The rate at which rentable space is filled, divided into gross absorption and net absorption. Gross absorption is a measure of the total square feet leased over a specified period, with no consideration given to space vacated in the same geographic area during the same time period. Net absorption is equal to the amount occupied at the end of a period, minus the amount occupied at the beginning of a period. Net absorption does take into consideration the space vacated during the period
Right of the owner of a piece of land to use a public road which is next to land, Clear approach to a plot or a building. Means of Access:- These shall include the road/street/vehicular access way, pathway up to the plot and to the building within a plot.
Agreement for lease/sale
A contract to enter into a lease (or sale), which in order to be enforceable either must be evidenced in writing and signed by the breach of the alleged contract and there must be a sufficient
act of part performance.
A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.
A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
One or more department or variety chain stores, or supermarkets, introduced into a shopping center in key positions to attract the shopping public into the Centre for the purpose of encouraging other retailers to lease shops en route. The larger the develop the more anchors required.
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
The increase in the value of a property due to changes in market conditions, inflation, or other causes.
The valuation placed on property by a public tax assessor for purposes of taxation.
The placing of a value on property for the purpose of taxation.
A public official who establishes the value of a property for taxation purposes.
Items of value owned by an individual. Assets that can be quickly converted into cash are considered “liquid assets.” These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.
A repayment of a loan bond, usually but not necessarily the final repayment, which is larger in amount than other installments.
A monthly rental net of maintenance and interest costs charged or quoted by landlords for any property. The base rent comprises of only the payment made for usage of the subject property under a lease agreement. Imputed costs such as holding costs fit out costs and building service charges are not usually included in the base rent.
An Indian term used to denote the token money given to the landlord to informally freeze negotiations on a particular property, after the initial terms and conditions have been formalized.
Breach of contract
An act, or omission, contrary to enforce specific performance to rescind the contract and/or to claim damages, the remedy available depending upon the nature of the breach.
A person or company who acts as a medium of bringing owners and proposed buyers together with a view to complete a real estate transaction.
1. Commission paid to a broker.
2. The activity of a broker in bringing together two parties in a transaction.
In a funding agreement between a developer and a prospective purchaser, the pre-determined investment yield which will be used to capitalize the annual income receivable at the time of sale to determine the buy-out price.
1. At a given date the conversion into the equivalent capital worth of a series of net receipts, actual or estimated, over a period.
2. A method of calculating a final purchase price for a development using an agreed formula to convert actual, or assumed, income from initial lettings into capitalism. Such capitalized sums may be offset against a purchasing fund’s interim finance payments, any excess being paid to the developer.
3. In relation to a company’s reserves, the conversion into capital of money, which is then distributed as a
Areas of useable at any floor level as worked out in the plinth area minus the area occupied by the walls.
It is a title which is free from any reasonable doubt and also free from all encumbrances.
It is actually the covered area of the common spaces and areas meant for use by the occupants of the building. These areas may include staircase, lifts, ducts for sanitation, electrical and air conditioning areas etc. This area is generally divided proportionately in relation to the size of the apartment
and charged accordingly.
1. The area of land from which finds its way into a particular watercourse, lake or reservoir.
2. By analogy, the ERE-49 area which contains those people who can be expected to obtain goods, services, employment or other benefits from a particularly property. More especially related to retail premises, where the success of forecasting depends on the accuracy of estimating the number of purchasers (catchment population) likely to be attracted from the different parts of the area and the average expenditure which might be expected from them.
Central business district
The functional centre around which the rest of a city is comparison shopping, office accommodation, leisure facilities, buildings for recreational use, public museums, art galleries and governmental functions. Generally the area of highest land values within a city.
An area which is to be cleared of all buildings. Generally promulgated by way of a government declaration, which is normally followed by the acquisition of the land and the clearance of the area.
A document transferring title to land from one person to another.
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
The remunerative rate of interest which is, or would be, an appropriate at the date of valuation, assuming the property to be let at its full rental value. It will be the same as the reversion yield where the reversion is to full rental value, and the same as the term yield where the rent receivable under the lease is full rental value.
An amount owed to another.
The legal document conveying title to a property.
Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.
Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a “late fee” for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.
A sum of money given in advance of a larger amount being expected in the future. Often called in real estate as an “earnest money deposit.”
A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Earnest money deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.
A right of way giving persons other than the owner access to or over a property.
An improvement that intrudes illegally on another’s property.
