Real Estate Glossary D [Part 1]

Terms Beginning With - D

Property Development & Investment Glossary, Terms & Definitions


The part of a wall below the dado rail and above the skirting board.


The money a person can get in a lawsuit if they were hurt or their property was damaged because of someone else’s actions or lack of action. It is hard to figure out the right amount of damages for different kinds of injuries. In cases of fraud, courts often use the “benefit-of-the-bargain” rule, which says that the difference in cash between the real value of the property and the value that was falsely told to the buyer is what the buyer is owed as compensation. In some cases, the courts use the “out-of-pocket” rule, which says that the person who is suing for damages gets the difference, if any, between the actual value of what he or she paid (called the “consideration”) and the actual value of what was received.

When a buyer backs out of a real estate contract, the seller often keeps the buyer’s deposit as compensation. When people sign a contract, they may agree that the party that breaks the contract will pay a certain amount to cover any damages. Damages that a landlord could get from a tenant who broke a lease agreement would be the difference between the agreed or contract rent and the price the landlord would have to take in order to re-rent the property quickly. The plaintiff is always the one who has to prove damages.

Damp proof course DPC

A waterproof layer that is put under masonry walls to stop water from getting in.

Damp proofing

To keep moisture out, a layer of plastic, lead, asphalt, or other water-resistant materials is applied between the interior and outside walls.

Application to building walls and floors to prevent moisture from entering the interior. Type of moisture-control method.


The top of a fireplace has an adjustable valve that controls the flow of warm gasses into the chimney.

The chimney is surrounded by a metal door.


Refers to information that has been gathered and put in a way that makes it easy to process and analyze.

Data dispersion

The amount or degree to which data points in a set are spread or dispersed around their mean (also referred to as variation about the mean).


A file or files containing associated geometric and attribute data; a collection of related data.


The date on which a legal document is signed. Several dates proving different events, such as the day the parties signed the document, the day the document was acknowledged, the day it was recorded, and/or the day an action begins or finishes, are frequently included in certain agreements, such as deeds or long-term leases (e.g., option).

Most real estate contracts do not require a date to be valid. A date is helpful for proving that a deed was delivered on the specified date, deciding priority two unrecorded deeds, creating performance time constraints (such as “seller has 48 hours to accept from the date of this offer”), and proving that the statute of limitations has run.

If the parties to a purchase agreement want to close on a specific date (with no extensions), they should specify that date and specifically state that “time is of the essence.”

The date may be essential in deciding who is liable for a casualty loss, personal injury to a guest, or liability for a special assessment in a contract for deed.

Avoid ambiguity by stating terms clearly, such as “the seller pays up to and including March 28.” Unless the phrases to and including are used, a period that runs “to” a specific date does not include that date. rather than "Use 11:30 am or 11:30 pm instead of “to 12:00 am,” which can cause confusion as to whether it is midnight or noon. Instead of mentioning “a 90-day period,” "To prevent debates over whether it is calendar days or 30-day months, and if the first and last days are counted, specify a particular termination date.

The appraisal date, also known as the valuation date, is the day on which the value estimate is applied (“date of value”), rather than the date on which the report is published (“date of report”).

Date of settlement

The day on which a vendor is required to deliver over a property to a buyer under the terms of the contract.

In real estate transactions, it is the day on which the vendor is required by the contract to transfer his or her estate or interest in property to the purchaser.


A reference system for measuring something else, such as horizontal or vertical position.

The datum plane is a level surface to which heights and depths are measured in relation to. The datum might be an assumed point (such as a monument), or it can be a natural feature such as a tide pool (that is, mean sea level).


Not attached to anything at all, the end of a pipe

Days on market

The number of days it takes to sell a property from initial listing.

The time between listing a property and getting it under contract or taking it off the market.


Doing business as is a phrase that is used to identify a trade name or a made-up business name.


Breast-high diameter: the diameter of a tree at 412 feet above the ground.

De facto

De facto is Latin for “in fact,” as opposed to de jure, which means “by law.” A de facto corporation is a business entity that has been formed despite the fact that the technical papers required by state law to constitute a valid company have not been filed.

De minimus

This is the bare minimum. Transactions of less than $250,000, for example, are exempt from requiring an appraisal by state-licensed or state-certified appraisers under federal requirements.

