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Acceleration Clause

A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.


An offeree's consent to enter into a contract and be bound by the terms of the offer.

Additional Principal Payment

A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.

Adjustable-rate Mortgage (ARM)

An adjustable-rate mortgage is a mortgage whose interest rate and monthly payments vary throughout its life. ARMs typically start with an unusually low interest rate that gradually rises over time. Caps limit the amount that the interest rate can fluctuate.

Adjusted Cost Basis

The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken. For tax purposes, the adjusted cost basis is important when you sell your property, because it allows you to determine what your profit or loss is.

Adjustment Date

The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment Period Or Adjustment Frequency

The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM). Some adjustable-rate mortgages change every month, but it is more typical to have one or two adjustments per year.


A person appointed by a probate court to administer the estate of a person who died intestate.


The gradual repayment of a debt by means of systematic payments of principal and/or interest over a set period, so that at the end of the period there is a zero balance. The principal is thus directly reduced or amortized over the life of the loan. Some loans are not fully amortized, and require a balloon payment at the end of the term of the loan.

Annual Mortgagor Statement

A report sent to the mortgagor (the borrower) each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.


A sum of money recieved by an annuitant in a series of fixed periodic payments.

Annual Percentage Rate (APR)

This figure states the total yearly cost of a mortgage as expressed by the actual rate of interest paid. The APR includes the base interest rate, points, and any other add-on loan fees and costs. The APR is thus invariably higher than the rate of interest that the lender quotes for the mortgage.


The Appraiser will call the Seller's Agent to set up the appointment, who in turn, will call the Seller to confirm the appointment. An appraisal takes about 30 minutes. The Seller or Buyer does not need to be present during this time. It can take up to one week after the appraiser leaves the property for him/her to complete the appraisal. The mortgage company will call the Buyer's Agent to let them know the results of the appraisal.

Arbitration Of Disputes

A method of solving contract disputes that is generally less costly and faster than going to a court of law. In arbitration, buyers and sellers present their differences to a neutral arbitrator who, after hearing the evidence, makes a decision that resolves the disagreement. The arbitrator's decision is final and may be enforced as if it were a court judgment


Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject property and that it is being purchased exactly as it is found. An "as-is" indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers from using "as-is" wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.

Assessed Value

The assessed value is the value of a property for the purpose of determining property taxes. This figure depends on the system that is used by the local tax assessor and, thus, may differ from the appraised or market value of the property.

Assumable Mortgage

A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must "qualify" in order to assume the loan.


One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

Balance Sheet

A financial statement that shows assets, liabilities and net worth as of a specific date.

Balloon Mortgage

A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.


A person who receives benefits from the gifts or acts of another, as in the case of one designated to receive the proceeds from a will, insurance policy, or trust; the real owner, as opposed to the trustee who holds only legal title. With a trust, the trustee holds the legal title, but the beneficiary enjoys the benefits of ownership.


To transfer personal property through a will.

Bill Of Sale

A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.


A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Biweekly Loan

A loan with twice-monthly payments to match a borrower's payroll schedule.

Blanket Insurance Policy

A single policy that covers more than one piece of property (or more than one person).

Blanket Loan

A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt.

Bona Fide

In good faith, without fraud or deception.

Bond Market

Usually refers to the daily buying and selling of thirty year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing. The same factors that affect the Treasury Bond market also affect mortgage rates at the same time. That is why rates change daily, and in a volatile market can and do change during the day as well.


A violation of any legal obligation.

Bridge Loan

If you find yourself in the inadvisable situation where you have closed on a new home before you have sold your old one, you may need a short-term bridge loan. Such loans enable you to borrow against the equity that is tied up in your old house until it sells. They say "bridge" because such a loan is the only thing keeping you above water financially during this period when you own two houses. Bridge loans are expensive compared to other alternatives, such as using a cash reserve, borrowing from family or friends, or using the proceeds from the sale of your current home. In most cases, you need the bridge loan for only a few months in order to tide you over until you sell your house.


Real estate brokers are one level higher on the real estate professional totem pole than real estate agents (or salespeople). Real estate agents cannot legally work on their own -- they must be supervised by a broker. To become a broker in most states, a real estate salesperson must have a number of years of full-time real estate experience, meet special educational requirements, and pass a state licensing exam.

Buydown Account

An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.

Buydown Mortgage

In a buydown, the builder or house seller agrees to pay part of the home buyer's mortgage for the first few years. The term also refers to the practice of a seller paying a mortgage lender a predetermined amount of money to reduce his or her mortgage interest rate, thereby creating more attractive financing for a potential buyer.

Call Option

A provision in the mortgage that gives the mortgagee (the lender) the right to call the mortgage due and payable at the end of a specified period for whatever reason.


The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.


Money used to create income, or the accumulated wealth of a person or business, or the net worth of a business represented by the amount by which its assets exceed liabilities.

Capital Expenditure

The cost of an improvement made to extend the useful life of a property or to add to its value.

Capital Gains

For tax purposes, a capital gain is the profit that you make when you sell a home. For example, if you buy a home for $125,000 and then (a number of years later) you sell the house for $175,000, your capital gain is $50,000. A sizable amount of capital gains on a house sale is excluded from federal tax: up to $250,000 for qualifying single taxpayers and $500,000 for married couples filing jointly.

Cash-out Refinance

A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

Cash Reserve

The amount of the buyer's liquid cash remaining after making the down payment and paying all closing costs.

Certificate Of Deposit (CD)

A document showing that the bearer has a specified amount of money on deposit with a bank, stock-brokerage firm, or other financial institution.