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
The gross rent payable per month by the occupiers which includes the base rent, maintenance charges, imputed costs of loss of interest on security deposit and rental advance. The effective rent indicates the total cash outflow of an occupier every month on account of leasing any property.
EMI Equated Monthly Installment
This is the installment amount the borrower has to make towards repayment of his loan. The EMI comprises of both the principal and interest.
This records details of transfer of ownership of a property in succession up to the current owner. It shows the date, the names of the parties involving the amount of consideration, the extent and schedule of the property. This certificate can be obtained from the sub registrar’s office for a payment of fee from any previous year till date. This certificate is also useful in establishing the events as to how and when the present owner came into possession of the property.
Estate: The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
An estoppel certificate is a document executed by a mortgagor or mortgagee setting forth the principal amount. The executing parties are bound by the amount specified.
The lawful expulsion of an occupant from real property.
Examination of title
The report on the title of a property from the public records or an abstract of the title.
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.
The greatest possible interest a person can have in real estate.
The co-ordination of many specialist disciplines to create the optimum working environment for staff.
The rent determined by a rent officer (or, on appeal, by a rent assessment committee) under a regulated tenancy and registered.
An act to regulate certain payments, dealing in foreign exchange, securities, the import and export of currency and acquisition of immovable property by foreigners. Under the Foreign Exchange Management Act (FEMA), it is mandatory for foreign corporations, which are not incorporated in India to obtain permission from the Reserve Bank of India (RBI) to acquire, hold, transfer or dispose off in any manner (expect by way of lease for a period not exceeding five years) any immovable property in India.
Relate to the interior permanent furnishings required in a property including HVAC ducting, fire protection system implementation, establishment of workstations and telephone/ computer cabling among others, in order to make the property fit for usage.
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the selling the property by auction and the proceeds being used to service the mortgage debt.
An estate in real property which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates which are created by acts of parties, such as an ordinary life estate, or by operation of law.
A general lien is a lien that attaches to all of the property of a person within the court’s jurisdiction.
In a mortgage, the grace period refers to a specified time frame in which payment may be made without the borrower being in default.
A graduated lease is a lease in which the rent changes from period to period over the lease term. This type of lease is usually used by a new business tenant whose income will increase over time.
A gross lease is a lease in which the lessor pays all costs of operating and maintaining property, including the property taxes.
A ground lease is a long-term lease of unimproved land and is usually for construction purposes.
Income before taxes are deducted.
A person who agrees to indemnify the holder of a loan all or a portion of the unpaid principal balance in case of default by the borrower.
A hectare is the metric system equivalent to 2.47 acres.
Holding period refers to the length of time a property is owned.
A holdover tenant is a tenant that remains in possession of a property after a lease terminates.
Housing Expense Ratio
The housing expense ratio is the relationship of a borrower’s monthly payment obligation on housing (principal, interest, taxes, insurances and other applicable housing expenses) divided by gross monthly income, expressed as a percentage. It is also referred to as top ratio.
HVAC is an acronym that stands for heating, ventilation and air conditioning.
Hypothecate is to pledge property as security for the payment of a debt without giving up possession.
Improvements are changes or additions made to a property. These typically increases the value of the property.
Indemnification is the reimbursement or compensation paid to anyone for a loss already suffered.
Index is a benchmark, usually a published interest rate, such as a one-year London Interbank Offered Rate (LIBOR) security yields, used to calculate the interest rate of an adjustable rate mortgage when rate is scheduled to change. Generally, a margin stated in loan documents is added to the index to determine the new interest rate.
A mortgage that is protected by private mortgage insurance. If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.
The fee charged for borrowing money.
Interest Only Loan
A loan where only the interest is repaid throughout the course of the loan. The original amount is repaid at the end of the term of the loan, rolled over by the same bank or the owner re-mortgages.
The rate of interest in effect for the monthly payment due.
A loan offered at a reduced rate for an introductory period to new borrowers.
A property that is not occupied by the owner, but provides a return to the owner through letting or leasing to a tenant.
Joint tenancy is a form of co-ownership that includes the right of survivorship.
One or two or more agents jointly instructed by a principal to act on his behalf. In the case of estate agents this is normally on the basis that if any one of the agents effects the sale, letting or other joint agent(s) will share the remuneration in agreed proportions. None of these agents would be entitled to a
commission if the transaction is concluded as a result of someone else’s introduction.
Joint sole agent
One of two or more agents jointly instructed as the only agent entitled to represent the principal. It is customary for the joint agents to share any commission earned on an agreed basis, irrespective of which agent effects the sale or letting.
