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A compilation of frequently used real estate terminology and their meaning, arranged in alphabetical order. |
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Abatement notice A notice served on the owner(s) or occupier(s) of a property from which a private nuisance arises, warning them of the intention to enter on the land in order to abate the nuisance. Absolute title 1. The right of ownership of a mortgage deed, which gives the right, in certain specified circumstances, to demand repayment in full, of the outstanding debt than the due date. 2. A clause in a deed or contract, which provides for the early termination of an exciting interest in land, in certain specified circumstances, thereby advancing the future interest. Agreement for lease/sale A contract to enter into a lease (or sale), which in order to be enforceable either must be evidenced in writing and signed by the person against whom action is taken for the breach of the alleged contract and there must be a sufficient act of part performance. Alternative user value The value of land and buildings which reflects a prospective use which is different from that of the current use. Amortisation 1.(UK) The concept of writing off the capital cost of a wasting physical asset by means of a sinking fund. 2. (USA) Payment of a debt in equal installments of principal interest, as opposed to interest-only payments. Anchor tenant One or more department or variety chainstores, or supermarkets, introduced into a shopping centre in key positions to attract the shopping public into the centre for the purpose of encouraging other retailers to lease shops en route. The larger the developments the more anchors required. Annuity A sum of money paid each year during the life of the recipient. An annuity is usually paid as a legal obligation under a contract or undertaking, as through a pension scheme, and may be paid in installments more frequently than once every twelve months. Asset valuation In the property market this expression is applied to the valuation of land and buildings or plant and machinery. The term is often used to describe an expert opinion of the worth of a property which may be incorporated into company accounts, where the ownership of the asset is not necessarily to be transferred but the valuation is required for the company takeovers, share flotation or mortgages. Assignment The transfer of a property interest, especially a lease, from one party to another. Atrium An entrance hall of a building, often rising through a number of storeys and containing lifts, reception areas and plants. Originally the hall or chief apartment of a Roman house. |
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Balloon payment A repayment of a loan bond, usually but not necessarily the final repayment, which is larger in amount than other installments. Bare shell Depicts the condition of any property after completion of construction activity and installations of basic building services. A bare shell includes basic flooring - tiled, mosaic, cement or granite and plastered walls. Apart from this, pantry and toilet facilities may also be operational in such condition. Basic rent A monthly rental net of maintenance and interest costs charged or quoted by landlords for any property. The base rent comprises of only the payment made for usage of the subject property under a lease agreement. Imputed costs such as holding costs, fit out costs and building service charges are not usually included in the base rent. Bayana An Indian term used to denote the token money given to the landlord to informally freeze negotiations on a particular property, after the initial terms and conditions have been formalised. Breach of contract An act, or omission, contrary to enforce specific performance to rescind the contract and / or to claim damages, the remedy available depending upon the nature of the breach. Broker/dealer A person or company who acts as a medium of bringing owners and proposed buyers together with a view to complete a real estate transaction. Brokerage 1. Commission paid to a broker. 2. The activity of a broker in bringing together two parties in a transaction. Building bye laws Local authority control of building standards promulgated to regulate and control the usage of land, property and areas in cities and towns. Building contract A contract between an owner or occupier of land and a building contractor, setting forth the terms under which construction is to be carried out, basis of remuneration, time scale, and penalties, if any, for failure to comply with terms of the contract. Business centre Commercial premises usable by the occupiers for a short period on a membership basis of the centre. Usually, a business centre charges for the full service accommodation, which is generally substantially higher than the rental of a standard office space and usually includes cost of HVAC, housekeeping, electricity, and security systems. Business park A landscaped area containing high tech, other amenities for business purposes, as distinct from high-tech park or a science park. Building density is lower than would be usual in a traditional industrial estate. Business parks are preferentially located where motorway, rail and airport communications are within a short distance. Buy-out rate In a funding agreement between a developer and a prospective purchaser, the pre-determined investment yield which will be used to capitalize the annual income receivable at the time of sale to determine the buy out price. |
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Capitalisation 1. At a given date the conversion into the equivalent capital worth of a series of net receipts, actual or estimated, over a period. 2. A method of calculating a final purchase price for a development using an agreed formula to convert actual, or assumed, income from initial lettings into a capitalism. Such capitalised sums may be offset against a purchasing fund's interim finance payments, any excess being paid to the developer. 3. In relation to a company's reserves, the conversion into capital of money, which is then distributed as a capitalisation issue. Catchment area 1. The area of land from which finds its way into a particular watercourse, lake or reservoir. 2. By analogy, the area which
contains those people who can be expected to obtain goods, services, employment
or other benefits from a particularly property. More especially related
to retail premises, where the success of forecasting depends on the accuracy
of estimating the number of purchasers (catchment population) likely to
be attracted from the different parts of the area and
A compilation
of frequently used real estate terminology and their meaning, arranged
in alphabetical order. Abatement notice A notice served on the owner(s)
or occupier(s) of a property from which a private nuisance arises, warning
them of the intention to enter on the land in order to abate the nuisance. Absolute title 1. The right of ownership of a
mortgage deed, which gives the right, in certain specified circumstances,
to demand repayment in full, of the outstanding debt than the due date.