De minimus settlement

An agreement between the Environmental Protection Agency and a person who may be accountable for dangerous substances under the Superfund law. The EPA is considering lowering the amount a landowner must contribute to the cost of hazardous waste cleanup if the landowner acquired the property without knowing or having cause to know about hazardous waste disposal.

Dead bolt

Unlike a spring bolt, a deadbolt can only be opened by turning the lock cylinder with a key, making it a unique locking mechanism.


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Dead light

The part of a window unit that doesn’t move and can’t be opened or closed.

Dead-end street

A single-entry street that sometimes leads to a cul-de-sac.


A deadline that must be reached.


An I.R.S. designation for someone who buys and sells real estate on a regular basis. If, at the time of the property’s sale, the person held the property “mainly” for sale to customers in the ordinary course of business, the person is categorized as a dealer.

“Primarily” has been construed by courts to indicate “first and foremost.” Any gains from the sale of property must be taxed at ordinary income rates, but losses can be deducted at ordinary rates. Furthermore, dealer property is not depreciable and does not qualify for IRC Section 1031 tax-deferred treatment or IRC Section 453, installment reporting of gains.

The position of a dealer is determined on a case-by-case basis. Depending on the details of each situation, one may be a dealer for some assets and an investor for others. Anyone who deals frequently must keep meticulous records of each transaction in order to establish their status as an investor rather than a dealer. The purpose for purchasing the property, the length of time the property was held, the number of sales activities of the owner, the existence of other income and other businesses, and the extent of improvements made on the property by the taxpayer are some of the IRS tests for determining dealer status. If the owner subdivides and develops the land, he or she is most certainly a dealer; but, there are exceptions, particularly with one-time subdividers.

To escape the passive income limitation on loss deductions, some real estate investors who actively manage their assets consider converting from investor to dealer status. Losses can only be used to offset income from other passive investments if an investor does not “materially participate” in the investment. Earned income, interest, and dividends cannot be used to offset passive losses.

A person who purchases and sells real estate.

One who buys and sells property interests for one’s own account in real estate. Gains on dealer sales are recorded as regular income rather than capital gains.

Dealer property

Real estate owned for the purpose of resale to others is taxable in the United States.


A long-term note or bond issued as proof of debt. A debenture, unlike a mortgage note, is not secured by a specific property. In most cases, the issuer enters into an indenture or agreement with a trustee, such as a bank. The amount, interest rate, term, and unique features of the bond issue, such as its capacity to be expedited or converted, are all specified in the indenture. Many issuers employ subordinated debentures to avoid limiting future borrowing power - that is, loans that can be subordinated to other corporate loans under the conditions of the debenture. Sinking fund debentures need a particular amount to be escrowed each year in order for money to be available for redemption.

Fannie Mae issues debentures to fund mortgage acquisitions in the secondary mortgage market. If a borrower defaults on an FHA loan, the government provides the mortgagee with interest-bearing debentures once the title is transferred to the FHA.

Bonds backed by the borrower’s income.


The opposite of a credit, a charge appears in the left column of an accounting statement or balance sheet. In a real estate transaction, it’s used for bookkeeping and creating the closing statement.


A lender’s responsibility to be repaid by a borrower.

Someone owes someone else money.

Debt amortization

The practice of progressively paying off a debt by making periodic payments to the creditor.

Debt constant

The annual percentage of the loan’s original principal amount that must be paid in order to fully repay interest and principal over the loan’s term. The constant can be stated as a yearly or monthly percentage. A debt service constant is a term that is used sometimes.

Debt coverage ratio (DCR)

Annual net income divided by annual debt service. For example, a lender may require a qualified corporate borrower to have net income equal to 1.5 times the loan’s debt service.

A lender’s ratio that represents the loan amount in terms of net operating income, often between 1.05 and 1.30.

The link between a project’s yearly net operational revenue and the requirement to repay borrowed cash in principle and interest. Debt coverage ratios are frequently used to assess a lender’s margin of safety when it comes to mortgage loans.

A measure of how much NOI may fall before it becomes unable to service the debt, defined as net operating income minus debt service.

Ratio of annual debt service to annual net operating income. Divided by the cost of paying off the debt each year.

Debt financing

Investing with borrowed funds as opposed to one’s own funds. Typically, in real estate, the property itself serves as security for the obligation.

