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Improvements:
In the context of leasing, the term typically
refers to the improvements made to or inside a building but may include any
permanent structure or other development, such as a street, sidewalks,
utilities, etc. See also “Leasehold Improvements”. See also “Leasehold
Improvements” and "Tenant Improvements".
Indirect Costs:
Development costs, other than material and
labor costs which are directly related to the construction of improvements,
including administrative and office expenses, commissions, architectural,
engineering and financing costs.
Inventory:
The total amount of rentable square feet of
existing and any forthcoming space (whether it be a tenant vacating space or new
buildings coming on the market), in a given category, for example, all warehouse
space in a specified submarket. Inventory refers to all space within a certain
proscribed market without regard to its availability or condition, and
categories can include all types of leased space such as office, flex, retail
and warehouse space.
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Judgment:
The final decision of a court resolving a dispute
and determining the rights and obligations of the parties. Money judgments, when
recorded, become a lien on real property of the defendant.
Judgment Lien:
An encumbrance that arises by law when a
judgment for the recovery of money attaches to the debtor’s real estate. See
also "Lien".
Just Compensation:
Compensation which is fair to both the
owner and the public when property is taken for public use through condemnation
(eminent domain). The theory is that in order to be “just”, the property owner
should be no richer or poorer than before the taking.
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Landlord’s Lien:
A type of lien that can be created by
contract or by operation of law. Some examples are:
(1) a contractual landlord’s
lien as might be found in a lease agreement; (2) a statutory landlord’s lien;
and (3) landlord’s remedy of distress (or right of distraint), which in not
truly a lien but has a similar effect. See also "Lien".
Landlord’s Lien or Warrant:
A warrant from a landlord to
levy upon a tenant’s personal property (e.g., furniture, etc.) and to sell this
property at a public sale to compel payment of the rent or the observance of
some other stipulation in the lease.
Lease:
An agreement whereby the owner of real property
(i.e., landlord/lessor) gives the right of possession to another (i.e.,
tenant/lessee) for a specified period of time (i.e., term) and for a specified
consideration (i.e., rent).
Lease Agreement:
The formal legal document entered into
between a Landlord and a Tenant to reflect the terms of the negotiations between
them; that is, the lease terms have been negotiated and agreed upon, and the
agreement has been reduced to writing. It constitutes the entire agreement
between the parties and sets forth their basic legal rights.
Lease Commencement Date:
The date usually constitutes the
commencement of the term of the Lease for all purposes, whether or not the
tenant has actually taken possession so long as beneficial occupancy is
possible. In reality, there could be other agreements, such as an Early
Occupancy Agreement, which have an impact on this strict definition.
Leasehold 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 Landlord. See also “Tenant Improvements”.
Legal Description:
A geographical description identifying a
parcel of land by government survey, metes and bounds, or lot numbers of a
recorded plat including a description of any portion thereof that is subject to
an easement or reservation.
Legal Owner:
The term is in technical contrast to equitable
owner. The legal owner has title to the property, although the title may
actually carry no rights to the property other than as a lien. See also “Lien”.
Letter Of Attornment:
A letter from the grantor to a
tenant, stating that a property has been sold, and directing rent to be paid to
the grantee (buyer). See also “Attorn”.
Letter Of Credit:
A commitment by a bank or other person,
made at the request of a customer, that the issuer will honor drafts or other
demands for payment upon full compliance with the conditions specified in the
letter of credit. Letters of credit are often used in place of cash deposited
with the landlord in satisfying the security deposit provisions of a lease.
Letter Of Intent:
A preliminary agreement stating the
proposed terms for a final contract. They can be "binding" or "non-binding".
This is the threshold issue in most litigation concerning letters of intent. The
parties should always consult their respective legal counsel before signing any
Letter of Intent.
Lien:
A claim or encumbrance against property used to
secure a debt, charge or the performance of some act. Includes liens acquired by
contract or by operation of law. Note that all liens are encumbrances but all
encumbrances are not liens.
Lien Waiver (Waiver of Liens):
A waiver of mechanic’s lien
rights, signed by a general contractor and his subcontractors, that is often
required before the general contractor can receive a draw under the payment
provisions of a construction contract. May also be required before the owner can
receive a draw on a construction loan.
