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.
Loan covenants are legally binding conditions within a loan agreement that borrowers must adhere to, designed to protect the lender's interests by ensuring financial health and responsible asset management throughout the loan term.
Loan default is the failure of a borrower to fulfill the terms of a loan agreement, typically by missing required payments, which can lead to severe financial consequences like foreclosure and credit score damage.
The collection of legal agreements and disclosures that outline the terms, conditions, and obligations between a borrower and a lender for a real estate loan, formalizing the debt and collateral.
A loan modification is a permanent adjustment to the terms of an existing mortgage or loan, typically made by the lender to help a borrower facing financial hardship avoid default and foreclosure.
Loss mitigation involves strategies employed by lenders and borrowers to avoid foreclosure when a borrower faces financial hardship, aiming to find mutually beneficial solutions to manage mortgage debt.
Loss of Income Protection is a type of insurance that reimburses real estate investors for lost rental income when their property becomes uninhabitable due to physical damage from a covered event, such as a fire or storm.
The Low-Income Housing Tax Credit (LIHTC) is a federal tax incentive program designed to encourage the development and rehabilitation of affordable rental housing for low-income individuals and families.
A material defect is a significant issue with a property that substantially affects its value, desirability, or safety, and would influence a reasonable buyer's decision to purchase or the price they would pay.
Material Participation refers to IRS criteria determining an individual's active involvement in a business or rental activity, crucial for deducting real estate losses against ordinary income.
Member rights define the powers, privileges, and responsibilities of individuals or entities within a real estate investment vehicle, typically an LLC or partnership, governing their involvement in decision-making, profit distribution, and operational control.
Mezzanine financing is a hybrid debt-equity instrument used in real estate to bridge the gap between senior debt and sponsor equity, offering higher leverage at a higher cost due to its subordinated position in the capital stack.
A mill rate is a property tax rate expressed as the amount of tax per $1,000 of a property's assessed value, used by local governments to fund public services.
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