Debt relief

A court order that says you don’t have to pay money. Even though the Mortgage Debt Relief Act of 2007 gave tax relief, if a lender decides to forgive all or part of a promissory note payment after December 31, 2013, such as in a “short sale,” the Internal Revenue Service requires the lender to file a Form 1099. The seller/borrower will have to pay taxes on the amount of debt that was forgiven, which is treated as ordinary income.

Debt service

The sum of money required to make periodic principal and interest payments on an amortized loan or debt. If the periodic payments are constant and equal, a portion will be used to pay off interest and the remaining to reduce principal.

The monthly charge of repaying a mortgage loan, which includes interest on the outstanding balance as well as, in many circumstances, principle reduction.

The principle, interest, and additional fees mentioned in the credit agreement, as well as the regular installments on a loan.

Payments made to a lender Debt service responsibilities may include payments of simply interest or payments of both principal and interest in order to completely or partially amortize a debt over a predetermined time.

How much it costs to keep a loan.

Debt Service Coverage Ratio (DSCR)

The annual net cash flow created by an income-producing property divided by the annual debt service payments needed under the conditions of the mortgage loan or loans taken out to finance the property. This is a measure of a property’s capacity to cover debt service payments and is usually represented as a multiple. If this ratio falls below 1.0, the property’s cash flow will be insufficient to support debt payments.

Debt service ratio

Most of the applicant’s wages will be enough to pay back the loan over the agreed loan term. Most lenders set a maximum DSR limit of between 30 percent and 33 percent, but this can vary from lender to lender.

Debt to equity ratio

The link between the total amount owing to the lender and the owner’s invested capital; also known as the leverage ratio.

The proportion of borrowed money to equity funds.

A requirement from the bank that the borrower put up a small amount of cash before the loan can be given.

Debt to income ratio

The part of a borrower’s income that is used to pay back debt.

Debt yield ratio

A mortgage underwriting ratio for loans secured by income-producing real estate. The ratio is calculated by dividing the property’s net operating income by the amount of the mortgage debt. It denotes the cash flow rate to the loan amount if the lender becomes the owner.


A person who owes money; a borrower, a note maker; a mortgagor.


A deceased person, particularly one who has recently died.


The decibel (dB) is a unit of measurement for the loudness of sound based on the pressure created in air by a noise.


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Decision model

A methodical approach to discovering opportunities that have the potential to contribute significantly to defined investing goals.


A patio or porch is an open, flat flooring area that may cover a roof or surround a hot tub or swimming pool.

Deck decked

A way to keep the sheets of plywood or wafer board on the floor.


The first person or company to build a condo, PUD, or townhouse community. This person or company records all the necessary documents, including the CC&Rs.


Under state law, the developer of a condo must usually file and record this legal document in order to make a condo. The declaration usually includes a detailed description of the land where the project is located, whether the land is owned outright or leased, a description of the apartments, common elements, and limited common elements, a statement about how the building or buildings and apartments will be used, including any restrictions, and a statement about other detailed legal requirements, such as how the declaration will be served and how it can be changed. Usually, the declaration must be recorded, along with a true copy of the project’s bylaws and a condominium map that shows the floor plan, elevations, and other things. Most of the time, the developer must also file a master deed or lease.

A master deed is a legal document that has important information and legal descriptions about a condo building.

Declaration of covenants

A document that is entered in the public records with a subdivision’s plat map. It contains a list of the subdivision’s restrictive covenants.

Declaration of restrictions

A list of all the rules, conditions, and restrictions that apply to a piece of land. When the subdivision plat is recorded, restrictions can be written on the map or plan or, if there are a lot of them, on a separate document called a declaration. Usually, the restrictions aim for uniformity by making sure that all lot owners follow the same building rules and restrictions. For example, the CC&Rs might say that lot owners have to build homes worth more than a certain amount or get approval from an architectural control committee before building. Once written down in the declaration, these rules stay with the land and apply to all future lot owners unless they are lifted after a certain amount of time has passed or by agreement of everyone who stands to benefit. If another owner breaks any of the rules, the owner can make the other owner pay for it.

