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Accrued
items of expense:
Incurred expenses that
are not yet payable. In a closing statement, accrued expenses
of the seller are credited to the purchaser (taxes, wages, interest,
etc.).
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Acknowledgment:
A
declaration before a notary public or other officer by a party
executing a legal document that the execution is his free and voluntary
act and deed.
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Acre:
A
measure of land. One acre is equal to 43,560 square feet or 160
square rods or 4,840 square yards.
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Ad
valorem:
According
to value (Latin). This term generally used to refer to real estate
taxes.
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Affidavit:
A
voluntary statement in writing, sworn to before a notary public
or other officer.
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top
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Agent:
One
who acts or has the power to act for another. A licensed real estate
broker authorized to act under a listing or management agreement
executed by a property owner (the principal); this creates a fiduciary
relationship under the law of agency. A building manager is the
agent of the property owner.
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Air-handling
light fixture:
A
light fixture into which air is introduced by means of an air diffuser
for quiet, draft-free distribution.
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top
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Amortization:
The
process of paying off a debt together with interest, usually with
equal payments at regular intervals over a period of time.
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top
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Amortized
mortgage:
A
mortgage loan in which the principal, as well as the interest,
is payable in monthly or periodic installments during the term
of the loan.
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top
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Annual
loan constant:
The
principal and interest of a loan expressed as the constant annual
payment required to retire a debt at a certain rate of interest
over a certain period of time.
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top
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Appraisal:
An
estimate of quantity, quality or value. The process through which
conclusions of property value obtained; also refers to the report
setting forth the estimate and conclusion of value.
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Approaches
to value:
Employed
by an appraiser to estimate the value of real estate: cost approach,
income approach and market data approach.
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Architect:
A
person who normally functions as a creator, coordinator, author
of the drawing and specifications and the general administrator
of construction.
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Architectural
drawing:
Includes
all architectural contracts and drawings such as plot plans, floor
plans, elevations, sections, details, schedules, etc., and any
architectural drawing that forms a part of the contract documents.
Exceptions include mechanical, electrical, and structural drawings,
as well as specialized data that are normally handled by consultants
to the architect or owner.
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Assessed
value:
The
value placed on land and buildings by a township or a county assessor
for use in levying annual real estate taxes.
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Assignment:
The transfer in writing
of an interest in a lease, mortgage or other instrument. The assignor,
or lessee, transfers the entire remainder of the term created by
the lease, and the assignee becomes liable to the original lessor
for rent. Assignor may or may not retain secondary liability for
performance under the lease, depending upon the terms of the lease
pertaining to assignment.
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Bag
filter:
A
unit within a mechanical system that bellows in a bag form when
air flows through, cleaning the air by collecting particles of
foreign matter. This system of filtering is rated the most efficient-
in a range of 92 to 95 percent.
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Banked
elevators:
A
group of elevators adjacent to each other with a specific demised
enclosure
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Bank
partition:
A
type of space divider usually made of steel and glass and extending
only approximately five to six feet up from the floor rather than
to the ceiling.
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Base
lease:
A
contract stating the minimum established requirements that are
applicable to all tenants.
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top
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Base
year:
The
year of a lease term that is used as the standard when implementing
as escalator clause. Operating costs are judged higher or lower
during the next year when compared to the base year.
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Bay:
An
unfinished area or space between a row of columns and the bearing
wall. Usually the smallest area into which a building floor can
be partitioned.
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Bids:
A
competitive system in which each bidder submits a sealed proposal
to execute construction work for a specified sum. The list of bidders
(bid list) is controlled by the client and architect.
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Binder:
A
preliminary agreement evidencing a meeting of the minds and effective
until the principal agreement can be executed.
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Block
Layout:
The
preliminary sketch showing different tenants' spaces on various
floors. This helps the building management to understand the feasibility
of the building.
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top
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Board
of underwriters:
An
organization that fixes rates for fire insurance and other types
of coverage. The organization also maintains a laboratory that
tests safety factors of materials, substances, electrical equipment,
machinery and other apparatus.
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Boot:
(See
Fixture boot.) |
Borrowed
light:
A
partition containing glass or plastic panels between an interior
dark space and a space illuminated by daylight or high-intensity
artificial light.
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Buck:
(See
Door frame.)
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Building
codes:
Ordinances
that specify minimum construction standards. These ordinances are
enforced for the protection of public safety and health.
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Building
core:
The
central or arterial part of a multistory building that integrates
functions and service needs for established occupants. Such areas
are normally composed of toilet facilities, elevator banks, janitors'
closets, utilities, mechanical facilities. smoke shafts and stairwells.