Like-Kind Property:
A term used in an exchange of property
held for productive use in a trade or business or for investment. Unless cash is
received, the tax consequences of the exchange are postponed pursuant to Section
1031 of the Internal Revenue Code.
Limited Partnership:
A type of partnership, created under
state law, comprised of one or more general partners who manage the business and
who are personally liable for partnership debts, and one or more special or
limited partners who contribute capital and share in profits but who take no
part in running the business and incur no liability over and above the amount
contributed. See also "General Partner".
Listing 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”.
Long Term Lease:
In most markets, this refers to a lease
whose term is at least three years from initial signing until the date of
expiration or renewal option.
Lot:
Generally, one of several contiguous parcels of land
making up a fractional part or subdivision of a block, the boundaries of which
are shown on recorded maps and “plats”.
Low Rise:
A building with fewer than 4 stories above ground
level.
Lump-Sum Contract:
A type of construction contract
requiring the general contractor to complete a building or project for a fixed
cost normally established by competitive bidding. The contractor absorbs any
loss or retains any profit.
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Maker:
One who creates or executes a promissory note and
promises to pay the note when it becomes due..
Market Rent:
The rental income that a property would
command on the open market with a landlord and a tenant ready and willing to
consummate a lease in the ordinary course of business; indicated by the rents
that landlords were willing to accept and tenants were willing to pay in recent
lease transactions for comparable space.
Market Study:
A forecast of future demand for a certain
type of real estate project that includes an estimate of the square footage that
can be absorbed and the rents that can be charged. Also called “Marketability
Study”.
Marketable Title:
A title which is free from encumbrances
and could be readily marketed (i.e., sold) to a reasonably intelligent purchaser
who is well informed of the facts and willing to accept such title while
exercising ordinary business prudence. See also “Encumbrance”.
Market Value:
The highest price a property would command in
a competitive and open market under all conditions requisite to a fair sale with
the buyer and seller each acting prudently and knowledgeably in the ordinary
course of trade.
Master Lease:
A primary lease that controls subsequent
leases and which may cover more property than subsequent leases. An Executive
Suite operation is a good example in that a primary lease is signed with the
landlord and then individual offices within the leased premises are leased to
other individuals or companies.
Mechanic’s Lien:
A claim created by state statutes for the
purpose of securing priority of payment of the price and value of work performed
and materials furnished in constructing, repairing or improving a building or
other structure, and which attaches to the land as well as to the buildings and
improvements thereon.
Metes and Bounds:
The boundary lines of land, with their
terminal points and angles, described by listing the compass directions and
distances of the boundaries. Originally, metes referred to distance and bounds
referred to direction.
Mid-Rise:
A building with between four and eight stories
above ground level although in a Central Business District, this might extend to
buildings up to twenty-five stories.
Mixed-Use:
Space within a building or project providing for
more than one use (i.e., a loft or apartment project with retail, an apartment
building with office space, an office building with retail space).
Mortgage:
A written instrument creating an interest in real
estate and that provides security for the performance of a duty or the payment
of a debt. The borrower (i.e., mortgagor) retains possession and use of the
property.
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Net Absorption:
The square feet leased in a specific
geographic area over a fixed period-of-time after deducting space vacated in the
same area during the same period. See also “Gross Absorption”.
Net Lease:
A lease in which there is a provision for the
tenant to pay, in addition to rent, certain costs associated with the operation
of the property. These costs may include property taxes, insurance, repairs,
utilities, and maintenance. There are also “NN” (double net) and “NNN” (triple
net) leases. The difference between the three is the degree to which the tenant
is responsible for operating costs. See also “Gross Lease”.
Net Rentable Area:
The floor area of a building that
remains after the square footage represented by vertical penetrations, such as
elevator shafts, etc., has been deducted. Common areas and mechanical rooms are
included and there are no deductions made for necessary columns and projections
of the building. (This is by the Building Owner and Manager Association - BOMA,
Standard).
Net Square Footage (S.F.):
The space required for a
function or staff position. Also see "Circulation Factor and "Usable Square
Footage".
Non-Compete Clause:
A clause that can be inserted into a
lease specifying that the business of the tenant is exclusive in the property
and that no other tenant operating the same or similar type of business can
occupy space in the building. This clause benefits service-oriented businesses
desiring exclusive access to the building’s population (i.e. travel agent, deli,
etc.).
