Welcome to the Lexicon of Real Estate Terms
Navigating the world of real estate can be daunting, especially with the myriad of terminology that pervades the industry. Our Lexicon of Real Estate Terms is here to simplify your experience, providing you with more than 3,300 terms and definitions and 33,000 Quizes to help you feel comfortable using modern real estate language.
This comprehensive guide serves as a quick reference for various audiences, whether you are a home buyer or seller, a real estate professional, a business student, an investor, or an attorney. We understand that mastery of the language is crucial in making informed decisions in the real estate market, and our lexicon is designed to empower you.
What You’ll Find in Our Lexicon:
Our lexicon includes detailed definitions for real estate topics from A to Z. Whether you’re looking to understand key concepts for personal knowledge or to enhance your professional repertoire, you’ll find terms related to:
-
Appraisal: Learn about the process of determining a property’s market value.
-
Architecture: Explore different styles and terminologies that define building design.
-
Brokerage: Understand the role of real estate brokers and the services they provide.
-
Construction: Familiarize yourself with the terms used in the building process.
-
Debenture: Discover financial instruments that could impact real estate investments.
-
Flood Plain: Understand the risks and regulations associated with properties in flood-prone areas.
-
Negative Amortization: Get insights into loan types that increase in balance over time.
-
Security Instrument: Learn about the agreements that secure a loan against a property.
-
Subprime Loan: Understand the implications of loans given to borrowers with poor credit.
-
Underlying Mortgage: Familiarize yourself with the financial obligations tied to a property.
-
Zoning: Get to grips with laws that define how land can be used.
In addition to these definitions, our lexicon provides a wealth of resources, including:
-
Common abbreviations used in real estate communications.
-
Mathematical formulas essential for calculating mortgage payments, investment returns, and more.
-
Charts and diagrams to visually represent complex concepts and processes.
Why Use Our Lexicon?
By utilizing this resource, you’ll gain confidence in your understanding of real estate terminology. Whether you’re conducting research, preparing for a transaction, or simply looking to expand your knowledge base, our lexicon ensures you have access to the information you need at your fingertips.
Join us in diving into the intricate world of real estate language, and empower yourself with the terminology that shapes the industry. Feel free to explore and reference frequently; your journey into mastering real estate has just begun!
Compensation in real estate refers to money or other property paid to individuals or entities in exchange for services rendered, goods provided, or contractual obligations fulfilled. It encompasses wages, commissions, payment for real estate contracts, and property exchanges.
Compensatory damages are awarded in legal cases to compensate for actual losses or damages suffered by the injured party, aiming to make them whole again. These damages cover measurable losses, such as medical expenses, lost wages, and repair costs, and do not include punitive or non-economic damages.
A key element for any valid contract in real estate, ensuring that individuals entering into legal agreements are legally capable and have the mental capacity to understand their actions.
A Completion Bond is a legal instrument designed to guarantee the completion of a development according to predefined specifications. It extends beyond a performance bond by ensuring the production of the entire development without reference to specific contracts and without requiring payment to the contractor.
A method of dividing real estate improvements into various parts such as the roof, plumbing, electrical system, and shell, and then depreciating each component separately for tax purposes.
The Compound Amount of One Per Period represents the final value of a series of $1.00 deposits made at each period, with interest compounded at each period.
The Compound Annual Growth Rate (CAGR) represents the mean annual growth rate of an investment over a specified period of time longer than one year.
The Compound Annual Growth Rate (CAGR) is a useful measure of the growth rate of an investment or value over a specific period of time, assuming the gain was compounded annually. It's an invaluable tool for comparing the historical performance of investments or predicting future growth.
Compound Interest refers to the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal amount, compound interest grows at an accelerating rate due to its compounding effect.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is a federal law aimed at the cleanup of sites contaminated with hazardous substances and pollutants. Also known as Superfund, it imposes strict joint and several liability on potentially responsible parties (PRPs) for site remediation.
A comprehensive plan is a set of guidelines developed, mapped, and adopted by a local government to steer public policy towards future development within the jurisdiction. It encompasses various aspects such as transportation, utilities, land use, recreation, and public services.
A compressed buy-down is a variant of the traditional buy-down mortgage where the extent of the rate reduction changes at 6-month intervals. This type of buy-down features accelerated rate adjustments compared to the more common annual adjustments seen in gradual buy-downs.
In real estate, 'COMPS' or 'Comparables' refer to properties similar in characteristics to the subject property that have recently sold and are used to help determine the market value of the subject property.
Computer-Aided Design (CAD) is the use of computer systems to assist in the creation, modification, analysis, or optimization of a design. This technology is widely used in various fields, including engineering, architecture, and industrial design, providing greater precision, speediness, and flexibility in the design process.