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Building
module:
A
unit of length and width by which the plan of a building can be
standardized and which facilitates the design and layout of office
space, The module places constraints on the size and shape of many
of the elements of the physical systems. In contrast, buildings
of a non-modular design present many problems for initial design
and subsequent alterations.
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Building
permit:
The
approval that must be obtained under state of local regulations.
Drawings and specifications must be filed with the legal authorities
in control of building operations.
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Building
shell:
The
skeleton of a building to which the finished exterior and interior
are applied. It includes the building foundation.
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Building
skin:
All
the materials that cover a building's shell (see Building shell).
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Building
standard:
The
specific construction standards that have been established by the
owner and architect to achieve a uniform element of design throughout
the building and to establish a cost basis for fitting up charges
and/or allowance. Such items may be changed only with the approval
of the building owner or the managing representative.
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Build-to-suit:
An
agreement between a landlord and a new tenant whereby the landlord
assumes the obligation of fitting up the demised space to the tenant's
specification within the constraints of building standards. The
tenant takes possession when the space is completed.
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Cancellation
clause:
A
provision in a lease that confers upon one or both of the parties
to the lease the right to terminate the lease upon the occurrence
of the condition or contingency set forth in the said clause.
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Capitalization:
The
process of ascertaining the value of a property by the use of a
proper investment rate of return and the net income expected to
be produced by the property. The formula of net annual income divided
by proper capitalization rate is expressed: Income/Rate = Value.
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Cash
flow:
The
net operation income of a property minus its debt service.
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Cash-on-cash
return:
A
percentage figure arrived at by dividing the cash flow from a property
by the total investment in the property and multiplying by 100.
Also called Cash yield.
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Cash
yield:
(See
Cash-on-cash return.)
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Certificate
of insurance:
A
certificate issued by an insurance company or its agent. It verifies
that a certain insurance policy is in effect for stated amounts
and coverage and names those insured.
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Certificate
of payment:
A
certificate issued by the architect to the contractor for such
amount as the architect decides is properly due. The amount of
the certificate is therefore left, subject to the contract's provisions,
entirely to the architect's discretion. However, in reaching a
decision, the architect is acting not as the owner's agent but
in a judicial capacity.
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Chain
of title:
The
succession of conveyances from some accepted starting point, usually
beginning with the original recorded source, whereby the present
holder of real property derives the title.
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Change
order:
An
order issued any time there is a change in the specifications,
price or time set forth in the building contract as authorized
by the owner, architect or engineer.
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Channeling:
Cutting,
chipping or routing a prescribed sectional area in a linear pattern
on any surface, usually in concrete or plaster.
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Chattels:
Personal
property items.
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Circulation
allowance:
The
space needed to have sufficient access to, from and around workspaces.
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Clear
span:
The
amount of floor area clear of interference form columns.
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Commitment:
A
pledge, promise, or affirmation of agreement.
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Common
areas:
Areas
used by two or more tenants and/or third parties and not under
control of any one tenant.
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Comparison
year:
During
the term of a lease with an escalator clause, any year that is
compared with a base year for the purpose of establishing a rise
or fall in operating costs (see Base year).
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Condemnation:
The
taking of private property for public use, with adequate compensation
to the owner, under the right of eminent domain.
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Condition
or conditions:
A
provision in a deed or a will. It guarantees that upon the occurrence
or nonoccurrence of a certain event, the title of the purchaser
of devisee will be limited, enlarged or terminated. A condition
in a deed is a restriction that is coupled with a reverter clause.
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Consideration:
Anything
of value given by one party to induce another to enter into a contract.
It may be money, personal services of even "love and affection'.
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Construction
allowance:
A
landlord's contribution to the cost of construction and/or alteration
necessary to prepare a space for a tenant's occupancy. This may
be an established amount, or it may vary from one kind of transaction
to another.
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Construction
cost:
Total
expense, plus normal overhead and profit, that must be paid for
the job in question.
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Construction
cost estimate:
A
figure submitted in advance of construction, not binding unless
submitted as a bid. It is used to help arrive at a decision concerning
the feasibility of a proposed project.
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Constructive
eviction:
Any
disturbance by the landlord of the tenant's possession of leased
premised, whereby they are rendered unsuitable for occupancy (the
purpose for which they were leased). In such a case, the tenant
is not liable for further payment of rent.
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Constructive
notice:
Notice
given to the world by the recording of documents with a public
official. All persons are charged with knowledge of such documents
and their contents, whether or not they have actually examined
them.
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Contingency
fund:
A
fund established by a developer to cover unforeseen construction
costs.
