Real Estate Glossary

1031 Exchange - This piece of the tax code allows for investors who sell a building or apartment and then use the money to purchase another building or apartment to avoid paying a capital gains tax on their sale. All money must be reinvested into the new property.

Abstract of Title - This is chronological summary of the recorded instruments and proceedings on the title of a property.

Air Rights - The right to use or control the space above a property, without the right to use the surface of the property. Air Rights can also be sold, rented or leased to another party.

Agency - Relationship wherein an agent is employed by a principal to perform certain acts on the principle's behalf.

Amenities - The benefits from home ownership, such as a feature that enhances value.

Amortizated Loan - A loan for which the principal and the interest are payable in monthly or other periodic installments over the term of the loan.

Appraisal - An estimate of a property's value by an appraiser who is presumed to be an expert. One may have an appraisal to determine the offering price during a sale.

Assessment - Tax charge or levy against real estate according to established rates.

Assignment - The process by which a right or contract is transferred from one party to another. Assigned contracts include mortgages, leases and deeds of trust

Balloon Mortgage Payment - A large payment of a mortgage loan, larger than the regular required payment, often at the end of the loan term.

Board Package - This is a package that must be presented to a co-op board for approval before you can purchase a unit. It is part of the co-op application process. These packages require a signed financial statement, a few years of federal tax returns, bank statements, brokerage statements, personal and professional reference letters, a loan commitment letter, lead paint acknowledgement, window guard acknowledgement, along with anything else the co-op board asks for.

Broker - A state licensed sales agent who acts for property owners and prospective purchasers in Real Estate transactions.

Brownstone - A 19 th century house which shares a common wall with the neighboring property.

Building Restrictions - Requirements in building codes that affect the size and appearance of the building.

Cancellation Clause - Proviso in contract or lease that confers the right to terminate obligations upon occurrence of the condition or contingency set forth in clause.

Capital Improvement - Any improvement that will increase the value of a property. Examples of this include having a new elevator installed in the building and or having a new roof installed.

Capital Gain - Tax term involved with selling or exchanging a capital asset.

Capital Loss - Amount by which the proceeds from the sale of a capital asset are less than the cost of acquiring it.

Caveat Emptor - Latin phrase for Let the buyer beware.

Certificate of Occupancy - In New York City, each building is required to have a Certificate of Occupancy which permits the structure to be occupied by members of the public. This means that the building is in compliance to health and building codes.

Classic Six - The term classic refers to a prewar building and the six refers to the number of rooms in the apartment. Classic Six’s have a living room, a formal dining room, a kitchen and three bedrooms.

Classic Seven - A classic six with an additional bedroom.

Classic Eight - A classic six with two additional bedrooms.

Client - The broker's employer.

Closing Date - Date on which the buyer takes ownership of the property.

Closing Cost - “Closing cost” is a catch-all term used to describe the myriad of one-time fees that come with buying an apartment in Manhattan. While a Manhattan co-op apartment will have different closing costs than a Manhattan condominium Elegran has a useful guide that can help you estimate your closing costs.

Closing Statement - A detailed accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.

Cloud on the Title - Outstanding claim or encumbrance which, if valid, affects or impairs owner's title.

Co-Broke - This is the term used when a broker sends out their listing to other brokers and other firms. The brokerage community then receives the listings and the commission will now be split evenly between the seller's broker and the firm that provides the buyer of the property.

Co-op - Every tenant in the apartment building is an owner of shares in the building. Taxes and maintenance are determined based on the number of shares owned. There is an application process during which the co-op board can either accept or deny a sale.

Combined Apartment - These are apartments that used to be two separate apartments and were combined into one by a previous owner. 

Commission - Payment to broker for services rendered; usually a percentage of the selling price.

Common Area - The area on the property or in the building that is available for use to all owners and tenants.

Comparables - Used in assessing or establishing the fair market value of a property, a property which has been sold recently that is similar in size, condition, location and amenities.

