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.
Fair Value Accounting is an accounting principle that requires certain assets and liabilities to be recorded at their current market value, or 'fair value,' rather than their historical cost. This approach aims to provide more relevant and up-to-date financial information for real estate investors.
A Family Limited Partnership (FLP) is a legal entity used by high-net-worth individuals to transfer assets to younger generations while retaining control, reducing estate taxes through valuation discounts, and providing robust asset protection.
A farm lease is a contractual agreement between a landowner (lessor) and a farmer (lessee) that grants the farmer the right to use agricultural land for farming purposes in exchange for rent or a share of the crop.
Fee simple is the highest and most comprehensive form of property ownership, granting the owner full, perpetual, and inheritable rights to the land and its improvements, subject only to governmental powers and private encumbrances.
A fiduciary deed is a legal instrument used by a representative (fiduciary) to transfer property, typically offering limited warranties and requiring enhanced buyer due diligence.
Fiduciary duty is a legal and ethical obligation for a professional to act in the best interest of their client, prioritizing the client's needs above their own with utmost loyalty, care, and disclosure.
The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury responsible for safeguarding the financial system from illicit use, combating money laundering, and promoting national security.
Financial irregularities refer to intentional misstatements or omissions in financial records, often involving fraud, embezzlement, or other deceptive practices, that can significantly impact real estate investments.
Financial misrepresentation in real estate involves providing false or misleading financial information about a property or transaction, often with the intent to deceive, leading to significant legal and financial repercussions for investors.
Financial Reporting Standards (FRS) are a set of accounting principles, rules, and procedures that companies must follow when preparing their financial statements, ensuring consistency, transparency, and comparability for stakeholders.
Financial separation is the practice of maintaining distinct bank accounts, credit cards, and financial records for your real estate investment activities, completely separate from your personal finances.
A financial statement is a formal record detailing the financial activities and position of a business or property, providing critical insights into its performance, cash flow, and overall financial health for informed investment decisions.
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