2. A clause in a deed or contract, which provides for the early termination
of an exciting interest in land, in certain specified circumstances, thereby
advancing the future interest. Agreement for lease/sale A
contract to enter into a lease (or sale), which in order to be enforceable
either must be evidenced in writing and signed by the person against whom
action is taken for the breach of the alleged contract and there must
be a sufficient act of part performance. Alternative user value
The value of land and buildings which reflects a prospective use which
is different from that of the current use. Amortisation 1.(UK)
The concept of writing off the capital cost of a wasting physical asset
by means of a sinking fund. 2. (USA) Payment of a debt in equal installments
of principal interest, as opposed to interest-only payments. Anchor tenant One
or more department or variety chainstores, or supermarkets, introduced
into a shopping centre in key positions to attract the shopping public
into the centre for the purpose of encouraging other retailers to lease
shops en route. The larger the developments the more anchors required. Annuity A sum of
money paid each year during the life of the recipient. An annuity is usually
paid as a legal obligation under a contract or undertaking, as through
a pension scheme, and may be paid in installments more frequently than
once every twelve months. Asset valuation In
the property market this expression is applied to the valuation of land
and buildings or plant and machinery. The term is often used to describe
an expert opinion of the worth of a property which may be incorporated
into company accounts, where the ownership of the asset is not necessarily
to be transferred but the valuation is required for the company takeovers,
share flotation or mortgages. Assignment The transfer
of a property interest, especially a lease, from one party to another. Atrium An entrance
hall of a building, often rising through a number of storeys and containing
lifts, reception areas and plants. Originally the hall or chief apartment
of a Roman house. Balloon payment A repayment of a loan bond, usually
but not necessarily the final repayment, which is larger in amount than
other installments. Bare shell Depicts the condition of any property
after completion of construction activity and installations of basic building
services. A bare shell includes basic flooring - tiled, mosaic, cement
or granite and plastered walls. Apart from this, pantry and toilet facilities
may also be operational in such condition. Basic rent A monthly rental net of maintenance
and interest costs charged or quoted by landlords for any property. The
base rent comprises of only the payment made for usage of the subject
property under a lease agreement. Imputed costs such as holding costs,
fit out costs and building service charges are not usually included in
the base rent. Bayana An Indian term
used to denote the token money given to the landlord to informally freeze
negotiations on a particular property, after the initial terms and conditions
have been formalised. Breach of contract
An act, or omission, contrary to enforce specific performance to rescind
the contract and / or to claim damages, the remedy available depending
upon the nature of the breach. Broker/dealer A person
or company who acts as a medium of bringing owners and proposed buyers
together with a view to complete a real estate transaction. Brokerage 1. Commission
paid to a broker. 2. The activity of a broker in bringing together two
parties in a transaction. Building bye laws
Local authority control of building standards promulgated to regulate
and control the usage of land, property and areas in cities and towns.
Building contract
A contract between an owner or occupier of land and a building contractor,
setting forth the terms under which construction is to be carried out,
basis of remuneration, time scale, and penalties, if any, for failure
to comply with terms of the contract. Business centre Commercial
premises usable by the occupiers for a short period on a membership basis
of the centre. Usually, a business centre charges for the full service
accommodation, which is generally substantially higher than the rental
of a standard office space and usually includes cost of HVAC, housekeeping,
electricity, and security systems. Business park A landscaped
area containing high tech, other amenities for business purposes, as distinct
from high-tech park or a science park. Building density is lower than
would be usual in a traditional industrial estate. Business parks are
preferentially located where motorway, rail and airport communications
are within a short distance. Buy-out rate In a
funding agreement between a developer and a prospective purchaser, the
pre-determined investment yield which will be used to capitalize the annual
income receivable at the time of sale to determine the buy out price.
