Real Estate Glossary

(According to value) which refers to the value of property used in the computation of taxes.

The existing condition of real estate, prior to any improvements contemplated under a lease.

The transfer of leasehold interest in a property to a second party.

To transfer to another or to agree to recognize a new owner of a property and to pay them rent.

Building Officials Conference of America, which writes the guidelines for basic, community building codes.

The minimum monthly rent, usually computed on a per- square-foot-per-year basis, due under the lease (see percentage rent).

A specific year of a lease against which certain rent escalations and additional expense reimbursements to landlord may be calculated.

A list of materials and finishes used in the the build-out, repair or restoration of a tenant’s suite.

Refers to the interior construction of a tenant’s space whether new construction or the reconfiguration of existing space.

A customized design and build approach to a tenant’s space usually resulting in a single occupant building which is then leased or sold to the tenant.

Presented by city building department to landlord or tenant after completion of tenant improvements and satisfactory inspections by city building department inspectors.

Property that is not residential. Owned or leased property such as office, research, retail and industrial properties.

The fee paid to a real estate broker as procuring cause and/or for his or her services rendered in a real estate transaction. May be paid by either party in a transaction; it is usually governed by a prior written agreement.

An additional, annual charge often assessed to tenants for maintenance of the property’s “common area”, such as its entryways, hallways or bathrooms.

Construction supervision by a qualified manager.

A customized design and build approach to a tenant’s space usually resulting in a single occupant building which is then leased or sold to the tenant.

The complete set of drawings, specifications, bidding instructions, construction agreement, etc. used in the construction industry. The AIA (American Institute of Architects) standard forms are routinely used, but are not mandatory.

The wall which separates a tenant’s suite from another tenant’s suite, or building common areas. In most cases, a demising wall will be constructed from floor to either the building roof deck or floor deck. The wall may also be a fire rated wall (see “partition wall”).

The abbreviation for “doing business as”.

The state of agreement both parties are looking for.

The right of a government entity to take (condemn) property with just compensation for the public good.

The mechanism in a lease which increases the rent, usually annually. May be set forth in fixed steps, tied to increases in operating expense, or to increases in the Consumer Price Index (CPI).

A statement concerning the status of an agreement (usually a lease), and the performance of obligations under the agreement. A third party such as a lender, relies on the statement (which is usually unilaterally executed by the tenant) for such things as making a loan on property.

The price which the market would bring, over a reasonable period of time, for a property for sale or for lease.

A building providing use flexibility between office, and other uses such as manufacturing, laboratory, warehouse, etc. Usually provides high bays and relocation flexibility for overhead doors and other entrances.

An uncontrollable force – an event outside the reasonable control of the parties to a contract, such as an “Act of God”, war, riots or strikes which would prevent the parties from complying with the provisions of an agreement.

The condition that results from a tenant closing their business, even though the lease is still in effect. Lease language may provide a means for a landlord to void a lease and take back the leased premises if the tenant ceases to operate its business at that location.

A long-term lease of land, entered into by a tenant to construct a building (at its expense) from which to conduct its business.

Usually refers to gross area of a building by measuring from the outside of its exterior walls and including all vertical penetrations, such as elevator shafts and basement space.

The condition that results when a tenancy exists beyond the end of the term of a lease.

Acronym for heating, ventilation and air conditioning.

A waiver of mechanic’s lien rights signed by a general contractor and his subcontractors.

See “attorn”.

Construction or improvements for the purpose of preparing the premises for the conduct of tenant’s business. Improvements permanently attach to the premises unless they are trade fixtures, and they remain with the premises after the end of term of the lease.

The date upon which the lease commences and the obligations of the parties begins (see also “rent commencement date”).

See “leasehold improvements”.

A claim provided for under state statutes securing the priority of payment for the value of work and materials furnished in the construction or repair of real property.

A lease for a specific period of time, usually one month, which automatically renews itself for the same period of time, unless landlord or tenant provide notice to terminate.

Structured such that a base rent for a rental property is paid to landlord. In addition, other charges such as utilities and building property taxes, insurance and maintenance are also payable by tenant. Sometimes referred to as triple net or absolute net lease.

See triple-net below.

Legal notice to the county’s register of deeds that remodeling/improvements will be undertaken at an address.

Legal notice by a subcontractor or supplier that it furnished labor or materials, subsequent to the notice of commencement, thereby establishing the legal right to be paid for the services rendered.

The costs associated with operating income producing property usually before interest and income tax expense, but including property taxes, insurance, repairs and maintenance, replacement reserves.

A term in a lease for the rights either tenant or landlord may have with respect to one another, usually with stipulations regarding timing of those rights.

A wall constructed to create work areas such as offices or conference rooms. Depending on security needs, a partition wall may not be constructed to the roof or floor decking, but may terminate at lower point such as a suspended ceiling.

A wall common to two adjoining buildings or rooms.

An expense associated with tenancy in which the landlord “passes through” to tenant certain increases in building operating expenses occurring after a base year in the lease.

Provides for a rent to be paid as a percentage of retail sales, usually quarterly or annually. Often coupled with a base rent.

A zoning category in which each of the proposed buildings or uses are approved in advance as a part of a parcel’s overall use. Usually preserves large common or open areas on a site.

In commercial real estate, the description of the leasehold and the specific square footage for which the parties enter into a lease.

A list of incomplete or unacceptable construction items which upon remedy and completion will usually complete the obligations of the contractor under a construction contract.

A person licensed to act as an agent for another person or business to negotiate a lease or purchase of a leasehold or property, respectively, for a fee.

Denotes the number of square feet in a commercial building deemed to be rentable, according to BOMA. May include a common area load factor or allowance for building amenities such as hallways and lavatories.

The date upon which the rent and usually the term of the lease begins. May be different from the lease commencement date when certain obligations must be fulfilled such as the construction of tenant improvements.

The land and anything permanently attached to the land such as buildings, parking lots, landscaping, or other items which would otherwise be classified personal property if not attached, excluding fixtures designed to be removable and reusable (see “trade fixtures”).

Lease language that provides the means for tenant to give landlord notice of its intent to renew (extend) the lease.

A financing arrangement usually designed to raise capital for the property owner or obtain favorable income tax results.

Zoning requirement that requires a building or an improvement to be set back a certain number of feet from the property line.

Generally, a deposit of money by a tenant with a landlord to secure performance of a lease.

The interior condition of either a new or existing building without improvements or finishes. Typically denotes floor, windows, walls and roof of an enclosed premises. May include some electrical or plumbing improvements, but not demising walls.

Any special charge levied against real property for public improvements that benefit the assessed property.

An agreement by which the tenant agrees to the priority of a mortgage over the leasehold interest, or other claim held by the tenant on the property.

The point during construction at which the contractor is ready to turn the property over to the tenant or client for acceptance and final punch list. Usually occurs upon the issuance of a certificate of occupancy.

Arrangement whereby a prospective tenant engages a real estate broker as its exclusive agent in negotiating a lease for commercial space. Also know as a “buyer’s broker.”

Lease language which specifies the business activities tenant will engage in at the leased premises.

Certain fixtures installed at the premises which are unique to tenant’s business, and which may generally be removed by tenant at the end of the term of the lease.

Generally refers to the requirement for the lessee to pay for its share of the property’s taxes, insurance and operating expenses.

Denotes the number of square feet in a commercial building or suite deemed to be usable by BOMA.

The interior condition of either a new or existing building or suite in which the improvements generally consist of heating/cooling with delivery systems, lighting, electrical switches and outlets, lavatories, a finished ceiling, walls that are prepped for painting, and a concrete slab floor. Also called a “vanilla box”.