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Contract
documents:
Documents
consisting of the agreement and the conditions of the contract
(general, supplementary and other conditions). They include the
drawings, the specifications, all addenda issued prior to execution
of the contract and all modifications thereto. A modification is
(1) a written amendment to the contract signed by both parties;
(2) a written interpretation issued by the architect in the form
of a drawing or otherwise; (3) a change order; or (4) a written
order issued by the architect for a minor change in the work.
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Contractor:
An
individual and/or firm used in performing work on construction
projects. There are different classes of contractors, which are
normally listed under the heading of subcontractors. The function
of the subcontractor is to perform a particular task only under
the direction and coordination of the general contractor, who takes
on the responsibility of managing the project in accordance with
the construction documents. The general contractor is normally
selected through bidding procedures and is totally responsible
for completion of the project in a skillful manner that is acceptable
to both architect and owner. However, the general contractor may
be pre-selected to handle all work within a particular project.
This is usually the case for multistory office buildings where
the general contractor is the same for all tenant space construction.
The contractor also could be contracted on a time-and-material
basis, which may or may not have an upset maximum.
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Contractor's
affidavit:
A
written statement, made under oath before a notary public by a
contractor, stating facts regarding the contract, subcontracts,
material suppliers and labor and setting forth the amounts paid
and unpaid and the balance of payments due.
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Convection
system:
A
system in which heat is transferred through the circulatory motion
of air that occurs when the temperature varies due to the difference
in air density and the action of gravity. A hot-water or steam
radiator is one such system.
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Convector:
A
heating unit in which air, heated by contact with a heating device
in a casing, circulated by convection. This term is often used
by the layperson in identifying what is really an induction unit
or system, which it resembles. It is usually taken for granted
that all systems are the same, and thus it is often used as a generic
term when identifying either system.
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Conventional
mortgage:
A
mortgage loan that is not insured or guaranteed by any government
agency (FHA or VA).
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Conveyance:
A
written instrument by which title or an interest in real estate
is transferred; a deed.
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Core:
(See
Building core.)
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Coring:
A
mechanical system of removing a cylindrical section of concrete
from the existing floor to gain access to the duct system.
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Cost
approach:
The
process of estimating the value of a property by adding to the
estimated land value the appraiser's estimate of the replacement
cost of the building, less depreciation.
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Cove
base:
(See
Wall base.)
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Covenant:
An
agreement, written into deeds and other instruments, promising
performance or nonperformance of certain acts or stipulation certain
uses or non-uses of the property.
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Damages:
The
estimated reparation in money for an injury sustained.
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Damper:
A
valve or plate that is operated mechanically or manually to regulate
air flow to or from any prescribed point.
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Debt
service:
The
total annual debt payment calculated by multiplying the loan constant
by the outstanding loan balance.
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Dedication:
The
voluntary giving of private property by the owner of a development
for some public use (streets, schools, etc.,).
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Deed:
A
written instrument that, when executed and delivered, conveys title
to an interest in real estate.
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Deed
of trust:
Also
known as a trust deed, an instrument used to create a mortgage
lien by which the mortgagor conveys a title to a trustee who holds
it for the benefit of the noteholder (the lender).
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Deed
restrictions:
Clauses
in a deed limiting the future uses of the property. Deed restrictions
may take many forms. They may limit the density of buildings, dictate
the types of structures that can be erected and/or prevent buildings
from being used for specific purposes or used at all. Deed restrictions
may impose a myriad of limitations and conditions.
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Default:
Failure
to meet an obligation when due or to perform any provision f a
lease, mortgage or other agreement.
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Demised
premises:
Premises,
or parts of real estate, in which an interest or estate has been
transferred temporarily, such as an interest in real property conveyed
in a lease.
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Demising
clause:
The
clause in a lease whereby the landlord (Lessor) leases and the
tenant (Lessee) takes the property. Demise is synonymous with "lease" or
'let".
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Demolition
clause:
The
clause within a lease denoting the fact that if or when the ground
lease has expired, the building will be demolished per such clause.
The lessor must notify the tenants within an established time of
such condition.
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Depreciation:
Loss
of value due to all causes. Depreciation usually includes: (1)
physical deterioration (ordinary wear and tear); (2) functional
depreciation (Obsolescence); and (3) economic obsolescence (causes
outside the property).
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Design
cost or budget cost:
Cost
based on an agreed-upon concept where specific units have been
established.
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Design
development:
The
process by which, upon approval of the schematic design, the architect
proceeds with development of the plans and elevations of the building.
