Real Estate Glossary B [Part 2]
An inclined piece of framing lumber used as a support for a wall or floor to strengthen the structure.
To add stiffness, framing timber is fastened at an angle.
Any company location other than the major or main office where real estate transactions are handled. In general, each branch office must have a broker-in-charge, sometimes known as a branch manager, who is in control of the branch’s activities. This manager may simply need to be a salesman in some states. In most states, each branch office must be registered and given a unique license.
Breach of contract
A breach of a contract’s terms that results in a default.
Violation of a contract’s terms and conditions without justification; default; nonperformance. When a contract is materially breached, the nonbreaching party typically has three options: rescission, money damages, or specific performance. (See damages, option of remedies, rescission, and particular performance.)
Breaching the contract’s terms.
The term refers to fixed rate loans where the borrower ends the loan contract before the fixed rate period is over.
Break-even cash flow ratio
The actual total earnings as a percentage of overall operating costs including debt service.
The amount of money needed to cover all operational expenses as well as debt payments.
The point at which rental revenue equals all needed costs and debt payment in a residential or commercial property. It is the moment at which gross income equals all fixed and variable costs paid in generating that income. The break-even analysis is essential for calculating a building’s profitability. Before a permanent lender can support a takeout mortgage on a major commercial project, standby financing obligations normally demand that the project be leased up to its break-even threshold.
The point at which an investment brings in just enough money to cover its regular expenses. For a real estate investment, the break-even point is when normal operating costs, including debt service, equal gross income (the stage at which the next cash flow becomes positive). Also called the starting point.
This ratio assesses a property’s ability to meet its commitments by dividing its operational expenses, capital expenditures, and debt payment by its prospective gross income.
The link between cash spending requirements and gross revenue from an investment project. A default ratio is a term that is used sometimes.
A distribution board is an electrical supply system component that separates an electrical power source into subsidiary circuits while providing a protective fuse or circuit breaker for each circuit in a shared enclosure.
The amount of sales above which a certain percentage of rent is due. It is worked out by dividing the annual base rent by the percentage of the tenant’s gross sales that was agreed upon.
A brick-resting segment of a foundation wall.
Metal brick rests on a structural member placed over an opening in a wall.
A material strip used to fill the space between a brick wall and a door or window in the wall.
Casing is a type of window casing that is used to close the gap between the window frame and the opening.
A short, corrugated metal strip nailed to the wall sheeting or studs.
A vertical brick face installed against and affixed to the sheathing of a framed wall or tile wall.
Between the end of one loan and the start of another, a loan application is used.
A short-term loan that bridges the gap between the end of one loan, such as an interim construction loan, and the start of another, such as a permanent takeout loan; the loan that bridges the gap between the purchase of a property and its improvement or development to qualify it for a permanent loan. A bridge loan is frequently used to cover the expenditures of converting an apartment building into a condominium.
A residential finance strategy in which a new house buyer borrows money and takes out a second mortgage on their or her unsold home to support the purchase of a new property. When the seller of the new house would not accept an offer “subject to the sale of the buyer’s home” or when the buyer must raise the down payment by a specified date or risk losing the new property, this loan is beneficial.
Between floor joists, insert small wood or metal pieces diagonally. Bridgings distribute weight over neighboring joists, enhancing the load capacity of the floor.
To keep floor or roof joists in place, a brace or a set of braces is installed between them.
A short-term loan used to cover the time between paying for one property and getting payment for another.
A short-term loan that is used to buy a new home before you sell your old home.
Purchasers are frequently required to complete a real estate transaction prior to the date that financing becomes available. In these circumstances, bridging finance (a temporary loan) is required to bridge the time gap in order to comply with the contract’s terms regarding settlement pending the availability of long-term finance.
A take-down search or continuation of a title search to ensure that no liens have been recorded against the property between the time of the original search and the recording of the transfer or mortgage. In several states, the buyer is responsible for the continuation charge.
British thermal unit (BTU)
A heat unit that is used to rate the capacity of air-conditioning and heating systems (radiators, boilers). One Btu is the amount of heat needed to increase the temperature of one pound of water by one degree Fahrenheit, to 39.2°F.
