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Real Estate > Definitions > Flashcards

Definitions Flashcards

1
Q

Estoppel

A

Principal does not stop an individual from representing their interests

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2
Q

Fee Simple

A

owns property unconditionally and passed down in family

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3
Q

Ownership in Severalty

A

Title in only 1 person’s name

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4
Q

Joint Tenancy

A

co-ownership by 2+ people with the “right of survivorship”

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5
Q

Tenancy in Common

A

co-ownership by 2+ people without the “right of survivorship”

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6
Q

Tenancy by Entirety

A

co-ownership limited to married couples

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7
Q

Leaseholds Estates: right of possession but not the title

A
  1. Estate for years: fixed period of time. when lease term ends, rental agreement is terminated. Most residential leases are this
  2. periodic estate: automatically renews itself, unless otherwise stated before lease ends.
  3. estate at will: unknown period of time. open-ended estate
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8
Q

Easement in Gross

A

right of use in the land of another without requirement of the holder of the right own that land

  • AKA: commercial easement in gross
  • commonly used by utility companies
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9
Q

Conveyance

A

Transfer of title of land from one to another

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10
Q

Abstract of Title

A

a summary of all links in chain of title

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11
Q

Proration

A

settlement costs between seller and buyer.

ex: RE taxes, fuel, sewage, survey, water, rent, security deposits

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12
Q

Mortgagor

A

Borrower

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13
Q

Mortgagee

A

Lender

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14
Q

Gross Lease

A

Landlord pays all expenses (residential lease)

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15
Q

Net Lease

A

Tenant pays some or all expenses.

ex: Triple Net Lease
- Commonly Commercial leases: large company→Triple Net Lease

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16
Q

Percentage Lease

A

rent based on volume or percentage of sales. Used in retail spaces.

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17
Q

Ground Lease (AKA: Land Lease)

A

Long term lease on unimproved land.

-Used for construction purposes

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18
Q

Loft Lease

A
  • Open unfinished space

- rental of floor space - not divided into rooms

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19
Q

Graduated Lease

A
  • Rent changes over the lease term

- Stair step fashion

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20
Q

Usable Square Footage

A

Area actually occupied by commercial tenant

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21
Q

Rentable Square Footage

A

Total area of space, some that cannot be used.

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22
Q

Loss Factor

A

Difference between Rentable Square Footage and Usable Square Footage

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23
Q

Net Operating Income (NOI)

A

Gross Income minus operating expenses

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24
Q

Capitalization Rate

A

Annual return investor expects from commercial property

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25
Q

Portfolio Income

A

Interest, Annuities, Dividends, Royalties

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26
Q

Straight Line Depreciation

A
  • Residential ↓ 27.5 years

- Commercial ↓ 39 years

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27
Q

Capital Gain

A

Profit realized from sale of any capital investment in real estate

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28
Q

Real Property

A

land and fixtures permanently attached

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29
Q

Personal Property

A

Not permanently fixed property

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30
Q

Uni-Lateral Contract

A

one-sided agreement

example: open listing contract

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31
Q

Novation

A

Replacing an obligation with a new obligation

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32
Q

Reformation

A

a doctrine that permits the court to rewrite a contract

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33
Q

Negative Amortization

A

monthly payment is less than full interest and does not pay any principal. The amount you owe will still go up because you are not paying enough to cover the interest

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34
Q

Buydown (Discount Points)

A

allows borrower to obtain a lower interest rate by paying additional points to the lender

35
Q

Zoning Board of Appeals

A
  • Maintain essential character of neighborhoods
  • Interprets zoning ordinances
  • responsible for granting variances
36
Q

Eminent Domain

A

The Right to take land for public use by the government. The property owner must receive a fair compensation.

37
Q

Condemnation

A

the Act of taking land

38
Q

Market Value

A

Probable price

39
Q

Market Price

A

Actual selling price

40
Q

Direct Costs

A

Labor and Materials

41
Q

Municipal’s Engineers Office

A

Estimate cost of paving, sewers, and sidewalks

42
Q

Actual Cash Value

A

Replacement cost minus depreciation

43
Q

Replacement Cost

A

Replacement cost in total for new item

44
Q

Escalation Clause

A

Allows landlord to raise rent during lease term

45
Q

Pro-forma

A

Accounting statement that forecasts income and expenses

-used by investors to estimate rate of return for a property

46
Q

Tax Shelters

A

Reducing payments to tax collecting entities

47
Q

Condominiums

A

Real Property

  • receive deed at closing
  • considered freehold estate
48
Q

Cooperatives (Co-Op)

Board of Directors

A

NOT Real Property

  • receives preprietary lease at closing - personal property
  • considered leasehold estate
49
Q

Right of First Refusal

A

Opportunity to buy condominium when it goes up for sale

50
Q

Attorney General

A

Prosecutes criminal actions for violations of real property law

51
Q

Vicarious Liability

A

A party is held accountable for a third party’s mistake

EX: Broker and salesperson

52
Q

1 Acre

A

43,560 Sq. Feet

53
Q

1 Hectare

A

3.47 Acres

54
Q

Exclusive Right to Sell Agreement

A

The seller must work exclusively with the broker to sell their property. The broker is entitled to a commission even if the seller finds a buyer themselves.

