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Abatement notice is a legal notice served by homeowners or tenants when they violate local laws related to the maintenance of the property. It is a legal order to refrain from carrying out an activity that creates a statutory nuisance such as smoke or noise pollution, parking in unauthorised areas etc. The notice also indicates actions needed to address the violation and the consequences in case they fail to take corrective measures.
Absolute title refers to a property ownership claim free from any debts, claims, or encumbrances. It guarantees the owner complete and undisputed ownership rights to the property. An absolute title provides the owner full legal authority to sell, lease, rent or modify the property without restrictions.
Accelerated depreciation lets property owners reduce the value of their assets more quickly for tax benefits. This means they can claim larger deductions in the early years of owning a property, which helps lower their taxable income and save money on taxes sooner.
A clause in the loan agreement that allows a lender to demand a borrower repayment of all or part of an outstanding loan if certain requirements are not met. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers the title to another individual without informing the lender.
A property is listed as "active under contract" when a property has an accepted offer, but the sale depends on certain conditions being met, like getting a loan or passing a home inspection. The deal isn't final yet, and the seller is also likely accepting backup offers in case their current offer fails to meet its contingencies.
Add-on factor: the number of usable square feet divided by the number of rentable square feet in a commercial real estate lease. The result of this calculation will be 1 if the two numbers are identical, but it is usually slightly lower than 1 because some square footage in a building will be partly or non-unusable. Non-usable square footage includes lobbies, hallways, stairwells, elevators and restrooms, support poles and interior walls. In a poorly designed building, the usable area may be considerably less than the rentable area. Potential tenants can thus use the add-on factor to help them compare leases and determine which lease offers the best value.
An addendum is an additional document attached to the original contract that modifies or adds specific terms. It’s used to clarify, update, or include extra conditions, like repairs or changes in the closing date. Both parties must agree to and sign the addendum for it to become part of the contract.
A type of mortgage where the interest rate can change periodically based on an underlying benchmark interest rate or index. Initial rates are often lower, but there's a risk they can increase in the future.
This is the date your mortgage begins to accrue interest (though you might not have made a mortgage payment yet). The adjustment date usually falls on the first day of the month after mortgage funds are advanced or dispersed to the borrower.
Advance payment is money paid in advance to secure a property before the final transaction. More than 10% of the total amount required to purchase the property shouldn’t be given in advance. In a renting transaction, it is the amount paid by the tenant to the landlord before signing the rent agreement to secure the transaction. This amount is usually equivalent to one month's rent which is adjustable against the first month's rent. Not to be confused with a security deposit or token advance.
A document provided by the property seller that explicitly states the status of potential legal issues involving the property or the seller. For example, someone looking to sell real estate would have to provide an affidavit of title indicating that the property is truly owned by the seller, that the property is not being sold to another party, that there are no liens against the property and that the seller is not in bankruptcy proceedings. An affidavit of title is designed to protect the buyer from outstanding legal issues that the seller might be facing.
An agent is any person registered to conduct real estate transactions. When a seller accepts an offer from a buyer, that offer is contingent upon the buyer’s ability to meet certain conditions before finalisation of the sale. Contingencies might include the buyer selling their home, receiving mortgage approval, or reaching an agreement with the seller on the home inspection.
An agreement to sell is a legal document between a buyer and seller that outlines the terms and conditions of the property sale and the parties' commitments to the transaction. It includes details like the sale price, payment schedule, and conditions for transferring ownership.
An alienation clause is a financial clause that enables the lender to collect the remaining loan amount in a lump sum after the property is sold or transferred.
The transfer of a real estate property without financing or debt funding. The buyer would produce the appropriate funds at the time of closing; the seller would receive the entire selling price at closing. There may be significant drawbacks to paying cash for real estate, including tax consequences resulting from no loan interest tax deduction or the loss of earning power on the money tied up in the purchase.
A lane or passage between or behind a buildings
An allotment letter is an important document issued by the developer to the buyer once the booking is done. It includes all details regarding the unit, payment options and any extra charges buyer will have to pay in case of maintenance or additional facilities. It also includes the construction schedule, house plans, delivery date and other booking terms. When applying for a loan, an allotment letter is a must-to-have document.
