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.
A Deed-in-Lieu of Foreclosure is a voluntary agreement where a homeowner transfers property ownership to their mortgage lender to satisfy a mortgage debt and avoid the formal foreclosure process.
Defeasance is a complex financial and legal process in commercial real estate where a borrower substitutes a portfolio of U.S. Treasury securities for the original property as collateral, effectively releasing the property from the mortgage lien, typically to facilitate a sale or refinancing when the loan contains a lockout period or strict prepayment penalty.
A deficiency judgment is a court order holding a borrower personally responsible for the remaining balance on a loan after the collateral, such as real estate, sells for less than the outstanding debt, typically following a foreclosure or short sale.
Delinquent rent refers to rental payments that have not been made by the due date specified in the lease agreement, often incurring late fees and initiating a formal collection process.
Delivery of Possession is the formal transfer of physical control and the legal right to occupy a property from one party to another, typically occurring at or shortly after closing.
The depreciable basis is the portion of an investment property's cost, excluding land value, that can be legally deducted over time through depreciation for tax purposes.
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.
Development potential refers to a property's capacity to be improved, expanded, or redeveloped for a higher and better use, thereby increasing its value and utility for real estate investors.
Direct negotiation in real estate involves buyers and sellers dealing directly with each other, bypassing agents to agree on terms, often for off-market or distressed properties.
Direct ownership in real estate refers to an individual or entity holding legal title to a property, granting full control over its acquisition, management, and disposition. This method offers complete autonomy but also carries direct responsibility for all aspects of the investment.
Direct to Seller is a real estate investment strategy where investors directly contact property owners to negotiate and acquire properties, bypassing traditional market channels like real estate agents or the MLS.
Disbursement in real estate refers to the release or distribution of funds from an escrow account or a designated party to various recipients involved in a transaction or property operation, ensuring all financial obligations are met.
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