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.
The Due Diligence Period is a contractual timeframe in real estate during which a buyer thoroughly investigates a property's condition, financials, and legal standing to make an informed purchase decision.
Due diligence in real estate development is a systematic investigation of a property's legal, financial, environmental, physical, and market conditions to assess the feasibility and risks of a proposed construction or redevelopment project.
Due process is a fundamental constitutional guarantee ensuring fair treatment and legal safeguards for individuals and entities in government actions, particularly relevant in real estate for protecting property rights and ensuring equitable legal proceedings.
A due-on-sale clause is a mortgage provision allowing the lender to demand immediate repayment of the entire loan balance if the property is sold or transferred without their consent, protecting against unauthorized loan assumptions.
A Dynasty Trust is an irrevocable trust designed to hold assets for multiple generations, often in perpetuity, shielding them from estate taxes, generation-skipping transfer (GST) taxes, and creditors for the benefit of descendants.
The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to protect individuals in these plans.
An Early Withdrawal Penalty is a fee charged by a lender if a borrower pays off a loan before its scheduled term or makes significant extra payments, often found in certain real estate loan agreements.
Earnest money is a deposit made by a buyer to a seller, held in escrow, demonstrating the buyer's serious intent to purchase a property and serving as security against buyer default.
Earnings management is the strategic manipulation of financial reports by management to achieve specific objectives, often to mislead stakeholders about the underlying economic performance of a company or real estate entity.
Earnings manipulation refers to the deceptive practice of intentionally distorting a company's financial statements to misrepresent its true financial performance, often to meet analyst expectations, inflate asset values, or secure more favorable financing terms.
An earnout is a contractual provision in a real estate transaction where a portion of the purchase price is contingent upon the future performance or achievement of specific milestones by the acquired asset or business post-acquisition.
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.
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