The value of land and buildings which reflects a prospective use which is different from that of the current use.
Amortisation is gradually paying off a home loan principal and interest in an agreed-stipulated time through scheduled, regular payments.
A table detailing the basic loan information i.e., loan tenure, number of periodic payments to be made, rate of interest, principal amount, and balance principal. In real estate, a buyer's amortisation schedule is usually one monthly payment over 15 to 30 years.
One or more department or variety chain stores, or supermarkets, introduced into a shopping mall in key positions to attract the shopping public into the centre to encourage other retailers to lease shops in the mall. The larger the developments the more anchors are required. Agreements with anchor tenants must be in place before most banks will finance the construction of a mall or shopping centre.
An apartment, also known as a “flat” in India, is a self-contained housing unit, typically occupying a part of the building, generally on a single storey. The building containing several individual apartments is called an ‘apartment building/complex’.
An appraisal is a professional evaluation of a property's actual worth conducted by a licensed appraiser. It considers factors like location, size, condition, and recent sales of comparable properties. Appraisal is essential for financing home loans. Lenders want to ensure they are not “over-paying” for a property. After appraisal, if it is found that the value of the home is inferior to the amount asked, the buyer is asked to pay the difference in cost.
An appraisal contingency is a clause that allows a buyer to dissolve a purchase agreement if a home’s appraised value is less than the sale price.
Appraisal fee is a one-time fee paid to a professional who assesses the value of a property. This appraisal helps lenders decide how much a home is worth and how much they are eligible or willing to loan.
Appreciation is an increase in the value of a property over time depending on various factors like market demand and supply, location improvements, area development, or interest rates.
Approval is the process where a lender agrees to finance you based on your financial situation. They look at factors like your credit score, income, net worth, age, fluctuation in bank account savings and debts to determine how much they’re willing to lend you. Getting approved means you can move forward with buying a home confidently.
A method of resolving a dispute in which a third party renders a decision.
The term “as is where is basis” is mainly used by banks while auctioning foreclosed properties. It means that you are buying a property in its existing condition, inheriting all the good and bad, physical and legal conditions of the property, with or without encumbrances. After purchasing the foreclosed property, the buyer will become responsible for any repairs, liens, liabilities & legal disputes etc., associated with the property and the auctioning bank will bear no responsibility. Therefore, it is in the best interest of the buyer to conduct thorough physical and legal due diligence before investing in a foreclosure property.
The asking price is the initial price set by the seller for the property. It's the starting point for price negotiations between buyers and sellers.
The value that a taxing authority places on real property for the purpose of calculating the amount of tax on that property. It is usually an estimated value of the property after considering the overall condition of the property, location, square footage, amenities or features, etc., in comparison to similar properties.
A person in whose name the rights and interests of a property are transferred.
When a buyer is interested in purchasing a property that is already under contract with someone else, that buyer has an opportunity to submit a “backup offer”, in case the first transaction falls apart. A backup offer must still be negotiated and any monies, such as earnest money, submitted, to confirm it is the next offer in line. There can only be one backup offer legally, as you cannot have a backup to the backup.
A long-term loan, often a mortgage, that has one large payment (the balloon payment) due upon maturity. A balloon loan will often have the advantage of very low-interest payments, thus requiring very little capital outlay during the life of the loan. Since most of the repayment is deferred until the end of the payment period, the borrower has substantial flexibility to utilise the available capital during the life of the loan. The major problem with such a loan is that the borrower needs to be self-disciplined in preparing for the large single payment since interim payments are not being made. Balloon loans are often undertaken when refinancing or when a major cash flow event is anticipated.
Instead of a traditional fixed-rate mortgage in which the owner pays on the loan in instalments, a balloon mortgage is paid in one lump sum (e.g., the balloon payment). It’s usually associated with investment or construction projects that are issued for the short term and don’t require collateral.
A balloon payment in real estate is a large, lump-sum payment due at the end of a loan term. It usually follows a period of smaller, regular payments. After making low payments for several years, the borrower must pay off the remaining balance all at once. This type of loan is often used in short-term financing.
