Contracts, regulations, compliance, entity structures, zoning, permits, and landlord-tenant law.
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Foundation terms you need to know first (88 terms)
Development costs are all the expenses incurred during the process of acquiring land, designing, constructing, and preparing a real estate project for use or sale, from start to finish.
Base rent is the fixed, minimum rent amount paid by a tenant to a landlord for the use of a property, excluding additional charges like operating expenses, taxes, or utilities.
An absolute auction is a type of real estate auction where the property is sold to the highest bidder, regardless of the price, with no minimum bid or reserve price set by the seller.
The Lease Commencement Date is the official date specified in a lease agreement when the tenant's rights and obligations, including rent payments and property responsibilities, legally begin.
An application fee is a non-refundable charge paid by a prospective tenant to a landlord or property manager to cover the costs associated with processing a rental application, including background and credit checks.
Complex strategies and professional concepts (103 terms)
An Equity-for-Property Swap is an advanced real estate investment strategy where an investor exchanges equity in one or more properties or entities for direct ownership of another property, often to achieve tax deferral, portfolio restructuring, or strategic asset acquisition.
The accounting process of recognizing the estimated cost of an Asset Retirement Obligation (ARO) as a liability and capitalizing a corresponding asset, which is then depreciated over its useful life, reflecting the future costs associated with retiring a long-lived asset.
A legally binding contract that alters the priority of liens on a property, allowing a senior lienholder to voluntarily place their claim in a junior position to another, typically to facilitate new financing or complex transactions.
Unrelated Business Income Tax (UBIT) is a tax levied on the net income of a tax-exempt organization, including certain real estate investment vehicles, derived from a trade or business regularly carried on and not substantially related to its exempt purpose.
Inverse condemnation is a legal action initiated by a private property owner against a government entity to recover "just compensation" for a taking of their property, where the government has not formally exercised its power of eminent domain but has effectively deprived the owner of beneficial use or value.
Convertible Preferred Stock is a hybrid security that combines features of both debt and equity, offering fixed dividend payments like preferred stock but with the option to convert into a predetermined number of common shares at the investor's discretion or upon specific triggers.
Conveyance is the legal act of transferring property ownership from one party to another, typically through a deed, ensuring the new owner holds official rights to the property.
Corporate formalities are the legal and procedural requirements that corporations and LLCs must follow to maintain their legal status, ensure limited liability protection for owners, and operate as distinct legal entities.
Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community.
A legal concept that separates the liabilities of a business entity from its owners, protecting personal assets from business debts and lawsuits.
A counteroffer is a response to an initial real estate offer that proposes different terms, effectively rejecting the original offer and creating a new one to continue negotiations.
Counterparty risk is the risk that a party to a contractual agreement will fail to fulfill its obligations, potentially leading to financial loss for the other party. In real estate, this can arise from various stakeholders, including lenders, borrowers, tenants, or joint venture partners.
A covenant in real estate is a formal, legally binding promise or agreement between parties, often recorded with the property deed, that dictates how a property can or cannot be used, or obligates parties to specific actions.
A legal assurance in a deed, typically a warranty deed, guaranteeing that the conveyed property is free from any undisclosed liens, easements, or other burdens on the title at the time of transfer.
A contractual promise by a grantor in a real estate transaction to perform any reasonable acts necessary to perfect the title conveyed to the grantee, should defects or omissions arise post-closing.
The Covenant of Quiet Enjoyment is an implied right in a lease agreement assuring a tenant undisturbed use and possession of a property without interference from the landlord or their agents.
The Covenant of Seisin is a legal promise in a deed, typically a general warranty deed, by which the grantor assures the grantee that they own the property being conveyed and have the legal right to transfer it.
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