Conditional Sales Contract - Contract for sale of property which states that the contract can be cancelled unless conditions of the contract have been fulfilled. A contract is usually condition for only a defined period of time.

Condominium - A type of apartment in which the owner actually owns a specific piece of property within a building.

Condop - As one may surmise from its name, a condop is a hybrid structure of a condominium and a co-op. It is similar to a co-op in that residents do not own their actually apartment, but rather they own shares in the building. However, it is also similar to a condominium in that a condop is much more in regards to financing, leasing, and boards than one would find in a co-op. A condop also has retail space located on the first floors which help offset some of the tax costs. Condop is very similar to a co-op, but there is one major difference between the two. Condops have separate residential and commercial units. The residential part of the building is run like a co-op and the commercial section of the building is usually held by the developer and leased out.

Condotel - A building that has condos but also operates as a hotel. Each unit is individual owned and the building features all of the amenities of a hotel. Owners can chose to rent out their units as a hotel room.

Contract - A legally binding agreement between two parties. To have a valid contract for the sale of Real Estate there must be:

• an offer
• an acceptance
• competent parties
• consideration
• legal purpose
• written documentation
• description of the property
• signatures of the principals
  

Contract Out - This is the moment in time when the buyer and seller have agreed to a price on an apartment and the lawyers have drafted a contract of sale and sent it to the buyer.

Conversion - This means that a commercial building or warehouse has been changed into a building that now has residential units.

Convertible - Refers to an apartment that features a large Dining-L, which could become another bedroom if a wall were constructed. For the new room to legally be considered a bedroom it needs to have a window.

Deed - a written document by which title of property is expressed from one party to another.

Duplex Apartment - An apartment that is on two levels.

Debt Service - Annual monthly amount to be paid by debtor to repay borrowed money.

Developer - One who improves land with buildings, usually on a large scale, and sells to homeowners and/or investors.

Discount Points - An added loan fee charged by a lender to make the yield on a lower-than-market-value loan competitive with higher-interest loans.

Egress - A way out.

Equity - Interest or value that an owner has in his or her property over and above any mortgage debts.

Escrow - This is when money is placed in the control of a third party and neither the buyer or seller has access to it without the consent of an escrow agent or until some condition is met.

Estate - The word used to describe the collection of all assets of a deceased person. Also, the extent of interest a person has in real property.

Estate for Life - The interest of real property that ends with the death of a person.

Exclusive Agency Listing - Listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission.

Exclusive Right to Sell - A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, whether by the broker, th owner or another broker.

Executor - Person or corporate entity designated in a will to carry out its provisions.

Fiduciary - Person who acts on behalf of another and transacts business or handles money regarding property not the persons own. The relationship is characterized by trust and confidence.

Fixed-Rate Mortgage - A loan where the interest rate remains constant over the entire term of the loan.

Fixtures - Personal property attached to the land or improvements that become part of the real property.

Flip Tax/Transfer Fee - This is a fee set by a co-op that must be paid whenever a co-op is sold. The fee can be determined a number of ways and is sometimes paid by the buyer while other times it is paid by the seller.

Floor-thru - An apartment that extends from the front of the building’s façade all the way to its rear wall. The unit is the only one on the floor.

Foreclosure - This is when a property is owned by a lending institution because the previous owner had failed to make their mortgage payments.

Full Service Building - This is a building that has both a 24 hour doorman and a 24 hour concierge.

Grace Period - Additional time allowed to perform an act or make a payment before a default occurs.

Grandfather Clause - If a new law is passed or an old is changed those people whose activity was legal under the previous law are allowed to continue because of this condition. This law is common with pets; some buildings that do not allow pets now, did in past, therefore, those owners are allowed to keep their pets.

Ground Lease - A lease of land only, on which the tenant usually owns a building or constructs a building as specified in the lease.

Holdover Tenant - A tenant who remains in possession of the leased property after the expiration of the lease term, and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy.

