A provision in a contract (e.g., lease) that confers the ability of one in the lease to terminate the party's obligations. The grounds and ability to cancel are usually specified in the lease.
Any major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof, and renovations of the lobby.
Capitalization Rate (Cap Rate)
The value given to the property when the Net Operating Income (NOI) is divided by the current market value or sales price. A cap rate can be used as a rough indicator of how quickly an investment will pay for itself. The higher the cap rate, the better. Example: A property has an NOI of $100,000, and the price is $1,000,000. The cap rate would be 10% ($100,000/$1,000,000 = 10%). Based on this calculation, you would see a return in 10 years.
Certificate of Occupancy (CO)
The government issues this official form, which states that the building is legally ready to be occupied.
Household goods, including personal property such as lamps, desks, and chairs.
Common Area Maintenance (CAM)
This is the amount of additional rent charged to the tenant, in addition to the base rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, escalators, sidewalks, skyways, parking areas, insurance, property taxes, etc. Most often, this does not include any capital improvements that are made to the property.
An agreed upon division of commissions earned between a sales agent and sponsoring broker, or between the selling broker and listing broker. Example: The seller of a $1,500,000 building paid a $75,000 comission at closing. The commission split was 50/50 between the listing and selling brokers. Each broker then split the fee received with the sales agent responsible for the sale, in accordance with each firm's comission split schedule.
Touching at some point or along a boundary
A requirement in a contract that must occur before that contract can be finalized
A legal agreement between entities that requires each to conduct (or refrain from conducting) certain activities. This document provides each party with a right that is enforceable under our judicial system.
Wording found in deeds that limits/restricts the use to which a property may be put (e.g., no bars).
Action to regain possession or real property. This is a last-ditch effort that is used when there is no relationship between landlord and tenant.
The government's right to condemn and acquire property for public use. The government must provide the owner fair compensation.
Signing one's name on the back of a check.
A written agreement among parties, requiring that certain property/funds be placed with a third party. The object in escrow is released to a designated entity upon completion of some specific occurrence.
A legal instrument executed by the one taking out the mortgage (i.e., mortgagor). The owner of a property may require an individual leasing a property to sign an estoppel certificate, which verifies the major points (e.g., base rent, lease commencement and expiration) existing lease between the landlord and tenant.
Physical removal of a tenant either by law or force.
The landlord or his agents disturb the tenant, rendering the leased space unfit for the tenant's previous use.
A legal proceeding by the landlord to remove a tenant
An agreement in which one broker has exclusive rights to represent the owner or tenant. If another broker is used, both the original and actual broker are entitled to leasing commissions.
An asset-based loan in which a borrower receives funds that are secured by the value of a piece of real estate and often at a higher interest rate than a traditional commercial property loan. They are used for acquisitions, turnaround situations, foreclosures and bankruptcies.
A tenant who remains in possession of leased property after the lease term expiration.
A requirement that must be conformed to as specified in any written document.
The actual selling or leasing price of a property.
The expected price that a property should bring if exposed for lease in the open market for a reasonable period of time and with market savvy landlords and tenants.
Meeting of the Minds
When all individuals to a contract agree to the substance and terms of that contract.
A person under a legal age, usually under 18 years old.
An arrangement among Real Estate Board of Exchange Members, whereby each broker presents the broker's listings to the attention of the other members so that if a lease results, the commission is divided between the broker bringing the listing and the broker making the lease.
Also called triple net lease. The lessee pays not only a fixed rental charge but also expenses on the rented property, including maintenance. Example: Super Saver Markets enters into a triple-net lease. They are to pay for all the taxes, utilities, insurance, repairs, janitorial services, and license fees; any debt service and the landlord's income taxes are the responsibility of the landlord.
The tenant signs this to prevent himself from being evicted if the property owner does not pay its mortgage to the bank.
A public officer who is authorized to witness and verify certain documents (e.g., contracts, deeds, mortgages). Also an affidavit may be sworn before this public officer.
The person who will receive the outcome of an obligation.
An individual who has engaged to perform an obligation to another person (i.e., obligee).
A listing given to any broker without liability to compensate any broker except the one who first secures a buyer who is ready, willing, and able to meet the terms of the listing, or secures the acceptance by the landlord of a satisfactory offer; the lease of the property automatically terminates the listing.
A right given to purchase or lease a property upon specified terms within a specified time. If the right is not exercised, the option holder is not subject to liability for damages. If the holder of the option exercises it, the grantor of option must perform the option’s requirements.
A license to occupy or use lands and buildings at the will of the landlord.
Tenancy by the Entirety
An estate which exists only between husband and wife. Each has equal right of enjoyment and possession during their joint lives, and each has the right of survivorship.
Work done on the interior of a space, can be paid for by landlord, tenant, or some combination of both, depending on the terms of the lease.
Tenancy in Common
Ownership of property by two or more individuals, each of whom has an undivided interest, without the right of survivorship.
Tenants at Sufferance
An individual who comes to possess land via lawful title and keeps it in perpetuity without any title.
A contract where one transaction depends upon another transaction.
A wrongful act or violation of a legal right for which a civil action will lie.
Triple Net Lease
A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs.Example: Super Saver Markets enters into a triple-net lease. They are to pay for all the taxes, utilities, insurance, repairs, janitorial services, and license fees; any debt service and the landlord's income taxes are the responsibility of the landlord.