Contracts, regulations, compliance, entity structures, zoning, permits, and landlord-tenant law.
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Foundation terms you need to know first (89 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 (117 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 discretionary account is an investment account where the account holder grants a financial advisor or broker the authority to make investment decisions, including buying and selling securities, without needing prior approval for each transaction.
A disposal group, under IFRS 5, represents a group of assets to be disposed of, by sale or otherwise, together with any directly associated liabilities. It is classified as held for sale or held for distribution to owners if specific criteria are met, impacting its measurement and presentation in financial statements.
A "Disqualified Person" is an individual or entity, as defined by the IRS, legally prohibited from engaging in certain transactions with a self-directed retirement account to prevent self-dealing and conflicts of interest.
A distribution policy in real estate investing outlines how profits, cash flow, and capital are allocated and disbursed among investors and sponsors in a syndicated deal or fund.
A Divorce Decree is a legally binding court order that formally ends a marriage, detailing the division of marital assets and debts, including real estate, and outlining post-marital financial responsibilities.
Document review in real estate investing is the critical process of thoroughly examining all pertinent legal, financial, and property-related records to assess risks, verify information, and ensure compliance before making an investment decision.
In real estate law, the dominant estate is the property that benefits from an easement over another property, known as the servient estate. It holds the right to use or access a portion of the servient estate for a specific purpose.
The voluntary transfer of real estate ownership from an individual or entity to a qualified charitable organization, often yielding significant income tax deductions and capital gains tax avoidance for the donor.
Double taxation is the taxing of corporate profits at the entity level and again when those profits are distributed to shareholders as dividends, significantly impacting net returns for real estate investors using C-Corporations.
The drawee is the party, typically a bank or financial institution, ordered by the drawer to pay a specific sum of money to the payee, most commonly seen in check transactions or other financial instruments. In real estate, the drawee is crucial for processing payments like earnest money or closing funds.
Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.
Due diligence in commercial real estate (CRE) is the comprehensive investigation and review process undertaken by a prospective buyer or investor to assess the risks and opportunities associated with a property before finalizing an acquisition.
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