A person who acts as a middleman between two parties. For the services provided, this person is paid a commission.
A person who works as an agent for another in the process of purchasing, selling, leasing, or managing property rights in exchange for a commission.
A person who serves as a go-between for two parties in a transaction. A real estate broker is a legally licensed party (individual, business, or partnership) who acts as a special agent for others to assist the sale or lease of real property in exchange for a valuable consideration or promise of payment.
A real estate broker is a self-employed businessperson who establishes office policies. A broker employs and oversees staff and affiliate licensees (either salespersons or brokers). The broker has the option of accepting or rejecting agency arrangements with principals.
Brokers represent their principals and undertake fiduciary and/or statutory duties to carry out their instructions with care, expertise, and honesty. A broker’s obligations are often limited to promoting property and locating someone who is ready, willing, and able to deal on the conditions provided by and acceptable to the principle. However, legislative action imposes legal constraints on brokers, and federal, state, and municipal fair housing laws put additional social duties on them. Brokers cannot lawfully refuse to exhibit, sell, rent, or otherwise negotiate property listed with them based on race, religion, gender, or national origin. All offers must be submitted to the principal by the broker.
The criteria for becoming a real estate broker are determined by state real estate license rules. In general, the candidate must pass a written test, satisfy educational criteria, demonstrate good character, and pay the necessary costs.
A broker is allowed by law to recruit individuals to help him or her in representing customers. Some brokers continue to actively sell, some are sales managers, and still others are largely administrative brokers who do little or no listing and selling.
In any agency connection with a buyer or seller, the broker is the principal agent. This is true even though the salesmen, who are brokers’ agents, have the majority of direct interaction with the buyer or seller client.
Without holding title to the property, an agent who buys or sells for a principal on a commission basis.
The permission provided by a state to run a real estate brokerage firm; the most comprehensive sort of real estate license.
Broker price opinion (BPO)
A broker’s written assessment of a property’s worth, usually in the form of a competitive market study. The broker may charge a separate fee for a BPO, depending on state legislation, as long as it is not used to originate a federally linked loan and is not branded as an appraisal. Relocation businesses and lenders involved in troubled property “short sales” frequently request BPOs.
A person who is authorized to offer securities by the Director of Corporations.
One who is authorized to purchase and sell securities. The National Association of Securities Dealers grants a general securities broker-dealer license or a direct participation programme license limited to real estate securities.
A broker appointed by a real estate brokerage company’s principle broker and registered with the state real estate license commission as the person directly in control of and responsible to the principal broker for the real estate activities done at a branch office in many states.
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Broker’s rate of return
A rate-of-return metric that modifies the cash-on-cash return to incorporate equity build-up from debt amortization, resulting in a slightly higher return than the cash-on-cash measure.
A broker’s business that encompasses all of the duties required to advertise a seller’s property and represent the seller’s (principal’s) best interests.
The portion of the real estate business dealing with bringing parties together and executing a real estate transaction comprising property swaps, rents, and trade-ins, as well as sales. The brokerage is typically, but not always, rewarded for this service by a commission, which is commonly based on a percentage of the gross sales price deducted from the seller’s equity. This commission is given to the broker directly (or brokerage company). who may then reimburse the selling affiliate licensee on a predetermined timetable
The existence or possible presence of a hazardous material, pollutant, or contaminant complicates the growth, redevelopment, or reuse of industrial sites. Brownfields and land rehabilitation initiatives run by the Environmental Protection Agency (EPA) understand that cleaning up and reinvesting in these areas improves the environment, lowers blight, and relieves development pressure on green spaces and working lands. Brownfields initiatives help to examine and clean up brownfields while also creating jobs and enhancing the value of nearby residential homes.
A reddish-brown sandstone row home with a narrow street frontage. Typically refers to a building built in the nineteenth century and found in older big cities.
A dark-colored red sandstone commonly utilized as a row house face.
Sandstone was previously a popular construction material.
The cash flow before taxes
Equity reversion prior to taxation
Members of the rough-frame opening.
A forecast of a property’s costs and revenues over a given time period.
