could be assessed to the land on each side of the road. The actual cost to a particular landowner would be based on his or her front footage as a percentage of the total footage being improved. (3) Joint forms of ownership such as condominiums and cooperatives allocate the expenses incurred for the maintenance and upkeep of the common areas and limited common areas and assess each unit owner for his or her proportionate share.

 ASSESSMENT RATIO
The ratio of assessed value to full market value as set by a taxing authority.

 ASSET
An accounting term used to denote the real and personal property one possesses, as distinguished from debts and obligations which are known as liabilities. Assets minus liabilities equals net worth.

 ASSET MANAGER
Analyzes the real estate market, recognizes and anticipates trends and anticipates their effect on the property, verifies the that decisions regarding financial details such as the budget, capital improvements, rental rates and other lease considerations make sense from a long term perspective.

 ASSIGN
To transfer to another.

 ASSIGNEE
The person to whom a claim, benefit, or right in property is made.

 ASSIGNMENT
The transfer of a claim, benefit or right in property belonging to one person (the assignor) to another person (the assignee). Real estate instruments in which assignments occur include sales contracts, mortgages, options, and leases. Rights under contracts are valuable property rights which can ordinarily be assigned to third persons. The legal effect of an assignment is to substitute the assignee for the assignor in the contractual relationship with the other original contracting party.

 B  Top   
 BALANCE SHEET
A financial statement in table form showing assets, liabilities, and equity, in which assets equal the sum of liabilities plus equity.

 BALLOON MORTGAGE
A mortgage with a balloon payment.

 BALLOON PAYMENT
The final payment on a loan, when that payment is greater than the preceding installment payments and pays the loan in full.

 BASE RENT
The minimum rent due under a lease that has a percentage or participation requirement.

 BASE YEAR
A point of time that serves as a benchmark for reflecting the change in an index.

 BASE YEAR RECOVERIES, or Base Year Scenario:
In this scenario, recoveries in the first year are added to the lump sum of the rent. In year two, the tenant pays the increase over the base year. This method is favored by commercial landlords, as they do not repay if a tenant’s costs go down during the fiscal year (though costs seldom go down anyway).

 BONA FIDE
In good faith, without fraud.

 BOND
A certificate that serves as evidence of a debt and of the terms under which it is undertaken.

 BOOK VALUE
The carrying amount of an asset, as shown on the books of a company.

 BREAK-EVEN POINT
The amount of rent or the occupancy level needed to pay operating expenses and debt service. Also called default point.

 BREAKPOINT
A pre-established base amount of the dollar sales volume for a tenant on which percentage rent is based.

 BROKER
A state-licensed agent who, for a fee, acts for property owners in real estate transactions, within the scope of state law. Also referred to as a Leasing Agent.

 BUDGET™
Software from Realm Business Solutions, streamlines and simplifies the budgeting process at every level. It eliminates spreadsheet errors, consolidation pains, data synchronization errors, and provides consistency throughout the budgeting cycle. No longer must real estate companies approach budgeting as a yearly chore – managers are using BUDGET to conduct this key process on a continuous basis to help make better decisions across their entire portfolio.

 BUILD OUT
The construction or improvements of the interior of a space, including flooring, walls, finished plumbing, electrical work, etc.

 BUILD TO SUIT
An arrangement whereby a landowner offers to pay to construct on his or her land a building specified by a potential tenant, and then to lease land and building to the tenant.

 BUILDING CLASSIFICATION
Set of ratings for the subjective quality and condition of a property for its location, ranked from “Class A” for prime properties that command higher rents, to “Class D” for properties that have deteriorated or become less desirable to tenants.

 BUILDING CODE
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

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

 BUILDING OWNERS AND MANAGERS ASSOCIATION (BOMA)
An organization of practitioners who own and manage buildings, notably office space. Address: Building Owners and Managers Association, 1221 Massachusetts Avenue NW, Washington, DC 20005.

 BUILDING PERMIT
A permission issued by a city for the construction of a building to ensure compliance with building codes. A building permit must be displayed in plain site during the entire construction process.

 BUSINESS CYCLE
A wavelike movement of increasing and decreasing economic prosperity consisting of four phases: expansion, recession, contraction, and revival.

 BUSINESS INTERRUPTION INSURANCE
A form of insurance coverage that provides income to a business in the event the premises become untenable.

 BUSINESS PARK
A development allocated to office/warehouse or similar use.
Also known as an office park or a industrial park.

 C  Top   
 CALENDAR YEAR
A calendar year used for sales reporting purposes.
Contract with Fiscal Year.

 CAM, or Common Area Maintenance
The process of maintaining the common areas of the building or retail space such as walkways, parking, courtyards, food courts, entries, elevators, etc. In commercial real estate, CAM expenses are usually recovered through estimated monthly payments from tenants in addition to their base rent through terms in the lease.

 CANCELLATION CLAUSE
A contract provision that gives the right to terminate obligations upon the occurrence of specified conditions or events.

 CAP
A limit placed on adjustments to recoverable expenses.

 CAPITAL EXPENDITURE
An improvement (as distinguished from a repair) that will have a life of more than one year. Capital expenditures are generally depreciated over their useful life, as distinguished from repairs, which are subtracted from income of the current year. Examples include upgrading the elevators, replacement of the roof, and renovations of the lobby.

 CAPITAL GAIN
Gain on the sale of a capital asset In 1991 and thereafter, the maximum individual tax rate on capital gains is 28%. There are limits on the deduction of capital losses against ordinary income.

 CAPITAL IMPROVEMENT
Same as capital expenditure.

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

 CAPITAL LOSS
Loss from the sale of a capital asset.

 CAPITALIZE
1) to estimate the present lump sum value of an income stream
2) to set up the cost of an asset on financial records.

 CAPTURE RATE
The sales or leasing rate of a real estate development compared to the sales or leasing rate of all developments in the market area.

 CASH EQUIVALENT
The conversion of the price of property that sold with either favorable or unfavorable financing into the price the property would have sold for had the seller accepted all cash in the transaction.

 CASH FLOW
Periodic amounts available to an equity investor after deducting all periodic cash payments from rental income.

 CASH METHOD
A method of accounting based on cash receipts and disbursements.
Contrast with accrual method.

 CENTRAL BUSINESS DISTRICT (CBD)
The downtown section of a city, generally consisting of retail, office, hotel, entertainment, and governmental land uses with some high density housing.

 CERTIFICATE OF INSURANCE
A document issued by an insurance company to verify the coverage.

 CERTIFICATE OF OCCUPANCY
A document issued by a local government to a developer permitting the structure to be occupied by members of the public. Issuance of the certificate generally indicates that the building is in compliance with public health and building codes. Also referred to as an Occupancy Permit.

 CERTIFIED COMMERCIAL INVESTMENT MEMBER (CCIM)
A designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Address: Realtors National Marketing institute 430 North Michigan Avenue Chicago, IL 60611.

 CERTIFIED PROPERTY MANAGER (CPM)
A professional awarded to real estate managers by the Institute of designation Real- Estate Management, an affiliate of the National Association of Realtors.
Address: Institute of Real Estate Management 430 North Michigan Avenue, Chicago, IL 60611.

 CHECK AND LIST
The process of applying or allocating incoming tenant payments to recoverable expenses in addition to base rents owed. This is a new feature of Realm COLLECT. Since many corporate clients pay all real estate expenses in one lump sum, this ability is huge for industrial/office real estate companies that must quickly pay invoices.

