Chapter 14 - Real Estate Specialization Vocabulary

Question 1

agricultural property

Answer 1

Property zoned for use in farming, including the raising of crops and livestock.

Question 2

Brownfield

Answer 2

An abandoned commercial or industrial site or under-utilized neighborhood where redevelopment is complicated by actual or perceived contamination.

Question 3

urban sprawl

Answer 3

The unplanned and often haphazard growth of an urban area into adjoining areas.

Question 4

directional growth

Answer 4

The location or direction toward which the residential sections of a city are destined or determined to grow.

Question 5

infill development

Answer 5

The development of vacant parcels in existing urban and suburban areas.

Question 6

Urban Renewal

Answer 6

The acquisition of certain areas by government action for the purpose of redevelopment.

Question 7

Leverage

Answer 7

The investment strategy of using borrowed funds, such as a mortgage, to increase the potential return on an investment. – Using a lender’s money to finance a sale.

Question 8

sales tax

Answer 8

Collected as a percentage of the retailing sales of a product, by a retailer, and forwarded to the State Board of Equalization.

Question 9

1031 Exchange

Answer 9

The Internal Revenue Code Section that allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale.

Also called Like-Kind Exchange or Tax-Deferred Exchange.

A method of deferring tax liability.

Question 10

tax-deferred exchange

Answer 10

The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade.

Question 11

estate tax

Answer 11

Federal tax on the transfer of assets owned by the estate of a person who has died.

Question 12

equity buildup

Answer 12

The gradual increase of the borrower’s equity in a property caused by amortization of loan principal.

Question 13

inheritance tax

Answer 13

A tax levied by states on inherited property and paid by the person receiving the property.

Question 14

gift tax

Answer 14

Tax that can be due when you give property or other assets to someone.

Question 15

Balance Sheet

Answer 15

A property management report that shows a snapshot of a specific property at specific moment in time, for example, cash on hand, liabilities, outstanding loan balance, etc.

Question 16

financing statement

Answer 16

(1) A written notice filed with the county recorder by a creditor who has extended credit for the purchase of personal property; establishes the creditor’s interests in the personal property which is security for the debt. (2) A document used to record debt.

Question 17

building manager

Answer 17

A person employed by a property manager or directly by an owner, and usually manages a single large building or office complex.

Question 18

Property Manager

Answer 18

A person hired by a real property owner to administer, market, and maintain property, especially rental property.

Question 19

Property Management

Answer 19

Leasing or renting, or offering to lease or rent, real property of others for a fee, commission, compensation, or other valuable consideration pursuant to a property management employee contract. – (1) A specialty in which real estate brokers manage homes and large real estate projects such as industrial complexes, shopping centers, apartment houses and condominiums. (2) The branch of the real estate business involving the marketing, peration, maintenance and day-to-day financing of rental properties.

Question 20

Property Management Agreement

Answer 20

A written agreement that creates an agency relationship between the property owner/investor and the property manager.

Question 21

Resident Manager

Answer 21

Represents a property management firm and may live on the premises of the building being managed. A person employed to manage an apartment building on a part or full-time basis.

Question 22

Management Agreement (contract)

Answer 22

A written agreement that governs the relationship between the property owner/investor and the property manager and outlines the duties of the property manager.

Question 23

Management Proposal

Answer 23

A plan created by the property manager for overseeing the principal’s property, including market analysis, and developing a variety of financial reports, including the operating budget.

Question 24

rent control

Answer 24

(1) Laws in some communities that limit or prohibit rent increases. (2) Also known as rent stabilization.

Question 25

no fault eviction

Answer 25

A lawful eviction in which the tenant is not at fault. This includes whether the owner wants to occupy the apartment or to get out of the rental housing business.

Question 26

maximum allowable rent

Answer 26

The maximum legal rent that a landlord may charge for a controlled rental unit.

Question 27

Consumer Price Index (CPI)

Answer 27

An index published monthly by the United States Bureau of Labor Standards (BLS) considered by many to be the basic indicator of inflation in the U.S.

Question 28

Floor Area Ratio

Answer 28

The maximum size of a building permitted on a development site according to zoning requirements. The floor area ratio (FAR) is typically stated as a percentage, such as 25%, 30%, etc.

Question 29

hedge against inflation

Answer 29

Real property appreciation keeps pace or exceeds inflation rates.

Question 30

installment note

Answer 30

A note which provides for a series of periodic payments of principal and interest, until amount borrowed is paid in full. This periodic reduction of principal amortizes the loan.

Question 31

installment sales

Answer 31

Where payments are made, by the buyer, to the seller, over a period of more than one year.

Question 32

Mansionization

Answer 32

A new trend of home remodeling and construction that is emerging in older neighborhoods with small to medium-sized homes.

Question 33

Houseboat

Answer 33

A barge that is designed and equipped for use as a dwelling.

Question 34

manufactured home

Answer 34

A home built in a factory after June 15, 1976 and must conform to federal Manufactured Home Construction and Safety Standards.

Question 35

Mobilehome

Answer 35

A factory-built home manufactured prior to June 15, 1976, constructed on a chassis and wheels, and designed for permanent or semi-attachment to land.

Question 36

mobilehome park

Answer 36

Any area or tract of land where two or more mobile home lots are rented or leased or held out for rent or leased to accommodate manufactured homes or mobilehomes used for human habitation.

Question 37

Timeshare

Answer 37

A form of property ownership in which several buyers purchase interests in real estate with each party having the right to use the property and facilities for a designated period of time.

Question 38

NIMBY

Answer 38

The mnemonic for Not In My Backyard.

Question 39

Note

Answer 39

A signed instrument acknowledging the existence of a debt and the promise to pay. An evidence of a debt.

Question 40

pro rata

Answer 40

In proportion; according to a certain percentage or proportion of a whole.

Question 41

Pro-Rata Share

Answer 41

The equitable distribution of expenses among tenants for the operating expenses of a building, generally based on the percentage of the property occupied by the tenant.

Question 42

Probate

Answer 42

A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; when there is no valid will, a judicial proceeding in which an administrator is appointed to distribute the estate to heirs according to the laws of intestate succession. The legal process to prove a will is valid.

Question 43

probate sale

Answer 43

A court-approved sale of the property of a deceased person.

Question 44

Promulgate

Answer 44

To publish or make laws known.

Question 45

turnkey projects

Answer 45

Investors purchase projects that are ready for occupancy.

Question 46

Uniform Commercial Code (UCC)

Answer 46

A general set of laws adopted by most states with the purpose of providing uniformity and fairness in commercial transactions, including the sale and financing of personal property.