A statement of estimated receipts and expenditures, often known as a balance sheet. The cash operational budget shows how a property’s positive and negative cash flows change month to month. Depreciation, bad debt losses, and other noncash items are frequently excluded. The capital improvements budget lays out a financial plan for making major repairs, replacements, or additions to a property over a certain time period. A budget is only as trustworthy as the person who develops it.
For a certain project, an itemized summary of probable income and expenses for a given period.
A loan with payments that go beyond interest and principal reductions. Monthly payments may include an amount equivalent to 122% of the year’s property taxes, a pro rata portion of the fire insurance premium (together known as PIT[), and any other comparable penalties that, if not paid, might result in a foreclosure. A budget mortgage with all-inclusive payments makes it easier for the buyer to pay for these costs and protects the mortgagee in the event that the buyer is unable to pay them all at once when they become due. Budget mortgages are particularly popular in conventional residential mortgage loans, as well as VA and FHA loans.
(1) A zone around the perimeter of a marsh or lake where land use activities are restricted in order to protect the water features; (2) a predetermined distance around any map feature in a GIS layer.
A strip of land dividing one land use from another in zoning. A developer of a big residential development may sometimes leave some land undeveloped as a buffer against adjacent land that is designated incompatibly, such as an industrial park.
This is a zonal area that separates residential districts from commercial areas by lying between two or more other areas.
Build to suit
Land improvements built to the specifications of a renter or buyer.
An arrangement between a builder and a booking in which the developer bears responsibility for fitting up the leased space to the renter’s specifications while adhering to building codes. When the space is finished, the tenant takes possession.
With this arrangement, the developer grants permission to a financially powerful tenant to construct a structure according to the tenant’s specifications. This agreement ensures that the tenant will have the space they need when it is needed, and it ensures the owner/builder that the space will be completely leased upon completion.
In exchange for a lease commitment from the potential tenant, a lessor undertakes to develop a property or finish a specific area to the standards of the lessee. The cost of completed work, or a portion of it, is often amortized through further rental payments. Possession is transferred upon completion.
Builder’s Risk Insurance
Written fire, liability, and extended-coverage insurance to address the unique hazards of a construction site. Coverage grows automatically as the construction advances and ends when the structure is completed. When the building is ready for occupation, this coverage should be replaced with permanent insurance. Premiums may be calculated using an anticipated “finished value” or a “full reporting clause,” in which the builder reports value increases as the project advances.
A type of property insurance that protects against damage to buildings while they are being built.
Building and loan association
A mutual organization that invests its members’ cash in residential mortgages and pays out the interest gained in monthly dividends to its member deposits.
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Building area (Gross)
The total enclosed and open area of the building at all floor levels, measured between the normal outside faces of any walls, balustrades, and supports that surround the building. The square metre is the unit of measurement for the area of a building. (The Property Council of Australia’s Method of Measurement can help you figure out how to measure floor space for renting.)
Regional government entities set standards to ensure that limited security needs are fulfilled.
The set of legislation that defines minimum requirements for new building construction or alterations to existing structures. Building rules are meant to provide the bare minimum of protection against fire damage and to protect against defective building design.
Local, state, or municipal governments frequently establish rules to control building and construction standards that are based on national norms. Building codes are intended to protect the public’s health, safety, and welfare by regulating and managing the design, construction, quality, use and occupancy, placement, and maintenance of all buildings and structures. Building codes are established as a lawful use of the state’s police authority, and hence codes are valid limits on an owner’s use of his or her property. Building permits and certificates of occupancy, as well as inspections, are used to enforce codes, and offenders are fined.
It is a set of laws, regulations, ordinances, or other statutory requirements enacted by a government legislative body involved in construction inspection.
A person who knows how to design and/or build buildings. If you hire this kind of person to do a pre-purchase report on a property, you should ask if he or she has insurance to cover any major problems that the report might miss. A building consultant doesn’t have to be registered, but many of them are registered as builders, drafts people, inspectors, surveyors, engineers, or commercial builders.
A multi-story structure’s centre or artery portion that unifies functions and service needs for existing building occupants. Bathrooms, elevator banks, janitorial spaces, utility rooms and mechanical rooms, smoke shafts, and stairwells are examples of such areas.