Certificate Of Eligibility

A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.

Certificate Of Reasonable Value (CRV)

A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.

Certificate Of Title

A statement of opinion prepared by a title company, licensed abstracter or an attorney on the status of a title to a parcel of real property, based on an examination of specified public records. This certificate of title should not be confused with the certificate of title that is issued to a titleholder of land registered under the Toreens system, or with a title insurance policy.

Chain Of Title

The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Frequency

The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).


Personal property.

Clear Title

A title to property that does not have liens, defects, or other legal encumbrances.


This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.

Closing Costs

Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or REALTORS® often provide estimates of closing costs to prospective homebuyers.

Cloud On Title

Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful: usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.


An asset that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

Commitment Letter

A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."

Commitment Period

The period during which a loan approval is valid.

Common Area Assessments

Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve or operate the common areas of the project.

Common Areas

Those portions of a building, land and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Common Law

An unwritten body of law based on general custom in England and used to an extent in some states.

Community Land Trust Mortgage Option

An alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.

Comparable Market Analysis (CMA)

In order to price your house appropriately, you need to know how much houses like yours are selling for. By analyzing the asking prices of houses comparable to yours that are currently on the market, you can see whether prices are rising, flat, or declining. A written analysis of comparable houses currently being offered for sale and comparable houses that sold in the past six months to one year is called a comparable market analysis (CMA).

Compound Interest

Interest computed on the principal sum plus accrued interest. At the beginning of the new interest period, all interest is added to the principal, forming a new principal figure on which interest is then calculated. This process repeats itself each interest period—interest may be compounded daily, monthly, semiannually or annually.


The process the government uses to take private property for public use without the consent of the owner.


A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project and sometimes the exclusive use of certain limited common areas.

Construction Loan

A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.


A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Conventional Mortgage

A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage.

Convertibility Clause

A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.

Convertible Adjustable-rate Mortgages

Unlike conventional adjustable-rate mortgages, convertible adjustable-rate mortgages give you the opportunity to convert to a fixed-rate mortgage, usually between the 13th to 60th month of the loan. For this privilege, convertible adjustable-rate mortgage loans have a higher rate of interest than conventional adjustable-rate mortgages, and a conversion fee (which can range from a few hundred dollars to 1 percent or so of the remaining balance) is charged. Additionally, if you choose to convert to a fixed-rate mortgage, you will pay a slightly higher rate than what you can get by shopping around for the best rates available at the time you convert.

Cooperatives (co-ops)

Cooperatives are apartment buildings where you own a share of a corporation whose main asset is the building that you live in. In high-cost areas, cooperatives (like their cousins, condominiums and townhouses) are cheaper alternatives to buying single-family houses. Unfortunately, cooperatives also resemble their cousins in that they generally lag behind single-family homes in terms of appreciation. Co-ops are also, as a rule, harder to sell and obtain loans for than condominiums.

Corporate Relocation

Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

Cost Of Funds Index (COFI)

One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.


A clause in a mortgage that can result in foreclosure, if the obligation or restriction is violated.

Credit Life Insurance

Insurance that pays off a mortgage in the event of the borrower's death.


A person to whom money is owed.


A horizontal plane from which heights and depths are measured.


The legal document that transfers ownership of a piece of property.


A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."

Deed Of Trust

The document used in some states instead of a mortgage; title is conveyed to a trustee.


The failure to fulfill a duty or discharge an obligation, such as making monthly mortgage payments.

Delinquent Mortgage

A mortgage that involves a borrower who is behind on payments. If the borrower cannot bring the payments up to date within a specified number of days, the lender may begin foreclosure proceedings.


The decrease in the value of an asset allowed when computing property value for tax purposes. It can also be a loss in the appraised value of a property due to physical deterioration. This latter type of depreciation is curable when it can be remedied by repair or an addition to the property, and incurable when there is no easy or economic remedy.

Discount Points

In the mortgage industry, this term is usually used in only in reference to government loans, meaning FHA and VA loans. Discount points refer to any "points" paid in addition to the one percent loan origination fee. A "point" is one percent of the loan amount.


The rights of a widow in the property of her husband at his death.

Due-on-sale Provision

A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.

Due-on-transfer Provision

This terminology is usually used for second mortgages.

Earnest Money

Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction; called bargain money, caution money, hand money, or a binder in some states.


A right of way giving persons other than the owner access to or over a property.

Economic Feasibility

The feasibility of a building or project in terms of costs and revenue, with excess revenue establishing the degree of viability.

Economic Rent

Currently referred to as market rent, it is the rental income that real estate can command in an open, competitive market at any given time, as contrasted with contract rent, or the income actually received under a lease agreement.

Effective Date

The date on which a registration statement becomes effective and the sale of securities can commence.

Effective Gross Income

Additional income that a lender considers when assessing the loan application of a potential borrower.

Effective Gross Rent (EGR)

The net rent generated, after adjusting for tenant improvements and other capital costs, lease commissions and other sales expenses.

Effective Rent

The actual rental rate to be achieved by the landlord after deducting the value of concessions from the base rental rate paid by a tenant, usually expressed as an average rate over the term of the lease.

Eminent Domain

The government's right to condemn private land for public use, such as the routing of a public highway.


An unauthorized invasion or intrusion of an improvement or other real property onto another's property, thus reducing the size and value of the invaded property. Common examples of encroachments are the roof of a building that extends over the property line or the front of a building that extends over the building setback line or extends onto a neighbor's property.


Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.


A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

ERISA (Employee Retirement Income Security Act)

Legislation passed in 1974 and administered by the Department of Labor that controls the investment activities primarily of corporate and union pension plans. More public pension funds are adopting ERISA-like standards.