 COLLECT™
World’s first fully automated rent collection and cash flow management solution for property owners and managers. It enhances the speed and accuracy of collections, by eliminating the manual processes of receiving, entering, and depositing rent payments. COLLECT’s technologies and value-added services completely integrate with existing property management systems. COLLECT works with all types of payment methods, including checks, credit cards, money orders and electronic (ACH) payments, providing the flexibility and service that today’s tenants are demanding. Innovative technologies automatically convert paper transactions into elccctronic transactions, eliminating excess data entry and overhead. The result: a substantial savings in monthly operating costs, and a streamlined, consistent process for managing receivables across your entire portfolio.

 COMMERCIAL PROPERTY
Property designed for use by retail, wholesale, office, hotel, or service users.

 COMMISSION
Payment to a broker for services rendered such as in the sale, purchase, or lease of real estate.

 COMMON AREA
Areas of a property that are used by all owners or tenants.

 CONCESSIONS
Benefits granted by a seller/lessor to induce a sale/lease.

 CONDEMNATION
1) taking private property for public use with compensation to the owner under eminent domain. Used by governments to acquire land for streets, parks, schools, etc., and by utilities to acquire necessary property.
2) declaring a structure unfit for use.

 CONSTRUCTION MANAGER
Supervises tenant finish out and capital improvements to the property.

 CONSULTING
In real estate technology, the service or contracted labor of designing the strategy, assisting implementation and/or training of users and managers within the client company to ensure on-time and in-budget deployment of the solution. For more information, refer to the Realm Client Services area.

 CONSUMER PRICE INDEX
The most widely known of many such measures of price levels and inflation that are reported to the U.S. government. It measures and compares, from month to month, the total cost of a statistically determined "typical market basket" of goods and services consumed by U.S. households.

 CONTIGUOUS
Actually touching; contiguous properties have a common boundary.

 CONTINGENCY
A requirement in a contract that must occur before that contract can be finalized.

 CONTRACT
A legal agreement between entities that requires each to conduct (or refrain from conducting) certain activities. This document provides each party with a right that is enforceable under our judicial system.

 CONTRACT SERVICES
Maintenance task performed by third party laborers on a regular basis for a specified fee.

 CONTRACTOR
One who contracts to supply specific goods or services, generally in connection with development of a property.

 CONVEY
To deed or transfer title to another.

 CONVEYANCE
The transfer of the title of real estate from one to another; the means or medium by which title of real estate is transferred.

 COTENANCY
Any of a number of forms of multiple ownership such as tenancy in common and joint tenancy.

 COVENANT
Promises written into deeds and other instruments agreeing to performance or nonperformance of certain acts, or requiring or preventing certain uses of the property.

 COVENANT NOT TO COMPETE
Same as non-compete clause.

 CREDIT
1) In finance, the availability of money.
2) in accounting, a liability or equity entered on the right side of the ledger.
3) in real estate, an amount owed by the landlord to the tenant. (NOTE: Crediting an asset will decrease the value of the asset. Crediting a liability or equity will increase that liability or equity.)

 CREDIT TENANT
In a shopping center or office building, the tenant who occupies the most space and/or has a nationally recognized name.
Credit tenants are considered creditworthy and attract customers or traffic to the center.

 CREDITOR
One who is owed money.

 CREDIT RATING REPORT
An evaluation of a person's capacity (or history) of debt repayment. Generally available for individuals from a local retail credit association; for businesses publicly held by companies such as Dunn & Bradstreet; and for bonds by Moody's, Standard & Poors, and Fitch's.

 CTI™ Real Estate System
Realm’s CTI is the most functionally rich property and asset management solution in the industry. Designed to automate and streamline your most costly and error-prone processes, it allows companies to realize material productivity gains in every facet of their operation. CTI’s suite of integrated modules serves a number of major operational roles, including accounting, property management, asset/portfolio management, automated consolidations, reporting and lease administration.

 D  Top   
 DCF, or Discounted Cash Flow
A term used in the valuation of a real estate asset. Refers to the cash flow generated by a leaseable property over time, minus expenses and other factors such as inflation and capitalization rates. Generating a DCF value is the basic function of Realm’s industry-standard ARGUS software.

 DEBIT
An asset entered on the left side of the ledger. (NOTE: Debiting an asset will increase the value of the asset. Debiting a liability or equity will decrease that liability or equity.)

 DEBT
An obligation of money, goods, or service either in the present or in the future from one person to another.

 DEBT EQUITY RATIO
The relationship between the total loan amount owed to the lender(s) and the invested capital of the owner(s). In real estate investments this ratio, also known as the leverage ratio, can be very high due largely in part to the loan security of real estate, thus real estate investments are often highly leveraged. Owner-occupied residential real estate typically has a high debt-equity ratio, particularly homes recently purchased. A $100,000 home purchased with $20,000 cash and an $80,000 mortgage would have a debt-equity ratio of 4:1 ($80,000/$20,000).

 DEBT FINANCING
The use of borrowed funds, or other people's money, to purchase real estate. Also known as debt capital as compared to equity capital, which is the amount of one's own money used to purchase real estate.

 DEBTOR
One who owes debt.

 DEBT SERVICE
The periodic payment (monthly, quarterly, annually) necessary to pay the interest and principal on a loan which is being amortized.

 DEBT-TO-INCOME RATIO
The relationship between a person's periodic (normally monthly) debt and his or her income. While lenders use various rules of thumb in determining the maximum amount of money a person can borrow, the ratio often used is that the total principal, interest, taxes, and insurance (PITI) due each month should not exceed 25 to 28 percent of the borrower’s monthly gross income.

 DECLINING-BALANCE DEPRECIATION
An accelerated method of depreciation for tax purposes in which the remaining depreciable balance each year is the base for calculating the subsequent year's depreciation. The result is a faster write-off in the early years than would be possible using a straight-line method of depreciation.

 DEED
A written instrument, usually under seal, conveying some property interest from a grantor to a grantee. In order for a deed to be effective in transferring title, it must be in proper legal form and executed as specified by the law in the state in which the property is located. The title is actually transferred the moment the deed is properly delivered to and accepted by the grantee. In order to protect the validity of the title from subsequent innocent third parties purchasing the same property from the original grantor, the deed must be recorded as required by the particular state's recording statute.

 DEED RESTRICTION 
An imposed restriction in a deed that limits the use of the property. For example, a restriction could prohibit the sale of alcoholic beverages.

 DEFAULT
The act of not performing up to the requirements of the lease. For example, not paying rent would result in a default.

 DEFERRED CHARGES
In accounting, expenditures for intangible assets, such as mortgage placement fees or property leasing commissions, that are to be written off over the life of the service provided.

 DEFERRED INCOME
Income to be received in the future.

 DEFERRED LIABILITY
A debt that need not be paid currently. Accelerated depreciation frequently causes a deferred income tax liability for income- producing property.

 DEFERRED MAINTENANCE
Inadequate repair and upkeep of a building which results in physical depreciation and loss in value.

 DELINQUENCY DATE
A specific time after which a penalty is incurred for nonpayment of amounts owed.

 DEMISE
A conveyance of an estate to someone for life, for a certain number of years, or at will by means of a lease. The word demise is synonymous with "lease" or 'let' and use of the word in a lease implies a covenant for quiet enjoyment which means the landlord (lessor) guarantees that the tenant (lessee) will not be disturbed by someone having superior claims against the property.

 DEMISED PREMISES
The part of a property which is leased to a tenant.

 DEPRECIABLE BASIS
The amount on which depreciation deductions are based for income tax purposes.