Capitalisation 1. At a given date the conversion
into the equivalent capital worth of a series of net receipts, actual
or estimated, over a period. 2. A method of calculating a final purchase price for
a development using an agreed formula to convert actual, or assumed, income
from initial lettings into a capitalism. Such capitalised sums may be
offset against a purchasing fund's interim finance payments, any excess
being paid to the developer. 3. In relation to a company's reserves, the conversion
into capital of money, which is then distributed as a capitalisation issue. Catchment area 1.
The area of land from which finds its way into a particular watercourse,
lake or reservoir. 2. By analogy, the area which
contains those people who can be expected to obtain goods, services, employment
or other benefits from a particularly property. More especially related
to retail premises, where the success of forecasting depends on the accuracy
of estimating the number of purchasers (catchment population) likely to
be attracted from the different parts of the area and the average expenditure
which might be expected from them. Central business district
The functional centre around which the rest of a city is comparison shopping,
office accommodation, leisure facilities, buildings for recreational use,
public museums, art galleries and governmental functions. Generally the
area of highest land values within a city. Clearance area An
area which is to be cleared of all buildings. Generally promulgated by
way of a government declaration, which is normally followed by the acquisition
of the land and the clearance of the area. Completion certificate/statement
1. (UK) statement prepared by solicitors, usually those acting for a purchaser
and a vendor respectively, following the conveyance of an interest in
property, giving a schedule of sums received leading to a balance being
the final amount due to the vendor. In some case the statement is prepared
at a later date and may show a figure recoverable by the purchaser from
the vendor. 2. A certificate issued
by the local development authority certifying that all necessary works
have been completed and that the property is fit for occupation.
Condominium (USA)
A building or a structure of two or more units, the interior space of
the individually owned and the balance of the property (both land and
building) being owned in common by the owners of the individual units. Conveyance A document
transferring title to land from one person to another. Current yield The
remunerative rate of interest which is, or would be, a appropriate at
the date of valuation, assuming the property to be let at its full rental
value. It will be the same as the reversion yield where the reversion
is to full rental value, and the same as the term yield where the rent
receivable under the lease is full rental value. Developer An entrepreneur who has an interest
in a property, initiates its development and ensures, that this is carried
out ( for occupation, investment or dealing) and from the outset accepts
the responsibility for providing or procures the requisite funds needed
to finance the whole project. Development control The powers of a local planning
authority to control the development and use of land, which includes inter
alia:- a) the refusal or grant (with or without conditions)of
planning permission. b) the issue of enforcement notices. c) the making of revocation, modification or discontinuance
orders. d) the grant or refusal of listed building consents. e) the designations of conversion areas. Development yield In
a valuation to ascertain a ground rent, the rate at which costs are decapitalised
to find the annual deduction from the occupation rents. It comprises: a) an investment yield b) an annual allowance for developers risk and profit
and, in some instances c) an annual sinking fund element Discounted cash flow analysis Techniques
used in investment and development appraisal whereby future inflows and
outflows of cash associated with a particular project are expressed in
present-day terms by discounting. The most widely used forms of DCF are
the internal rates of return (IRR) and net present value (NPV). The techniques
may be used for such purposes as the valuation of land and investment,
the ranking of projects or their components. Easement (UK) A right appurtenant to a parcel
of land entitling a dominant owner to use the land of the servient owner
in a particular manner, or constraining the legal rights otherwise enjoyed
by the servient owner, eg. A right of way, right to light, right to support.
Strictly speaking, easements cannot exist "in gross", ie personal and
unattached to the ownership of land, but rights similar to easements can
be created by statute, usually for the benefit of public utility undertakings,
and these are commonly referred to as "statutory easements". Effective rent The gross rent payable per month
by the occupiers which includes the base rent, maintenance charges, imputed
costs of loss of interest on security deposit and rental advance. The
effective rent indicates the total cash outflow of an occupier every month
on account of leasing any property. Equity linked mortgage
A mortgage whereby the interest on the principal in part or in whole is
calculated, usually yearly, by reference on the security, eg. It may reflect
annual increase or possible decreases, in the annual return on, or the
value of, the property in which the mortgage is secured. Escalation clause Specified
in lease agreements wherein renewals of lease period are built in. It
involves an increment in the base rent at every renewal of a lease agreement
and is generally a percentage rate that is either pre agreed or negotiated
before the renewal of the lease agreement. Facilities management The co-ordination of many
specialist disciplines to create the optimum working environment for staff. Fail rent The rent determined by a rent officer
(or, on appeal, by a rent assessment committee) under a regulated tenancy
and registered. FERA An act to regulate
certain payments dealing in foreign exchange, securities, the import &
export of currency and acquisition of immovable property by foreigners.