Equal Credit Opportunity Act (ECOA)

Federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin, or age, or because the applicant receives public assistance.

Escalation Clause

A clause in a lease that provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes and operating costs.


The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place. Although is some states a real estate broker is authorized to handle escrow functions, the common practice is to employ the services of a licensed escrow company, title company or lending institution.


Method of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation.

Exclusive Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

Exculpatory Clause

A clause in an agreement that relieves a party from all obligation for his or her acts or failure to act.

Executory Contract

A contract under which something remains to be done by one or more of the parties.

Exit Strategy

Strategy available to investors when they desire to liquidate all or part of their investment.

Face Rental Rate

The asking rental rate published by the landlord.

Fair Housing Act

Pursuant to the federal Fair Housing Act, any offer to sell, rent, buy, or exchange property shall not contain any preference, limitation, or discrimination based on race, color, religion, sex, national origin, handicap, familial status, or an intention to make such preference, limitation or discrimination.

Fair Market Value

The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Fannie Mae (FNMA)

The Federal National Mortgage Association - A quasi-governmental corporation authorized to sell debentures in order to supplement private mortgage funds by buying and selling FHA (Federal Housing Administration) and VA (Veterans Affairs) loans at market prices.

Fee Simple Interest

When an owner owns all the rights in a real estate parcel.


A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another. The term fiduciary describes the faithful relationship owed by an attorney to a client or by a broker (and salesperson) to a principal. The fiduciary owes complete allegiance to the client. Among the obligations that a fiduciary owes to his or her principal ane the duties of loyalty, obedience and full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies.

First Mortgage

The senior mortgage that, by reason of its position, has priority over all junior encumbrances. The holder has a priority right to payment in the event of default.

First Refusal Right, Or Right Of First Refusal

A lease clause giving a tenant the first opportunity to buy a property or lease additional space in a property at the same price and on the same terms and conditions as those contained in a third-party offer that the owner has expressed a willingness to accept

First-loss Position

The position in a security that will suffer the first economic loss if the underlying assets lose value or are foreclosed on. The first-loss position carries a higher risk and a higher yield.

Fixed-rate Loan

A loan with the same rate of interest for the life of the loan.


The number of freely traded shares in the hands of the public

For Sale By Owner (FSBO)

Some owners choose to sell their own property without the aid of a real estate broker. "For Sale By Owner" properties are often a source of listings when the owner is unsuccessful finding qualified buyers.

Force Majeure

A force that cannot be controlled by the parties to a contract and prevents them from complying with the provisions of the contract. This includes acts of God such as a flood or a hurricane, or acts of man such as a strike, fire or war.


The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Forward Commitments

Contractual obligations to perform certain financing activities upon the satisfaction of any stated conditions. Usually used to describe a lender's obligation to fund a mortgage.

Freddie Mac (FHLMC)

A congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Full Recourse

A loan on which an endorser or guarantor is liable in the event of default by the borrower.

General Contractor

A licensed construction specialist who enters into a construction contract with a developer or property owner to construct a building or real estate project. The general contractor often negotiates individual contracts with sub-contractors who specialize in various aspects of the building process, such as electricity, drywall and plumbing.

General Lien

The right of a creditor to have all of a debtor's property—both real and personal—sold to satisfy a debt.

General Warranty Deed

A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.

Good-faith Estimate

A preliminary accounting of expected closing costs. The Real Estate Settlement Procedures Act (RESPA) requires the lender to promptly give loan applicants a good-faith estimate of closing costs.

Grandfather Clause

An expression that conveys the concept that something that was once permissible continues to be so, despite changes in the law.


To bestow or transfer an interest in real property by deed or other instrument.

Ginnie Mae Government National Mortgage Association GNMA

A wholly-owned U.S. government corporation within the U.S. Department of Housing and Urban Development (HUD). The main focus of Ginnie Mae is to ensure liquidity for U.S. government-insured mortgages including those insured by the Federal Housing Administration (FHA), the Veterans Administration (VA) and the Rural Housing Administration (RHA). The majority of mortgages securitized as Ginnie Mae MBS are those guaranteed by FHA. FHA mortgagors are typically first-time home buyers and low-income borrowers.


The person to whom an interest in real property is conveyed.


The person conveying an interest in real property.

Gross Investment In Real Estate (historic Cost)

The total amount of equity and debt invested in real estate investments, including the gross purchase price, all acquisition fees and costs, plus subsequent capital improvements, less proceeds from sales and partial sales.


Agreement whereby the guarantor assures satisfaction of the debt of another or performs the obligation of another if and when the debtor fails to do so.

Hard Cost

The cost of actually constructing property improvements.

Hard Money Loan

A loan made in cash by a non-institutional lender.

Highest And Best Use

The possible use of a property that would produce the greatest net income and thereby develop the highest value.


Funds not released under a construction loan agreement due to a failure to lease to the required minimum.

Holding Period

The length of time an investor expects to own a property from purchase to sale.

Home Equity Conversion Mortgage (HECM)

Usually referred to as a reverse annuity mortgage, what makes this type of mortgage unique is that instead of making payments to a lender, the lender makes payments to you. It enables older home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property.

Home Equity Loan

A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.

Home Inspection

A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

Homeowner's Association

A nonprofit association of homeowners organized pursuant to a declaration of restrictions or protective covenants for a subdivision, PUD or condominium.

