Quite a few real estate terms are thrown around and have found their way on our day to day lives. Words like carpet area, built up area and super built up area are used interchangeably because at this point asking what they mean would be super embarrassing.If terms such as conveyance, freehold and FSI make your head spin, we have just the thing for you. We’ve curated a list of commonly used terms that shall come in handy when it comes to understanding real estate. We’ve divided the list alphabetically into parts and shall post a few terms at a time for easier understanding.
Let’s begin with :
“As is” Condition
The sale. purchase. lease or conveyance of a property or an item in its existing state, i.e.. without any change, improvement,addition. alteration or repair. Also called “as is where is” in some countries.
Abandonment
The act of voluntarily giving up a right (of ownership or lease or any other right) over a property.
Abatement Notice
A notice served on the owner(s)or occupier(s) of a property from which a private nuisance arises.warning them of the intention to enter on the land in order to abate the nuisance. Absentee Landlord / Owner. Owner of a property who resides elsewhere (usually in another city or country).
Absolute Title
The right of ownership of a legal estate in registered land; a title that is guaranteed by the state that no one has a better title, that is subject to minor or overriding
interests.
Absorption
Actual space leased by tenant in a completed building ,where the tenant has either started operations or fit-outs. Exceptions: If a tenant has started operations in a building that is close to completion. the transaction is considered as absorption.
Abstract
Summary of a lengthy document or piece of writing which contains all or most of the salient points of the original.
Accelerated Depreciation
An accounting term indicating any method of depreciation which allows owners to claim depreciation benefits at rates greater than those calculated under the straight-line method.
Acceleration Clause
A clause in a loan deed or mortgage agreement that allows the lender to demand full and immediate repayment of a loan. It is usually triggered by an event
such as default in the payment of instalments or a change in the ownership.
Accrued Interest
The unpaid interest accumulatedfrom an investment or a loan.
Accumulated Amortisation
The total periodic charge/ expense till date relating to fixed assets since the assets were in operation. Also called Reserve for
Depreciation.
Accumulated Depreciation
A deduction from fixed assets to show the total amount of periodic charges to income. over the estimated useful lives of those assets. Also called Reserve for
Depreciation.
Accumulated Interest
Interest dues that have accumulated as a result of non-payment in the past.
Accumulation Index
Financial Index which measures the total return considering both the price movement and income.
Acquisition Costs
The cost of acquiring a property;includes purchase price and all other allied costs like insurance
and legal fees, brokerage charges EEC
Acre
A unit measure of land. defined by 43,560 square feet or 4,840 square yards or approximately 4.047 square meters. Also referred to as Acreage.
Acre Foot
The volume of water that would cover I acre to a depth of l foot (43,560 cubic feet or l,233 cubic meters.)
Ad Valorem
Literally, according to the value.Used to compute tax/duties on commodities at specified rates on their value. For instance, to a scale of stamp duty, inheritance tax or
property tax.
Adjusted Mortgage Loans (AMLS)
Also called floating rate loans,flexible rate loans, variable rate loans and adjustable rate loans.Here, the rate of interest varies and is adjusted from time to time to coincide with the rate
prevailing in the economy or to a pre-determined peg.
Adjusted Gross Income
Total rental income of a property at full capacity minus amounts that cannot be collected on account of vacancies and other reasons.
Affidavit
A statement or declaration made in writing under oath before a competent (usually court) official.
Agency Agreement (agency listing)
A term describing a listing under which the broker’s commission is protected against a sale by other agents and often by the principal.
Agent
Also known as Real Estate Agent, Realtor or Broker. An agent plays the role of a facilitator for property transactions for a consideration.
Agreement for Lease/Sale
A contract by which land or any other property is leased or sold by one party to another.
Air Rights
The right to use the space above a property.This however does not include the right to use the land surface on which the property is located.
Allotee
The person who is allotted a property, either by government body/authority or by a developer.
Alternative User Value
The value of land and buildings which reflects a prospective use which is different from that of the current USE.
Amortisation
I)The concept of writing off the capital cost of a wasting physical asset by means of a sinking fund.
2) Payment of a debt in equal installments of principal and interest, as opposed to interest only payments.
Amortisation Rate
The rate of interest used for purposes of amortisation.The percentage of a periodic payment that is applied to the reduction of the principal; in a level-payment mortgage this corresponds to the sinking fund factor.
Amortisation Term
The period. usually expressed as a number of years, coinciding with the useful life of an asset over which the value of the asset is written off.
Anchor Tenant
One or more department or variety chain stores. supermarkets or hypermarkets. introduced into a shopping centre in key positions to attract the consumer/ customer/shopper into the centre
and also for the purpose of encouraging other retailers to lease shops en route.The larger the development the more anchors required.
Annual Debt Service
Amount of principal and debt repayments due per year.
Annual Sinking Fund
A sinking fund where payments and interest accumulated are calculated annually.
Annual Percentage Rate (APR)
The cost of a loan expressed as a yearly rate on the balance of the loan.
Annuity
The payment of a certain sum of money to a person annually for life or for a stipulated period of years.
Annuity Method
Method for appraising the present value of a property which takes into account expected future incomes before depreciation.
Appreciation
An increase in the value of a property due to changes in market conditions or other causes over a period of time.
Arbitrage
The system through which dealing in securities is carried out in order to profit from a variation in the price quoted in different markets. Often effected by buying and selling in two different markets at the same time in order to profit from the margin.
Arbitration
A method of resolving a disagreement between two parties by presenting different views to an independent arbitrator. The ruling is binding on the parties but an arbitrator’s
decision can be challenged in court of law under certain circumstances.
Arbitration Clause
A clause in a contract providing for disputes arising from the contract to be referred to for the decision of a third party (arbitrator). Common examples are disputes over rent review clauses in leases or the terms of building contracts.
Arbitrator
An impartial person who is appointed to settle a difference between two parties.
Arrears
I) Money paid after the due date. Thus a debt is in “arrears” if unpaid after the due date.
2) Rent is said to be paid in arrears where the lease provides for the rent for a particular period to be paid at the end of that period.
Asset Management
Active approach to asset acquisition / disposal and property management with the objective of optimising asset performance.
Assessed Valuation
The value that a taxing authority places on real property for the purpose of determining the amount of taxation for that property.
Asset Valuation
In the property market, this expression is applied to the valuation of land and buildings or plant and machinery.The term is often used to describe an expert opinion on the worth of a property which may be incorporated into company accounts, where the ownership of the asset is not necessarily to be transferred but the valuation is of interest to, e.g. shareholders or is required for company takeovers,share floatation or mortgages.
Assignment of Lease
The transfer by a lessee of all his rights over a leased property. In such a case. the assignee becomes a lessee under the original lessee.Some leases contain clauses
Source: Various
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