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Quitclaim Deed:
A deed operating as a release that is
intended to pass any title, interest, or claim that the grantor may have in the
property, but not containing any warranty or professing that such title is
valid.
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Raw Land:
Unimproved land that remains in its natural
state.
Raw Space:
Unimproved "shell space" in a building.
REO (Real Estate Owned):
Real estate that has come to be
owned by a lender, including real estate taken to satisfy a debt. Includes real
estate acquired by lenders through foreclosure or, in settlement of some other
obligation.
Real Property:
Land, and generally whatever is erected or
affixed to the land, such as buildings, fences, and including light fixtures,
plumbing and heating fixtures, or other items which would be personal property
if not attached.
Recapture:
(1) When the IRS recovers the tax benefit of a
deduction or a credit previously taken by a taxpayer, which is often a factor in
foreclosure since there is a forgiveness of debt. (2) As used in leases, a
clause giving the lessor a percentage of profits above a fixed amount of rent;
or in a percentage lease, a clause granting the landlord a right to terminate
the lease if the tenant fails to realize minimum sales.
Recourse:
The right of a lender, in the event of a default
by the borrower, to recover against the personal assets of a party who is
secondarily liable for the debt (e.g. endorser or guarantor).
Rehab:
An extensive renovation of a building or project
which is intended to cure obsolescence of such building or project.
Renewal Option:
A clause giving a tenant the right to
extend the term of a lease, usually for a stated period of time and at a rent
amount as provided for in the option language.
Rent:
Compensation or fee paid, usually periodically (i.e.
monthly rent payments, for the occupancy and use of any rental property, land,
buildings, equipment, etc.
Rent Commencement Date:
The date on which a tenant begins
paying rent. The dynamics of a marketplace will dictate whether this date
coincides with the lease commencement date or if it commences months later
(i.e., in a weak market, the tenant may be granted several months free rent). It
will never begin before the lease commencement date.
Rentable Square Footage:
Rentable Square Footage equals the
Usable Square Footage plus the tenant’s pro rata share of the Building Common
Areas, such as lobbies, public corridors and restrooms. The pro-rata share,
often referred to as the Rentable/Usable (R/U) Factor, will typically fall in a
range of 1.10 to 1.16, depending on the particular building. Typically, a full
floor occupancy will have an R/U Factor of 1.10 while a partial floor occupancy
will have an R/U Factor of 1.12 to 1.16 times the Usable Area.
Rentable/Usable Ratio:
That number obtained when the Total
Rentable Area in a building is divided by the Usable Area in the building. The
inverse of this ratio describes the proportion of space that an occupant can
expect to actually utilize/physically occupy.
Rental Concession:
Concessions a landlord may offer a
tenant in order to secure their tenancy. While rental abatement is one form of a
concession, there are many others such as:
increased tenant improvement
allowance, signage, lower than market rental rates and moving allowances are
only a few of the many. See also "Abatement".
Rent-Up Period:
That period of time, following construction
of a new building, when tenants are actively being sought and the project is
approaching its stabilized occupancy.
Representation Agreement:
An agreement between the owner of
a property and a real estate broker giving the broker the authorization to
attempt to sell or lease the property at a certain price and terms in return for
a commission, set fee or other form of compensation. See also “Exclusive Listing
Agreement”.
Request for Proposal (“RFP”):
The formalized Request for
Proposal represents a compilation of the many considerations that a tenant might
have and should be customized to reflect their specific needs. Just as the
building’s standard form lease document represents the landlord’s “wish list”,
the RFP serves in that same capacity for the tenant.
Right Of First Refusal:
See “First Refusal Right”.
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Sale-Leaseback:
An arrangement by which the owner occupant
of a property agrees to sell all or part of the property to an investor and then
lease it back and continue to occupy space as a tenant. Although the lease
technically follows the sale, both will have been agreed to as part of the same
transaction.
Second Mortgage:
A mortgage on property that ranks below a
first mortgage in priority. Properties may have two, three, or more mortgages,
deeds of trust, or land contracts as liens at the same time. Legal sequence
priority, indicated by the date of recording, determines the designation first,
second, third, etc.
Second Generation or Secondary Space:
Refers to previously
occupied space that becomes available for lease, either directly from the
landlord or as sublease space. See also "First Generation Space.
Security Deposit:
A deposit of money by a tenant to a
landlord to secure performance of a lease. This deposit can also take the form
of a Letter of Credit or other financial instrument.
Seisen (Seizen):
Possession of real property under claim of
freehold estate. This term originally referred to the completion of feudal
investiture by which a tenant was admitted into the feud and performed the
rights of homage and fealty. Presently it has come to mean possession under a
legal right (usually a fee interest). As the old doctrine of corporeal
investiture is no longer in force, the delivery of a deed gives seisin in law.
Setback:
The distance from a curb, property line or other
reference point, within which building is prohibited.
Setback Ordinance:
Setback requirements are normally
provided for by ordinances or building codes. Provisions of a zoning ordinance
regulate the distance from the lot line to the point where improvements may be
constructed.