High Ceilings - A ceiling must be at least 9’ for it to be considered a high ceiling.

Interest Rate - The percentage of a sum of money charged for its use.

Involuntary Lien - A lien imposed against property without the consent of the owner, such as taxes and special assessments.

LEED Certification - This is certification by the Leadership in Environmental Engineering and Development Green Building System which recognizes the use of green building practices. The levels are Certified, Silver, Gold, and Platinum.

Land Lease - This refers to a building in which the land underneath it is not owned by the same person who owns the building.

Lessee - Tenant

Lessor - Landlord

Lien - Right given by law to certain creditors to have their debt paid out of the property of a defaulting debtor.

Listing - A contract between principal and agent, authorizing the agent to perform services for the principal within a given time, for which the principal agrees to pay a commission.

Litigation - The act of carrying on a lawsuit.

Loft Space -  An apartment that has been converted into a residential space from a warehouse or commercial space. Lofts are known for having high ceilings, open space, and large windows that let in light. In New York City, most lofts and converted commercial space is located downtown.

Lot - A measured section of land.

Maintenance - A monthly payment made by apartment owners which covers the cost of running the building, a proportional share of the building’s real estate taxes, and a proportional share of a mortgage on the building (if there is one).

Maisonette - A ground floor apartment which has a separate entrance from the rest of the building. There is usually another entrance located in the buildings lobby. Many of these types of apartments are found on Park Avenue.

Managing Agent - An independent company that is hired to manage a property. In New York City, most of the cooperative and condominium buildings are managed by a company which is responsible for the building operations.

Market Value - The probable price a ready, willing, able, and informed buyer would pay and a ready, willing, able, and informed seller would accept, neither being under any pressure to act.

Marketable Title - A title which a court of equity considers to be so free from defect that it will enforce its acceptance by a purchaser.

Meeting of the Minds - Whenever all parties to a contract agree to the exact terms thereof.

Mortgage - A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.

Mortgate Commitment - A formal indication, by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms.

Mortgagee - A lender in a mortgage transaction.

Mortgagor - A borrower who conveys his or her property as security for a loan.

Negotiation - The process of discussing an issue between two parties who are working towards the same goal. Successful negotiation usually leads to a contract and then a sale.

Notarize - To verify the authenticity of a signature by a certified Notary Public.

Negative Pledge - A co-operative apartment loan given in a building whose Board of Directors does not permit financing. Instead of pledging the shares to the lending institution, which requires recognition of the lien in writing by the Co-op Board, the purchaser agrees not to pledge the shares for any other purpose, hence the name negative pledge. Other collateral may be required for a loan of this nature.

Net Listing - A price below which an owner will not sell the property and a broker will not receive a commission. Net listings are illegal in New York State. The broker keeps any amount above the net price.

Offer and Acceptance - Two essential components of a valid contract; a meeting of the minds when all parties agree to the exact terms.

Open Listing - A listing given to any number of brokers without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer; the sale of the property automatically terminates the listing.

Option - An agreement to keep open for a set period of time an offer to sell or purchase property, usually for consideration.

Penthouse - A luxury apartment in a high rise building.

Performance Bond - A bond used to guarantee the specific completion of an endeavor in accordance with a contract.

Pied-a-Terre - A French term that refers to an apartment that is not the primary residence of the owner. A Pied a Terre is used when a person lives in another location and comes to New York several times a month or a few weeks a year to either work or enjoy this great city.

Points - Discount charges imposed by lenders to raise the yields on their loans. A charge levied by the lender on the borrower for the mortgage for prepaid interest. One point equals one percent of the amount of the loan.

Post War - Any apartment built after World War II.

Power of Attorney - A written instrument duly signed and executed by an owner of property, which authorizes an agent to act on behalf of the owner to the extent indicated in the instrument.

Pre-War - An apartment building that was erected prior to World War II.