55
Q

Exclusive Agency Agreement

A

The seller must work exclusively with the broker to sell their property, BUT the seller does not have to pay the broker commission if they find a buyer themselves

56
Q

Open Listing Contract

A

The seller is allowed to work with any broker who brings them a buyer. Only the broker who brings a buyer is entitled to commission. (unilateral contract)

57
Q

Net Listing

A

method of establishing the listing broker’s commission as all money above a specified net amount to the seller. Illegal in New York

58
Q

Easement (right of way)

A

The right to cross or use another persons property for a specified purpose

59
Q

Easement by Necessity

A

when a property owner is landlocked and needs to cross and adjacent property to get access to their property

60
Q

Easement by Prescription

A

Obtained by use of land without the owners permission for a legally prescribed length of time

61
Q

Easement by implication

A

Arises by implication from the conduct of parties.
Ex: If a landowner sells mineral rights to a company, that company has an easement by implication to go onto the property to do mining.

62
Q

Encroachments

A

a building, or part of a building, or obstruction which intrudes upon the property of another.
Ex: A fence that crosses onto the neighbors property line or a tree that has grown over the property line

63
Q

Liens

A

A claim or charge against the property of another.

64
Q

Usury Laws

A

Governs the amount of interest that can be charged on a loan.

65
Q

Non-Conforming Use

A

Pre-existing use of a property that no longer complies with the current zoning regulations. The non-confirming use is “grandfathered” in.

66
Q

Escheat

A

When the property owner died with no will or heirs, the property reverts to the state

67
Q

Percolation

A

The movement of water through soil

68
Q

Comparative Market Analysis (CMA)

A

Determines property value by comparing other properties currently on the market. NOT an appraisal, more an opinion of value.

69
Q

Indirect Costs

A

Costs that support the project such as engineering fees, attorney fees, etc.

70
Q

Obsolescence

A

Cause of depreciation due to new inventions, changes in design, etc.

71
Q

Assessed Value

A

Used to calculate property taxes. A percentage of the market value.

72
Q

Ad Valorem

A

Property is taxed according to value. In NY, the real property tax is based on the Fair Market Value of real property

73
Q

Assessor

A

Calculates property taxes

74
Q

Condop

A

A building that includes condominium and cooperative ownership in the same structure. The building is part condo, part co-op

75
Q

Offering Plan

A

Developer of a new condominium or co-op building must file an offering plan with the NY Attorney General’s office.

76
Q

Prospectus (Red Herring)

A

The first part of the Attorney Generals review of the offering plan. The attorney general can suggest any changes to the project. Once the attorney general accepts the prospectus, it is known as a black book or offering plan.

77
Q

CPS-1 (Cooperative Policy Statement)

A

Used by real estate developers to test the market before building a condominium or Co-Op.

  • must be filed with attorney general
  • statement includes rules on how the development may be advertised. The developer cannot declare a firm price.
  • period lasts 120 days from the date of acceptance of the CPS statement by the attorney general, but can extend up to an additional 60 days. developers can advertise and take names of people who are interested but cannot take deposits or sell the properties.
78
Q

Leverage

A

Use of borrowed capital (mortgage) to increase the potential return of an investment. also known as “other people’s money”

79
Q

Adjusted Basis

A

The original cost or other basis plus certain additions and minus certain deductions such as depreciation and casualty losses

80
Q

Permitted Tax Deductions

A

Property Taxes

Mortgage interest

81
Q

Non-Tax Deductible Closing Costs

A 
Appraisal fees
Notary fees
Preparation costs for the mortgage
Mortgage insurance premiums
VA Funding fees
82
Q

Operating Statement

A

used by property managers to project the net operating income for the property. Defines all income and expenses for the property.

83
Q

Stabilized Budget

A

Forecast of income and expenses projected over a short period of time

84
Q

Capital Reserve Budget

A

Money set aside by a property owner for long-term capital expenditures to a property. also knows as a replacement reserve.

Real Estate (4 decks)

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