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.
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.
A Subscription Agreement is a legal contract between an investor and a private company (or syndicator) outlining the terms for purchasing shares or units in a private offering, commonly used in real estate syndications to formalize capital commitment and ensure regulatory compliance.
A successor trustee is an individual or entity designated in a trust agreement to assume the management and distribution of trust assets upon the death, resignation, or incapacity of the initial trustee.
A surety bond is a three-party agreement guaranteeing that a principal will fulfill contractual obligations to an obligee, with the surety company backing the principal's performance. In real estate, they protect against financial loss due to contractor default or non-compliance.
The Takings Clause of the Fifth Amendment to the U.S. Constitution prohibits the government from taking private property for public use without just compensation, safeguarding property owners' rights.
Tangible personal property refers to physical assets that can be moved and are not permanently attached to real estate. In real estate investing, understanding this distinction is crucial for tax purposes, depreciation, and property valuation.
A tax abatement is a temporary reduction or elimination of property taxes granted by a government entity to encourage economic development, revitalization, or specific types of construction within a designated area.
A tax audit is an examination of an individual's or organization's tax returns and financial information by a tax authority, such as the IRS, to verify accuracy and compliance with tax laws.
Tax deferral is the legal postponement of paying taxes on investment gains or income until a future date, allowing capital to remain invested and grow through compounding.
A tax exemption is a statutory reduction or elimination of an obligation to pay a tax, often granted to specific individuals, organizations, or property types to reduce their property tax burden.
Tax implications in real estate refer to the various taxes, deductions, and credits that affect an investor's profitability and financial obligations, encompassing income, property, capital gains, and estate taxes. Understanding these is crucial for optimizing investment returns and ensuring compliance.
A tax lien is a legal claim placed on a property by a government entity due to unpaid property taxes, taking precedence over most other liens.
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