Under Section 31 (1) of the Foreign Exchange Regulation Act ( FERA) of
1973, it is mandatory for foreign corporations, which are not incorporated
in India to obtain permission from the Reserve Bank Of India (RBI) to
acquire, hold, transfer or dispose off in any manner (expect by way of
lease for a period not exceeding five years) any immovable property in
India. Fire certificate A
certificate covering matters of safety required under the legislation
for hotels, boarding houses, factories, offices shops and railway premises,
excluding those buildings containing less than a minimum number of employees.
In order to obtain a fire certificate,one must apply to a fire officer,
who then inspects the building and issues a list of requirements (eg.
Fire escape doors/stairways). Once the fire officer is satisfied that
those requirements have been met he will issue the fire certificate. It
enables fire officers, in the event of an emergency, to have prior knowledge
inter alia of the permitted number of people on each floor; it also informs
officials if any authorised inflammables /explosives materials are found
on the premises. Fitouts Relate to
the interior permanent furnishings required in a property including HVAC
ducting, fire protection system implementation, establishment of workstations
and telephone/computer cabling among others, in order to make the property
fit for usage. Flatted factory An
industrial building of more than one storey, usually with two or more
goods lifts, and constructed or converted for multiple occupation. The
building is subdivided into small, separately occupied units which are
used for manufacturing, assembly and associated storage. Force majeure A force,
which cannot be resisted, in other words, something beyond the control
of the parties involved . It includes acts of God and acts of man, eg.
Riots, strikes, arson. In many contracts and insurance policies, specific
provision is made for damage or injury arising from force majeure. For
example, the financial liability of a building contractor for failure
to complete by a specific date may be relieved to the extent it was caused
by force majeure. This is a common clause in most property contracts. Foreclosure 1. (UK)
The mortgagees restricted power to extinguish the mortgagor's right of
redemption by transferring the mortgagor's interest in the property to
himself, if the mortgagors default in paying his dues or in complying
with any other terms of the mortgage deeds. 2. (USA) The legal process
by which a mortgagee can sell the mortgagors interest in the property
to satisfy debt: also called "foreclosure sale". Also applied to the extinguishment
of a mortgagors right of redemption. Freehold In general
parlance this is used as shorthand for the tenure of an estate in fee
simple absolute in possession. Strictly speaking, however, freehold includes
fee simple, entailed interests and tenancies for life. Frontage(line) The
full length of a plot of land or a building measured alongside the road
on to which the plot or building fronts. In the case of contiguous buildings
individual frontages are usually measured to the middle of any party wall. Greased lease back The disposal by a freehold
or leasehold owner of his interest on a property or leasehold interest
where the rent payable is geared to a fixed percentage of some variables,
often rack-rental value. Gold cause (UK) A clause in a lease which provides
for the rent to be reviewed with reference to the price of gold. Green field site An
area of land, usually in the edge of a town or city or away from substantial
urban areas, hitherto undeveloped but for which development is now proposed. Gross External Area (GEA)
The aggregate superficial area of a building taking each floor into account.
As described in the RICS/ISVA Code of Measuring Practice (UK), this includes:
external walls and projections, internal walls and partitions, columns,
piers, chimney-breasts, stairwells, lift wells, tank and plant rooms,
fuel stores; whether or not above main roof level and open-sided covered
areas and enclosed car-parking areas, terraces etc. Hi-tech building (high technology building) Primarily
a modern industrial building which is particularly suited to the flexible
uses and space needs of business organisations engaged in modern technologies.
Such activities usually require more office or laboratory space than a
traditional factory and also more sophisticated and adaptable installations
for services and communications. High point loading A concentration of abnormally
heavy floor-loading at one point or more. Particular places in a building
or other structure where extra support may be required. HVAC Refers to the
heating, ventilation, air conditioning system installed in a building
to regulate temperature. This includes air conditioning plants, chillers
and ducting systems, which ensure the uniform transfer of the cold or
hot air, as the case may be throughout the building. Indian Stamp Act, 1899 A legal statute, which
provides for the payment of stamp duty in case of all real estate transactions
to duty to the local government. The value of the stamp duty depends on
the rental payable and the lease term or the sale value as the case may
be. This duty is paid by purchasing non judicial Indian Stamp Paper, on
which the lease/sale agreements are documented. Improvements Generally, physical changes which
enhance the capital value of land or buildings. These may include additional
buildings, extensions to existing buildings, installation of new services,
eg. central heating and air conditioning and infrastructure works. On
the other hand, mere replacement by a modern equivalent if something worn
out would normally be regarded as a repair rather than an improvement.