 DEPRECIABLE LIFE
The estimated economic useful life of a depreciable asset such as a building. Depreciable life is not a measure of how long the building will remain standing, but rather how long the improvements are expected to provide an economic return.
As an analogy, automobiles may last for decades, but the cost and annoyance of repairs and the modern equipment of newer cars gives most automobiles a short useful life. Improvements to real estate are long-lasting, but without renovation, they steadily march to the junkyard.

 DEPRECIATED COST
In taxation, the cost new minus any depreciation taken.

 DEPRECIATION (ACCOUNTING)
A method of allocating the cost of a wasting asset over its estimated useful life. For income tax purposes, depreciation is a provision for the estimated wear and tear of an asset. Depreciation deductions can be claimed as a tax deduction on real estate improvement (not land), regardless of whether the market indicates an increase or decrease in the value of the property. To claim depreciation on an income tax return, a bookkeeping entry is required, not a cash payment. In many real estate investment situations, depreciation deductions are of significant value. Depreciation deductions serve to reduce the adjusted tax basis of property, so, upon a resale, there will be a greater capital gain on which a tax is due. Most investors prefer to enjoy substantial amounts of current depreciation deductions in the face of a future tax because of (1) the time value of money, and (2) the possibility of lower tax rates upon resale.

 DIRECT COSTS
Expenditures made in the construction of an improvement that can be directly attributable to the improvement. Also known as hard costs, direct costs include such items as labor, material, contractor's overhead, and profit.

 DISBURSEMENT
A cash expenditure.

 DISCOUNT
The amount of money paid at the front end to acquire a loan. This amount deducted from the principal at the time the loan is made and thus represents interest paid in advance. The discount is normally stated in terms of points or percent.

 DISPOSSESS
The removal or eviction of someone from real estate through legal action.

 DISTRESSED PROPERTY
Real estate which must be sold due to a pending mortgage foreclosure.

 DOING BUSINESS AS (DBA)
The name under with the tenant is operating. This name could be different from the legal entity name. Also referred to as the Operating As Name.

 DOUBLE-DECLINING BALANCE DEPRECIATION
In accounting, an accelerated depreciation method restricted to certain qualified properties. The method calculates depreciation at twice the rate of the straight-line method on a balance that is reduced each year as the depreciation is taken.

 DOWNREIT
A variation of a standard REIT (See Real Estate Investment Trust). Structured much like an UPREIT but the REIT owns and operates properties other than its interest in a controlled partnership that owns and operates separate properties.

 DRAG
Unrecovered costs that directly impact the enterprise value of a real estate company. Through reduced manual effort and increased process accuracy in billing tenants according to leasing terms, companies can create significant reductions in non-recoverable costs.

 DYNA™
Solution by Realm, provides sophisticated forecasting tools for real estate asset and portfolio management. The task of preparing operating projections for commercial office, retail, industrial, apartment and hotel properties on a cash, tax or book basis is made easy. DYNA can draw on operating budgets and perform sophisticated analyses of both simple and complex properties. Properties can then be consolidated into portfolios, offering a comprehensive, complete view of the organization’s financial position.

 E  Top   
 EASEMENT
The right, privilege, or interest that one party has in the land of another (e.g., right-of-way or utilities).

 EGRESS
Access from a land parcel to a public road or other means of exit. Contrast with Ingress.

 EJECTMENT
Action to regain possession of real property. This is a last-ditch effort that is used when there is no relationship between landlord and tenant.

 EMINENT DOMAIN
The right of the government or a public utility to acquire property for necessary public use by condemnation; the owner must be fairly compensated.

 ENCROACHMENT
A building, a part of a building, or an obstruction that physically intrudes upon, overlaps, or trespasses upon the property of another.

 ENCUMBRANCE
Any right to or interest in land that affects its value. Includes outstanding mortgage loans, unpaid taxes, easements, deed restrictions. Encumbrances also come into play in office space, where a tenant may have first right of refusal on the space they currently occupy, or dibs on another floor if that tenant moves out. There can be several encumbrances at once so it is important to have these brought to the landlord’s attention when one of these obligations comes into play.

 END CAP
A tenant whose space occupies the end of a retail shopping center.

 ENDORSEMENT
Signing one's name or inscribing the receiving company on the back of a check, usually prior to deposit. Realm’s COLLECT solution can automate this process.

 ENTITY
The legal form under which property is owned.

 EQUITY
The interest or value that the owner has in real estate over and above the liens against it.

 EQUITY DIVIDEND
The annual cash flow that an equity investor receives.
 ESCALATION CLAUSE
A provision in a lease that requires the tenant to pay more rent based on an increase in costs.

 ESCROW
Payments made as partial payments throughout the term of the lease. At some designated point(s), the escrow amounts are reconciled against the actual amounts owed.

 ESTOPPEL
A doctrine of law that stops one from later denying facts which that person once acknowledged were true and others accepted on good faith.

 ESTOPPEL CERTIFICATE
A document by which the mortgagor (borrower) certifies that the mortgage debt is a lien for the amount stated. The debtor is thereafter prevented from claiming that the balance due differs from the amount stated.

 EVICTION
The removal of someone from real estate through legal action.

 EVICTION NOTICE
A landlord’s legal notice to a tenant explaining the tenant’s default under the terms of the lease and informing him/her of a pending eviction suit.

 EXCLUSIVE AGENCY
An agreement in which one broker has exclusive rights to represent the owner or tenant. If another broker is used, both the original and actual broker are entitled to leasing commissions.

 EXCULPATORY CLAUSE
A clause in a broker agreement that clears the owner of any responsibility if the broker misrepresents the property.

 EXECUTION DATE
The date a lease is signed.

 EXPANSION OPTION
A lease clause granting a tenant the option to lease additional adjacent space after a specified period of time.

 F  Top   
 FAÇADE
The exterior wall of a building.

 FAIR MARKET VALUE
An economic concept denoting the price, in terms of money, at which a willing seller and willing buyer will agree when both parties are acting prudently, knowledgeably, and under no compulsion.

 FASB 13
A ruling of the Financial Accounting Standards Board that requires rent to be “straight lined” (i.e., any free rent or rent bumps are spread evenly over the lease term). Also referred to as Straight Line Rent.

 FIDUCIARY
A person who represents another on financial/property matters.

 FINANCIAL STATEMENT
A written statement of the financial position of a person or company, showing total assets and liabilities as of a certain date. Many lenders require a financial statement as part of a loan application.

 FINANCING
The difference between the purchase price and the down payment, commonly referred to as debt or the mortgage. One of the features distinguishing real estate from some investments is the ability to finance all or a significant part of the purchase price with borrowed dollars.

 FIRST RIGHT OF REFUSAL
A lease option that grants the tenant the first chance at leasing a particular suite, prior to the landlord offering the suite to any other party. Also called Right of First Refusal.

 FISCAL YEAR
A business year used for accounting or tax purposes. Contrast with Calendar Year.

 FIXED EXPENSES
Expenditures such as property taxes, license fees, and property insurance not vary directly given changes in the occupancy rate. Contrast with Variable Expenses.

 FIXTURE
Personal property which for some reason, such as the manner of attachment, has become realty (part of the building and/or property). Such property is also referred to as chattel realty. Examples of fixtures include built-in cabinets in a kitchen, bathtubs, permanent bookcases, and other such objects.

 FLOOR PLAN
The layout of a building showing the exact specifications as to size and shape of each room.

