A AAA-Tenant, also referred to as a Triple-A Tenant, is a highly creditworthy and dependable tenant that typically includes large, established corporations or government entities. These tenants are deemed exceptionally low risk for defaulting on lease payments, making them highly desirable for property owners and investors.
An absentee owner is a person or entity that owns a property but does not reside in or personally manage the property. They often delegate these tasks to property management companies or other individuals.
An Accredited Management Organization (AMO) is a prestigious designation awarded to property management firms by the Institute of Real Estate Management (IREM). This credential recognizes firms that meet high ethical and operational standards.
Active Participation is a type of investor position that influences how rental income is taxed. The requirements for active participation are less stringent than for material participation.
Actual Eviction is the legal process by which a landlord removes a tenant from rental property.
An alley serves as a narrow lane, pathway, or passageway often situated between buildings or behind a building. It is commonly utilized for deliveries, garbage collection, or as a secondary access route.
An anchor parcel refers to the land under and around an anchor tenant in a shopping center that includes the tenant’s building, parking, and landscaping. This property may be owned by the anchor tenant or controlled through a ground lease.
Attornment is the formal agreement by a tenant to recognize a new owner of the property as their landlord, typically due to a sale or foreclosure.
Biannual refers to events or actions that occur twice within a single year, similar to the term 'semiannual.' It is important not to confuse it with biennial, which means occurring every two years.
BOMA, also known as the Building Owners and Managers Association, is a professional association that represents the interests of the commercial real estate industry through a range of services, advocacy, standards, and educational programs.
A term used to describe the physical property and infrastructure of a business or organization, as opposed to its intangible assets or online presence.
An itemized list of expected income and expenses prepared weekly, monthly, or annually. A budget is crucial in managing finances efficiently and planning for future needs in real estate investments.
The Bundle of Rights Theory posits that property ownership entails a collection of distinct rights, including the rights of occupancy, use, and enjoyment, as well as the ability to sell, bequeath, give, or lease these rights.
A buyout occurs when the owner of a new building acquires the remaining lease term of a tenant from a different building, thereby freeing the tenant from their old lease obligations and allowing them to negotiate a new lease.
CAD is an acronym that can stand for 'Cash Available for Distribution,' 'Central Appraisal District,' or 'Computer-Aided Design,' all of which are pertinent in different realms of real estate and related industries.
The Community Associations Institute (CAI) is an international organization designed to provide education, resources, and advocacy for community association leaders, such as homeowners associations, condominium owners, and housing cooperatives.
Common Area Maintenance (CAM) charges are fees paid by tenants to cover the maintenance of common areas in a commercial property.
Capital Expenditure, commonly referred to as CAPEX, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.
Capital improvements, also referred to as capital expenditures, are significant upgrades, enhancements, or additions to an existing property that increase its overall value, extend its useful life, or adapt it to new uses.
The Certified Property Manager (CPM) designation is a professional accreditation awarded by the Institute of Real Estate Management (IREM), recognizing expertise in real estate management.
Class of property is a subjective division of buildings based on desirability among tenants and investors, considering factors like age, location, quality, and maintenance.
Common Area Maintenance (CAM) charges are fees paid by tenants to landlords for the upkeep of shared spaces such as hallways, restrooms, and parking lots. These charges are typically calculated on a pro-rata basis and are essential for the maintenance and functionality of commercial properties.
Common areas are portions of a property that are accessible and used by all owners or tenants. They play a crucial role in the overall functionality and value of residential, commercial, and mixed-use properties.
Common Areas Assessments (HOA Fees) are special fees assessed by a Homeowners' Association against its members for a one-time expense, such as the construction of a community facility.
In a condominium, 'common elements' refer to the portions of the property not owned individually by unit owners but in which an indivisible interest is held by all unit owners. These generally include the grounds, parking areas, recreational facilities, and external structure of the building.
Common Property refers to property owned equally by all members of a group, which can include areas within a cooperative apartment building or municipal parks.
A Community Association is an organization of property owners dedicated to managing common interests and elements within a residential community, such as condominiums or subdivisions.
The Community Associations Institute (CAI) is a not-for-profit educational and research organization dedicated to addressing the challenges of managing homeowners’ associations and other community associations, such as condominium owners' associations. CAI provides educational seminars, resources, and publications to promote effective community management.
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.
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 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.
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.
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.
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.
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.
The term coterminous in real estate refers to two or more arrangements, such as leases or agreements, that have the same period or ending date.
Covenants and Conditions (Restrictions), often referred to as CC&Rs, are contractual limits tied to the property that impose certain rules or obligations on property owners.
The CPM (Certified Property Manager) is a professional designation conferred by the Institute of Real Estate Management (IREM). It signifies a high level of competence and ethical standard in property management.
Cropland is property devoted to growing annual agricultural products. It is distinct from pasture and grazing land or range land. Cropland is eligible for agricultural use exemptions under specific conditions.