HUD-1 Settlement Statement

A form used by a settlement, or closing, agent itemizing all charges imposed on a borrower and seller in a real-estate transaction. It gives a picture of the closing transaction, providing each party with a complete list of their incoming and outgoing funds. "Buyers" are referred to as "borrowers" on this form even if no loan involved. The HUD-1 is also known as a "closing sheet" or "settlement form".


The acronym for heating, ventilating and air conditioning.

Hybrid Debt

A mortgage position with equity-like participation features in both cash flow and the appreciation of the property at the time of sale or refinance.

Implied Agency

An agency agreement created by the actions of the parties, and not a stated (written or verbal) agreement.

Implied Easement

When the owner of two or more adjacent properties sells a part thereof, he or she grants by implication all those apparent and visible easements which are necessary for the reasonable use of the property granted.


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, sidewalk, utilities, etc.


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, sidewalk, utilities, etc.

Income Ratio

The relationship between a person's total income and the amount needed to make one month's mortgage payment.

Incorporeal Right

A nonpossessory right in real estate; for example, an easement or a right of-way.

Independent Contractor

One who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as to how he or she performs the act. The critical feature, and what distinguishes an independent contractor from an employee or agent, is the degree of control the employer has over such a person's activities.


A way to enter a property - access. The opposite of egress.

Inflation Hedge

An investment that tends to increase in value at a rate greater than inflation and helps contribute to the preservation of the purchasing power of a portfolio

Initial Public Offering (IPO)

The first time a private company offers securities for sale to the public.

In-house Sale

A sale in which the listing broker is the only broker in the transaction; there is no outside broker involved as in a cooperative sale. Either the listing salesperson finds the buyer, or another salesperson working for the listing broker finds the buyer. If the buyer is a client of the broker, the issue of dual agency arises.Interest: The price paid for the use of capital.

Internal Rate Of Return (IRR)

A discounted cash-flow analysis calculation used to determine the potential total return of a real estate asset during an anticipated holding period.

Intrinsic Value

An appraisal term referring to the value created by a person's personal preferences for a particular type of property.

Investment Policy

A document that formalizes an institution's guidelines for investment and asset management. An investment policy typically will contain goals and objectives; core and specialty investment criteria and methodology; and guidelines for asset management, investment advisory contracting, fees and utilization of consultants and other outside professionals.

Investment Strategy

The investment parameters used by the manager in structuring the portfolio and selecting the real estate assets for a fund or account. This includes a description of the types, locations and sizes of properties to be considered, the ownership positions that will be used, and the stages of the investment lifecycle.

Involuntary Lien

A lien placed on property without the consent of the property owner.

IRS Tax Lien

A federal tax lien, or Internal Revenue Service (IRS) tax lien, results from a person's failure to pay any portion of federal taxes, such as income and withholding taxes. A federal tax lien is a general, statutory, involuntary lien on all real and personal property held by the delinquent taxpayer. Its priority, however, is based on the date of filing or recording; it does not supersede previously recorded liens.

Joint Tenancy

A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.

Joint Venture

An investment entity formed by one or more entities to acquire or develop and manage real property and/or other assets.

Judgment Lien

A general lien on the property of a judgment debtor, giving the holder of the judgment a right to levy the property to satisfy the debt.

Jumbo Loan

A "jumbo" loan is any loan that exceeds the underwriting guidelines for Fannie Mae/Freddie Mac maximum loan limits ($240,000 as of January 1999).

Just Compensation

Compensation that is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain).


Payment made to someone for referral of a customer or business. Unlike a commission, a kickback is made without the customer's knowledge; thus, the referral could have been made without the customer's best interest at heart.


A kiosk is a freestanding structure (open sides, usually multi sided) located in a shopping center or mall from which merchandise is sold. A multi-sided structure found in a shopping mall or center.

Land Contract

A land contract is a real property sales contract.

Landlord's 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.

Latent Defect

A hidden structural defect that would not be discovered by ordinary inspection and that threatens the property's soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects. Buyers have been able to either rescind the sales contract or receive damages when a seller fails to reveal known latent defects. The courts have also decided in favor of the buyer when the seller neglected to reveal violations of zoning or building codes.

Law Of Agency

A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.


Lead is an element that was once used as a pigment and drying agent in paint. An elevated level of lead in the body can cause serious damage to the brain, nervous system, kidneys and red blood cells. The degree of harm is related to the amount of exposure and the age at which a person is exposed. The Federal government estimates that lead is present in about 75 percent of all private homes in the United States built before 1978.

Leasehold Estate

A tenant's right to occupy real estate during the term of a lease; a personal property interest.

Legal Description

A geographical description identifying a parcel by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion that is subject to an easement or reservation.

Legal 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.


A person who receives money or personal property under a will.

Letter Of Credit

A commitment by a bank or other person 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.


The use of credit to finance a portion of the costs of purchasing or developing a real estate investment. Positive leverage occurs when the interest rate is lower than the capitalization rate or projected internal rate of return. Negative leverage occurs when the current return on equity is diminished by the employment of debt.


1. Legal responsibility for an act. 2. A debt.


A claim or encumbrance against property used to secure a debt, a charge or the performance of some act.

Lien Waiver

Documents signed by subcontractors and suppliers, indicating they have received payment in full.

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 comprised of one or more general partners who manage the business and are personally liable for partnership debts, and one or more limited partners who contribute capital and share in profits but who take no part in running the business and incur no liability above the amount contributed.


Refers to the time it takes to convert an asset to cash that is a reflection of its market value.

Listing Agreement

An agreement between the owner of a property and a real estate broker giving the broker 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.

Littoral Rights

The rights of a landowner whose land borders a pond, lake or ocean shore-line where the body of water is non-flowing. Littoral rights extend to the mean high watermark of ocean or tidal waters.