 FORECAST, or Forecasting
In real estate, the process of evaluating the long-term revenues and expenses for a property or portfolio of assets. The forecast for most commercial real estate is usually evaluated over a 12 year term. Many companies use Realm’s DYNA software to create forecasts based on existing annual budgets and/or financial data from a property management system.

 FREE RENT PERIOD
A portion of the term of a lease when no rent is required. It is offered by a landlord as a rental concession to attract tenants.

 FRONTAGE
The linear distance of the front face of a commercial space.

 G  Top   
 GENERAL CONTRACTOR
One who constructs a building or other improvement for the owner or developer.
May retain a construction labor force or use sub contractors.

 GENERAL LEDGER, or GL
The basic accounting function of the real estate enterprise, listing accounts, revenues and expenses. The GL workflow can be accomplished through a property management system like Realm’s CTI real estate system, or by using generic accounting applications with some customization.

 GOODWILL
 A business asset of intangible value created by customer and supplier relations.

 GRACE PERIOD
The period during which one party may fail to pay amounts due without being considered in default.

 GROSS AREA
The total floor area of a building, usually measured from its outside walls.

 GROSS INCOME
Total income from property before any expenses are deducted.

 GLA, or GROSS LEASABLE AREA
The floor area that can be used by tenants. Generally measured from the center of joint partitions to outside wall surfaces. Contrast with Net Leasable Area.

 GROSS LEASE
A lease of property whereby the landlord (i.e., lessor) pays for all property charges usually included in ownership. These charges can include utilities, taxes, and maintenance, among others. In a gross lease, the tenant ONLY pays rent, with no calculation for recoverables. They may pay part of the recovery as inflated rent. This usually happens with distressed properties when a tenant is really needed or for short term/seasonal or sub-lease deals. Many landlords instead use the Triple Net Lease scenario.

 GROSS SALES
The total sales made by a retail tenant at a leased space.
A percentage of gross sales is charged as rent under a percentage rent lease.

 GROSS UP
Increase a building’s operating expenses to a stated occupancy level when the actual occupancy level is below that level. This recoverables scenario is most typical of retail but is also considered in office space.

 GROUND LEASE
Only the ground is covered by the lease.
Same as land lease.

 GROUND RENT
The rent earned by leased land.

 GUARANTY
An assurance provided by one party that another party will perform under a contract.

 H  Top   
 HIGH RISE
A commonly used expression referring to a building that is high enough to require an elevator.

 HOLDBACK
That portion of a contractor's draw under a construction loan that is withheld by the lender until all work is completed to the satisfaction of the lender.
Quite often the amount withheld is equal to the contractor's profit, which means that enough of the loan is dispersed so that the sub-contractors can be paid.
Also called Retainage.

 HOLD HARMLESS CLAUSE
An exculpatory clause freeing one from personal liability.

 HOLDOVER TENANT
The retention by a tenant of possession after the lease on a property has expired. Holding over creates a tenancy at sufferance, and there is typically a monetary punishment enforced on the tenant. Contrast with Month-To-Month Tenant.

 HVAC
Heating, ventilation and air conditioning (usually listed as a cost item for landlords).

 I  Top   
 INCOME
The money or other benefit coming from the use of the property.

 INCOMPETENT
An individual who is unable to handle his own affairs by reason of some medical condition (e.g., insanity, Alzheimer's).

 INDEX LEASE
Increase or decrease in rent is tied to a selected index of economic conditions (e.g., CPI).

 INDUSTRIAL
Commercial asset type including warehouse, semi-warehouse, and distribution facilities. Sometimes includes factories, etc. which may require major customization for the specific needs of the tenant. Industrial properties usually have simpler recoveries and longer term leases.

 INDUSTRIAL PARK
An area designed and zoned for manufacturing, warehousing and associated activities.

 INGRESS
Access from a public road or other means of entrance to a land parcel. Contrast with Egress.

 INSIGHT™
A real estate business intelligence and reporting solution from Realm. This easy-to-use toolset allows real estate companies to provide employees, customers, and business partners with relevant and critical information from within Realm’s CTI real estate system and other sources of data.

 INSTITUTE OF REAL ESTATE MANAGEMENT (IREM)
A professional organization of property managers. Affiliated with the National Association of Realtors. Publishes the Journal of Property Management. Address: Institute of Real Estate Management 430 North Michigan Avenue Chicago, IL 60611.

 INSTRUMENT
A written legal document created to secure the rights of the parties participating in the agreement.

 INTEREST
1) A charge made by a lender for the use of money; or 2) the type and extent of ownership in property.

 INTERNAL RATE OF RETURN (IRR)
The true annual rate of earnings on an investment. Equates the value of cash returns with cash invested. Considers the application of compound interest factors. Requires a trial-and-error method for solution.

 INVENTORY
In commercial real estate, leaseable or vacant space is considered the inventory for sale to tenants.

 IRREVOCABLE
Incapable of being altered, changed, or recalled.

 J  Top   
 JOINT VENTURE
An agreement by two or more individuals or entities to engage in a single project or undertaking. Joint ventures are used in real estate development as a means of raising capital and spreading risk. For all practical purposes a joint venture is similar to a general partnership. However, once the purpose of the joint venture has been accomplished, the entity ceases to exist.

 JOINT TENANCY
Ownership of real property by two or more individuals, each of whom has an undivided interest with the right of survivorship.

 JUDGMENT
A formal decision issued by a court relating to the specific claims and rights of the parties to an act or suit.

 K  Top   
 KIOSK
A small freestanding structure located in a shopping center or mall from which merchandise is sold. The type of products marketed would include film, flowers, ice cream, or any item that is uniform in nature so that it can be purchased with little or no shopping. Typically, the tenants of these operations pay a substantially high rent based on a percentage of sales.

 L  Top   
 LAND LEASE
Only the ground is covered by the lease. Same as ground lease.

 LANDLORD
One who rents property to another; a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.

 LATE PAYMENTS
A fee added to a bill after the expiration of a specific grace period. Such payments are intended to encourage timely payment of the bill.

 LEASE
A contract in which, for a payment called rent, the one entitled to the possession of real property (lessor) transfers those rights to another (lessee) for a specified period of time.

 LEASE™, or Realm LEASE
Leasing agents are really sales people for real estate. Rather than typing in information, they’d rather be out finding tenants and developing relationships to keep the units occupied. Realm LEASE was developed to improve the speed and legal accuracy of the negotiation process, and allow lease data to be abstracted to work with property management systems such as CTI.

 LEASE ABSTRACTION
The process of reducing the text of a lease document down to its business rules and financial components as data. Abstraction of a lease means quantities and terms within a lease may be interpreted or acted upon by software, as when leases within Realm LEASE can be imported into the Realm CTI property management system.

 LEASE ASSUMPTION
A transaction whereby a landlord agrees to take over the balance of payments on a prospective tenant’s current lease if he/she rents space in the landlord’s property.

 LEASE NEGOTIATION
In the agreement between the landlord and the tenant, almost EVERYTHING is negotiable. This means real estate managers need to be able to view, approve and track all the variables in the lease. Each lease has its own rules for recovery expenses, improvement costs, payment terms, and credit. These lease terms need to be abstracted into the company’s software to ensure that they are carried out accurately.

 LEASE TERM
The period of time during which the lease is in effect. Also referred to as Term.

 LEASEHOLD
The space on which a lessee (tenant) of real estate has a lease.

 LEASEHOLD IMPROVEMENTS
Fixtures attached to real estate that are generally acquired or installed by the tenant.
Upon expiration of the lease, the tenant can generally remove them, provided such action does not damage the property nor conflict with the lease.