Shell Space:
The interior condition of the tenant's usable
square footage when it is without improvements or finishes. While existing
improvements and finishes can be removed, thus returning space in an older
building to its "shell" condition, the term most commonly refers to the
condition of the usable square footage after completion of the building's
"shell" construction but prior to the build out of the tenant's space. Shell
construction typically denotes the floor, windows, walls and roof of an enclosed
premises and may include some HVAC, electrical or plumbing improvements but not
demising walls or interior space partitioning. In a new multi-tenant building,
the common area improvements, such as lobbies, restrooms and exit corridors may
also be included in the shell construction. With a newly constructed office
building, there will often be a distinction between improvements above and below
the ceiling grid. In a retail project, all or a portion of the floor slab is
often installed along with the tenant improvements so as to better accommodate
tenant specific under-floor plumbing requirements.
Site Analysis:
The study of a specific parcel of land which
takes into account the surrounding area and is meant to determine its
suitability for a specific use or purpose.
Site Development:
The installation of all necessary
improvements, (i.e. installment of utilities, grading, etc.), made to a site
before a building or project can be constructed upon such site.
Site Plan:
A detailed plan which depicts the location of
improvements on a parcel of land which also contains all the information
required by the zoning ordinance.
Slab:
The exposed wearing surface laid over the structural
support beams of a building to form the floor(s) of the building or laid
slab-on-grade in the case of a non-structural, ground level concrete slab.
Soft Cost:
That portion of an equity investment other than
the actual cost of the improvements themselves (i.e. architectural and
engineering fees, commissions, etc.) and which may be tax-deductible in the
first year. See also “Hard Cost”.
Space Plan:
A graphic representation of a tenant’s space
requirements, showing wall and door locations, room sizes, and sometimes
includes furniture layouts. A preliminary space plan will be prepared for a
prospective tenant at any number of different properties and this serves as a
“test-fit” to help the tenant determine which property will best meet its
requirements. When the tenant has selected a building of choice, a final space
plan is prepared which speaks to all of the landlord and tenant objectives and
then approved by both parties. It must be sufficiently detailed to allow an
accurate estimate of the construction costs. This final space plan will often
become an exhibit to any lease negotiated between the parties.
Special Assessment:
Any special charge levied against real
property for public improvements (e.g., sidewalks, streets, water and sewer,
etc.) that benefit the assessed property.
Specific Performance:
A requirement compelling one of the
parties to perform or carry out the provisions of a contract into which he has
entered.
Speculative Space:
Any tenant space that has not been
leased before the start of construction on a new building. See also "First
Generation Space".
Step-Up Lease (Graded Lease):
A lease specifying set
increases in rent at set intervals during the term of the lease.
Straight Lease (Flat Lease):
A lease specifying the same, a
fixed amount, of rent that is to be paid periodically during the entire term of
the lease. This is typically paid out in monthly installments.
Strip Center:
Any shopping area, generally with common
parking, comprised of a row of stores but smaller than the neighborhood center
anchored by a grocery store.
Subcontractor:
A contractor working under and being paid by
the general contractor. Often a specialist in nature, such as an electrical
contractor, cement contractor, etc.
Subdivision Plat:
A detailed drawing which depicts the
manner in which a parcel of land has been divided into two or more lots. It
contains engineering considerations and other information required by the local
authority.
Subordination Agreement:
As used in a lease, the tenant
generally accepts the leased premises subject to any recorded mortgage or deed
of trust lien and all existing recorded restrictions, and the landlord is often
given the power to subordinate the tenant's interest to any first mortgage or
deed of trust lien subsequently placed upon the leased premises.
Surety:
One who at the request of another, and for the
purpose of securing to him a benefit, voluntarily binds himself to be obligated
for the debt or obligation of another. Although the term includes guarantor and
the terms are commonly, though mistakenly, used interchangeably, surety differs
from guarantor in a variety of respects.
Surface Rights:
A right or easement granted with mineral
rights, enabling the possessor of the mineral rights to drill or mine through
the surface.
Survey:
The process by which a parcel of land is measured
and its boundaries and contents ascertained.
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Taking:
A common synonym for condemnation or any actual or
material interference with private property rights but it is not essential that
there be physical seizure or appropriation.
Tax Base:
The assessed valuation of all the real property
that lies within the jurisdiction of a taxing authority, which is then
multiplied by the tax rate or mill levy to determine the amount of tax due.
Tax Lien:
A statutory lien, existing in favor of the state
or municipality, for nonpayment of property taxes which attaches only to the
property upon which the taxes are unpaid.
Tax roll:
A list or record containing the descriptions of
all land parcels located within the county, the names of the owners or those
receiving the tax bill, assessed values and tax amounts.
Tenant (Lessee):
One who rents real estate from another and
holds an estate by virtue of a lease.
Tenant At Will:
One who holds possession of premises by
permission of the owner or landlord, the characteristics of which are an
uncertain duration (i.e. without a fixed term) and the right of either party to
terminate on proper notice.
Tenant Improvements:
Improvements made to the leased
premises by or for a tenant. Generally, especially in new space, part of the
negotiations will include in some detail the improvements to be made in the
leased premises by the landlord. See also “Leasehold Improvements”,
“Workletter”.