Computer-Assisted Mass Appraisal (CAMA) refers to the process of using computer software to value large sets of properties within a given area, often for the purpose of property tax assessments.
Computer-Assisted Mass Appraisal (CAMA) refers to proprietary software designed to rapidly appraise one or more real properties. This software varies in complexity, from simple percentage increases in property values to sophisticated statistical models that evaluate comparable properties.
A computer-based network of lenders that allows affiliated real estate brokers, builders, or advisors to originate loans at the site of the home. Provides a streamlined process whereby a person can buy a home and apply for a loan at the same place and time.
Concessions are agreements that offer complementary goods, services, or financial incentives like reduced rent or purchase prices to tenants or buyers.
Condemnation refers to the process by which private property is taken for public use with compensation provided to the property owner. This is often done under the legal right known as eminent domain. Alternatively, it can also refer to the declaration of a structure as unfit for use.
A condemnee is a property owner who is required to forfeit all or part of their property to the government or a governmental authority through the process of condemnation.
A condemnor is a government or agency with governmental authority that is empowered to take private property for public use upon payment of just compensation, typically in the process known as eminent domain.
Condition(s) provision(s) in a contract that specify certain events or circumstances that can alter or negate the terms of the contract. Common examples include events such as destruction of property or inability to secure financing.
A conditional commitment is an agreement by a lender to provide a loan to a qualified borrower, subject to specific conditions that must be met. It serves as a binding commitment from the lender, provided that all pre-stipulated criteria and terms are satisfied.
A Conditional Estate, also known as Fee Simple Defeasible, is a type of ownership where the owner's rights may be revoked upon the occurrence or non-occurrence of a particular event.
A conditional offer is a purchase contract tendered to the seller that stipulates one or more requirements to be satisfied before the purchaser is obligated to buy.
A Conditional Sales Contract is a legal agreement for the sale of property in which the seller retains the title until the buyer fulfills certain predefined conditions, typically the full payment.
A Conditional Use Permit (CUP) is a specialized form of zoning variance that allows a property owner to use their land in a way that is not typically permitted under the current zoning laws.
Conditions, Covenants, and Restrictions (CC&Rs) are documents that control the use, modifications, and appearance of properties within a particular real estate development or community.
Conditions, Covenants, and Restrictions (CCRs) are rules and guidelines that govern the use and appearance of properties within a community or municipality. They are designed to maintain a cohesive and appealing environment among property owners and to protect property values.
A condominium, often shortened to condo, refers to a private residential unit within a complex or building of multiple units. While individual condo units are separately owned, common areas are jointly owned by all condo owners.
Condo fees, also known as maintenance fees, are regular payments made by condominium residents to cover the upkeep and maintenance of common areas and facilities within the condominium complex.
A condominium is a type of residential property where individuals own individual units but share ownership of common areas and facilities.
The process of converting rental apartments or other types of multi-unit buildings into individually owned units usually under a condominium structure.
A Condominium Declaration, often referred to simply as a 'Declaration,' is a legal document that establishes a condominium. It outlines the division of property, including both individual units and common areas, and sets forth rules, regulations, and governance structures for the development.
A Condominium Owner's Association (COA) is an organization of all unit owners within a condominium, established to oversee and manage the common elements and enforce the community bylaws.
A condotel is a type of property that combines elements of both condominiums and hotels. Individual units within the property are sold to individual owners who can use the property when they choose and participate in a rental program when they are not using it.
Conduit tax treatment allows income to pass through an entity without additional taxation, making certain entities preferred vehicles for real estate ownership as they distribute income and losses directly to their owners, maintaining the earnings' nature.
Confirmation of Sale refers to the official recognition and approval of the sale of property by a court of law. This process validates that the sale was conducted properly according to legal standards.
Confiscation involves the seizure of private property for public use, primarily by the government, although it can occur under other authorities. It is not the same as eminent domain as it often occurs without compensation to the owner.
A conflict of interest in real estate arises when an individual faces a potential decision in an official capacity from which they stand to benefit personally. This often necessitates the individual stepping down from one role to maintain ethical standards.
A conforming loan is a mortgage that adheres to the guidelines set by government-sponsored entities Fannie Mae and Freddie Mac, including loan limits, borrower credit score, down payment, and debt-to-income ratio requirements.
The conformity principle is an appraisal principle that asserts property values tend to reach their maximum potential when the neighborhood is reasonably homogeneous in terms of social and economic activity.
Congregate housing provides residents with communal living spaces, particularly a shared dining facility, offering a balance of privacy and community living. Often chosen by the elderly who wish to avoid meal preparation, congregate housing supports an independent lifestyle while promoting social interaction.
A consent decree is a judicial ruling that imposes issues and precautions requested by the defendant to rectify alleged illegal activities without admitting fault or guilt.