The distinction has legal and taxation consequences. Indenture a deed between
two or more parties, each party having his own copy. Originally copies
were all included in a single document from which each part was torn or
cut along a wavy (intended) line. Institutional investors These
are generally taken to include banks, pension funds, insurance companies,
unit trusts and investment trusts, which are together commonly referred
to in the investment field as the "institutions". Investment yield The
annual percentage return which is considered to be for a specific valuation
in an investment being expressed as the ratio of annual net income (actual
or estimated) to the capital value. It is therefore a measure of an investor's
opinion about the prospects and risks attached to that investment. The
better the prospects and lower the risks, the lower the expected yield
and thus the greater the capital value. The required yield from an investment
is estimated in the light of such factors as: a) the security in real terms of the capital invested. b) the security in real terms and regularity of income. c) the ability to adjust the income to reflect market
conditions. d) the complexity and cost of management. e) the ease and likely cost of realizing the capital. f) the tax position. Internal rate of return (IRR)
1. The rate of interest (expressed as a percentage) at which all-future
cash flows (positive and negative) must be discounted in order that the
net present value of those cash flows should be equal to zero. It is found
by trial and error by applying present values at different rates of interest
in turn to the net cash flow. It is something called the discounted cash
flow rate of return. 2. An alternative explanation might be: the highest
rate of interest ( expressed as a percentage) at which funded f cash flow
generated is to be sufficient to repay the original outlay at the end
of the project life. Joint agent One or two or more agents jointly
instructed by a principal to act on his behalf. In the case of estate
agents this is normally on the basis that if any one of the agents effect
the sale, letting or other joint agent(s) will share the remuneration
in agreed proportions. None of these agents would be entitled to a commission
if the transaction is concluded as a result of someone else's introduction.
Joint sole agent One of two or more agents jointly
instructed as the only agent entitled to represent the principal. It is
customary for the joint agents to share any commission earned on an agreed
basis, irrespective of which agent effects the sale or letting. Kiosk A small enclosed retailed outlet, normally
without toilet facilities and in the retail area, frequently located in
a public concourse or other place where it may remain open only during
peak times and be closed securely when there are no customers. Kiosks
are now sometimes included in managed shopping schemes. Land assembly The process of forming a single
site from a number of lands, usually for eventual development or redevelopment.
This will include acquisition of individual interest and the eventual
development or redevelopment, removal or discharge of any restrictive
covenants or other encumbrances and obtaining physical possession, when
required, from occupiers. Landlord The owner of an interest in land who,
in consideration of a rent or other payment (eg. a premium), grants the
right to exclusive possession of the whole or part of their land to another
person for a specific or determinable period by way of a lease or tenancy. Lease agreement An
agreement, usually written, between the lessor and the lessee, which allows
for the conveyance of property to the tenant under a contract, and confers
usage and control rights to the tenant for the duration of lease. Apart
from financial terms and conditions, several clauses describing the other
binding terms and conditions of the agreement are also documented. LicenseThe lawful
grant of a right to do something which would otherwise be illegal or wrongful.
It may be gratuitous, contractual or coupled with an interest in land.
The grantor of license is the licensor and the grantee is the licensee.
A gratuitous ("mere" or "bare") license can always be revoked (ie. cancelled),
but revocability of a contractual license depends on the terms of the
contract. A license coupled with an interest in land may be irrevocable
and unlike the other two categories, may be binding on successors in title
of the licensor. One example of license is permission, usually required
in writing, given specifically by an owner to a tenant, enabling something
to be done which otherwise would be in breach of a term of the lease.