A small enclosed retailed outlet, normally without toilet facilities and in the retail area, frequently located in a public concourse or other place where it may remain open only during peak times and be closed securely when there are no customers. Kiosks are now sometimes included in managed shopping schemes.
Khata, chitti, adangal
These are basic documents called by different names in different places indicating the ownership of property as entered in the register of the Government authorities.
A person who rents property to another, a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.
You buy the right to own the home and lease the land for a certain time. You pay rent to the landlord for the land. You can sell the lease if you want to move on. There may be restrictions on your use of the property.
A person leasing a property.
The owner of a property that is leased to another person.
A list of debts owned.
Stands for “London Interbank Offered Rate”, and is the average yield of interbank offered rates for one-year U.S. dollar-denominated deposits in the London market. LIBOR is a common index used as a benchmark for adjusting mortgage interest rates in adjustable-rate mortgages.
A legal claim against a property that must be paid off when the property is sold.
Also called Tenancy for Life. A freehold interest (in real property) that expires upon the death of the owner or any other specified person.
Loan-to-Value Ratio (LTV)
The loan-to-value ratio is the mortgage amount divided by the lower of the purchase price or the appraised value of the property. This ratio is expressed as a percentage. A lender will use this ratio in determining the maximum mortgage loan that it will make on the property.
The monthly charge levied on owners by a cooperative corporation to cover the building’s operating costs, real estate taxes, and the debt service on the building’s underlying mortgage.
The market value of a property is an estimation of the price for a property in relation to the current real estate market.
A mortgage is a pledge of real estate collateral to secure a debt. Also, it is a legal document describing and defining the pledge. The mortgage may also include the terms of repayment of the debt. It is also referred to as a deed of trust.
A mortgage banker is an institution that performs services similar to those of a mortgage broker. However, a mortgage banker is also legally permitted to lend its own funds.
A real estate professional who represents an array of banks seeking to issue mortgages. The mortgage broker meets with a customer, assists with the application, and facilitates the mortgage process on behalf of the borrower and the bank. Generally, in the case of residential mortgages, the mortgage broker is paid a fee by the bank for this service.
Mortgage Insurance (or Private Mortgage Insurance / PMI)
Mortgage insurance is insurance that protects the lender in case the home buyer does not make their mortgage payments. Typically, a borrower would be required to pay a fee for mortgage insurance if their down payment is less than 20%.
The mortgagee is the lender in a mortgage transaction.
The mortgagor is the borrower in a mortgage transaction.
This occurs when a loan permits the borrower to make a payment that is less than the full amount required to cover the interest charge on the open balance and the shortfall is added to the mortgage principal.
A net lease refers to a type of lease in which the tenant pays a fixed rent plus the operational costs of the property.
Net worth is your assets less your liabilities.
A nonconforming use refers to the utilization of land that does not conform to the zoning ordinance for the area
Net present value method (NPV)
A method used in discounted cash flow analysis to find the sum of money representing the difference between the present value of all inflows and outflows of cash associated with the project by discounting each at a target yield.
An offer is made to purchase a property at a specific price. Once an offer is accepted, then a contract of sale is issued by the seller’s attorney.
Open-ended Listing Contract
An open-ended listing contract is a contract between a seller and a real estate broker that does not have a termination date.
An open-end mortgage is a mortgage that may be refinanced without rewriting the mortgage contract.
Costs incurred by the owner of an interest in property, usually calculated on a yearly basis e.g. management, repairs, rates, insurance and rent payable to the holder of a superior interest, as appropriate to his contractual or other liabilities. It is prudent to make annual provision for future items involving expenditure at intervals of more than one year.
A parcel is a specific portion of land, such as a lot
A percentage lease refers to a lease that has a rental amount that is a combination of a fixed amount plus a percentage of the lessee’s gross sales
Price-to-Earnings Ratio (P/E Ratio)
The price-to-earnings ratio is the common metric used to assess the relative valuation of equities. To compute the P/E ratio in the case of a rented house, divide the price of the house by its potential earnings or net income, which is the market rent of the house minus expenses, which include maintenance and property taxes. This formula is:
House P/E Ratio = House Price / Rent-Expenses
Compare this ratio to the simpler but less accurate price-rent ratio.
It is the basic affordability measure for housing in a given area. It is generally the ratio of median house prices to median familial disposable incomes, expressed as a percentage or as years of income. This ratio, applied to individuals, and also referred to as “attainability”, is a basic component of mortgage lending decisions.