It refers to a property or space that includes basic structural elements like walls, floors, ceilings, etc., but does not have any installed utilities, such as plumbing or electrical systems. This allows buyers to customise the space according to their needs and preferences.
The minimum threshold interest rate set by the Reserve Bank of India (RBI) from July 1, 2010, below which banks cannot lend. The Base Rate includes all those elements of the lending rate that are common across all categories of borrowers. Banks are allowed to determine their actual lending rates on loans and advances concerning the Base Rate and by including such other customer-specific charges as considered appropriate. All categories of loans are priced only concerning the Base Rate.
In real estate, a prospective buyer’s last and highest offer. A best and final offer is typically submitted in response to a bidding war. A seller who has received several offers will ask either all bidders or the top bidders to submit their best and final offers. This type of offer presents the most favourable terms the buyer is willing to offer the seller for the purchase of the property.
Bedroom Hall Kitchen
A bi-weekly mortgage payment means a homeowner pays their monthly mortgage payment in two monthly instalments instead of one. With a bi-weekly mortgage, you'll make 26 payments per year instead of 12. The result is that you'll pay the equivalent of 13 monthly payments each year lowering interest rates and your principal balance at a faster pace.
A situation where two or more buyers are so interested in an item (such as a house or a business) that they make increasingly higher offers of the price they are willing to pay to try to become the new owner of the item. The bidding usually occurs at a fast pace, requiring potential buyers to make less thought-out decisions than they normally might. While a bidding war is a seller’s dream come true, it may cause buyer’s remorse.
In this kind of offer, the buyers don't check the property but make the offer immediately because of the competition with the other buyers. When a buyer makes an offer on a property they haven’t seen, even when it was possible, that offer is considered a “blind offer”. It is most commonly used in a highly competitive area and/or circumstance and used as an attempt to be first and win quickly.
The attempt to induce someone to sell their home because someone from a protected class is rumoured to be moving into the neighbourhood. A classic example of this would be a real estate agent passing out her card to neighbours while telling them that a minority family is moving in down the block and they should sell now before the neighbourhood gets any worse. This is illegal.
Cash or other property given to make up any difference in value or equity between two properties in an exchange.
In any transaction, including real estate, certain conditions are specified. Any violation of the conditions is considered a breach of contract.
A bridge loan is a short-term loan a homeowner takes out against their property to finance the purchase of another property. It’s usually taken out for a few weeks to up to three years.
Brokerage is the fee or commission paid to a real estate intermediary, broker or agent for facilitating a property transaction between the homebuyer and the developer. This fee is typically a percentage of the property's sale price, a flat rate or a monthly rental amount usually agreed upon before the transaction.
A single, independent floor in a building, usually without the amenities of a multi-storey apartment complex. It's considered residential when it's inhabited by families or individuals as their main residence.
Established in 1941, BAI is a vertex that represents civil construction or development organisations. A large portion of the framework advancement firms and land developers of India fall under the umbrella of BAI.
The Building Approval Plan, sanctioned by the local municipal body or city development authority, validates that the construction of the building complies with all the rules and regulations.
A set of rules and regulations established by local authorities that govern the construction, design, and safety standards of buildings. These guidelines cover height limits, structural integrity, ventilation, and land use.
Regulations that set standards for the construction, design, material and safety of buildings. They ensure that buildings are safe for occupancy and meet certain quality benchmarks.
A contract between an owner or occupier of land and a building contractor, setting forth the terms under which construction is to be carried out, the basis of remuneration, time scale, and penalties, if any, for failure to comply with terms of the contract.
Built-up area refers to the total floor area of a property, including the carpet area (usable space) and the space occupied by walls, balconies, terraces, utility areas and other structures. It typically exceeds the carpet area by 10-15%.
Any short-term, generally five to seven years, financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced to meet the balloon payment obligation. These loans are riskier because the homeowner’s equity in the property doesn’t increase over time.