Tenant Improvement (“TI”) Allowance or Work Letter:
Defines
the fixed amount of money contributed by the landlord toward tenant
improvements. The tenant pays any of the costs that exceed this amount. Also
commonly referred to as "Tenant Finish Allowance.
“Time Is Of The Essence”:
Means that performance by one
party within the period specified in the contract is essential to require
performance by the other party.
Title:
The means whereby the owner of lands has the just
and full possession of real property.
Title Insurance:
A policy issued by a title company after
searching the title and which insures against loss resulting from defects of
title to a specifically described parcel of real property, or from the
enforcement of liens existing against it at the time the title policy is issued.
Title Search:
A review of all recorded documents affecting
a specific piece of property to determine the present condition of title.
Total Inventory:
The total amount of square footage of a
type of property (i.e. office, industrial, retail, etc.) within a geographical
area, whether vacant or occupied. This normally includes owner-occupied space.
Trade Fixtures:
Personal property that is attached to a
structure (i.e. the walls of the leased premises) that are used in the business.
Since this property is part of the business and not deemed to be part of the
real estate, it is typically removable upon lease termination.
Triple Net (NNN) Rent:
A lease in which the tenant pays, in
addition to rent, certain costs associated with a leased property, which may
include property taxes, insurance premiums, repairs, utilities, and
maintenances. There are also “Net Leases" and “NN” (double net) leases,
depending upon the degree to which the tenant is responsible for operating
costs. See also “Gross Lease”.
Turn Key Project:
The construction of a project in which a
third party, usually a developer or general contractor, is responsible for the
total completion of a building (including construction and interior design) or,
the construction of tenant improvements to the customized requirements and
specifications of a future owner or tenant.
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Under Construction:
When construction has started but the
Certificate of Occupancy has not yet been issued.
Under Contract:
A property for which the seller has
accepted the buyer’s offer to purchase is referred to as being “under contract”.
Generally, the prospective buyer is given a certain period of time in which to
perform its due diligence and finalize financing arrangements. During the period
of time the property is under contract, the seller is precluded from
entertaining offers from other buyers.
Unencumbered:
Describes title to property that is free of
liens and any other encumbrances. Free and clear. See also "Encumbrances.
Unimproved Land:
Most commonly refers to land without
improvements or buildings but can also mean land in its natural state. See also,
“Raw Land”.
Use:
The specific purpose for which a parcel of land or a
building is intended to be used or for which it has been designed or arranged.
Usable Square Footage:
Usable Square Footage is the area
contained within the demising walls of the tenant space. Total Usable Square
Footage equals the Net Square Footage x the Circulation Factor. Also see:
Circulation Factor and Net Square Footage.
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Vacancy Factor:
The amount of gross revenue that pro forma
income statements anticipate will be lost because of vacancies, often expressed
as a percentage of the total rentable square footage available in a building or
project.
Vacancy Rate:
The total amount of available space compared
to the total inventory of space and expressed as a percentage. This is
calculated by multiplying the vacant space times 100 and then dividing it by the
total inventory.
Vacant Space:
Refers to existing tenant space currently
being marketed for lease. This excludes space available for sublease.
Variance:
Refers to permission that allows a property owner
to depart from the literal requirements of a zoning ordinance that, because of
special circumstances, cause a unique hardship. Included would be such things as
the particular physical surroundings, shape or topographical condition of the
property and when compliance would result in a practical difficulty and would
deprive the owner of the reasonable use of the property.
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Warranty of Possession:
This is the old "quiet enjoyment"
paragraph, which of course had nothing to do with noise in and around the leased
premises. It provides a warranty by Landlord that it has the legal ability to
convey the possession of the premises to Tenant; the Landlord does not warrant
that he owns the land. This is the essence of the landlord’s agreement and the
tenant’s obligation to pay rent. This means that if the landlord breaches this
warranty, it constitutes an actual or constructive eviction.
Weighted Average Rental Rates:
The mean proportion or
medial sum made out of the unequal rental rates in two or more buildings within
a market area.
Workletter:
A list of the building standard items that the
landlord will contribute as part of the tenant improvements. Examples of the
building standard items typically identified include:
style and type of doors,
lineal feet of partitions, type and quantity of lights, quality of floor
coverings, number of telephone and electrical outlets, etc. The Workletter often
carries a dollar value but is contrasted with a fixed dollar tenant improvement
allowance that can be used at the tenant’s discretion. See also Leasehold
Improvements and "Tenant Improvements.
Working Drawings:
The set of plans for a building or
project that comprise the contract documents that indicate the precise manner in
which a project is to be built. This set of plans includes a set of
specifications for the building or project.
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Zoning:
The division of a city or town into zones and the
application of regulations having to do with the structural, architectural
design and intended use of buildings within such designated zone (i.e. a tenant
needing manufacturing space would look for a building located within an area
zoned for manufacturing).
Zoning Ordinance:
Refers to the set of laws and
regulations, generally, at the city or county level, controlling the use of land
and construction of improvements in a given area or zone.
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