The overall height is measured from the bottom level to the top of the roof’s exterior surface. Local zoning rules often govern maximum height, sometimes restricting or lowering heights based on a structure’s closeness to setback lines.
An inspection is usually done before you buy a house to make sure it’s safe to live in. To make a deal, you can make it if the building inspection goes well.
A local government officer in charge of inspecting buildings under construction and completed buildings to ensure that they have been built in accordance with building control provisions.
To protect their home from things like fire and landslides, the owner of the home took out a policy to cover it. Buyers often have to insure their new home when they sign a contract.
A type of property insurance that protects the property from risks such as fire, landslide, and so on.
A long-term lease of bare land in which the tenant agrees to pay a certain ground rent and to develop and maintain certain improvements to the property.
A regular distance, usually measured from a road, behind which structures must be built
A setback line is a line beyond which no improvement may be built. Building line limits can be imposed by including a restriction in the subdivider’s deed or by identifying them on a recorded subdivision plat. Building lines establish a right to unimpeded light, air, and view by ensuring a degree of homogeneity in the look of structures.
The minimal distance beyond which no construction may expand in order to maintain the appearance of uniformity in the city’s streets.
A unit of depth and diameter that can be used to standardize a building’s plan and facilitate the design and layout of office space. Many of the physical system’s elements are constrained in size and shape by the module. Non Modular buildings, on the other hand, can cause a slew of issues during the design phase.
Building owners and managers association international (BOMA)
A trade organization for apartment and office building owners and operators.
Bitumen, a natural asphalt derived from coal, petroleum, or another water-resistant chemical, is used to treat fiber-reinforced, waterproof paper. To insulate the home and keep moisture out, building paper is applied between siding and wall sheathing, around door and window frames, and in other spots.
This is a long roll material sheet that is employed in constructions with little regard for its properties or applications.
The consent must be secured from the state governmental authority before building may begin.
A documented official permit to construct a new building or other improvement, demolish or substantially repair an existing structure, or install factory-built dwellings. The planned construction must comply with local zoning and building rules, and it is generally inspected and authorized after it is completed. A building permit is usually required prior to the commencement of a project, which provides a handy mechanism for local authorities to check zoning code compliance.
A smart developer should add a condition in the purchase agreement for a prospective development site that not only requires the developer to secure a construction permit, but also that the permit be received within a certain time frame. Otherwise, the developer can take an unreasonable amount of time to obtain the permission while keeping the seller’s home off the market.
Any property owner considering an addition or alteration should consult the relevant county or municipal building department first to avoid any building code violations, which would usually leave a seller’s title unmarketable. Failure to disclose such infractions might be considered a serious misrepresentation, allowing the buyer to cancel the purchase and receive a refund.
Permission to construct or modify a structure.
A permit issued by the local government for the construction or structural alterations of all structures.
Laws that establish material and construction standards that must be followed in order to ensure health, safety, and specific design minimums in any structure or alteration.
Local Government Authorities adopt and enforce laws that specify the method of building construction as well as the nature and materials to be used, as well as the standards that buildings must not fall below. They are intended to ensure public safety and health, as well as the minimum acceptable society standards for design, construction, alteration, repair, and occupancy. Also known as building by-laws and the building code.
Building residual technique
A method of assessing the contribution of an improvement to the present worth of the total property, as used in appraisal.
Typically used for valuing income property. Also used to see if the building’s worth after refurbishment is more than the renovation expenditures.
When the appraiser determines the value of land, the appraiser subtracts the amount of net income that must be assigned to the land to justify its value from the property’s net income. For example, if the land is worth $10,000 and the current interest rate is 12%, the land must return 12% of its value, or $1,200 a year, in order to justify its purchase price. The income related to or produced by the building is represented by the balance or residual of net income. To arrive at the suggested value of the building, the residual is capitalized at a rate that gives a market-acceptable return on the building and recapture of the wasted asset (building).
The value of the land is added to the total value of the property.
Zoning laws or private limitations incorporated in a deed or ground lease set limits on the amount and types of improvements that can be made. Building limitations violations may render the title unmarketable.
Local government laws that limit the use, size, and location of buildings or other improvements on land.
