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A right to use the land of another for a specific purpose, such
as a right-of-way or for utilities; a non-possessory interest in
land. An easement appurtenant passes with the land when conveyed.
method of depreciation. A method of computing accrued depreciation
in which the cost of a building is depreciated at a fixed annual
percentage rate; also called the straight-line method.
The level of business activity in a community-particularly activity
that brings income into the community from surrounding areas.
The period of time during which a structure may reasonably be expected
to per- form the function for which it was designed or intended.
(See external obsolescence)
(See market rent.)
The age of a building based on the actual wear and tear and maintenance,
or lack of it, that the building has received.
The desire to buy coupled with the ability to pay.
income. Estimated potential gross income of a rental property
from all sources, less anticipated vacancy and collection losses.
A way to leave a tract of land; the opposite of ingress. (See also
The right of a federal, state or local government or public corporation,
utility or service corporation to acquire private property for public
use through a court action called condemnation, in which the court
determines whether the use is a necessary one and what the compensation
to the owner should be.
A building, wall or fence that extends beyond the land of the owner
and illegally intrudes on land of an adjoining owner or a street
or an alley.
Any lien (such as a mortgage, tax lien or judgment lien), easement,
restriction on the use of land, outstanding dower right or other
interest that may diminish the value of property to its owner.
profit. The amount of profit attributable to the development
obsolescence. (See external obsolescence)
The raising or lowering of assessed values for tax purposes
in a particular county or taxing district to make them equal to
assessments in other counties or districts.
(See neighborhood life cycle. ) equity. The interest or value that
an owner has in real estate over and above any mortgage or other
lien or charge against it.
rate. A rate that reflects the relationship between a single
year's before- tax cash flow and the equity investment in the property.
The before-tax cash flow is the net operating income less the annual
debt service payment, and the equity is the property value less
any outstanding loan balance. The equity capitalization rate, when
divided into the before- tax cash flow, gives an indication of the
value of the equity. Also called cash on cash rate, cash flow rate
or equity dividend rate.
rate. (See equity capitalization rate. )
Investors making use of what is termed venture capital to take an
unsecured and thus relatively risky part in an investment.
A clause in a contract, lease or mortgage providing for increases
in wages, rent or interest, based on fluctuations in certain economic
indexes, costs or taxes.
reversion of property of a decedent who died intestate (without
a will) and without heirs to the state or county as provided by
The closing of a transaction through a disinterested third person
called an escrow agent or escrow holder, who holds funds and/or
documents for delivery on the performance of certain conditions.
The degree, quantity, nature and extent of ownership interest that
a person has in real property.
Estate in land.
The degree, quantity, nature and extent of interest a person has
in real estate.
Estate in remainder.
The remnant of an estate that has been conveyed to take effect and
be enjoyed after the termination of a prior estate; for instance,
when an owner conveys a life estate to one party and the remainder
to another. (For a case in which the owner retains the residual
estate, see estate in reversion. )
Estate in reversion.
An estate that comes back to the original holder, as when an owner
conveys a life estate to someone else, with the estate to return
to the original owner on termination of the life estate.
(See excess rent.)
The amount by which scheduled rent exceeds market rent.
The cost of goods and services required to produce income.
clause. Lease provision to pass increases in building maintenance
expenses on to tenants on a pro-rata basis.
Loss of value from forces outside the building or property, such
as changes in optimum land use, legislative enactments that restrict
or impair property rights and changes in supply-demand relationships.
The principle that outside influences may have a positive or negative
effect on property value.
study. An analysis of a proposed subject or property with emphasis
on the attainable income, probable expenses and most advantageous
use and design. The purpose of such a study is to ascertain the
probable success or failure of the project under consideration.
Bank System. Central bank of the United States established to
regulate the flow of money and the cost of borrowing.
The greatest possible estate or right of ownership of real property,
continuing with- out time limitation. Sometimes called fee or fee
Fee simple defeasible.
Any limitation on property use that could result in loss of the
right of ownership.
Fee simple qualified.
Ownership of property that is limited in some way.
Federal Housing Administration. Insures loans made by approved lenders
in accordance with its regulations.
estimate. The appraiser's estimate of the defined value of the
subject property, arrived at by reconciling (correlating) the estimates
of values derived from the sales comparison, cost and income approaches.
Reform, Recovery and Enforcement Act of 1989 (FIRREA). Federal
legislation that mandates state licensing or certification for appraisers
performing appraisals in certain federally related transactions.
A mortgage that has priority as a lien over all other mortgages.
Those costs that are more or less permanent and do not vary in relation
to the property's occupancy or income, such as real estate taxes
and insurance for fire, theft and hazards.
(See amortized mortgage.)
Anything affixed to land, including personal property attached permanently
to a building or to land so that it becomes part of the real estate.
A court action initiated by a mortgagee or lienor for the purpose
of having the court order that the debtor's real estate be sold
to pay the mortgage or other lien (mechanic's lien or judgment).
report. Any of the relatively brief standard forms prepared
by agencies such as the Federal Home Loan Mortgage Corporation and
Federal National Mortgage Association and others for routine property
An estate in land in which ownership is for an indeterminate length
The arrangement of data into groups according to the frequency with
which they appear in the data set.
A standard of measurement, being a strip of land one foot wide fronting
on the street or waterfront and extending the depth of the lot.
Value may be quoted per front foot.
Defects in a building or structure that detract from its value or
marketability, usually the result of layout, design or other features
that are less desirable than features designed for the same functions
in newer property.
Physical or design features that are no longer considered desirable
by property buyers but could be re- placed or redesigned at relatively
Currently undesirable physical or design features that are not easily
remedied or economically justified.
value. The value existing in an established business property
compared with the value of selling the real estate and other assets
of a concern whose business is not yet established. The term takes
into account the goodwill and earning capacity of a business.
A type of deed in which the grantor warrants that he or she has
not previously conveyed the estate being granted to another, has
not encumbered the property except as noted in the deed, and will
convey to the grantee any title to the property the grantor may
A person who receives a conveyance of real property from a grantor.
The person transferring title to or an interest in real property
to a grantee.
area. All enclosed floor areas, as measured along a building's
(See potential gross income)
multiplier. A figure used as a multiplier of the gross income
of a property to produce an estimate of the property's value.
area. Total space designed for occupancy and exclusive use of
tenants, measured from outside wall surfaces to the center of shared
A lease of property under the terms of which the lessee pays a fixed
rent and the lessor pays all property charges regularly incurred
through ownership (repairs, taxes, insurance and operating expenses).
area. Total finished, habitable, above-grade space, measured
along the building's outside perimeter.
income. (See potential gross in- come. )
Gross rent multiplier.
(See gross income multi-
A lease of land only on which the lessee usually owns the building
or is required to build as specified by the lease. Such leases are
usually long-term net leases; the lessee's rights and obligations
continue until the lease expires or is terminated for default.
Rent paid for the right to use and occupy land according to the
terms of a ground lease.
mortgage (GERI). A type of loan that rapidly increases the equity
in a property by increasing the monthly payments a certain percentage
each year and applying those increases to the principal.
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