Curable Depreciation refers to a type of property deterioration that can be corrected at a cost that is less than the value it will add to the property.
A Declaration of Condominium Ownership is a legal document required for the establishment, management, and governance of a condominium association according to relevant state laws. This document outlines the rights and responsibilities of unit owners, common areas, and the owners' association.
A written statement by a trustee acknowledging that the property is held for the benefit of another party.
Deferred maintenance refers to the practice of postponing necessary repairs and maintenance activities on real estate properties. This neglect typically results from budget constraints or prioritization of financial resources toward other projects, and it consequently leads to physical depreciation.
Deficit Rent refers to the difference between the market rent and the contractual rent for a specific property. It can indicate potential income loss for property owners when actual collected rent is less than the prevailing market rates.
Demolition is the process of tearing down and removing an existing structure, typically to clear a site for new development or construction. This can involve a variety of methods, depending on the size, location, and type of construction of the building to be demolished.
Depreciable life is the time period over which the cost of an asset can be spread for tax or appraisal purposes, reflecting either the recovery of investment or the estimated useful economic life of an asset.
Dispossess proceedings refer to the legal process initiated by a landlord to remove a tenant from a rental property and regain possession, typically due to non-payment of rent or violation of lease terms.
Real estate that is under foreclosure or impending foreclosure due to insufficient income production, leading to negative cash flow or default on mortgage payments.
Due Care refers to the standard of conduct that is expected from a reasonable and prudent person in a given situation. It imposes a duty to act as a reasonably careful person would under similar circumstances.
A duplex is a type of multi-family home that features two distinct living units within one building and a single structure.
Economic life refers to the remaining period for which real estate improvements are expected to generate more rental income than their operating expenses.
Economic obsolescence refers to the decrease in property value caused by external factors, such as environmental changes or new developments. It is also known as external obsolescence or environmental obsolescence.
Economic Occupancy refers to the effective occupancy rate of property units based on units rented for money, rather than the physical occupancy, which simply counts the number of occupied units regardless of whether rent is being paid.
The effective rental rate calculates the true cost of renting a property by taking into account rental concessions over the lease's duration. This provides a more accurate measure for both tenants and landlords compared to the asking rent.
The efficiency ratio in real estate is the proportion of a building's area that is leasable space, reflecting how efficiently space within the building is utilized for leasing purposes.
Encapsulation in real estate refers to the process of covering or enclosing hazardous materials to prevent the release of dangerous substances into the environment or to minimize exposure hazards. It is commonly used for materials like asbestos and lead paint in older buildings, offering a safer and often more cost-effective alternative to removal.
Eviction is a legal process initiated by a lessor (landlord) to regain possession of their property from a tenant who has violated the lease agreement.
Actual eviction is the legal process where a tenant is removed from a property either by physical force or through legal procedures, typically initiated by the landlord for reasons such as non-payment of rent or breach of lease terms.
The Expense Ratio is a financial metric used to compare the operating expenses of a property to its potential gross income, allowing investors and property managers to analyze the relative operating efficiency.
Expenses in real estate represent the costs associated with acquiring, maintaining, and operating a property. These expenses can significantly impact the profitability of real estate investments and the overall management of properties.
Facilities management involves the processes and services that support the core business operations of an organization, ensuring that the environment is managed effectively and efficiently.
FF&E stands for Furniture, Fixtures, and Equipment, encompassing all movable property that is used in business operations and can include everything from chairs and desks to lighting and cabinetry.
FIABCI (Fédération Internationale des Administrateurs de Biens Conseils Immobiliers) is the French acronym for the International Real Estate Federation, a global network of real estate professionals that provides education and advocacy for its members.
A type of insurance purchased by an employer to protect against financial loss due to dishonest acts committed by employees who handle valuable property or funds.
Fixed expenses in real estate management refer to costs that remain constant regardless of occupancy levels, which contrast with variable expenses that fluctuate based on usage or occupancy.
A Flat Lease is a rental agreement that stipulates a constant rental payment over the lease period, without any variations or escalations.
Free rent refers to the occupancy of a space without payment, typically used as a promotional tool or as part of a compensation package. It is commonly seen in real estate where landlords might offer rent-free periods as an incentive to tenants or include free rent as part of employment agreements.
Frictional vacancy refers to the short-term, transitional unemployment situation in real estate when properties are vacant due to tenants moving in or out. It represents the natural turnover rate within the market.
FSG (Full Service Gross) is a type of lease in which the landlord covers all property-related expenses. These expenses typically include taxes, insurance, maintenance, utilities, and more. FSG leases simplify budgeting for tenants and offer peace of mind by mitigating unexpected costs.
A Full Service Gross (FSG) lease requires the property owner to cover all operating expenses, making it easier for tenants to manage costs, as opposed to a net lease where the tenant is responsible for additional expenses.
Functional vacancy refers to the phenomenon in real estate where space remains intentionally vacant due to it being uneconomical to market or part of a broader investment strategy.