 LEASING AGENT
A state-licensed agent who, for a fee, acts for property owners in real estate transactions, within the scope of state law. Also referred to as a Broker.

 LEGAL NAME
The name one has for official purposes.

 LEGAL NOTICE
Notification of others using the method required by law, typically of a default of the lease terms.

 LESSEE
A person to whom property is rented under a lease. A tenant. Contrast with Lessor.

 LESSOR
A person who rents property to another under a lease. A landlord. Contrast with Lessee.

 LETTER OF CREDIT
An arrangement, with specified conditions, whereby a bank agrees to substitute its credit for a customer's. Used in place of cash for a security deposit.

 LETTER OF INTENT
An informal, usually non-binding, agreement among parties indicating their serious desire to move forward with negotiations.

 LIABILITY
1) a debt or financial obligation.
2) a potential loss. Contrast with Asset.

 LIABILITY INSURANCE
Protection for a property owner from claims arising from injuries or damage to other people or property.

 LIEN
A charge against property making it security for the payment of a debt, judgment, mortgage, or taxes; it is a type of encumbrance. A specific lien is against certain property only. A general lien is against all of the property owned by the debtor. Contractors and sub-contractors can put a lien against the property until they receive payments for services rendered.

 LIENHOLDER
One who holds, or benefits from, a lien.

 LINEAR FOOT
A measure of one foot, in a straight line, along the ground.

 LISTING
An employment contract between principal and agent that authorizes the agent (such as a broker) to perform services for the principal and his property.

 LIQUIDITY
The ability to sell an asset and convert it into cash at a price close to its true value in a short period of time.

 LOCATION
Physical location, which will always be one of the primary factors in determining the potential tenant demand, and thereby the value of a property.

 LONG-TERM LEASE
Generally, a commercial lease of 5 years or longer, or a residential lease longer than one year.

 LOSS FACTOR
The percentage of the gross area of a space that is lost or not leaseable due to walls, elevator, etc. The rule of thumb in Manhattan for Loss Factor is approximately 15%.

 M  Top   
 MANDATORY
A requirement that must be conformed to as specified in any written document.

 MAINTENANCE
The act of keeping a building in general repair. Lack of proper maintenance will result in a loss in value.

 MAINTENANCE COSTS
The expenditure necessary to keep a building and grounds in general repair. Such costs appear on an income statement as an operating expense and are the responsibility of the property manager. While maintenance costs vary greatly from property to property, there is some degree of uniformity with like-like properties. As such, investors and lenders often examine the history of maintenance costs as an indication of how a specific property has been maintained.

 MANAGEMENT AGREEMENT
An employment contract between the owner of real estate and a property management firm that agrees to oversee the management of the property. As is true in any business agreement, the property manager or management firm and the owner of the property should enter into a formal contract. The management contract should include the responsibilities specified in the employment agreement, the term and period of the contract, the management policies to be followed, the power and authority of the property manager, and the compensation for the management services. Normally, a property manager's compensation is an agreed-upon percentage of gross income. The range can vary from a very small amount, perhaps one percent on a large structure, to as much as ten or fifteen percent.

 MANAGEMENT FEE
The agreed-upon compensation paid to a property management company for managing a real estate project. The fee is usually based on a percentage of collected revenue, excluding security deposits and other deposits (e.g., prepaid rent).

 MANAGEMENT PLAN
A written report of what the property management company hopes to accomplish and how it intends to do so. Before assuming the management of a piece of property, a long-range plan should be developed. However, before the plan can be developed, an analysis has to be made of the owner's objectives. Certainly, the property manager has to be confident that these objectives can be met. A physical inspection of the property itself has to be made, and the property manager needs to understand existing market conditions regarding competition, rental structures and operating expenses.

 MARKET PRICE
The actual selling price of an acquired or sold property.

 MARKET RATE
The rental income that a property is likely to command in the current market. The market rate may be either higher or lower than what the property is actually renting for under the terms of a lease.

 MASTER LEASE
The dominant or main lease in a building in which a sublease exists. Same as Primary Lease.

 MATURITY DATE
The date when a note or negotiable instrument is due and payable.

 MECHANIC'S AND MATERIALMAN'S LIENS
Statutory liens levied on property by persons who are not compensated after providing labor (mechanic) or material (materialman) for the improvements to the property.
Both types of liens are commonly referred to as mechanic's liens. The mechanic's lien is justified on the equitable theory that work or materials provided by contractors add to the value of the improvements and increase the value of the land. Because of this theory, work and materials must become permanently attached or incorporated into the land or improvements.

 MERCHANTS’ ASSOCIATION
An organization of shopping center tenants intended to facilitate joint advertising, promotion, and other activities beneficial to the center as a whole. A fee is typically paid each month to the landlord for a fund from which these marketing endeavors are paid.

 MERGER
The absorption of one entity into another.

 METROPOLITAN STATISTICAL AREA (MSA)
A reference to a geographic area which contains at least 50,000 residents within a total metropolitan population of at least 100,000. Historically, such an area has been referred to as a Standard Metropolitan Statistical Area (SMSA).

 MINIMUM-GUARANTEED PERCENTAGE RENT LEASE
A type of percentage lease that provides the lessor (landlord) a minimum rent regardless of the amount of sales. The minimum guarantee is referred to as a “floor," referring to the fact that the rent cannot fall below that amount.

 MINIMUM RENT
The least amount of rent due from a tenant under a lease with a varying rental schedule.

 MIXED-USE COMMERCIAL PROJECT
A real estate development that contains two or more different uses all intended to be harmonious and complementary. An example would include a high-rise building with retail shops on the first two floors, office space on floors three through ten, apartments on the next ten floors, and a restaurant on the top floor.

 MONTH-TO-MONTH TENANT
The tenant rents for one month at a time. There is typically no monetary penalty for the tenant, but rent may be set higher. Contrast with Holdover Tenant.

 MORTGAGE REIT
A variation of a standard REIT (See Real Estate Investment Trust). A REIT that makes or owns loans and other obligations that are secured by real estate collateral.

 MULTIPLE LISTING
An arrangement among Real Estate Board of Exchange Members, whereby each broker presents the broker's listings to the attention of the other members so that if a lease results, the commission is divided between the broker bringing the listing and the broker making the lease.

 N  Top   
 NATIONAL ASSOCIATION OF CORPORATE REAL ESTATE EXECUTIVES (NACORE)
Membership includes those active with purchasing, selling, and managing real estate held by corporations. Address: National Association of Corporate Real Estate Executives, 471 Spencer Drive, S, Suite 8 West Palm Beach, FL 33409.

 NET INCOME
1) in accounting, the amount remaining after all expenses have been met.
2) in appraisal, same as net operating income.

 NET LEASABLE AREA, or NLA
In a building or project, floor space that may be rented to tenants. The area upon which rental payments are based. Generally excludes common areas and space devoted to the heating, cooling, and other equipment of a building. Contrast with Gross Leasable Area.

 NET LEASE
A lease whereby, in addition to the rent, the lessee (tenant) pays such expenses as taxes, insurance, and maintenance. The landlord's rent receipt is thereby "net" of those expenses. Also called triple net lease.

 NET OPERATING INCOME (NOI)
Income from property or business after operating expenses have been deducted, but income taxes and financing expenses (interest and principal payments).

 NET PRESENT VALUE (NPV)
A method of determining whether expected performance of a proposed investment promises to be adequate.

