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 legal right allowing one party to use or access another's property for a specific, limited purpose, without owning the land. It creates a non-possessory interest that can affect property value and use.
An easement in gross is a legal right to use another person's land for a specific purpose, where the right is attached to a specific individual or entity, rather than to an adjoining parcel of land. It does not transfer with the land's ownership.
The complete network of components, including wiring, panels, outlets, and switches, that distributes electrical power throughout a real estate property, essential for safety and functionality.
Assets or property that a lender deems acceptable to secure a loan, providing assurance that the borrower will fulfill their repayment obligations and allowing the lender to recover funds in case of default.
Embezzlement in real estate refers to the fraudulent appropriation of funds or property entrusted to an individual, such as a property manager or syndicator, for their personal use rather than for the intended purpose.
Eminent domain is the government's inherent power to take private property for public use, even against the owner's will, provided that fair and just compensation is paid.
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to identify a business entity for tax purposes, often required for real estate investment structures like LLCs and partnerships.
Employment verification is the process by which a lender confirms a borrower's current employment status, job title, and income to assess their ability to repay a loan.
Encroachment is an unauthorized intrusion of a structure or improvement onto an adjacent property, crossing the established boundary line.
A claim or liability against a real estate property that affects its title and may diminish its value or restrict its use, but does not prevent its transfer.
Entitlements in real estate refer to the legal rights and approvals granted by governmental authorities for a property to be developed or used for a specific purpose, often involving zoning changes, permits, and environmental clearances.
Entity formation is the legal process of establishing a business structure, such as an LLC or corporation, to own and operate real estate investments, providing asset protection and tax advantages.
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