Common parts of a declaration of restrictions are the following:

  • “Every building or other structure must be built, put up, and kept in strict accordance with the plans and specifications that have been approved.”
  • “No building can be built on a lot closer than 35 feet to the street lot line, 30 feet to the back lot line, or 10 feet to the side lot lines,” the law says.
  • “No building or structure may be taller than 25 feet, measured from the highest natural grade at any point on the foundation of the structure to the highest point of the roof.”
  • “No animals, livestock, or poultry of any kind shall be raised, bred, or kept on any land in the subdivision except by special permit issued by the board of directors. But a reasonable number of dogs, cats, or other common pets can be kept without a permit.”
  • Restrictions can’t break the law, like if they have to do with race or religion. They should be carefully written so there is no room for confusion. For example, if trailers aren’t allowed, does that mean mobile homes are, too? Is there a swimming pool or a fence in the word structure? How does a home business work?

A document that is used to put restrictions on property on the public record.

Declining balance depreciation

A technique of depreciation in which the depreciation deduction is calculated by applying a rate to the remaining balance.

Declining balance method

A technique of calculating yearly depreciation or cost recovery allowances that offers the largest allowance in the first year of ownership and gradually decreasing allowances in subsequent years.

A way of keeping track of depreciation for income tax purposes that gives larger deductions in the early years of a property’s life than a straight line. This method applies to property that was put into use before 1981.

In the IRS percentage tables used to figure out ACRS depreciation deductions for personal property, the declining-balance method of calculation is used. The 3-, 5-, 7-, and 10-year classes use the 200 percent declining-balance method and switch to the straight-line method at the right time. The 15- and 20-year classes use the 150 percent declining-balance method and also switch to the straight-line method.


A judgment of a court of equity requiring the terms of that judgment to be carried out.

A court order or decision.

Dedicate (dedication)

To transfer specific subdivision lands to the local government.

Dedicated (property)

Property is transferred from a private owner to the government for public use. Examples include the commitment of roadways, parks, or other places to local governments during subdivision construction.

Dedicated circuit

A single-appliance electrical circuit is what it sounds like.


The gratuitous handover of privately owned land to the public with the expectation that it will be accepted and used for public purposes. A landowner can devote his or her full fee simple interest or a public right-of-way across his or her property.

Statutory and common law dedications are the two forms of dedications. A statutory dedication is performed by recording a subdivision map that has been approved by local officials and expressly stating those areas dedicated to the public, such as parks and roadways, on the map.

A common-law dedication is a contract, requiring an offer, proven by the owner’s purpose and an unequivocal act of dedication, as well as public approval. The dedication might be explicit (as when a developer or subdivider deeds roads to the county) or implicit (as when an owner agrees to the public use of his or her land for the prescribed term). (See deed of cession.)

For example, the Rockefeller Center shutters its streets and walkways for one day each year to prevent the public from claiming a dedication. This demonstrates that the public’s right to utilize the property is merely a license, and that Rockefeller Center is not devoted to the public. Some property owners additionally install a metal sign in their walkway that reads, “Private Property, Permission to Use Revocable.” Signs that read “No Trespassing” may not be enough to prevent the public from claiming a dedication.

The dedication fee interest is comparable to a qualified fee. For example, if a dedicated public use is abandoned, the fee may revert to the owner, while the government is prohibited from diverting the land to a new use.

The dedication of land such as streets and open spaces is sometimes required before a proposed development can be approved by the government. In other circumstances, rather than dedicating land, the developer can pay a fee.

The owner of a property gives it to the public for usage.

Giving land to the public by the person who owns it.

Deductible expenses

The amount used in business that has to do with running and managing a property.


Expenses that are considered ordinary and essential throughout the course of a tax year and which reduce the amount of taxable income and, consequently, the amount of tax due. Individuals can claim deductions for mortgage interest and real estate taxes, while businesses can claim deductions for automobile and office expenditures, among other things.


The seller signs a written document transferring title to a chunk of land.

A legal instrument that transfers ownership of real estate from one party to another. The document must be signed, attested, presented, and accepted before it may be accepted.

A type of written contract used to transmit a permanent ownership interest in real estate.

A written instrument in which a property owner, known as the “grantor,” conveys and transfers ownership of real property to a “grantee.” Warranty deeds (most generally used), grant deeds, contract and sale deeds, quitclaim deeds, gift deeds, guardian’s deeds, executor’s deeds, personal representative’s deeds (probate), sheriff’s deeds, commissioner’s deeds (foreclosure), and deeds in trust are examples of deeds. Rather than a deed, title to leasehold property is transferred using a “assignment of lease” instrument.