Non-Recourse Loan:
A loan which bars a lender from seeking
a deficiency judgment against a borrower in the event of default. The borrower
is not personally liable if the value of the collateral for the loan falls below
the amount required to repay the loan.
Normal Wear and Tear:
The deterioration or loss in value
caused by the tenant’s normal and reasonable use. In many leases the tenant is
not responsible for “normal wear and tear”.
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Open Space:
An unimproved area of land or water, or
containing only such improvements as are appropriate to the use and enjoyment of
the open area, and dedicated for public or private use or enjoyment or for the
use and enjoyment of owners and occupants of land adjoining or neighboring such
open spaces.
Operating Cost Escalation:
Although there are many
variations of escalation clauses, all are intended to adjust rents by reference
to external standards such as published indexes, negotiated wage levels, or
expenses related to the ownership and operation of buildings. During the past
thirty years, Landlords have developed the custom of separating the base rent
for the occupancy of the leased premises from escalation rent. This technique
enables the landlord to better ensure that the “net” rent to be received under
the lease will not be reduced by the normal costs of operating and maintaining
the property. The landlord’s definition of Operating Expenses is likely to be
broad, covering most costs of operation of the building. Most landlords pass
through proper and customary charges, but in the hands of an overly aggressive
landlord, these clauses can operate to impose obligations which the tenant would
not willingly or knowingly accept.
Operating Expenses:
The actual costs associated with
operating a property including maintenance, repairs, management, utilities,
taxes and insurance. A landlord’s definition of operating expenses is likely to
be quite broad, covering most aspects of operating the building.
Operating Expense Escalation:
Although there are many
variations of operating expense escalation clauses, all are intended to adjust
rents by reference to external standards such as published indexes, negotiated
wage levels, or expenses related to the ownership and operation of buildings.
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Parking Ratio or Index:
The intent of this ratio is to
provide a uniform method of expressing the amount of parking that is available
at a given building. Dividing the total rentable square footage of a building by
the building’s total number of parking spaces provides the amount of rentable
square feet per each individual parking space (expressed as 1/xxx or 1 per xxx).
Dividing 1000 by the previous result provides the ratio of parking spaces
available per each 1000 rentable square feet (expressed as x per 1000).
Partial Taking:
The taking of part (a portion) of an
owner’s property under the laws of eminent domain.
Pass Throughs:
Refers to the tenant's pro rata share of
operating expenses (i.e. taxes, utilities, repairs) paid in addition to the base
rent.
Percentage Lease:
Refers to a provision of the lease
calling for the landlord to be paid a percentage of the tenant's gross sales as
a component of rent. There is usually a base rent amount to which "percentage"
rent is then added. This type of clause is most often found in retail leases.
Performance Bond:
A surety bond posted by a contractor
guaranteeing full performance of a contract with the proceeds to be used to
complete the contract or compensate for the owner’s loss in the event of
nonperformance.
Plat (Plat Map):
Map of a specific area, such as a
subdivision, which shows the boundaries of individual parcels of land (e.g.
lots) together with streets and easements.
Power Of Sale:
Clause inserted in a mortgage or deed of
trust giving the mortgagee (or trustee) the right and power, on default in the
payment of the debt secured, to advertise and sell the property at public
auction.
Precast Concrete:
Concrete components (i.e. walls) of a
building which are fabricated at a plant site and then shipped to the site of
construction.
Preleased:
Refers to space in a proposed building that has
been leased before the start of construction or in advance of the issuance of a
Certificate of Occupancy.
Prime Space:
This typically refers to first generation
(new) space that is currently available for lease and which has never before
been occupied by a tenant.
Prime Tenant:
The major tenant in a building or, the major
or anchor tenant in a shopping center serving to attract other, smaller tenants
into adjacent space because of the customer traffic generated.
Pro rata:
Proportionately; according to measure, interest,
or liability. In the case of a tenant, the proportionate share of expenses for
the maintainenance and operation of the property. See also "Common Area" and
"Operating Expenses".
Punch List:
An itemized list, typically prepared by the
architect or construction manager, documenting incomplete or unsatisfactory
items after the contractor has notified the owner that the tenant space is
substantially complete.
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