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.
Auditing in real estate investment is a systematic, independent examination of financial records, operational processes, and compliance adherence within an investment entity or property to ensure accuracy, efficiency, and regulatory conformity.
Automatic renewal refers to a contractual provision where an agreement, such as a lease or service contract, continues for a specified period unless one party provides timely notice of termination.
A balloon payment is a large, lump-sum payment of the remaining principal balance that becomes due at the end of a loan term, typically after a period of smaller, partially amortized or interest-only payments.
A Bank Statement Loan is a non-qualified mortgage (Non-QM) product designed for self-employed individuals and real estate investors who cannot easily document their income through traditional tax returns, instead relying on 12-24 months of business or personal bank statements for income verification.
Bankruptcy is a legal process allowing individuals and businesses to discharge or repay debts under court supervision, significantly impacting real estate assets and future investment capabilities.
A bare trust is a simple trust arrangement where the trustee holds legal title to an asset, but the beneficiary has absolute entitlement to both the asset and any income it generates, retaining full control over the asset's management and disposition.
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.
Beneficial ownership refers to the ultimate natural person(s) who directly or indirectly own or control a company or legal entity, even if legal title is held by another entity. It's crucial for transparency and anti-money laundering efforts in real estate.
A beneficiary is an individual, group, or entity designated to receive assets, property, or benefits from a will, trust, life insurance policy, or other legal instrument.
A bid bond is a financial guarantee provided by a surety company to a project owner, ensuring that a bidder will enter into a contract if awarded, and provide the required performance and payment bonds. It protects the owner from financial loss if the winning bidder defaults on these obligations.
The bid process in real estate is the structured procedure through which a prospective buyer submits a formal offer to purchase a property, and the seller evaluates and responds to that offer.
A bilateral contract is a legally binding agreement where two parties exchange mutual promises to perform specific actions, making it the most common type of contract in real estate transactions.
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