Drawings establishing all major elements and outline specifications
are prepared. A revised statement of probable construction cost
is usually made at this time.
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Developmental
planning:
Establishing
a plan for the current spaces needs of an office that also takes
into account anticipated future needs.
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Diffuser:
A
device for reducing the velocity of air flow from a mechanical
duct system supplying air. Its shape is usually circular or square
and it is set in the ceiling at predetermined locations to diffuse
air within that space.
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Door
frame:
Made
of either wood or hollow metal. A frame includes the following
components: (a) head - the horizontal top portion of the door frame;
(b) jamb - either the left or right vertical portion of the frame;
(c) sill - the bottom of the door at floor level; (d) stop - a
continuos projection around the frame to resist the door from traveling
beyond a closing point; (e) buck - the subframe of wood or pressed
metal to which the door case is fixed.
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Doors:
The
most common types are solid-core wood (S.C.), hollow-core wood
(H.C.), or hollow metal (H.M.). All of the doors can be furnished
for paint finish; wood doors, when it is requested, may be furnished
with any particular wood veneer available, at an additional cost.
(One particular type of door that may come up periodically on proposed
construction jobs is the class B door. This door of wood or metal,
but usually metal, has a two-hour fire rating and is primarily
located at stairwells or other enclosures requiring fire protection
for at least two hours.)
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Dry
and wet bulb thermometer:
A
special thermometer that measures relative humidity.
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Duct:
A
pipe, tube, channel or any other necessary for conveying gases,
liquids or solid units from one point to another. The term is mostly
identified with air-conditioning systems where the transfer of
air is necessary. This is accomplished through sheet-metal ducts.
The term is also applicable to under-floor duct systems for conveyance
of telephone lines and other electrical conductors.
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Easement:
A
right to use the land of another for a specific purpose, such as
a right-of-way or for utilities (see Incorporeal interest). An
easement, appurtenant passes with the land when it is sold.
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Economic
obsolescence:
Impairment
of desirability or useful life or loss in the use and value of
property arising from economic forces outside the building or property,
such a changes in optimum land use, legislative enactment that
restrict or impair property rights and changes in supply-demand
relationships.
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Effective
gross income:
The
scheduled gross income of a property minus the vacancy rate.
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Egress:The
right to leave a tract of land. Often used in connection with
access.
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Electrified
floor:
A
floor in a commercial or office building containing ducts that
house telephone and power lines, which emerge from the floor at
frequent intervals for easy installation of telephones and power
equipment.
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Eminent
domain:
The
right of a government or municipal quasi-public body to acquire
private property for public use. It is acquired through a court
action called condemnation in which the court determines the use
is a public use and decides the price or compensation to be paid
to the owner.
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Encroachment:
A
building or some portion of it, or a wall or fence that extends
beyond the land of the owner and illegally intrudes upon land of
an adjoining owner, a street, or an alley.
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Encumbrance:
Any
lien, such as a mortgage, tax, or judgement lien. It can also be
an easement, a restriction on the use of the land or an outstanding
dower right that may diminish the value of the property.
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Entrepreneurial
building:
A
building where the landlord is not a major tenant and that is built
primarily for its investment-return potential.
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Equalization:
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.
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Equity:
The
interest or value an owner has in real estate over and above the
mortgage against it.
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Escalation
clause:
A
clause in a contract providing for increases or decreases in rent
payments in accordance with fluctuations of certain costs or expenses
of the landlord.
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Escalation
payments:
Payments
under an escalation clause.
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Escrow:
A
written agreement between two or more parties providing that certain
instruments or property be placed with a third party to be delivered
to a designated person upon the fulfillment or performance of some
act or condition.
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Eviction:
The
forced removal, by legal means, of a tenant from the leased premise
(see Constructive eviction).
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Exclusive
agency listing:
A
listing contract under which the owner appoints a real estate broker
as the one exclusive agent for a designated period of time to sell
the property on the owner's stated terms, and under which the owner
agrees to pay the broker a commission. However, the owner reserves
the right to sell without a commission to a prospect not introduced
or claimed by the broker (see Exclusive right to sell).
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Exclusive
listing:
A
contract to sell property as an agent, whereby the agent is given
the exclusive right to sell the property or is made the exclusive
agent for its sale.
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Exclusive
right to sell:
A
listing contract in which the owner appoints a real estate broker
as the exclusive agent for a designated term. The broker must sell
the property on the owner's stated terms, and the owner agrees
to pay the broker a commission when the sale is consummated.
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Expense
ratio:
The
percentage of gross income that is consumed by the operating expenses
of a property.