A deed must have the following elements to be valid between grantor and grantee:

Grantor: The deed must designate a grantor who is at least 18 years old and of sound mind. If the grantor’s identity is otherwise established, a mistake in spelling of the grantor’s name or signature will not invalidate the deed. If there are numerous grantors, each must be mentioned as a grantor in the deed in order for each grantor’s interest to be conveyed, or each may transmit separately in separate deeds. (See also grantor.)

Grantee: There must be a genuine grantee. A deed delivered to a company prior to its formal formation (by filing its articles of incorporation) is null and void for lack of a grantee, as is a deed issued to the estate of a deceased grantee. A deed given to a minor or incompetent person is valid. A fake person’s deed is null and void, yet a fictitious person’s deed is valid. It is customary to include the parties’ marital status, minor status, trustee status, or personal representative status. A grantor cannot be the sole grantee, but he or she may pass the deed jointly to another individual or to the grantor’s organization.

A deed is not a legitimate conveyance until the grantee’s name is entered in it by the grantor directly, by someone at the grantor’s request and in the grantor’s presence, or by a duly authorized in written agent of the grantor.

Consideration: A deed should include some mention of consideration, albeit it does not have to be the real consideration in most cases. Most deeds include a small sum of money, such as “for $10 and other useful and valued consideration.” However, fiduciary deeds must state the actual consideration, and the contract of sale must state the actual consideration in all situations.

Conveyance words: Conveyance language, such as “I hereby grant and convey,” differentiates the deed from a mortgage instrument.

Legal definition: The land conveyed must be legally described, either by metes and bounds, lot, block, and subdivision, or by a government survey. Because the full legal description is already recited in the recorded declaration, the unit designation and post office address are usually adequate in a condominium deed. If the deed attempts to transmit more property than the seller actually owns (via an erroneous legal description), the deed is not void but is usually legitimate for the portion of the description that the grantor truly owns.

Signature: The deed must be signed by the grantor. If the grantee is taking over an existing mortgage or agrees to abide by a restriction term in the deed, the grantee must also sign. Some states require the signature to be witnessed and/or notarized. A date of execution is not required, although it is common and helps to determine the date of delivery.

Delivery is the grantor’s final act, indicating his or her intention for the deed to take effect. To be effective, a deed must be delivered and accepted during the grantor’s and grantee’s lifetimes; title passes and the deed is no longer an operational instrument, and its loss deed of trust or destruction has no effect on the grantee’s title. When transferring Torrens-registered property, however, registration of the deed rather than the act of delivery gives title.

The destruction of a deed has no effect on the deed because it is only evidence of the title and not the title itself. As a result, even if the grantee destroys the deed with the goal to restore the grantor’s original title, title cannot be reinvested in the grantor.

Though not required for legality, a deed is usually documented to protect the grantee against third-party claims. A deed must be correctly documented in the chain of title for it to be validly recorded.

Any written legal document that transfers, affirms, or confirms an interest, right, or property and is signed, notarized, delivered, and in some places, sealed.

An instrument (document) under the seal of a party to which an agreement is made, an obligation is entered into, or property is conveyed.

Deed in lieu

Gives the title to the lender when the borrower is behind on payments but doesn’t want the loan to be taken back.

Deed in lieu of foreclosure

A deed that an owner gives to a lender to transfer property that has a mortgage on it but the mortgage has not been paid. It is an alternative to going through with a foreclosure. For a lender, the biggest problem is that the deed doesn’t get rid of junior liens like a foreclosure would. Also called an act of free will.

A deed provided to a lender in lieu of foreclosure by the owner.

Deed in trust

A deed that transfers real estate to a trustee, usually to establish a land trust. The trustee is given complete powers to sell, contract to sell, mortgage, and subdivide under the conditions of such an instrument. However, under the terms of the trust agreement, the beneficiary has authority over the trustee’s exercise of these rights. In states that recognise land trusts, deeds in trust are used.

Deed of reconveyance

After a loan secured by a deed of trust has been paid to the lender, a document is used to transfer legal title from the trustee to the borrower (trustor) (beneficiary). Also known as a release deed.


Continued at…
:point_right: Real Estate Glossary D [Part 2]