Loan Origination Fee

The processing of a mortgage application is known as loan origination. When a mortgage loan is originated, a loan origination fee, or transfer fee, is charged by most lenders to cover the expenses involved in generating the loan. These include the loan officer's salary, paperwork and the lender's other costs of doing business.

Loan-to-value Ratio

The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.

Lock-box Structure

A structure whereby the rental or debt-service payments are sent directly from the tenant or mortgagor to the trustee.

Lock-in Clause Or Lockout

A condition in a promissory note that prohibits prepayment of the note.

Loss Severity

The percentage of principal lost when a loan is foreclosed.


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.

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.


The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.


One who creates or executes a promissory note and promises to pay the note when it becomes due.

Market Rental Rates

The rental income that a property most likely would command in the open market, indicated by the current rents asked and paid 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.

Market Value

The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale.

Marketable Title

A title free from encumbrances that could be readily marketed to a willing purchaser.

Master Servicer

An institution that acts on behalf of a trustee for the benefit of security holders in collecting funds from a borrower, advancing funds in the event of delinquencies and, in the event of default, taking a property through foreclosure.


The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

Mechanic's Lien

A claim created 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.

Metes And Bounds

The boundary lines of land described by listing the compass directions and distances of the boundaries. Originally, metes referred to distance and bounds referred to direction.

Mezzanine Financing

Mezzanine financing is somewhere between equity and debt. It is that piece of the capital structure that has senior debt above it and equity below it. There is both equity and debt mezzanine financing, and it can be done at the asset or company level, or it could be unrated tranches of CMBS. Returns are generally in the mid- to high-teens.

Mineral Rights

Rights to subsurface land and profits. Nornally, when real property is conveyed, it includes everything above and below the surface of the land, except where specified by the grantor.


A false statement or concealment of a material fact made with the intention of inducing some action by another party.


Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.

Plan Sponsor

The person or institution that establishes, contributes to and is responsible for the administration of an employee benefit plan, often used interchangeably to describe staff who administer the plan and trustees or investment board members who govern it.


A map of a town, section or subdivision indicating the location and boundaries of individual properties.

Portfolio Management

The portfolio management process involves creating, modifying and implementing a real estate investment strategy in light of an investor's broader overall investment objectives. It also can be defined as the management of several properties owned by a single entity.

Portfolio Turnover

The average time that passes from the funding of an investment until it is repaid or sold.

Power Of Sale

The clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power, upon default in the payment of the debt secured, to advertise and sell the property at auction.

Prepayment Rights

Rights given to the borrower to make partial or full payment of the principal balance prior to the maturity date with no penalty.

Price To Earnings Ratio

This ratio is calculated by dividing the current share price by the sum of the primary earnings per share from continuing operations, before accounting changes or extraordinary items , over the past four quarters.

Primary Issuance

The preliminary financing of an issuer.

Prime Space

Typically refers to first-generation space that is accessible for lease.

Prime Tenant

The major tenant in a building, or the major or secure tenant in a shopping center.

Principal Payments

The return of invested capital to the lender.

Private Placement

A sale of a security in a method that is exempt from the registration rules and requirements of the Securities and Exchange Commission. An example would be a REIT directly placing an issue of stock with a pension fund.

Production Acres

The area of land that can be used in agriculture or timber operations to produce income, not including areas used for crop or machinery storage space, or other support areas.

Prohibited Transaction

ERISA defines the following transactions as prohibited between a pension plan and a party in interest: the sale, exchange or leasing of any property; a loan or other extension of credit; and the furnishing of goods or services. Other prohibited transactions include the transfer of plan assets to a party in interest or use of plan assets by a party in interest, and the acquisition of employer real property in excess of limits set by ERISA.

Prudent Man Rule

The standard to which a fiduciary is held accountable under ERISA. "Act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims."

Punch List

An itemized list documenting deficient or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially inclusive.

Quitclaim Deed

A deed operating as a release that is proposed to pass any title, interest or claim that the grantor may have in the property, but not guaranteeing such title is valid.


Grade, assigned by a rating agency, designating the credit quality or creditworthiness of the principal assets.

Rating Agencies

Independent firms engaged to rate the creditworthiness of securities for the assistance of investors. The major rating agencies are Fitch Ratings, Standard & Poor's and Moody's Investors Service.

Raw Land

Unimproved land that remains in its natural state.

Raw Space

Unimproved shell space in a building.

Real Estate Fundamentals

The factors deciding the value of real property (i.e., the supply, demand and pricing for land and/or developed space in a given geographic or economic region).

Real Property

Land, and generally whatever is erected or affixed to the land that would be personal property if not attached.

Real Rate Of Return

Yield to investors net of an inflationary factor. The formula for calculating the real rate of return is [(1 + nominal yield) / (1 + inflation rate)] - 1.


The right of a lender, in the event of borrower default , to recover against the personal assets of a party who is secondarily liable for the debt.

Red Herring

The groundwork prospectus for an initial public offering. Before the registration statement becomes effective, underwriters may use the preliminary prospectus to market the offering. The preliminary prospectus, however, must bear a legend printed in red ink stating that the offering has been filed but is not yet effective.

Regional Diversification

Definitions for what constitute various regions, for diversification purposes, vary among managers, consultants and plan sponsors. Some boundaries are defined based purely on geography; others have attempted to define boundaries along economic lines.

Registration Statement

Forms filed with the Securities and Exchange Commission (or the appropriate state regulatory agency) in connection with a proposed offering of new securities or the listing of outstanding securities on a national exchange.