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Expense
stop:
A
ceiling or limit on the dollar amount one party, typically the
landlord, will pay in an expense category. This ceiling is determined
by adding a percentage or dollar amount to the base year costs.
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Exploratory
costs:
The
cost figures collected on the basis of a discussion of possible
needs and reviewed with an interested individual (see Preliminary
cost estimates).
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Fee
simple:
The
largest possible estate or absolute right of ownership or real
property. It can be held without time limitation and is freely
transferable and inheritable.
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Fiduciary:
A
person to whom power or property is entrusted for the benefit of
another.
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Field
of observation:
(On-site
observation.) Observation deemed necessary by the architect to
ensure successful completion of the project.
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Fin-tube
radiation system:
A
heating convection system that transmits heat through a series
of sheet-metal plates spaced at close intervals on a center pipe.
The energy of heat transmission is usually through hot water or
steam.
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First
right of refusal:
A
lease concession that gives a tenant the first right, within a
limited period, to a designated additional space that another prospective
tenant has expressed a desire to lease.
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Fit
up:
(Fitting
up). The construction necessary within the enclosing walls, i.e.,
the space the tenant is leasing, to divide and improve that tenant's
space into a functional layout, including partitions, doors, telephone
and electrical outlets, finished surfaces, paint, tile, carpet,
etc., and up to the point of furnishing with personal property.
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Fixture:
Personal
property or improvements so attached to the land as to become part
of the real property. The right of the tenant to remove fixtures
may be given by stipulation in the lease or by separate written
agreement between the parties.
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Fixture
boot:
A
sheet-metal housing, over air-handling light fixtures, that will
receive ducts for conveying conditioned air through such light
fixtures to particular areas at certain required quantities.
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Flat
base:
(See
Wall base.)
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Footcandle:
A
measurement of light level. It is equivalent to the light intensity
made by one candle at a distance of one foot.
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Footcandles
maintained:
The
level of light that will be maintained after the initial drop-off
of footcandles following installation. Usually it will be after
the first 100 hours of burning.
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Footprint:
The
shape and configuration of a building.
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Foreclosure:
A
court action initiated by the mortgagee or a lienor for the purpose
of having the court order the debtor's real estate sold to pay
the mortgage or other lien (mechanic's lien or judgement).
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Functional
obsolescence:
Defects
in a building or structure that detract from its value or marketability.
(See Obsolescence.)
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Garden-type
building:
A
modern, low-rise building typically found in suburban areas, that
is built to blend in with its surroundings. Often of stucco exterior.
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General
lien:
A
lien on all property, both real and personal, of a debtor.
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Glazier:
A
mechanic responsible for handling and installing glass.
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Graduated
lease:
A
lease that provides for specific increases or decreases in rent
at definite times during the term of the lease.
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Grantee:
A
person to whom an interest in land is conveyed by deed, grant,
or other written instrument.
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Grantor:
A
person who transfers his or her interest in land to another by
a written instrument.
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Gross
lease:
A
lease of property whereby the lessor is to pay all property charges
regularly incurred through ownership. (See Net lease.)
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Gross
rent multiplier:
A
figure that produces an estimate of the property's value when used
as a multiplier of the gross income of a property.
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Ground
lease:
A
lease (usually of long duration) of land to a tenant who covenants
to erect a building on the premises. The building is security for
rentals. If the tenant defaults, the landlord may foreclose on
the lease. (See Subordinated ground lease).
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Hard
construction costs:
The
costs of constructing a building shell plus most of the covering
materials.
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Hardware:
General
term that includes the following: (a) hinges, butt or pivot; (b)
lever handles, knobs or pulls; (c) latchset, lockset, magnetic
and friction catches; and (d) door closers, door holds, door bumpers.
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Highest
and best use:
The
possible use of land that will produce the greatest net income
and thereby develop the highest land value.
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High
rise:
An
inexact term, usually denoting a building of steel frame construction
regardless of the building height.
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Hold
harmless:
(See
Save harmless.)
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Holding
area:
A
space or room usually in the freight-docking area where deliveries
to a tenant (or the building management) may be held until delivered;
sometimes also called a receiving area.
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Holding
over:
The
act of a tenant retaining possession of the premises longer than
the term expressed in the lease.
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HVAC:
An
abbreviation for heating, ventilating, and air conditioning.
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Improvements
on land:
Usually
publicly owned structures such as buildings, fences, driveways,
and retaining walls erected so that a site can be used.
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Improvements
to land:
Usually
publicly owned structures such as curbs, sidewalks, streetlights,
and sewers constructed to enable the development of privately owned
land.
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Income
approach:
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