The price-rent ratio is the average cost of ownership divided by the received rent income (if buying to let) or the estimated rent that would be paid if renting (if buying to reside). This formula is:
House Price-Rent ratio = House Price / Monthly Rent x 12
The principal in the mortgage is the amount that is borrowed and on which interest is paid or received.
Private Mortgage Insurance (PMI)
Processing is the second step in the mortgage application process which involves the verification of information stated on the application. Credit reports and the appraisal are also ordered at this time.
Current tax rules permit the profit on the sale of a primary residence to be tax exempt for up to $250,000 for an individual, or $500,000 for a married couple.
Property Condition Disclosure Form
This form is a comprehensive checklist pertaining to the condition of the property including its structure and any environmental issues in and around the property.
The tax issued by a municipality on the ownership of a property.
The lease issued by a cooperative corporation to each tenant-shareholder prescribing his or her right to occupy a specific apartment and his or her general obligations as an owner and tenant.
In relation to a co-op, the pro-rata share is your apartment’s share of the building’s underlying mortgage. The share is determined by dividing the amount of the underlying mortgage by the number of shares in the building then multiplying the per-share amount by the number of shares for your apartment. The lower of either the appraised value or purchase price then divides that number.
A quadruplex is an apartment with four levels.
A restriction contained in a legal document which limits the rights of a person having an interest in the land but, by its wording envisages the possibility of removing the limitation on terms agreed between the parties e.g. a covenant by a lessee not to assign or sublet without the landlord’s written consent.
Real Estate Broker
A real estate broker is an individual employed on a fee or commission basis as an agent to bring buyers and sellers together and assist in negotiating real estate contracts between them.
Real Estate Investment Trust (REIT)
An REIT is a trust owned by shareholders that buys and initiates mortgage loans.
A referral fee is a percentage of a broker’s commission paid to another broker for the referral of a buyer or seller.
Refinancing are the proceeds of a new loan used to pay off an existing mortgage on the same property.
A rental building only has apartments for rent and not for purchase.
A form of rent regulation, rent control occurs when an apartment has tenants that have been in continual residence since July 1, 1971, or other qualified occupants that have been in residence with the original tenant continuously for either two years (immediate relative) or five years (non-relative). Rent control limits the amount of rent landlords can charge for apartments and restricts their ability to evict.
It is the value of the property at which the property is registered. Generally the rates for the value for registration is fixed for specific areas by the authorities in many places.
The payment of EMI or pre-EMI as applicable is called as repayment of the loan. In case of NRIs this amount should come from Non-Resident (External) Account/Non-Resident (Ordinary) Account in India.
Right of Assignment
The right of assignment allows the lender to sell a mortgage at any time and obtain money invested rather than wait for the completion of the loan term.
Right of First Refusal
A condition contained in many condominium master deeds that permits the board to review any party seeking to purchase or rent an apartment and to refuse the applicant if it so desires. If the board refuses the applicant, it must thereafter purchase or rent the apartment under the same terms and conditions stipulated in the contract.
Right of Survivorship
The right of survivorship is the right of an owner to receive the title to a co-owner’s share upon death of the co-owner, as in the case of joint tenancy and tenancy by the entirety.
Right-of-way is an easement allowing someone to use the land of another for a specific purpose.
The sale price, also referred to as the purchase price, refers to the amount of money paid by the purchaser to the seller.
Sales Comparison Approach
The sales comparison approach is an appraisal tool for estimating the value of a property with other similar properties that have sold recently.
It is an agreement which is entered into between the parties for dealing with the property and which creates a right to obtain a sale deed mentioning the property. Normally it fixes a time for completion, payment of earnest money or part payment of purchase consideration. Generally it is a document that precedes a sale deed and in such cases does not require registration and will also not confer any charge or right on the property. However, in some states the sale agreement itself will be registered and will act as a sale deed.
It is an instrument in writing which transfers the ownership of the property or properties in exchange for a price paid/consideration. This is a document that requires to be registered compulsorily. Sanction letter Once the loan is approved, a letter communicating the sanction terms and conditions will be issued to the party.
A drawing containing the plans, section of elevations of areas along with detailed schedules, specifications and area statements on which the sanctioning authorities grant permission to carry out work as regulated in the byelaws.
It is the duty/fee payable on the different instruments/documents as per the prescribed rate. This differs from state to state. The adequacy of stamp duty should be ensured to make a document valid and enforce.
