Commerical Real Estate Glossary
Assignee: Individual to whom a contract is assigned.
Build Out: The construction or improvements of the interior of a space, including flooring, walls, finished plumbing, electrical work, etc.
Building Permit: Written government permission to develop, renovate, or repair a building.
Cancellation Clause: A provision in a contract (e.g., lease) that confers the ability of one in the lease to terminate the party's obligations. The grounds and ability to cancel are usually specified in the lease.
Capital Improvement: Any major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof, and renovations of the lobby.
Certificate of Occupancy (CO): The government issues this official form, which states that the building is legally ready to be occupied.
Common Area Maintenance (CAM): This is the amount of additional rent charged to the tenant, in addition to the base rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc. Most often, this does not include any capital improvements that are made to the property.
Contiguous: Touching at some point or along a boundary.
Contingency: A requirement in a contract that must occur before that contract can be finalized.
Contract: A legal agreement between entities that requires each to conduct (or refrain from conducting) certain activities. This document provides each party with a right that is enforceable under our judicial system.
Covenants: Wording found in deeds that limits/restricts the use to which a property may be used.
Deed: A signed, written instrument that conveys title to real property.
Deed Restriction: An imposed restriction in a deed that limits the use of the property. For example, a restriction could prohibit the sale of alcoholic beverages.
Default: Failure to fulfill a promise, discharge an obligation, or perform certain acts.
Eminent Domain: The government's right to condemn and acquire property for public use. The government must provide the owner fair compensation.
Estoppel Certificate: A legal instrument executed by the one taking out the mortgage (i.e., mortgagor). The owner of a property may require an individual leasing a property to sign an estoppel certificate, which verifies the major points (e.g., base rent, lease commencement and expiration) existing lease between the landlord and tenant.
Fiduciary: A person who represents another on financial/property matters.
Fixtures: Personal property so attached the land or building (e.g., improvements) it is considered part of the real property.
Gross Lease: A lease of property whereby the landlord (i.e., lessor) pays for all property charges usually included in ownership. These charges can include utilities, taxes, and maintenance, among others.
Holdover Tenant: A tenant who remains in possession of leased property after the lease term expiration.
Irrevocable: Incapable of being altered, changed, or recalled.
Joint Tenancy: Ownership of real property by two or more individuals, each of whom has an undivided interest with the right of survivorship.
Judgement: A formal decision issued by a court relating to the specific claims and rights of the parties to an act or suit.
Landlord: One who rents property to a tenant.
Lease: A contract whereby the landlord grants the tenant the right to occupy defined space for a set period at a specific price (i.e., rent).
Leasehold: The estate or interest a tenant has as stated in the tenant's lease.
Lessee: An individual (i.e., tenant) to whom property is rented under a lease.
Lessor: An individual (i.e. landlord) who rents property to a tenant via a lease.
Listing: An employment contract between principal and agent that authorizes the agent (such as a broker) to perform services for the principal and his property.
Loss Factor:What percentage of the gross area of a space is lost due to walls, elevator, etc.
Mandatory: A requirement that must be conformed to as specified in any written document.
Market Price: The actual selling or leasing price of a property.
Market Value: The expected price that a property should bring if exposed for lease in the open market for a reasonable period of time.
Net Lease: Also called triple net lease. The lessee pays not only a fixed rental charge but also expenses on the rented property, including maintenance.
Non-Disturbance Agreement: The tenant signs this to prevent himself from being evicted if the property owner does not pay its mortgage to the bank.
Option: A right given to purchase or lease a property upon specified terms within a specified time. If the right is not exercised, the option holder is not subject to liability for damages. If the holder of the option exercises it, the grantor of option must perform the option's requirements.
Percentage Lease: A lease of property in which the rent is based upon the percentage of the sales volume made on the specific premises. There is usually a clause for a minimum rent as well.
Power of Attorney: A written instrument duly signed and executed by an individual which authorizes an agent to act on his behalf to the extent indicated in the document.
Quiet Enjoyment: The right of a landlord or tenant to use the property without disturbances.
Real Property: Land and any capital improvements (e.g., buildings) erected on the property.
Rent: Compensation from tenant to landlord for the use of real estate.
Restriction: A restriction, often specified in the deed, on the use of property.
Revocation: An act of rescinding power previously authorized.
Specific Performance: When a court requires a defendant to carry out the terms of an agreement or contract.
Square Feet: The usual method by which rental space is defined. It is the area of that space, calculated by taking length times width. For example, a room 30 feet by 60 feet has an area of 1,800 square feet.
Subletting: The leasing of space from one tenant to another tenant.
Surrender: The cancellation of a lease by mutual consent of the tenant and the landlord.
Tenant Improvements: Work done on the interior of a space, can be paid for by landlord, tenant, or some combination of both, depending on the terms of the lease.
Triple Net Lease or Net Lease: A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs.
Valuation: Estimated price, value, or worth. Also, the act of identifying a property's worth via an appraisal.
Variance: Government authorization to use or develop a property in a manner which is not permitted by the applicable zoning regulations.
Waiver: The intentional relinquishment or abandonment of a specific claim, privilege, or right.
Work Letter: An amount of money that a landlord agrees to spend on the construction of the interior of a space per the lease, usually negotiated.
Zoning Ordinance: A law by a local governmental authority (i.e., city or province) that sets the parameters for which the property may be put to use.
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