 NON-COMPETE CLAUSE
A lease clause granting a retail tenant an exclusive right to operate without competition on the property. The landlord agrees not to lease space in that center to a tenant whose business is of the same nature.

 NON-DISTURBANCE AGREEMENT
The tenant signs this to prevent himself from being evicted if the property owner does not pay its mortgage to the bank.

 NOTARY PUBLIC
A public officer who is authorized to witness and verify certain documents (e.g., contracts, deeds, mortgages). Also, an affidavit may be sworn before this public officer.

 NOTE
A written instrument that acknowledges a debt and promises to pay.

 NOTICE OF DEFAULT
A letter sent to a defaulting party as a reminder of the default. May state a grace period and the penalties for failing to cure the default.

 NOTICE TO QUIT
A notice to a tenant to vacate property.

 O  Top   
 OCCUPANCY
Physical possession and use of real estate.

 OCCUPANCY PERMIT
A permit required under the building codes of many local governments which indicates that the property passes a final inspection. The permit indicates that all applicable building codes have been met and that the structure is suitable for occupancy. Also referred to a Certificate of Occupancy.

 OCCUPANCY RATE
The ratio of the space rented to the total amount of space available for rent. A 500,000 square foot office building in which 400,000 square feet is currently rented has an occupancy rate of 80 percent (400,000:500,000)

 OFFICE BUILDING
A structure used primarily for the carrying on of business.

 OFFICE
Commercial real estate asset type including office buildings and corporate campus facilities, which may have a single anchor tenant or dozens of unique tenants per property. Office assets usually have complex CAM recoveries and lease components and significant market volatility.

 OFFICE PARK
A parcel of land designed and developed to provide for a number of separate or attached office buildings. Normally located in suburban areas such as next to a beltway surrounding a metropolitan area, office parks are intended to provide the users with the facilities necessary to carry on normal business.

 OFF-SITE IMPROVEMENTS
Physical improvements that affect the use and value of a parcel of land, but are not located directly on the lot. For a residential subdivision, examples would include streets, street lights, and curbs.

 ON-SITE IMPROVEMENTS
Physical improvements such as buildings, sidewalks, and landscaping made inside the legal boundaries of the property.

 ON-SITE MANAGEMENT
Property management activities that need to be performed directly on the premises. Such activities would include the showing of available space, maintenance, and eviction of tenants.

 OPEN LISTING
A listing given to any broker without liability to compensate any broker except the one who first secures a buyer who is ready, willing, and able to meet the terms of the listing, or secures the acceptance by the landlord of a satisfactory offer; the lease of the property automatically terminates the listing.

 OPERATIONAL EXCELLENCE
Increasing enterprise value through improved performance on the informational aspects of real estate as opposed to physical improvements to assets. Realm’s mission is to create software that enables operational excellence for the real estate industry.

 OPERATING AS NAME
The name under with the tenant is operating. This name could be different from the legal entity name. Also referred to as the Doing Business As (DBA).

 OPERATING BUDGET
A projection of income and expenses for the operation of a property over a one-year period.

 OPERATING EXPENSE RATIO (OER)
The relationship of operating expenses to potential gross income or effective gross income. This ratio may vary with each type of property. However, it can be used by an appraiser/investor to compare a particular property with similar-use properties. For apartment buildings the ratio generally falls between 35% and 45%; however, it may be as high as 50% if the landlord is responsible for paying all utilities. Office buildings which are expensive to maintain can have ratios exceeding 50%, while property leased under a net or net, net agreement will have a very low operating expense ratio.

 OPERATING EXPENSES (OPE)
Periodic expenses of operating income-producing property other than debt service and income taxes. Operating expenses are those expenses directly related to the level of occupancy and usage of the building. These can include management fees, maintenance, ground maintenance, utilities, supplies, legal fees, accounting fees, and other such costs. These expenses when subtracted from gross income equal net operating income.

 OPTION
A right, given for consideration to a party (optionee) by a property owner (optionor), to purchase or lease property within a specified time at a specified price and terms. An option is an offer which, because it is secured by consideration, cannot be revoked. An option may be assigned to another person who may exercise the option. This is an exception to the rule that only the offeree may accept an offer. Assignment is not effective if the option itself prohibits the assignment or if the terms are dependent on the personal credit of the original option holder. An option is irrevocable by the optionor and will not be extinguished by death or insanity of either party.

 OPTIONEE
The holder or receiver of an option.

 OPTIONOR
One who gives an option to another.

 ORIGINAL EQUITY
The cash down payment applied to purchase property.

 OUTLOT
An individual freestanding site for a retailer, often adjacent to a larger shopping center. Same as Pad Site.

 OUTSTANDING BALANCE
The remaining balance owed on a debt.

 OVERAGE RENT
Percentage rent based on retail sales, in addition to a fixed base rent.

 OVERALL RATE OF RETURN (ORR)
The mathematical rate obtained by dividing net operating income by the selling price or value of income-producing real estate.

 P  Top   
 PAD SITE
An individual freestanding site for a retailer, often adjacent to a larger shopping center. Same as Outlot. Gas stations, convenience stores, restaurants and some specialty stores and services are built on pad sites.

 PARCEL
A part or portion of a piece of land.

 PAY™
This A/P solution from Realm is a value-added service and technology product. PAY streamlines payables processes across the entire real estate company, saving significant time and money by eliminating the manual tasks of receiving, entering and approving invoices. It works with any vendor, and any invoice to ensure increased control, consistency and clarity in payables processes.

 PERCENTAGE LEASE
A lease of property in which the rental is based on a percentage of the volume of sales made upon the leased premises. It usually stipulates a minimum rental and is regularly used for retailers who are tenants.

 PERCENTAGE RENT
Rent payable under a percentage lease. Typically the percentage applies to sales in excess of a pre-established base amount of the dollar sales volume (called a Breakpoint).

 PERSONAL PROPERTY
Any property which is not real property. Examples include furniture, clothing, and artwork.

 POSSESSION
The holding, control, or custody of property for one's use, either as owner or person with another right.

 POWER OF ATTORNEY
A written instrument duly signed and executed by an individual which authorizes an agent to act on his behalf to the extent indicated in the document.

 PRELEASE
To obtain lease commitments in a building or complex prior to its being available for occupancy.

 PREMISES
Land and tenements; an estate; the subject matter of a conveyance.

 PREPAID EXPENSES
Amounts that are paid prior to the period they cover.

 PRIMARY LEASE
A lease between the owner and a tenant whose interest, all or in part, has been sublet. Same as Master Lease.

 PRIMARY METROPOLITAN STATISTICAL AREA (PMSA)
A classification of the U.S. Census Bureau applied to cities with the following classifications. Within a metropolitan area with a population of one million or more, there may be areas that would qualify as metropolitan areas on their own, yet are linked to other cities in close proximity. These individual areas are called Primary Metropolitan Statistical Areas, while the metropolitan area containing these PMSAs is called a Consolidated Metropolitan Statistical Area (CMSA).

 PRINCIPAL
1.) The amount of money borrowed.
2.) The employer (e.g., landlord) of an agent or broker. This is the agent's or broker's client.

 PRINCIPAL AND INTEREST PAYMENT (P&I)
A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to amortization of the principal balance. Commonly used with amortizing loans.

 PRINCIPAL, INTEREST, TAXES AND INSURANCE PAYMENT (PITI)
The periodic (typically monthly) payment required by an amortizing loan that includes escrow deposits. Each periodic payment includes a principal and interest payment plus a contribution to the escrow account set up by the lender to pay insurance premiums and property taxes on the mortgaged property.