Extensive renovation intended to cure obsolescence of a building or project.

REIT (Real Estate Investment Trust)

A business trust or corporation that combines the capital of many investors to acquire or provide financing for real estate. A corporation or trust that qualifies for REIT status generally does not pay corporate income tax to the IRS. Instead, it pays out at least 90 percent of its taxable income in the form of dividends.

REMIC (Real Estate Mortgage Investment Conduit)

A product of the Tax Reform Act of 1986, REMICs are designed to hold a pool of mortgages for the exclusive purpose of issuing multiple classes of mortgage-backed securities in a way that avoids a corporate double tax.

Renewal Option

A clause giving a tenant the right to extend the lease term.

Renewal Probability

Used to estimate leasing-related costs and downtime, it is the average percentage of tenants in a building that are expected to renew at market rental rates at the expiration of their leases.

Rental Concession

Definition of what landlords offer tenants to secure their tenancy. While rental abatement is one form of a conession, there are many others such as increased tenant improvement allowance, signage, below-market rental rates and moving allowances.

Rental Growth Rate

The expected trend in market rental rates over the analysis period, expressed as an annual percentage increase.


A legal document by which real property is pledged as security for repayment of a loan until the debt is repaid in full.


The lender in a mortgage agreement.


The borrower in a mortgage agreement.

Mortgage Constant

The ratio of an amortizing mortgage payment to the outstanding mortgage balance.

Mortgage Insurance Premiums (MIP)

Most FHA loans require the borrower to pay two mortgage insurance premiums: one upfront paid at closing; the second is an annual premium based on the loan balance each year.

Multiple-listing Clause

A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.

Multiple-listing Service (MLS)

A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. Most multiple-listing services accept exclusive-right-to-sell or exclusive agency listings from their member brokers.

NAREIT (National Association Of Real Estate Investment Trusts)

The national, not-for-profit trade organization that represents the real estate investment trust industry.

NCREIF (National Council Of Real Estate Investment Fiduciaries)

An independent organization of real estate professionals who serve on working committees, sponsor research articles, seminars and symposiums, and produce the NCREIF Property Index.

NCREIF Property Index (NPI)

The index reports quarterly and annual returns consisting of income and appreciation components. The index is based on data collected from the voting members of NCREIF.

Negative Amortization

Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.

Net Assets

Total assets less total liabilities on a market-value basis.

Net Cash Flow

Income from an investment property after expenses such as principal, interest, taxes, and insurance are subtracted.

Net Worth

The worth of a person or company based on the difference between total assets and liabilities.

Net Operating Income (NOI)

The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses. It is a key indicator of financial strength.

Net Purchase Price

Gross purchase price less associated debt financing.

Net Real Estate Investment Val

The market value of total real estate after property-level debt is subtracted.

Nominal Yield

is calculated as the annual dollar amount of income retained from a fixed interest security divided by the issue's par value (usually $1000). This yield is also called the coupon rate. annual interest payment = par value.

Non-performing Loan

A loan that has failed to meet its contractual principal and interest payments.

Non-recourse Debt

Debt for which the borrower is not liable.


An offer is a promise made by one party, requesting something in exchange for the promise. The offer is made with the intention that the offeror will be bound to the terms if the offer is accepted. The terms of the offer must be specific and must be communicated to the offeree.

Open-end Fund

A commingled fund that does not have a finite life, continually accepts new capital and makes new property investments.

Operating Expense

The actual costs associated with operating a property, including maintenance, repairs, management, utilities, taxes and insurance.


A company that sources and underwrites commercial and multifamily mortgage loans.


Retail sites in a shopping center.


A practice through which underwriters offer and sell more shares than they have agreed to purchase from the issuer.

Partial Taking

Taking part of an owner's property under the laws of eminent domain.

Participating Debt

In addition to collecting a contract interest rate, participating debt allows the lender to have participatory equity rights through a share of increases in income and/or increases in residual value over the balance or original value at the time of funding.

Party In Interest

Parties in interest include employers, unions and, in certain circumstances, fiduciaries. It excludes service providers and their affiliates. Fiduciaries would only be parties in interest where they act on behalf of a plan sponsor in entering into a transaction. An affiliate of a party in interest does not include remote affiliates of employers, unions and fiduciaries, as well as employees of such remote affiliates.

Pass-through Certificate

Payments of principal and interest from the underlying mortgages are passed through to the holders of the certificates.

Percentage Rent

Rent payable under a lease that is equal to a percentage of gross sales or revenues received by the tenant. It is often used in retail center leases.


The quarterly changes in account or fund values attributable to investment income, realized or unrealized appreciation, and the total gross return to the investors both before and after investment management fees. Formulas for calculating performance information are varied, making comparisons almost impossible.

Performance Bond

A surety bond posted by a contractor guaranteeing performance of a contract with the proceeds to be utilized to complete the contract or compensate for the owner's loss in the event of nonperformance

Performance Measurement

The process of measuring the real estate performance of an investor in terms of individual assets, advisers/managers and portfolios. The scope of performance measurement reports is diverse among managers, consultants and plan sponsors.

Performance-based Fees

Monies paid to advisers or managers based on returns to investors, often packaged with a modest acquisition and asset-management.

Permanent Loan

The long-term mortgage on a property.

Plan Assets

The assets of a pension plan.

Proof of Funds

You must be able to provide the Seller or Seller's agent of proof of funds for the balance of the down payment. This can be done by a letter from your bank, recent bank statements, a gift letter or as equity coming from the sale of your current home. Your lender will be able to assist us with the necessary documentation.

