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.
Homeowners Association (HOA) fees are mandatory monthly or annual payments made by property owners in planned communities, condominiums, or townhomes to cover the costs of maintaining common areas and shared amenities.
A legal provision that allows homeowners to protect a portion of their primary residence's value from property taxes and, in many cases, from creditors, thereby reducing their annual tax burden and enhancing financial security.
Housing discrimination is the illegal practice of treating individuals unfairly in housing-related matters based on protected characteristics such as race, religion, sex, or disability, violating federal and local fair housing laws.
IRS Compliance for real estate investors involves adhering to all tax laws, regulations, and reporting requirements set by the Internal Revenue Service to ensure proper taxation of real estate income and expenses.
IRS Form 4797 is used by businesses and individuals to report gains and losses from the sale or exchange of business property, including real estate, and involuntary conversions, primarily addressing depreciation recapture.
IRS Form 843, officially titled 'Claim for Refund and Request for Abatement,' is used by taxpayers to request a refund of overpaid taxes, interest, penalties, or additions to tax, or to request the abatement of an unpaid assessment.
An impairment loss occurs when an asset's carrying value on the balance sheet exceeds its recoverable amount, indicating a decline in its future economic benefits or fair value.
A non-cash payment for goods, services, or debt, often involving assets, property, or services instead of monetary exchange. It's common in real estate for partnerships, property exchanges, or compensation.
In-place leases are the active rental agreements on a property at the time of acquisition or valuation, directly determining its current income stream and influencing its market value.
Income documentation refers to the financial records and statements required by lenders to verify a borrower's ability to repay a loan, crucial for securing real estate financing.
An indemnification clause is a contractual provision where one party (the indemnitor) agrees to compensate the other party (the indemnitee) for losses, damages, or liabilities incurred due to specified events or actions.
In real estate, independent parties are individuals or entities who have no pre-existing relationship or conflict of interest, ensuring fair and unbiased transactions.
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