The General Services Administration (GSA) strategically manages and disposes of federal properties, ensuring other government agencies have the resources they need for efficient operations.
Gross Leasable Area (GLA) is a key metric in commercial real estate that represents the total floor area designed for tenant occupancy and exclusive use, usually measured from the centerline of shared walls and to the outer surface of exterior walls.
Gross income represents the total income generated from property or other sources before any expenses or deductions are applied. It includes rental income, alimony, retirement benefits, and various other income streams.
Gross Leasable Area (GLA) refers to the total floor area of a building that can be used by tenants, including all areas that are used by tenants and the communal spaces shared by tenants. It is measured from the center of joint partitions to the exterior surfaces of outside walls.
A gross lease is a type of lease agreement wherein the landlord is responsible for paying all property expenses, including taxes, insurance, utilities, and repairs. The tenant pays a fixed rental fee.
Gross Possible Rent (GPR), also known as Potential Gross Income (PGI), represents the maximum rental income a property could generate if it were entirely occupied year-round with zero vacancies.
The General Services Administration (GSA) is a U.S. government agency that manages and supports the basic functioning of federal agencies. Established to streamline the administrative work of the federal government, it oversees real estate transactions, property management, and procurement of goods and services.
Homeowners' fees, also known as maintenance fees, are regular payments required by homeowner associations (HOAs) to cover the upkeep of common areas and amenities in a housing development.
A hunting lease is an agreement between a landowner and a hunter that grants the hunter access to specific property for hunting purposes. This can range from a day to an entire season and might include limitations on the type of game that can be hunted.
Imperative necessity refers to the legal principle that grants an agent the authority to take necessary and immediate action in case of emergencies, even if it means disregarding the principal’s instructions, to protect the interests of the principal.
The Income/Expense Ratio in real estate measures the relationship between a property's operating income and its operating expenses, providing investors insights into financial performance.
An index lease is a rental agreement that adjusts the rent based on a published record of cost changes like the Consumer Price Index (CPI). This helps maintain the rent's real value over time despite inflation.
The Institute of Real Estate Management (IREM) is a professional organization dedicated to serving property managers. It is affiliated with the National Association of REALTORS® and is known for publishing the Journal of Property Management.
The Institute of Real Estate Management (IREM) is a global organization that provides education, resources, and professional certifications to real estate management professionals, enhancing their skills and career prospects.
A land lease, also known as a ground lease, is a contractual agreement where the tenant leases the land on which they intend to construct a building or other improvements, while the land itself remains the property of the landlord.
A lease is a legal contract in which the entity entitled to the possession of real property (lessor) transfers those rights to another entity (lessee) for a specified period in exchange for payment called rent.
A Lease Abstract encapsulates the major highlights and key provisions of a lease agreement, offering a quick reference for property managers, landlords, and tenants while ensuring essential information is easily accessible.
A lessor is a person or entity that rents out property to another party, known as the lessee, under the terms outlined in a lease agreement. Often referred to as the landlord, the lessor retains ownership of the property while allowing the lessee to use it for a specified period.
In real estate, a 'LET' refers to the act of renting out a property to a tenant. It commonly applies to residential or commercial properties that are being leased for an agreed-upon rent amount over a specified period.
A life-support system in real estate encompasses all critical infrastructure and systems in a building aimed at ensuring safety, security and sustenance. These include camera surveillance, fire protection, communications systems, backup lighting, and more, crucial for both tenant safety and property utility.
A long-term lease typically refers to a commercial lease agreement that spans five years or more or a residential lease agreement lasting over one year. Long-term leases offer stability and predictability for both landlords and tenants, coming with distinct advantages and potential drawbacks for each party.
Maintenance involves the activities carried out to ensure the upkeep, repair, and efficient operation of a property, compensating for wear and tear over time.
A maintenance fee is an assessment by a Homeowners' Association (HOA) or a Condominium Owners' Association (COA) to cover the costs associated with maintaining and operating common elements and areas.
A maintenance reserve is a fund allocated by property owners or a property management entity specifically for maintaining and repairing a property. This financial reserve is crucial to ensure that a property remains functional, safe, and visually appealing over time.
In legal terms, majority refers to the age at which an individual is no longer considered a minor and is fully able to conduct their own affairs. It can also refer to more than half of a group when making collective decisions.
A management agreement is a contract between a property owner and a manager, detailing responsibilities for leasing, operating, and managing the property. It often includes a fee structure ranging from 2-6% of the rental income.
The management fee is the cost charged by a professional property management company for overseeing and managing rental properties. It is typically a fixed percentage of the total rental income generated by the managed property.
A Master Lease is a primary leasing agreement under which the tenant, who leases the entire property, has the right to sublease portions of it to other sub-tenants. It serves as the foundation lease agreement in situations where the property may be divided for subleasing.
Mini-warehouses consist of small lockable individual units, often with garage-door-style openings, providing short-term storage solutions for personal or business use.