Consequential damages refer to the loss in value of a property caused by the taking of a nearby property or development on another property. These damages may not be directly caused by an action but occur as a consequence of it.
A conservation easement is a legal agreement, voluntarily entered into between a landowner and a government agency or land trust, that limits the use of land to protect its conservation value.
A conservator is an individual or entity appointed by a court to manage the estate and financial affairs of a person who is unable to do so themselves due to physical or mental limitations. This role is often conferred to ensure that the individual's property is adequately cared for and managed.
Consideration is a fundamental element in contract law that refers to something of value being exchanged between parties when entering into a contract. This exchange can include money, services, products, etc. It is a necessary component for a contract to be deemed valid.
Exploring how consignment functions within the real estate finance domain, particularly focusing on the FSLIC's role in replacing management in insolvent savings and loan associations to ensure continued operations.
A consolidation loan is a new loan that pays off more than one existing loan, generally providing easier repayment terms. It is often used to simplify multiple debts into a single monthly payment with a potentially lower interest rate.
The Constant Annual Percent, also known as the Mortgage Constant, is the ratio of the annual debt service (which includes both principal and interest payments) to the original loan amount.
A constant payment loan is a type of loan structured with equal periodic payments that ensure the loan is paid off by the end of its term. This type of loan is often used in mortgage financing.
Constitutional rights in real estate refer to the guarantees provided by federal or state constitutions, such as the payment of just compensation to property owners in eminent domain proceedings.
Construction lenders specialize in providing construction loans, which are short-term loans used to finance the building or renovation of real estate projects. They differ from permanent lenders who provide long-term financing solutions once a project is completed.
A construction lien is a claim made by contractors, subcontractors, or suppliers who have performed work or provided materials but have not been paid. It ensures they are compensated by securing a legal right against the property where the work was performed or materials supplied.
A construction loan is a short-term loan used to finance the building of a home or other real estate project. It covers costs such as the purchase of land, materials, and labor until the project is completed.
A Construction to Permanent Loan (C2P) is a financing arrangement that transitions seamlessly from a construction phase to a permanent mortgage, eliminating the need for multiple loans and reducing overall costs. This type of loan is crucial for bridging the time gap between the completion of construction and the availability of permanent financing.
Constructive eviction is a legal doctrine in real estate that allows tenants to terminate their lease and vacate the property when a landlord's actions or failure to act substantially interfere with the tenant's use and enjoyment of the premises.
Constructive eviction occurs when a property becomes uninhabitable due to a landlord’s actions or failure to act, allowing tenants to terminate their lease.
Constructive notice is a legal concept wherein an individual is presumed to have knowledge of a fact when such fact is a matter of public record, even if they do not have actual knowledge of it.
Constructive receipt defines the tax obligation associated with the right to receive income, regardless of whether the income is physically in hand. It influences both cash flows in tax reporting and real estate exchange transactions.
Consulting in real estate involves providing expert advice, information, analysis, and recommendations to aid in making informed real estate decisions.
The Consumer Price Index (CPI) is one of the most widely utilized measures of price levels and inflation. It gauges and compares the total cost of a specified 'market basket' of goods and services consumed by households over different time periods.
The Consumer Price Index (CPI) measures the average change in prices over time that consumers pay for a basket of goods and services. It is a crucial indicator used to assess inflation and the cost of living.
A Consumer Reporting Agency (CRA), also known as a Credit Rating Service, collects, maintains, and provides consumer credit information to third parties to assist in evaluating creditworthiness.
A contaminant is a substance, element, or compound that can cause harm to humans or other forms of life if released into the environment. Contaminants are commonly found in concentrations above acceptable levels or in places where they should not be. This term is particularly relevant in real estate during the due diligence process when evaluating property for purchase or financing.
Contamination refers to the presence of harmful substances in real estate properties, which can significantly impact property value, usage restrictions, and potential health hazards. Identifying and addressing contamination are critical steps in real estate transactions, environmental assessments, and property development.
Contemporary architecture refers to the design and concept of buildings that utilize modern, innovative, and forward-thinking approaches. These structures often depart from traditional styles and feature characteristics like flat roofs, extensive use of glass, curved surfaces, exterior decking, and unconventional façade materials.
In real estate terminology, 'contiguous' refers to properties that share a common boundary. These properties are directly adjacent to each other, and their borders touch at some point. This can be particularly relevant in zoning, development, and legal contexts.
A contingency clause specifies conditions that must be met for a real estate contract to become binding, providing a safeguard for both buyers and sellers.
Contingent interest refers to an interest payment on a loan that is due only if certain pre-specified conditions are met. It often acts as an incentive for the borrower to perform well and achieve specific financial metrics.
A contingent offer in real estate is a bid or offer that is proposed with specific conditions which must be met for the sale to proceed. These conditions, called contingencies, protect the buyer and ensure their interests are safeguarded before finalizing the purchase.