REO (Real Estate Owned)

Real estate owned by a savings institution as a result of default by borrowers and subsequent foreclosure by the savings institution.

Replacement Cost

The estimated current cost to construct a building with utility equal to the building being appraised, using modern materials and current standards, design and layout.

Replacement Reserves

An allowance that provides the periodic replacement of building components that wear out more rapidly than the building itself and need replacement during the building's economic life.

Request For Proposal (RFP)

A formal request, issued by a plan sponsor or its consultant, inviting investment managers to submit information on their firms' investment strategy, historical performance, current opportunities, management fees, other pension fund client relationships, etc. Firms that meet the qualifications are requested to make a formal presentation to the board of trustees and senior staff members. Finalists are chosen at the completion of this process, and contract negotiation begins.

Reserve Account

An account that a borrower has to fund to protect the lender. Examples include capital expenditure accounts and deferred maintenance accounts.

Retention Rate

The percent of trailing 12-month earnings that have been recycled back into the company. It is calculated as 100 minus the trailing 12-month payout ratio.

Return On Assets

The income after taxes for the trailing 12 months divided by the average total assets, expressed as a percentage.

Return On Equity

The income available to common stockholders for the trailing 12 months divided by the average common equity, expressed as a percentage.

Return On Investments

The trailing 12-month income after taxes divided by the average total long-term debt, other long-term liabilities and shareholders equity, expressed as a percentage.

Reversion Capitalization Rate

The capitalization rate used to determine reversion value.

Reversion Value

A lump-sum benefit that an investor receives or expects to receive at the termination of an investment.

Risk Management

An approach to identifying and separating insurable risks from non-insurable risks, and evaluating the availability and costs of purchasing third-party insurance.

Risk-adjusted Rate Of Return

Used to identify investment alternatives that can be expected to deliver a positive premium, after taking into consideration the expected volatility. The risk-adjusted rate of return is defined as the expected rate of return of a given asset, less the expected return for T-bills, divided by the expected standard deviation of the returns for the assets.


The owner-occupant of a property agrees to sell all or part of the property to an investor, then lease it back and continue to occupy space as a tenant.

Sales Comparison Value

A value indication existing by comparing the property being appraised to similar properties that have been sold recently.

Second-generation Or Secondary Space

Previously occupied space that becomes available for lease, either directly from the landlord or as sublease space.

Secondary Financing

A loan on real property secured by a lien junior to an existing first mortgage loan.

Secondary Market

A market where existing mortgage loans are securitized and then bought and sold to other investors.

Secondary, Or Follow-on, Offering

A stock offering made by an existing public company.

Securities And Exchange Commission (SEC)

The federal agency that supervises and oversees the issuance and exchange of public securities


The process of converting an illiquid asset, such as a loan, into a tradable form, such as mortgage-backed securities.

Security Deposit

A deposit of money by a tenant to a landlord to secure performance of a lease. It also can take the form of a letter of credit.

Seisen (seizen)

Possession of real property under a claim of freehold estate.

Senior Classes

With regard to securities, describes the classes with the highest priority to receive the payments from the underlying mortgage loans.


An organization that acts on behalf of a trustee for the benefit of security holders.


The distance from a curb, property line or other reference point, within which building is prohibited.

Shares Outstanding

The number of shares of common stock currently outstanding, less the shares held in treasury.

Site Analysis

Determines the suitability of a specific parcel of land for a specific use.

Site Development

The installation of all necessary improvements made to a site before a building or project can be constructed on the site.

Site Plan

A detailed plan that depicts the location of improvements on a parcel.


The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building.

Soft Cost

The portion of an equity investment other than the actual cost of the improvements themselves that may be tax-deductible in the first year.

Space Plan

A graphic representation of a tenant's space requirements, showing wall and door locations, room sizes and sometimes furniture layouts.

Special Assessment

Special charges levied against real property for public improvements that benefit the assessed property.

Special Servicer

A firm that is employed to work out mortgages that are either delinquent or in default.

Specified Investing

Investment in individually specified properties or portfolios, or investment in commingled funds whose real estate assets are fully or partially specified prior to the commitment of investor capital.

Speculative Space

Any tenant space that has not been leased before the start of construction on a new building.

Stabilized Net Operating Income

Projected income less expenses that are subject to change but have been adjusted to reflect equivalent, stable property operations.

Stabilized Occupancy

The optimum range of long-term occupancy that an income-producing real estate project is expected to achieve after exposure for leasing in the open market for a reasonable period of time at terms and conditions comparable to competitive offerings.

Strip Center

Any shopping area comprised of a row of stores but smaller than a neighborhood center anchored by a grocery store.


A contractor working under and being paid by the general contractor, often a specialist in nature, such as an electrical contractor, cement contractor, etc.


A person or identity to whom the rights of use and occupancy under a lease have been conveyed, while the original lessee retains primary responsibility for the obligations of the lease.

Subordinated Classes

With regard to CMBS, describes those classes with the lowest priority to receive payments from the underlying mortgage loans.


The process of sharing the risk of credit losses disproportionately among two or more classes of securities.


One who voluntarily binds himself to be obligated for the debt or obligation of another.

Surface Rights

A right or easement granted with mineral rights, enabling the possessor of the mineral rights to drill or mine through the surface.


The process by which a parcel is measured and its boundaries and contents ascertained.

Survey of the Property

This is the time do decide if you want a survey of the property. If the property you are purchasing is new construction, the lender will require a mortgage inspection by a land surveyor. A mortgage inspection shows the position of the improvements on the lot as a drawing. If you want a pinned survey, which means that the surveyor marks the corners of the property with an iron rod and flagging, you will have to pay extra. All in all, a pretty good idea to have this done and the only way to know exactly where the property boundaries are located. A pinned mortgage survey on a "typical" city lot in Kentucky should cost between $250.00 - $300.00.