A license does not itself transfer any interest in the land but may authorise
the licensee to enter the licensor's land for some specific purposes of
the license; the licensor may enter the land and use it in any way not
inconsistent with the rights of the licensee. However, a landlord may
authorise by license some act or omission by a tenant, which would otherwise
be a breach of the terms of the lease. Load bearing The capacity
of an element in a building structure to support a weight in addition
to its own, whether vertically or laterally. Thus a load bearing wall
is one which supports part of the structure in addition to its own weight. Maintenance In property parlance, the
keeping of a building, structure or other physical feature in a specified
condition eg. wind and weather tight conditions. The approved cost of
maintenance may be deductible for income taxation. Mattha Frontage of a building with the
main road. Mortgage The
conveyance of a legal or equitable interest in freehold or leasehold property
as security for a loan and with provision for redemption on repayment
of the loan. The lender (mortgagee) has powers of recovery in the event
of default by the borrower (mortgagor). A mortgage is a form of land charge
and can be either legal or equitable. Negotiation Discussion,
written or otherwise, between two or more parties of different sides,
the aim being to reach a common agreement. Non conforming
use The use of a property which does not conform to the allocation
of the area for planning purposes. Such a property may have been built
in conformity with the planning requirement at the time and a policy change
ensued; more usually, the property was constructed before planning control
was introduced. Net present
value method (NPV) A method used in discounted cash flow analysis
to find the sum of money representing the difference between the present
value of all inflows and outflows of cash associated with the project
by discounting each at a target yield. Open market
value 1. The best price which might reasonably be expected
to be obtained at arms' length for an interest in a property at the date
of valuation, subject to any statutory assumptions which may be required. 2. For the purpose
of asset valuations this is defined by the Royal Institute of Chartered
Surveyors (UK) as the best price which might reasonably be expected to
be obtained for an interest in a property at the date of valuation assuming:
Outgoings Costs
incurred by the owner of an interest in property, usually calculated on
a yearly basis. Eg. management, repairs, rates, insurance and rent payable
to the holder of a superior interest, as appropriate to his contractual
or other liabilities. It is prudent to make annual provision for future
items involving expenditure at intervals of more than one year. Patwari Usually
denotes the person appointed by a local government or land authority to
maintain and update land ownership records for a specific area as well
as to undertake the collection of land taxes. Penal rent A
financial punishment of a tenant for failing to honour his obligation
to pay rent at the proper time, taking the form of a vastly higher figure
being payable during the period of default. Permitted
one Colloquially, either 1. A use authorised by a grant of planning
permission or , 2. A use allowed
by the deemed grant of planning permission under the local development
control norms. Pre-stressed
concrete A type of reinforced concrete in which all or some of
the ordinary steel reinforcement is replaced by high-tensile steel bars
or wires which are tensioned by 'pre-tensioning' or 'post-tensioning'.
The number and positioning of wires or tendons can be arranged to eliminate
all tension in the concrete, thereby preventing cracking and so rendering
the concrete water-tight and gas-tight as well as increasing in durability.
Pre-stressed concrete structures can achieve greater spans and carry higher
loading. Premium rent 1. A
rent above the level which a property could reasonably be expected to
command in the open market on normal terms. Such rents may be justified
in instances where the tenant receives a present or future benefit against
the market. Eg. in inflationary conditions where upward-only rent reviews
are normally required at three-yearly intervals, the tenant may be prepared
to pay a higher rent if fixed for a longer period of say, 5 years. 2. A rent which
is higher than would reasonably be expected because the tenant is particularly
anxious to secure the property. Private treaty The
most common method of disposal of real property, in which
negotiations are carried out between the vendor and prospective purchasers
(or their respective agents) privately and in comparative secrecy, normally
without any limit on the time within which they must be completed, before
contracts are exchanged. Project management
(development management) The leadership role which plans, budgets,
co-ordinates, monitors and controls the operational contributions of property
professionals, and others, in a project involving the development of land
in accordance with a client's objectives in terms of quality, cost and
time. Property
investment trust A public company, having certain tax advantages
and complying with rules applicable to its operation and investment activities,
managed by a professional specialist team and established for the purpose
of acquiring mainly shares in property companies-public or private. To
such an extent, as is permitted legally, without prejudicing its beneficial
tax treatment, it may invest in other securities, own property directly
or undertake development. It provides shareholders with an interest in
a wide ranging portfolio and the reassuring knowledge that investment
policy is in the hands of experts. Property
management The range of functions concerned with looking after
buildings, including collection of rents, payment of outgoings, maintenance
including repair, provision of services, insurance and supervision of
staff employed for services, together with negotiations with tenants or
prospective tenants. The extent of and responsibility for management between
landlord and tenant depend on terms of the lease(s). The landlord may
delegate some or all of these functions to managing agents. Property
portfolio management The unified management of a group of properties
which are held in one ownership. Decisions taken in respect of any issue
are reached on the basis of achieving the maximum benefit for the owners,
having regard to the effect on the portfolio as a whole rather than on
an individual property. Pugree An
Indian term used to describe an interest free security deposit given to
landlords which is refundable at the expiry of the lease term to the outgoing
tenant by the successive tenant. Qualified