The Continuous Occupancy Clause is a lease provision mandating that tenants, especially anchor ones, must keep their retail spaces open and operational to maintain the shopping center's viability.
A provision in a shopping center lease requiring a store to maintain minimum inventory levels and/or remain open certain hours, be adequately staffed, and keep the store name for a certain period of time.
A contour map is a type of map that highlights the topography of a site using contour lines to indicate various elevations. It helps in understanding the terrain by representing how slopes and elevations are distributed across an area. Often used in real estate and land development, contour maps are crucial for planning before construction and making informed decisions regarding land use.
A contract is a legally binding agreement between two or more competent parties to undertake or refrain from specific actions in exchange for consideration. In real estate, a valid contract typically includes essential elements such as an offer, acceptance, competent parties, consideration, lawful purpose, and documentation.
A Contract for Deed, also known as a Land Contract, is a financing arrangement wherein the seller retains legal title to a property until the buyer completes all payment obligations.
A Contract for Purchase or Sale, also known as an Agreement of Sale, is a comprehensive legal document between a buyer and a seller that outlines the terms and conditions of a real estate transaction.
The contract interest rate, also known as the face interest rate, is the interest rate specified in a loan agreement or mortgage note. This rate is used to calculate the periodic interest payments owed by the borrower throughout the loan term.
A Contract of Sale, also known as an Agreement of Sale, is a legal document that outlines the terms and conditions under which a sale of property will be completed between a seller and a buyer.
In an installment sale, the contract price (tax) is the selling price less any existing mortgages assumed by the buyer. Understanding this term is crucial for accurate tax calculations and compliance.
The contract rate, also known as the face interest rate, is the interest rate specified in a loan agreement or bond contract, stipulating the amount of interest that will be paid by the borrower or issuer.
Contract Rent refers to the amount of rent that has been explicitly agreed upon in a lease or rental agreement between a tenant and a landlord. It remains fixed over the term stated in the contract unless otherwise adjusted according to specified conditions.
A contractor is an individual or company that agrees to supply goods or services under a contract, usually related to the development or renovation of a property. Contractors play essential roles in various aspects of construction projects, such as landscaping, carpentry, plumbing, and architecture.
The principle of contribution states that the value of a property component is determined by the value it adds to the entire property.
Control Premium refers to the additional amount paid over the market price of shares to gain ownership control to set policies, direct operations, and make significant decisions for a business.
A Controlled Business Arrangement allows real estate brokerage offices to provide related services such as financing, title, and hazard insurance through subsidiary companies without violating the Real Estate Settlement Procedures Act (RESPA).
A Controller’s Deed is a legal document that serves as evidence of property ownership, issued by a governmental unit after the property is sold at a public auction, often as a result of unpaid property taxes.
Restrictions, either public or private, placed on the use of private property.
A conventional home refers to a dwelling constructed on-site from the ground up as opposed to mobile homes or modular housing, which are typically prefabricated elsewhere.
A Conventional loan is a type of mortgage that is not guaranteed or insured by any government agency. They typically require higher credit scores and a higher down payment than government-backed loans.
Conversion in real estate refers to various forms of changing the use, ownership, or financing structure of a property. This can include transforming rental apartments into condominiums, involuntary taking of property, changing the ownership structure of financial institutions, or altering the terms of a mortgage.
A converter is an active real estate entrepreneur who changes the ownership and/or physical configuration of property. Converters often transform properties into different usage types or upgrade them to increase their value.
A Convertible ARM is an Adjustable Rate Mortgage (ARM) that gives the borrower the ability to change the payment schedule to a fixed-rate at specific points during the loan term, commonly for a nominal fee, with an interest rate determined by the original loan agreement.
To convey means to transfer ownership or interest in a property from one party to another, typically through the execution of a deed or other legal document.
Conveyance refers to the transfer of the title of real estate from one party to another through a legally binding instrument. It typically involves documentation that deeds property from a seller to a buyer during a recognized transaction.
A cooperating broker is a real estate professional who agrees to share the commission with another broker, usually the one representing the other party in a property transaction.
A cooperative, or co-op, is a type of corporate ownership of real property where stockholders of the corporation are entitled to use certain dwelling units or other spaces. Special income tax laws allow tenant stockholders to deduct their share of interest and property taxes paid by the corporation.
Core Space refers to the central areas of a building that house essential services like elevator banks, restrooms, stairwells, electrical services, and janitorial closets. This space is crucial for the functionality and accessibility of the building.
A Core-Based Statistical Area (CBSA) is a geographical region defined by the Office of Management and Budget (OMB) that centers around an urban area with a population of at least 10,000, encompassing the urban core and its adjacent territories with strong socio-economic ties.