The completed outer layer and interiors are applied to the structure of the building.
All of the materials used to create the building’s outside casing.
The building owner and architect have set particular construction standards in order to ensure a uniform element of design across the structure and to establish a cost foundation for setting up the charges and/or concessions.
The construction elements that the owner/developer decides to employ throughout a structure. The building standard provided to an office tenant, for example, might refer to the type of partitions, doors, ceiling tile, light fixtures, carpet, and draperies, among other things.
A building surveyor who is registered with the Building Practitioners Board. Qualified to issue a building permit, inspect for Building Act and Building Regulation compliance, and issue an Occupancy Permit or Certificate of Final Inspection.
Building-related illness (BRI)
A condition produced by harmful chemicals or diseases that persists after an inhabitant has left the building. Hypersensitivity, pneumonitis, asthma, and allergic responses are all possible symptoms. Legionnaires’ disease, for example, is caused by a recognized bacteria that may be found in air conditioner cooling towers and spread through the ventilation ducts. After multiple deaths in the 1970s, a large hotel was forced to close for several years.
Specific interior finishes are built to a tenant’s specifications.
Certain stationary equipment, such as various kitchen appliances, bookshelves, workstations, shelving, cabinets, and furniture, is permanently attached to real estate and is expected to be included when the property is sold. A built-in garage is one that is under the same roof as the primary structure it serves.
An assessment technique for calculating the discount, or interest, rate that will be utilized to determine the proper capitalization rate. The safe rate, burden of management, non liquidity, and risk for the specific type of property being assessed are the four essential components of the discount rate. The summation approach of rate selection is also known as this.
A roofing material made up of three to five layers of asphalt felt laminated with coal tar, pitch, or asphalt. Crushed slag or gravel is used to finish the top.
Bulk sales transfer
Any large transfer (not a transfer in the usual course of the seller’s business) of a significant portion of an enterprise’s materials, inventory, or supplies. The Uniform Business Code (UCC) governs bulk transfers in order to combat commercial frauds such as a merchant selling out stock, pocketing the cash, and failing to pay creditors. The buyer of the goods is required under the UCC to demand that the seller submit a schedule of all the property and a list of all creditors, as well as to notify creditors of the planned sale. Failure to comply with the UCC renders the transfer or sale unenforceable in relation to the seller’s creditors’ claims. Bulk transfers are generally necessary when a company is liquidated or sold. A bulk transaction must be notified to the state tax authorities by the seller, and the purchaser must withhold payment until the seller receives tax clearance.
If the tax clearance is not obtained, the buyer may be held accountable for any unpaid taxes that are a lien on the assets sold.
Bull nose (drywall)
Corners of drywall are rounded.
A loan in which the full principle is repaid in a single payment at maturity.
A short-term, interest-only loan with a balloon payment, sometimes with no right to prepay or a significant prepayment penalty if prepayment is permitted.
A wooden, rubber, or other material device intended to soften the impact of parking vehicles around a loading dock.
The contents of a shingle packet. 3 bundles per square and 27 shingles per bundle are typical.
Bundle of rights
A concept that considers real estate interests to be a collection of land ownership.
The right to sell, lease, encumber, use, enjoy, exclude, and devise by will are all legal rights attached to real property ownership.
These rights also include the rights to use, occupy, cultivate, and explore, as well as the rights to license, dedicate, give away, share, mortgage, trade, and exchange. When buying real estate, the buyer is truly getting the seller’s rights, with the exception of those that are reserved or limited in the transaction. Beneficial interests connected with real property interests are the term for these rights.
A modest home with one or two stories.
In Victoria, Australia, for example, the word usually refers to a separate, smaller house on the property of an already existing house. In other states, the term is used to describe a single-story house or a house with a certain layout and look from the outside.
Burden of proof
In a trial or an administrative hearing, the duty to show the validity or untruth of a fact. The burden of proof is on the complainant in a discrimination case.
A rating bureau sets a standard rate for hazard insurance and, in certain jurisdictions, title insurance for all firms selling policies in a given region.
Electrical wires connect many circuits in an industrial plant to offer service via a single line.
Real Estate Glossary B [Part 4]