Commercial/Investment A Flashcards
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.
1031 Exchange
An act in which tenants acknowledge their obligations to a new landlord.
Attornment
The minimum amount of rent indicated in a lease.
Base Rent
All costs incurred in maintaining the common areas of a commercial property including parking lot sweeping and repair, snow removal, common utilities, landscaping, and other maintenance tasks. These costs are usually prorated among all tenants.
CAM (Common Area Maintenance)
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 US.
Consumer Price Index (CPI)
Lease clause that provides for an increase in rent to reflect increases in expenses paid by the landlord, such as real estate taxes, operating costs, and cost of living expenses.
Escalation Clause
Legal doctrine that prevents a person from asserting rights or facts inconsistent with earlier actions or statements
Estoppel
Commission payment is determined by an agreement in which a fixed dollar amount is paid for the performance of specific real estate services; payment usually requires the successful completion of the transaction.
Fixed Fee
Commission payment that is determined by multiplying the agreed upon percentage by the actual sale price of the property.
Fixed Percentage
A possessory interest in real property of uncertain (and often unlimited) duration; an ownership estate in real property; either a fee simple or life estate. Holder of freehold estate has title.
Freehold Estate
A lease that specifies step-by-step rent increases, generally paid at set intervals
Graduated Lease
Commission payment in which the compensation percentages are set on a graduated scale.
Graduated Percentage
A lease for which the tenant pays a fixed amount to the landlord and the landlord is responsible for paying all expenses.
Gross Lease
Licensees are paid based on an advanced payment agreement or retainer or a fee based on hours worked. In these situations the retainer or _____ ____ is usually paid even when transactions do not close.
Hourly Fee
A lease in which the amount of the rent is tied to some common index indicator such as the Consumer Price Index or the Wholesale Price Index. As the agreed upon index increases, the rent goes up by the same percent of change.
Index Lease
Lease under which the tenant leases only the land from the owner, but the tenant owns the building. Also called Ground Lease.
Land Lease
An interest that gives the holder, the tenant, a temporary right to exclusive possession of the estate, without title.
Leasehold Estate
The effect borrowed funds have on investment returns.
Leverage
The difference between rentable square footage and usable square footage.
Loss factor
Lease for which tenants pay all taxes, insurance, etc., plus utilities and rent.
Net Lease
An additional operating cost that is passed from a property owner to a tenant, such as when property taxes go up.
Pass-Through
Lease under which a tenant pays a percentage of gross sales in addition to rent.
Percentage Lease
Ties the rent escalation to the wages of the building’s cleaning and building maintenance personnel (called “porters”). The formula provides tenant’s rent will increase a specific amount per square foot for a specified increase in the porter’s hourly wages.
Porter’s Wage Escalation Formula
An interest in property that entitles the holder to possess and occupy the property, now or in the future; an estate, which may be either a freehold or leasehold.
Possessory Interest
This fees are typically paid when a licensee is working with a tenant representative and is paid a fee for finding space for the tenant. ________ fees are often fixed fees but could be percentage based.
Procurement Fee
An income statement where certain amounts are hypothetical, such as the anticipation of lease income under certain circumstances or if certain events occur.
Pro Forma
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.
Pro-Rata Share
The “useable” square feet plus a pro-rata portion of the common areas shared among all of the tenants such as corridors, lobbies, and restrooms. This is the number typically used for calculating base rent. Also called Gross Square Feet.
Rentable Square Feet
When a tenant transfers only part of his or her right of possession or other interest in leased property to another person for part of the remaining lease term (as opposed to an assignment, where the tenant gives up possession for the entire remainder of the lease term). Compare: Assignment
Sublease
A contract clause that gives a mortgage recorded at a later date the right to take priority over an earlier recorded mortgage or existing lease.
Subordination Clause
A lease in which the tenant pays all the expenses associated with the property (property tax, insurance, maintenance) in addition to rent. Also called Net-Net-Net.
Triple Net Lease
The space actually available and useable for a tenant’s personnel, furniture, and equipment. The actual floor space inside the exterior walls of leased premises. Space the tenant can physically use inclusive of interior walls and columns. Also called Net Square Feet.
Useable Square Feet
Fair housing protected classes:
Friends car- FRNDS CR minus vowels
Federal Protected Classes
Familial status
Race
National origin
Disability
Sex
Color
Religion
Fair housing additional NY State protected classes:
MAMS
Marital (status)
Age
Military (status)
Sexual (Orientation)
Fair housing New York City additional protected classes:
CALP
Citizenship
Alien (status)
Lawful (income)
Partnerships (status)
Commercial real estate also referred to as investment real estate types:
Residential (single-family, multi-family, large multi-family)
Office buildings
Retail
Industrial
Mixed use
Unimproved land