A tax abatement is a financial incentive offered by a local or municipal government to stimulate development in a particular area. The owner of the property and/or the developer has reduced taxes for a specific period of time, typically 10-15 years. The taxes are raised incrementally to the full tax burden over the period of a few years.
A tax deductible expense helps to reduce taxable income. The tax deductible expenses related to real estate are interest payments on mortgages and real estate taxes.
To land or buildings to meet the needs of and carried out wholly or partly at the expense of the tenant. Town and country planning The determination of policy for the development and use of land and the control of its implementations in urban and rural areas by district and country planning authorities.
A rent which is calculated as a proportion of the annual turnover of the lessee’s business. Usually, it does not fall below a base rent. More commonly used in the USA, although in recent years being applied with increasing frequency in the Europe and the mature markets of Asia, especially in the case of
the more profitable retail outlets.
The title of a property is the evidence or documentation that an owner is in lawful possession of the property, such as a property deed.
Title insurance is an insurance policy protecting the insured from financial loss caused by a defect or question about the title to real property.
Title Search: Title search is a process that examines local public records, laws and related court decisions to determine if any other parties have valid claims against the subject property (such as past due taxes, judgments or mechanics’ liens). It also discloses past and current facts about the subject property’s ownership.
Title Transfer Tax
Title transfer tax is a tax imposed on the conveyance of title to real property by deed.
Triple Net Lease
Triple net lease refers to a condition when the lessee pays all the expenses associated with the property in addition to the rent.
A triplex is an apartment that has three levels.
In mortgage lending, underwriting is the decision-making process used to determine whether the loan risk is acceptable to the lender. Underwriting involves the satisfactory review of the property appraisal and examination of the borrower’s ability and willingness to repay the debt and sufficiency of collateral value of the property.
Unencumbered property is property that is free of any lien.
Unity of Interest
Unity of interest occurs when co-owners all have the same percentage of ownership in a property.
Unity of Possession
Unity of possession occurs when all co-owners have the right to possess any and all portions of the property owned, without physical division.
Unity of Time
Unity of time occurs when co-owners receive title at the same time in same conveyance.
Unity of Title
Unity of title occurs when co-owners have the same type of ownership in a property.
The vacancy rate is the projected rate of the percentage of rental units that will be vacant in a given year.
Valuation establishes an opinion of value utilizing an objective approach based on facts related to the property, such as age, square footage, location, cost to replace, etc.
A variance is a deviation from specific requirements of a zoning ordinance due to special conditions of the property.
designed and built for the purpose of bulk storage of raw materials or finished or partly finished goods, pending either onward transit or division into smaller batches and subsequent distribution. Willing seller-willing buyer An assumption sometimes made for valuation purposes that the owner of the property concerned is willing to dispose of his interest therein and that there is at least one genuine purchaser in the market for that interest, whether or not such is actually the case at the date of valuation. Written-down value At a given time, the result of making one or more annual of periodic deductions for depreciation against
Capital cost or worth.
The walk-through inspection of a property occurs right before a closing to ensure that the property is being delivered as stipulated in the contract of sale.
Words of Conveyance: Words of conveyance is a stipulation in a deed demonstrating the definite intent to convey a specific title to real property to a named grantee.
The yield refers to the return on an investment.
An area of a municipality or specific building that is zoned for a specific use, such as residential, commercial, etc.
Zoning: Zoning are the laws regulating land use.
Zoning Ordinance: Zoning ordinance is a statement settling forth the type of use permitted under each zoning classification and specific requirements for compliance.
Zone demarcation and classification:
• Agricultural land (Green Zone)
• Residential Zone (R zone)
– Residential (R-1)
– Residential with Shopping Line (R-2)
• Commercial Zone (C Zone)
– Commercial (C)
– Local Commercial (C-1)
– District Commercial (C-2)
– Shopping Centre (SC)
• Industrial Zone (Yellow Zone)
– Service Industries (I-1)
– General Industries (I-2)
– Special Industries (I-3)
– Industrial Estate (IE)
• Public / Semi-Public
– School – Primary / Secondary
– Recreation Ground (RG)
– Playground (PG)
– Garden (G)
– Park (P)
• Non-Agricultural land (Urbanisable Zone U-1 & U-2)
• Forest land (Forest Zone – No development zone or Eco-sensitive Zone )
• Red zone –/ Restricted zone /defense zone
• Coastal regulation zone
• Special economic zone