Synthetic Lease

A transaction that appears as a lease from an accounting standpoint but as a loan from a tax standpoint.


A common synonym for condemnation, or any interference with private property rights, but it is not essential that there be physical seizure or appropriation.

Tax Base

The assessed valuation of all real property that lies within a taxing authority's jurisdiction. When multiplied by the tax rate, it determines the amount of tax due.

Tax Lien

A statutory lien for nonpayment of property taxes that 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 the lease are an uncertain duration and the right of either party to terminate on proper notice.

Tenant Improvement (TI)

Improvements made to the leased premises by or for a tenant.

Tenant Improvement (TI) Allowance

Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount.

Tenant Mix

A phrase used to describe the quality of a property's income stream. In multi-tenanted properties, institutional investors typically prefer a mixture of national credit tenants, regional credit tenants and local non-credit tenants.


The lifetime of a loan.

Time-weighted Average Annual Rate Of Return

The constant annual return over a series of years that would compound to the same return as compounding the actual annual returns for each year in the series.


The means whereby the owner has the just and full possession of real property.

Title Insurance

A policy issued by a title company that 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 Assets

The sum of all gross investments, cash and equivalents, receivables, and other assets presented on the balance sheet.

Total Commitment

The full mortgage loan amount that is obligated to be funded if all stated conditions are met.

Total Inventory

The total square footage of a type of property within a geographical area, whether vacant or occupied.

Total Principal Balance

The total amount of debt, including the original mortgage amount adjusted for subsequent funding, principal payments and other unpaid items (e.g., interest) that are allowed to be added to the principal balance by the mortgage note or by law.

Total Retail Area

Total floor area of a retail center less common areas. It is the area from which sales are generated and includes any department stores or other areas (such as banks, restaurants or service stations) not owned by the center.

Total Return

The sum of quarterly income and appreciation returns.

Trade Fixtures

Personal property that is attached to a structure that is used in the business. Because this property is part of the business and not deemed to be part of the real estate, it is typically removable upon lease termination.


A class of securities. CMBS offerings are generally divided into rated and unrated classes, or tranches, according to seniority and risk. Higher-rated tranches allow for internal credit enhancements; lower-rated classes offer higher yields.

Triple Net Lease

A lease that requires the tenant to pay all expenses of the property being leased in addition to rent. Typical expenses covered in such a lease include taxes, insurance, maintenance and utilities.


The trustee oversees the flow of funds through the CMBS structure on behalf of the bondholders. The trustee is responsible for collecting principal and interest from the servicer, distributing payments to bondholders and reporting to bondholders.

Turn Key Project

The construction of a project in which a third party is responsible for the total completion of a building, or for the construction of tenant improvements to the customized requirements and specifications of a future owner or tenant.

Under Construction

The period of time after construction has started but before the certificate of occupancy has been issued.

Under Contract

The period of time after a seller has accepted a buyer's offer to purchase a property and during which the buyer is able to perform its due diligence and finalize financing arrangements. During this time, the seller is precluded from entertaining offers from other buyers.


A company, usually an investment banking firm, that guarantees or participates in a guarantee that an entire issue of stocks or bonds will be purchased.


Property that is free of liens and other encumbrances.

Unimproved Land

Most commonly refers to land without improvements or buildings but also can mean land in its natural state.

Unrated Classes

Typically the most subordinated classes of CMBS.

UPREIT (Umbrella Partnership Real Estate Investment Trust)

Organizational structure where a REIT's assets are owned by a holding company for tax purposes.

Usable Square Footage

The area contained within the demising walls of the tenant space that equals the net square footage multiplied by the circulation factor.


The specific purpose for which a parcel or a building is intended to be used or for which it has been designed or arranged.

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.

Vacant Space

Existing tenant space currently being marketed for lease excluding space available for sublease.


A phrase generally used by advisers and managers to describe investments in underperforming and/or undermanaged assets. The objective is to generate 13 percent to 18 percent returns.


A loan interest rate that varies over the term of the loan, usually tied to a predetermined index. Also called adjustable-rate.


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.

Waiting Period

The time between the initial filing of a registration statement and its effective date.

Weighted-average Coupon

The weighted average of the gross interest rates of the mortgages underlying a pool as of the issue date, with the balance of each mortgage used as the weighting factor.

Weighted-average Equity

The denominator of the fraction used to calculate investment-level income, appreciation and total returns on a quarterly basis, consisting of net assets at the beginning of the period adjusted for weighted contributions and distributions.

Weighted-average Rental Rates

The average proportion of unequal rental rates in two or more buildings within a market.

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.


The process by which a borrower attempts to negotiate with a lender to restructure the borrower's debt rather than go through foreclosure proceedings.


The accounting procedure used when the book value of an asset is adjusted downward to better reflect current market value.


The accounting procedure used when an asset has been determined to be uncollectible and is therefore charged as a loss.


The effective return on an investment, as paid in dividends or interest.

Yield Maintenance Premium

A penalty, paid by the borrower, designed to make investors whole in the event of early redemption of principal.

Yield Spread

The difference in yields between a commercial mortgage and a benchmark value, typically U.S. Treasuries of the same maturity.


The division of a city or town into zones and the application of regulations having to do with the architectural design and structural and intended uses of buildings within such zones.

Zoning Ordinance

The set of laws and regulations controlling the use of land and construction of improvements in a given area or zone.

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