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best use. The legally and physically possible use of land that
is likely to produce the highest land (or property) value. It considers
the balance between site and improvements as well as the intensity
and length of uses.
Actual cost of a property at the time it was constructed.
Scheduled (or contract) rent paid in past years.
A tenancy in which the lessee retains possession of the leased
premises after the lease has expired and the landlord, by continuing
to accept rent from the tenant, thereby agrees to the tenant's continued
association. Organization of property owners in a residential
condominium or subdivision development, usually authorized by a
declaration of restrictions to establish property design and maintenance
criteria, collect assessments and manage common areas.
fund table. A table that sup- plies a factor by which a property's
annual net income may be multiplied to find the present worth of
the property over a given period at a given rate of interest.
of Housing and Urban Development.
Real property made suitable for building by the addition of
utilities and publicly owned structures, such as a curb, sidewalk,
street-lighting system and/or sewer.
Structures of whatever nature, usually privately rather than publicly
owned, erected on a site to enable its utilization, e.g., buildings,
fences, driveways and retaining walls.
approach. The process of estimating the value of an income-producing
property by capitalization of the annual net operating income expected
to be produced by the property during its remaining economic life.
law of. The situation in which property improvements increase property
income or value.
A depreciated item that would be impossible or too expensive to
restore or replace.
contractor. A person who con- tracts to do work for another
by using his or her own methods and without being under the control
of the other person regarding how the work should be done. Unlike
an employee, an independent contractor pays all of his or her expenses,
personally pays income and social security taxes and receives no
employee benefits. Many real estate salespeople are independent
An appraisal technique used to estimate reproduction or replacement
cost. The appraiser multiplies the original cost of construction
by a price index for the geographic area to allow for price changes.
Costs of erecting a new building not involved with either site preparation
or building construction; for example, building per- mit, land survey,
overhead expenses such as insurance and payroll taxes, and builder's
or park. A controlled development zoned for industrial use and
designed to accommodate specific types of industry, providing public
utilities, streets, railroad sidings and water and sewage facilities.
The way to enter a tract of land. Often used interchangeably with
access. (See also ac- cess.)
contract. A contract for the sale of real estate by which the
purchase price is paid in installments over an extended period of
time by the purchaser, who is in possession, with the title retained
by the seller until a certain number of payments are made. The purchaser's
payments may be forfeited upon default.
The highest reasonable value that can be placed on property for
percentage of the principal amount of a loan charged by a lender
for its use, usually expressed as an annual rate.
Return on an investment; an interest rate is composed of four component
rates--safe rate, risk rate, non-liquidity rate and management rate.
Management rate. Compensation to the owner for the work involved
in managing an investment and reinvesting the funds received from
the property. Non-liquidity rate. A penalty charged for the time
needed to convert real estate into cash. risk rate. An addition
to the safe rate to compensate for the hazards that accompany investments
in real estate. safe rate. The interest rate paid by investments
of maximum security, highest liquidity and minimum risk.
A temporary property use awaiting transition to its highest and
Dying without a will or without having made a valid will. Title
to property owned by someone who dies intestate will pass to his
or her heirs as provided in the law of descent of the state in which
the property is located. investment value. The worth of investment
property to a specific investor.
table. A table that supplies a factor to be multiplied by the
desired yearly income (based on the interest rate and length of
time of the investment) to find the present worth of the investment.
Ownership of real estate between two or more parties who have been
named in one conveyance as joint tenants. On the death of a joint
tenant, the decedent's interest passes to the surviving joint tenant(s)
by the right of survivor- ship.
The joining of two or more people to conduct a specific business
enterprise. A joint venture is similar to a partnership in that
it must be created by agreement between the par- ties to share in
the losses and profits of the venture. It is unlike a partnership
in that the venture is for one specific project only, rather than
for a continuing business relationship.
earth's surface in its natural condition, extending down to the
center of the globe, its surface and all things affixed to it, and
the air- space above the surface.
rate. The rate of return, including interest, on land only.
method. (See subdivision development method. )
A parcel of land without any access to a public road or way.
One who owns property and leases it to a tenant.
technique. A method of capitalization using the net income remaining
to the land after return on and recapture of the building value
have been deducted.
A trust originated by the owner of real property in which real estate
is the only asset. Because the interest of a beneficiary is considered
personal property and not real estate, ajudgment against the beneficiary
will not create a lien against the real estate. Thus land trusts
are popular when there are multiple owners who seek protection against
the effects of divorce, judgments or bankruptcies of each other.
Physical deficiencies or construction defects not readily ascertainable
from a reasonable inspection of the property, such as a defective
septic tank or underground sewage system, or improper plumbing or
written or oral contract for the possession and use of real property
for a stipulated period of time, in consideration for the payment
of rent. Leases for more than one year generally must be in writing.
The lessor's interest and rights in the real estate being leased.
The lessee's right to possess and use real estate during the term
of a lease. This is generally considered a personal property interest.
A statement identifying land by a system prescribed by law.
(See also lot and block system, metes and bounds description and
rectangular survey system.)
The person to whom property is leased by another; also called a
An interest having value only if the agreed-on rent is less than
the market rent.
person who leases property to an- other; also called a landlord.
The value of lease rental payments plus the remaining property value
at the end of the lease period.
Letter of opinion.
Report of property value that states the appraiser's conclusion
of value or a range of values and provides only a brief summary
of the supporting data and appraiser's analysis.
Letter of transmittal.
First page of a narrative appraisal report, in which the report
is formally presented to the person for whom the appraisal was made.
impose or assess a tax on a person or property; the amount of taxes
to be imposed in a given district.
(1) The revocable permission for a temporary use of land--a personal
right that cannot be sold. (2) Formal permission from a constituted
authority (such as a state agency) to engage in a certain activity
or business (such as real estate appraisal.)
LID - Land improvement
district. special tax or assessment passed on to home buyers
to pay for roadwork and improvements. can last up to 17 years or
more, can be billed, monthly, quarterly, or annually. Usually becomes
lien on property and is passed down to future owners until paid
right given by law to certain creditors to have their debts paid
out of the property of a defaulting debtor, usually by means of
a court sale.
An interest in real or personal property that is limited in duration
to the lifetime of its owner or some other designated person or
An arrangement in which a property owner (truster) transfers assets
to a trustee, who assumes specified duties in managing the asset.
After the payment of operating expenses and trustee's fees, the
income generated by the trust property is paid to or used for the
benefit of the designated beneficiary. The living trust is gaining
popularity as a way to hold title and avoid probate of trust assets.
Lot and block system. Method of legal description of an
individual parcel of land by reference to tract, block and lot numbers
and other information by which the parcel is identified in a recorded
subdivision map. Also called lot, block and tract system and subdivision
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