 PROFIT AND LOSS STATEMENT, or P&L
An annual financial report of a property’s actual net profit (or loss) before taxes.

 PRO-FORMA STATEMENT
(from Latin pro forma, "according to form"). financial statements showing what is expected to occur.

 PROGRESS PAYMENTS
In construction, loan payments issued to the builder as building is completed.

 PROMISSORY NOTE
A promise to pay a specified sum to a specified person under specified terms.

 PROPERTY MANAGEMENT
The operation of property as a business, including leasing, rent collection, maintenance, etc.

 PROPERTY MANAGER
The person responsible for caring out the duties of property management.

 PROPERTY TAX
A government levy based on the market value of privately owned property. Sometimes referred to as ad valorem tax or real estate tax.

 PRORATE
To allocate between seller and buyer their proportionate share of an obligation paid or due; for example, to prorate real property taxes or insurance.

 PROSPECT
A person considered likely to lease space. A prospective lessee.


 Q  Top   
 QUIET ENJOYMENT
The right of a landlord or tenant to use the property without disturbances.

 R  Top   
 REAL ESTATE
In law, land and everything more or less attached to it. Ownership below to the center of the earth and above to the heavens. As an industry, real estate has existed throughout recorded human history.

 REAL ESTATE BOARD
An organization whose members consist primarily of real estate professionals such as brokers.

 REAL ESTATE COMMISSION
State agency that enforces real estate license laws.

 REAL ESTATE INVESTMENT TRUST (REIT)
A real estate mutual fund, allowed by income tax laws to avoid the corporate income tax if it distributes at least 95% of its taxable income to shareholders each year. It sells shares of ownership and must invest in real estate or mortgages. It must meet certain other requirements, including minimum number of shareholders, widely dispersed ownership, asset and income tests.

 REAL ESTATE MARKET
The potential buyers and sellers of real property at the current time, and the current transaction activity for real property. It includes markets for various property types, such as housing market, office market, condominium market, land market.

 REAL ESTATE SYNDICATE
When partners (either with or without unlimited liability) form a partnership to participate in a real estate venture.

 REAL PROPERTY
Land and any capital improvements (e.g., buildings) erected on the property.

 REALTOR
An active member of a local real estate board, affiliated with the National Association of Real Estate Boards, usually referred to in residential real estate.

 RECAPTURE CLAUSE
A provision in a percentage rent lease that grants the landlord the right to terminate the lease at the end of a certain period if gross sales have not reached the level anticipated during lease negotiations.

 RECONCILIATION
The process of comparing estimated payments (escrows) with actual expenses.
The tenant is either credited (escrow payments were higher than actuals) or billed (escrow payments were lower than actuals) for the reconciliation amount.

 RECOVERIES, or Recoverables
Expenses related to maintaining a property, such as landscaping, security, CAM, public areas, taxes, etc., that the property management or landlord must secure. These expenses can be charged back to the tenant on an aggregate basis as part of the standard lease, rather than having the tenant find all these services themselves. These costs can be extremely complicated to manage and create a huge risk for owners, Better management of recoveries is often a vital lever for creating profitability.

 REGIONAL SHOPPING CENTER
A type of retail shopping center containing 300,000 to 900,000 square feet of shopping space and at least one major department store.

 REIT
See Real Estate Investment Trust.

 RELOCATION CLAUSE
A lease stipulation that allows the landlord to move the tenant within the building or shopping center.

 RENEWAL OPTION
The right, but not the obligation, of a tenant to continue a lease at specified term and rent.

 RENT
Compensation from tenant to landlord for the use of real estate.

 RENT BUMP
An increase in rent during the term of a lease.

 RENTABLE AREA
Same as Net Leasable Area.

 RENTAL RATE
The periodic charge per unit for the use of a property. The period may be a month, quarter, or year. The unit may be a dwelling unit, square foot, or other unit of measurement.

 RENT ROLL
A current list of all tenant information on a property or portfolio of properties – locations occupied, rents collected and delinquent, expected moveout and lease renewal dates, etc. This is one of the fundamental reports for monitoring the current status and cash flow of an asset. For instance, the rent roll view is one of the most commonly used screens for valuating assets in Realm’s ARGUS software.

 RENT-UP PERIOD
The time it takes for newly constructed properties to be fully occupied.

 RESIDENTIAL
The housing asset class of real estate. Generally the demand for residential property is fairly constant and predictable, which means lower risk investment with lower potential profit margins. Residential assets encompass any dwelling, including private homes (single-family units that are usually bought or managed privately), and multi-family units such as apartments, condos and co-op housing, which are more likely to be rented and managed by real estate firms.

 RESTRICTION
A limitation placed upon the use of property, contained in the deed or other written instrument in the chain of title or in local ordinances pertaining to land use.

 RETAIL
Commercial real estate asset class encompassing destination retail centers, strip malls, single-tenant pad sites and large stores. A retail site can range anywhere from a pad site (one tenant/one building) to a mall or chain of malls containing several hundred tenants. Retail investments often have the highest level of complexity in terms of leases and recoverables, and rent calculations are often based on a percentage of sales (percentage rent) in addition to base rent.

 RETAINAGE
In a construction contract, money earned by a contractor but not paid to the contractor until the completion of construction or some other agreed-upon date. Also called Holdback.

 REVOCATION
An act of rescinding power previously authorized.

 RIGHT OF FIRST REFUSAL
The opportunity of a party to match the terms of a proposed contract before the contract is executed. Also called First Right of Refusal.

 ROLLUP, Roll up, or Rollups
The process of consolidating financial reports for a given period of time from all records for a property or portfolio of assets. The rollup feature of Realm’s CTI software, as well as the INSIGHT product, allows real estate companies to generate a consolidated and categorized report at any time, which is a time and cost benefit especially for companies with complex portfolios and financial models.

 RULE OF THUMB
A common or ubiquitous benchmark. For example, it is often assumed that each worker in an office will need approximately 250 square feet of space.

 S  Top   
 SATELLITE TENANT
A smaller tenant in a shopping mall. Such tenants are dependent upon the larger and better-known anchor tenants to attract customers to the mall. Examples of satellite tenants include cigar stores, candy stores, and specialty apparel stores.

 SECURITY DEPOSIT
A sum of money held by a landlord from a tenant for the purpose of securing the performance of the terms of the lease by the tenant for such things as the payment of rent and repair of damages caused by the tenant.

 SHOPPING CENTER
A type of retail space consisting of various stores and normally located on enough land to provide off-street parking.

 SINKING FUND
Periodic deposits of money into an account that, with its interest earnings, will be used to replace assets or to retire loans.

 SITUS
Legal (Latin) term for the location of a property.

 SPECIFIC PERFORMANCE
When a court requires a defendant to carry out the terms of an agreement or contract.

 SQUARE FEET, or sq. ft., s.f.
The usual method by which rental space is defined (even in many countries that otherwise use the Metric meter for calculating distance). It is the area of that space, calculated by taking length times width. For example, a room 30 feet by 60 feet has an area of 1,800 square feet.

 STATUTE
A law established by an act of a legislature.

 STATUTE OF FRAUDS
State law (founded on ancient English law) which requires that contracts must be reduced to written form if it is to be enforced by law.

 STATUTE OF LIMITATIONS
A law barring all right of redress after a certain period of time from the moment when a cause of action first arises.

 STATUTORY LIEN
A lien imposed on property by statute (e.g., a tax lien). Contrast with Mechanic’s and Materialman’s Liens.