Covenant A restriction contained in a legal document which
limits the rights of a person having an interest in the land but, by its
wording envisages the possibility of removing the limitation on terms
agreed between the parties eg. a covenant by a lessee not to assign or
sublet without the landlord's written consent. In certain cases, such
as the one quoted, statute law strengthens the applicant's position by
importing such words as "such consent not to be unreasonably with-held". Rack-rent A
rent representing the full, or nearly the full, letting value of a property
on a given set of terms and conditions Rateable
value The figure upon which property tax is charged in India. This
value is determined by the tax authorities and thereafter the tax liability
is charged to the owner(s) of the property on the basis of certain pre-determined
tax slab rates. In order to
qualify, a trust must, among other requirements, be owned by at least
100 shareholders and invest most of its capital in real estate loans or
properties and receive income in the hands of shareholders Real Estate
Investment Trust (USA/UK) A legally constituted organisation (entitled
to preferential tax treatment) which enables investors to own and transfer
shares of an interest in a property or properties; the shares can be dealt
with in a manner similar to corporate stock. In order to qualify, a trust
must be formed by at least 100 shareholders and invest most of its capital
in real estate loans or properties and receive income from them. The special
feature is that such a trust reduces its own taxable income by a distribution
to shareholders with no tax deducted, but this is taxable income in the
hands of shareholders according to their own tax status. To maintain the
trust's right to gross distributions these must, in aggregate, be equal
to minimum of 90% of the total trust income. Refurbishment Improvement
and modernisation of a building falling short of rebuilding or redevelopment
and thus not normally requiring planning permission (other than for alterations
to the external appearance), except in the case of listed buildings. Registration
and mutation: It is mandatory for the sale deed of all high value
property transactions to be registered at the regional sub registrar's
office of the local municipal authority. Thereafter, the buyer has to
apply for mutation, which involves a change in the title records to incorporate
the name of the buyer of the property. In order to complete the transfer
of property, it is mandatory for the seller to furnish or arrange a valid
"certificate of completion" issued from the local municipal authority
to the buyer. Renewal As
distinct from repair, this is "reconstruction of the entirely meaning
not necessarily the whole subject matter".0 Rent Act
(s) Legislation promulgated by various states in India, which
regulates the terms and conditions of the rental market with a view to
curb profiteering and hoarding. Though its restrictive nature has not
allowed owners to enjoy economic returns from same categories of property,
thereby allowing market inefficiencies. Rent free
period An agreed period, usually for several weeks or months, during
which a lessee is allowed to occupy the subject premises without payment
of rent:
Rentable
area The area of floor space for which rent is calculated even
though other areas, within or outside the premise, are lawfully used by
the tenant. For example, in an office building it is customary to exclude
from the direct calculation of rent the space used for corridors, atrium
and stairways. Rental advance Comprises
a lump sum payment to the landlord at the beginning of the lease term,
which is thereafter adjusted in equal installments over the lease term
against the monthly base rental payable by the tenant. The advance amount
generally ranges between 3 to 18 months depending on the city, type, location
of property and the period of the lease. Root of title
(UK) In conveyancing of unregistered land, a document which forms
a solid basis to establish the title to the land. It must go back, sufficiently
for identification, showing a disposition of the whole interest contracted
to be sold and containing nothing throwing any doubt on the title. Sale and
leaseback An arrangement whereby a freeholder or lessee sells his
interest in a property for an agreed sum and takes back a lease on the
whole or part of the property from the purchaser, generally either at
a rack rent or at some lesser rent related to the price paid. Science park A
development of an industrial nature suited to accommodate high technology,
with supporting amenities, which is associated on site with or is close
to a higher educational research establishment to provide cross-fertilisation
of ideas between entrepreneurs and researchers for the purpose of enabling
academic knowledge to be applied to effective commercial use. Security
deposit Comprises of an interest free lump sum payment to the landlord
at the commencement of the lease, which is refundable at the end of the
lease term. Though the deposit amount varies depending on city, property
type, location and the period of the lease, it may range anywhere between
6 to 18 months of monthly rental. It is not uncommon for some landlords
to provide a bank guarantee to the tenant as security for the repayment
of the initial deposit amount. Serviced
accommodation Suites of offices or rooms where the landlord provides
a range of services within the individual premises extending beyond the
traditional ones associated with the maintenance and management of the
building itself or the operation and maintenance of the installation or
plant therein eg. furniture, telephone, fax machine, room cleaning, and/or
provides centralised specialised services, such as a receptionist and
secretarial and communication facilities. Shopping
Mall A group of retail outlets designed and built with ways for
pedestrians on one or more levels to form a unified whole under one roof. Site Plans A
drawing of an area of land, on a horizontal plane, showing the boundaries
and physical extent of the land included in a particular parcel. It may
also show any existing buildings or the proposed layout of a development. Speculator A
person (usually a dealer) who undertakes a transaction in property, in
expectation of asking for a profit but with the risk of not doing so. Strata Title Freehold
title to a horizontal title above and/or below. Satisfactory arrangements
for management usually involve a statutory obligation for the setting
up of a management corporation with responsibility for the maintenance
of common facilities and areas. Sub Leasing A
method wherein, the primary lessee of a property has the right to further
lease out a part or whole of the property to another occupier or lessee.
