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.
Unrelated Business Taxable Income (UBTI) refers to the gross income derived by a tax-exempt organization from any unrelated trade or business regularly carried on by it, less the deductions directly connected with the carrying on of such trade or business, subject to certain modifications. This income is taxable to the exempt organization.
Usable square footage is the actual area within a commercial property that a tenant occupies and can use for their business operations, excluding common areas and structural elements.
Vertical integration in real estate is a business strategy where a company controls multiple stages of its supply chain, from acquisition and development to construction, property management, and even financing, to enhance efficiency and profitability.
A vesting schedule outlines the timeline and conditions under which an individual gains full ownership rights to an asset, typically equity or profit interests, often used in real estate partnerships and syndications to align interests.
Voting rights in real estate investment grant investors the power to influence decisions regarding the acquisition, management, and disposition of properties or the overall investment vehicle. These rights are typically outlined in partnership agreements, operating agreements, or corporate bylaws.
Warrants in real estate are financial instruments that grant the holder the right, but not the obligation, to purchase an equity stake in a real estate project or entity at a predetermined price within a specified timeframe.
A real estate warranty is a guarantee that a property or its components will meet certain quality standards for a specified period, protecting investors from unexpected repair or replacement costs.
A legal document that transfers property ownership with the highest level of guarantee, where the grantor warrants clear title against all defects, past and present.
The Warranty of Habitability is an implied legal guarantee that residential rental properties must be fit for human habitation, requiring landlords to provide and maintain safe, sanitary, and structurally sound living conditions.
Water damage refers to any destructive impact on a property caused by unwanted water, ranging from minor leaks to major flooding, leading to structural issues, mold, and significant repair costs for real estate investors.
Water rights grant property owners the legal authority to use water from a specific source, such as a river, lake, or underground aquifer, influencing a property's value, utility, and development potential in real estate.
Waterfall distribution is a tiered profit-sharing structure in real estate syndications, dictating how cash flow and profits are allocated among investors and sponsors based on predefined hurdle rates and preferred returns.
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