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.
Rent control refers to government-imposed limits on the amount landlords can charge for rent and the rate at which rents can be increased, typically enacted to promote housing affordability.
A rent escalation clause is a lease provision that mandates periodic increases in the base rent over the term of the lease, typically to account for inflation or rising operating costs.
A rental application is a form used by landlords to collect information from prospective tenants, helping them assess an applicant's financial stability, rental history, and overall suitability for a property.
Rental history is a detailed record of an individual's past tenancy, providing landlords with insights into their payment habits, property maintenance, and adherence to lease agreements, crucial for tenant screening.
A repair credit is a financial concession from a seller to a buyer at closing, typically used to cover the cost of necessary repairs identified during a home inspection, reducing the buyer's upfront cash needed.
Representations are statements of fact made by one party to induce another into a contract, while warranties are promises that those facts are true, providing a basis for recourse if false.
A reserve price is the minimum amount a seller is willing to accept for a property in an auction. If bids do not reach this price, the seller is not obligated to sell, protecting them from selling below their desired value.
A restrictive covenant is a legally binding condition that limits how a property owner can use or develop their land, typically established by a developer or homeowners' association and recorded in public records.
Revaluation surplus is an equity account on a company's balance sheet, representing the unrealized gain arising from the revaluation of an asset, typically property, plant, and equipment, to its fair value, exceeding its historical cost or previous revalued amount.
Revenue recognition is an accounting principle that dictates when and how revenue should be recorded in financial statements, ensuring it is recognized when earned, not necessarily when cash is received.
Risk transfer is a strategy in real estate investing where the potential financial burden of a risk is shifted from the investor to another party, often through insurance policies or contractual agreements, to protect assets and limit liability.
The Rule Against Perpetuities (RAP) is a common law legal principle that prevents property interests from being tied up indefinitely in the future, ensuring that ownership vests within a specific period to promote alienability.
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