Prepayment Clause - A clause in a mortgage which gives a mortgagor the privilege of paying the mortgage indebtedness before it becomes due.

Principal - The employer of an agent or broker; the broker's or agent's client.

Proprietary Lease - A written lease in a cooperative apartment building, held by the tenant/shareholder, giving the right to occupy a particular unit.

Prospectus - A printed statement disclosing all material aspects of a real estate project.

Purchase Money Mortgage - A note secured by a mortgage given by a buyer, as mortgagor, to a seller, as a mortgagee, as part of the purchase price of the real estate.

Quiet Enjoyment - The right of an owner or a person legally in possession to the permitted use of property without interference of possession.

Racial Steering - The unlawful practice of influencing a person's housing choice based on his race.

Ready, Willing and Able Buyer - One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Real Property - Land, and generally whatever is erected upon it or affixed thereto.

Recognition Agreement - The agreement between the co-operative building and the bank lending money for purchase of shares of stock in the co-operative.

Recording - The act of recording or entering in a book of public record instruments affecting the title to real property.

Redemption - The right of a mortgagor to redeem the property by paying a debt after the expiration date and before sale at foreclosure the right of an owner to reclaim the owner's property after the sale for taxes.

Red Herring - Preliminary offering plan for a cooperative or condominium project submitted to the attorney general and to tenants and subject to modification.

Security Deposit - A payment required by a landlord to guarantee that the tenant meets his or her obligations under the lease and to guard against any potential damages that may be incurred during the term of the lease.

Shares - When one purchases an apartment in a cooperative building he or she is actually purchasing the shares in the cooperative. They represent the proportion of the building owned by the unit owner based on the size and value of the apartment.

Special Assessment - An assessment made against a property to pay for a general improvement by which the assessed property is supposed to be especially benefited.

Specific Performance - A legal action brought in a court of equity in special cases to compel a defendant to carry out the terms of an agreement or contract.

Sponsor - The developer or owner organizing and offering for sale a condominium or cooperative development.

Statute of Frauds - State law which provides that certain instruments, such as deeds, real estate sales contracts, and certain leases must be in writing in order to be legally binding.

Statute of Limitations - Law pertaining to period of time within which certain actions must be brought to court, in New York, 6 years for contracts.

Subletting - A leasing by a tenant to another for part of the lessee's remaining term.

Surrogate's Court (Probate Court) - A court having jurisdiction over the proof of wills and the settling of estate.

Square Footage - The area measured in square feet of a certain property. Square footage can be measured in different ways and is usually considered approximate. Condominium apartments have specific laws that determine the way which the apartment is measured therefore condominium measurements are more accurate.

Tax Abatement - A tax break offered by New York City to help foster real estate development in certain areas of the Manhattan. They can come as the result an underdeveloped neighborhood or it could come help promote converting commercial real estate into residential real estate.

Tax Deductible - An expense that reduces taxable income. Each year, shareholders in cooperatives apartments are able to deduct a certain amount from their personal taxes. The amount is determined by the amount of shares that are owned.

Time is of the Essence - A phrase in a contract that requires the performance of a certain act within a stated period of time, terminating irrevocably on a certain date.

Title - Evidence that owner of land is in lawful possession thereof; evidence of ownership.

Title Search - An examination of the public records to determine the ownership and encumbrances affecting real property.

Transfer Tax - A tax charged under certain conditions on the transfer of property. Both New York State and New York City impose transfer taxes.

Triple Mint - Refers to the condition of the residence. Triple mint condition means that the residence is in immaculate condition.

Unearned Increment - An increase in value of real estate due to no effort on the part of the owner; often due to increase in population.

Walk-Up Building - This refers to a building without an elevator. These are usually pre-war low-rises that are no more than six stories.

Walk Through Inspection - The inspection of a property immediately before the closing to ensure that the property does not have any new damages.

Zone - An area set by local law for specific use with certain rules and regulations.