 STRAIGHT LINE METHOD OF DEPRECIATION
A method of computing depreciation for income tax purposes in which the difference between the original cost and the salvage value is deducted in even installments over the depreciable life of the asset.

 STRAIGHT LINE RENT
A ruling of the Financial Accounting Standards Board that requires rent to be “straight lined” (i.e., any free rent or rent bumps are spread evenly over the lease term). Also referred to as FASB 13.

 SUBAGENT
An agent of an individual already acting as an agent of a principal.

 SUBLEASE
A lease agreement in which the lessee (tenant) transfers some of the interest in the leased property to a third party (sublessee) but retains some reversionary interest for himself or herself. In a sublease, the sublessor has no direct legal relationship is created between the landlord and the sublessee . A sublease is really an estate within an estate. The lessee becomes a sublessor and a landlord/tenant relationship is established between the sublessor and the sublessee. Since the sublessor can only convey the rights which he or she has, the sublessee is effectively bound by any limitations in the main or underlying lease. The sublessor remains primarily liable to the landlord for rent and the performance of all covenants.

 SUBLESSEE
The tenant under a sublease who has subleased from someone who in turn is a lessee (tenant) of the owner of the property.

 SUBLESSOR
A lessee (tenant) who leases part of his or her interest to a third party (sublessee) but retains some interest in the property.

 SUBLET
Partial transfer of a tenant’s right in a rental property to a third party. See Sublease.

 SUBSCRIBING WITNESS
The witness to the execution of an instrument who has written his name as proof of seeing such execution.

 SURRENDER
The cancellation of a lease by mutual consent of the tenant and the landlord.

 T  Top   
 TENANCY AT SUFFERANCE
Tenancy established when a person who had been a lawful tenant wrongfully remains in possession of property after expiration of a lease.

 TENANCY AT WILL
A license to use or occupy lands and buildings at the will of the owner. The tenant may decide to leave the property at any time or must leave at the landlord’s will. Agreement may be oral or written.

 TENANCY BY ENTIRETY
An estate which exists only between husband and wife. Each has equal right of enjoyment and possession during their joint lives, and each has the right of survivorship.

 TENANCY IN COMMON
Ownership of property by two or more individuals, each of whom has an undivided interest, without the right of survivorship.

 TENANT
One who is given possession of real estate for a fixed period or at will.

 TENANT CONTRIBUTIONS
All costs that are the responsibility of the tenants over and above the contract rent specified in the lease. Examples include the cost of common area maintenance, snow removal, excess over tax stop, percentage rent above fixed minimum, escalator provisions, and janitorial services.

 TENANT FINISH OUT
Those additions/changes to the leased space in order for the tenant to open for business. Also referred to as Tenant Improvements.

 TENANT FIXTURES
Fixtures added to ]eased real estate by a lessee that, by contract or by law, may be removed by the lessee upon expiration of the lease.

 TENANT IMPROVEMENTS, or TI
Those additions/changes to the leased space in order for the tenant to open for business. Also referred to as Tenant Finish Out.

 TENANT MIX
The combination of retail tenants occupying a shopping center. This must be considered very carefully to achieve maximum profit for each merchant and the center as a whole.

 TERM
The period of time during which the lease is in effect. Also referred to as Lease Term.

 TIE-IN ARRANGEMENT
A contract where one transaction depends upon another transaction.

 TIME VALUE OF MONEY
A concept that money available now is worth more than the same amount in the future because of its potential earning capacity.

 TORT
A wrongful act or violation of a legal right for which a civil action or suit will be filed.

 TRIPLE NET LEASE
A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs. The opposite of Gross Lease. The tenant plays rent plus their fair share of all recoverable costs up front for the first year. Each year the total recoverable can be recalculated. Obviously the property manager likes this deal as they get the money up front, but in practice the results are usually similar. See also Net Lease.

 TURNKEY
The landlord completes all tenant finish out for the tenant. All the tenant has to do is pick the key up from the landlord.

 U  Top   
 UPREIT
A variation of a standard REIT (See Real Estate Investment Trust). Partners of the Existing Partnerships and a newly-formed REIT become partners in a new partnership termed the Operating Partnership. For their respective interests in the Operating Partnership (“Units”), the partners contribute the properties from the Existing Partnership and the REIT contributes the cash proceeds from its public offering. The REIT typically is the general partner and the majority owner of the Operating Partnership Units. After a period of time (often one year), the partners may enjoy the same liquidity of the REIT shareholders by tendering their Units for either cash or REIT shares (at the option of the REIT or Operating Partnership). This conversion may result in the partners incurring the tax deferred at the UPREIT’s formation. The Unit holders may tender their Units over a period of time, thereby spreading out such tax. In addition, when a partner holds the Units until death, the estate tax rules operate in such a way as to provide that the beneficiaries may tender the Units for cash or REIT shares without paying income taxes.

 URBAN PROPERTY
Property in a city or a high-density area.

 USEABLE SPACE
The floor area of a building that can be used for the tenant’s business.
This excludes things such as stairwells, restrooms, elevator shafts, etc.

 USEFUL LIFE
The period of time over which property is expected to have utility.

 V  Top   
 VACANCY RATE
The percentage of all space that is unoccupied or not rented. On a pro-forma income statement, a projected vacancy rate is used to estimate the vacancy allowance, which is deducted from potential gross income to derive effective gross income.

 VACATE
To move out.

 VALID
A binding situation that is authorized and enforceable by law.

 VALUATION
Estimated price, value, or worth. Also, the act of identifying a property's worth via an appraisal. In commercial real estate, valuation usually refers to the cash flow (DCF) generated through rents by a leaseable asset over time, which is the basic function of Realm’s ARGUS software.

 VARIABLE EXPENSES
Property operating costs that increase with occupancy. Contrast with Fixed Expenses.

 VARIANCE
1) Government authorization to use or develop a property in a manner which is not permitted by the applicable zoning regulations. 2.) The difference between the amount budgeted and the amount actually paid or received.

 VENDOR
A person from whom a good or service was purchased.

 VIOLATION
Act, condition, or deed that violates the permissible use of property.

 VOID
Something that is unenforceable.

 VOIDABLE
A situation which is capable of being unenforceable but is not so unless direct action is taken.

 W  Top   
 WAIVER
The intentional relinquishment or abandonment of a specific claim, privilege, or right.

 WALK-THROUGH
The physical inspection of property that takes place immediately prior to closing for the purpose of ensuring the owner that the property is in the same physical condition as when the tenant first leased the space.

 WAREHOUSE
A building used to receive and store goods and merchandise.
In terms of classifying such property, warehouses are normally located in an area zoned for either commercial or industrial property.

 WORK LETTER
A letter given by a landlord to a tenant detailing the amount and type of work the landlord and the tenant will each do in preparing the property for occupancy by the tenant. Usually negotiated during the leasing phase.

 WORKOUT
A loan (promissory note) agreed upon by the landlord and the tenant as a way for the tenant to repay amounts in default.

 X  Top   
 XML
A simple, standardized convention for identifying and transferring a stream of data over the Internet or any other network. XML enables multiple applications to send and receive data without proprietary or custom integration. Realm’s reXML data standard, based on XML, allows real estate applications from Realm and other software vendors to share information by defining the common properties of real estate data.

 Z  Top   
 ZONE
An area, delineated by a governmental authority, which is authorized for and limited to specific uses.

 ZONING ORDINANCE
An exercise of police power by a county or municipality to regulate and control the character and use of property.