Essentially, the right to sub lease is decided beforehand at the time
of signing the main lease agreement and is with the consent of both the
lessor and the lessee. Suspended
ceiling A ceiling, not being part of the structural framework of
a building, installed below the level of the underside of the floor above
or of the roof. Commonly used to provide space for services eg. cables,
recessed lighting and piping; to reduce the cost of heating in a room;
to improve the acoustics; or to produce more aesthetically pleasing proportions. Tax clearance
(37-1) The Income Tax Act, 1961 specifies that any lease transaction
for not less than 12 years or any sale transaction, above a prescribed
transaction value limit tax, has to undergo a clearance process from the
appellate body known as the Income Tax Appropriate Authority, constituted
under the Income Tax Act. A joint application by the parties involved
in the transaction is submitted along with processing fees to the Income
Tax Authority, which takes upto a maximum of three months to grant the
clearance, without which the sale transaction is not complete. This procedure
is popularly known as the 37-(I) clearance, which is the application form
number used for this purpose. Technology
Park A landscaped development usually comprising of high specification
office space as well as residential and retail developments, designed
to encourage localisation of high technology companies such as information
technology, software development etc., thereby giving each the benefit
of economies of scale. Usually, technology parks are located outside the
inner city areas as these are quite land intensive in nature. Tenancy 1. Strictly
speaking, the interest of a person holding property by any right or title. 2. More usually,
an arrangement, whether by formal lease or informal agreement, whereby
formal lease or informal agreement, whereby the owner (the landlord) allows
another (the tenant) to take exclusive possession of land in consideration
for rent, with or without a premium, either:
Tenant's
improvements Improvements to land or buildings to meet the
needs of and carried out wholly or partly at the expense of the tenant. Town and
country planning The determination of policy for the development and
use of land and the control of its implementations in urban and rural
areas by district and country planning authorities. Turnover
rent A rent which is calculated as a proportion of the annual turnover
of the lessee's business. Usually, it does not fall below a base rent.
More commonly used in the USA, although in recent years being applied
with increasing frequency in the Europe and the mature markets of Asia,
especially in the case of the more profitable retail outlets. Uplifted
rent A rent which reflects lease terms which are more beneficial to
the tenant than prevailing commercial terms, eg. a higher rent to reflect,
say, 14-yearly reviews, rather than the more common five-yearly reviews. Urban Land
Ceiling and Regulation Act (ULCRA) A legislation promulgated in 1976
as a social equity measure with a view to curb profiteering and hoarding
in the urban land market as well as prevent urban congestion. Urban centers
i.e. cities were classified into categories such as A, B and C and a ceiling
on the maximum permissible usage on land by respective owners was set
under provisions of the act. User 1.
The use or enjoyment of a property or of a right over property. 2. A person
who uses, enjoys or has a right over a property. Vaastu shastra
A traditional Indian architecture and design system, which specifies the
detailed methodology of designing buildings, buying land etc. in order
to maximise benefits, from the same for the occupier. This system relies
in harmonising any real estate development with the five elements of Indian
Mythology namely air, water, earth, fire and space. Valuation
1. The process of making an estimate of worth of real property or real
property or other assets for a particular purpose eg.letting, purchase,
sale, audit, rating, compulsory purchase or taxation. That purpose and
the relevant circumstances will determine assumptions and facts that are
appropriate and hence the process used. 2. A statement,
usually in writing, setting, out the facts, assumptions, calculations
and resultant value. 3. Colloquially,
the value arrived at as a result of the valuation process. Value
The price that might an interested in property or some other asset might
reasonably be expected to fetch if disposed of at right Vertical
slice participation A method of multi-participation in a venture,
usually a development, whereby each of the pa | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||