Commercial premises usable by the occupiers for a short period on a membership basis of the centre. Usually, a business centre charges for full-service accommodation, which is substantially higher than the rental of standard office space and usually includes the cost of HVAC, housekeeping, electricity, and security systems.
Clustered areas of office buildings or industrial spaces, designed to cater to specific industries or businesses.
A buyer’s agent is a licensed real estate professional whose job is to find the right property, represent their interests by negotiating, obtain the best price and be actively involved throughout the buying process.
A situation in which supply exceeds demand, giving buyers an advantage over sellers in price negotiations. Contrast with the seller’s market.
In a buyback scheme, the buyout rate is the final appreciated rate at which the builder buys out the property back from the investor, taking into account the promised investment yield.
An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, real estate or other instrument at a specified price within a specific period. For a lender, an acceleration clause is a form of call option.
Capital Gain is the profit from selling an asset (like real estate property) for more than what you originally paid. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes. Long-term capital gains are usually taxed at a lower rate than regular income. This is done to encourage entrepreneurship and investment in the economy.
Capital gains tax is a tax that needs to be made on the profit received from selling a property (as it is considered an income). The tax paid on capital gains can be long-term or short-term, and the tax levied can range from 10-15%. If held longer, it may qualify for tax benefits.
Capital Loss is incurred when an asset (like real estate property) is sold for less than its purchase price.
Capitalisation rate (Cap rate) is a real estate valuation standard that compares different real estate investments and roughly determines the potential return on an investment. [Cap Rate = Net Operating Income ÷ Current Market Value]
The maximum interest rate that can be charged on a variable or adjustable-rate mortgage. For example, a 10-year loan may be issued to a borrower at 10%, but with a capped rate of 12%. The interest rate can thus fluctuate up and down, but can never go higher than the 12% capped rate. Capped rates are supposed to provide the borrower with a hybrid of a fixed and variable rate loan.
It is the actual usable space within a property where a carpet can be laid as well as the area of internal walls (excluding the area of external walls of the house). [RERA Carpet Area = (Carpet Area + Thickness of internal walls) - Thickness of outer walls]. It excludes areas covered by exterior walls, balconies, utility areas, ducts, and common spaces like lobbies or elevators.
A rate of return often used in real estate transactions. The calculation determines the cash income on the cash invested. Calculated as: Cash on Cash Return = Annual Cash Income/ Total Cash Investment Eg. When a Buyer purchases a rental property with a 20% downpayment, the cash-on-cash return will be calculated on annual rental income with the downpayment.
Cash reserves, or emergency funds, refers to any liquid funds or assets that a borrower has access to, after paying the downpayment and closing costs. This is often considered by lenders during the loan approval process.
In Real Estate terms, it is the area which contains those people who can be expected to obtain goods, services, employment or other benefits from a particular property. More especially related to retail premises, where the success of forecasting depends on the accuracy of estimating the number of purchasers (catchment population) likely to be attracted from different parts of the area and the average expenditure which might be expected from them.
Any commercial area, located in the centre of a city, within a radius of 2-3 km surrounding it, is called a Central Business District (CBD). This is the hub of all major commercial activity in the city, comprising financial institutions, large corporate entities and retail stores. The Real Estate prices here would be the highest compared to all the other locations in the city.
A Certification of Incorporation is a legal document expressing the establishment of a new venture or company. It is issued by the state government and fuses nuances, for instance, date of solidification, legal proprietors and name of the association.
The Chain of Title is the official record of all past ownership of a property. It is important to trace the historical transfers from the current owner to the original owner. The accurate title records are maintained by a centralised registry.
The minimum value of a property at which the registration of a property is done.
A city overview plan is the draft proposition to study a city/town/village to plan the development of different physical highlights, for example, private stashes, streets, sewerage and seepage lines and other framework ventures.
The subset of framework division that incorporates essential comforts given by the civic bodies is called city framework. It can incorporate offices, for example, sewerage, seepage and water and power supply.
Also known as a "just title," "good title," or a "free and clear title" -- a clear title doesn’t have any kind of lien or levy from creditors. It means there's no question of legal ownership of the property such as building code violations or bad surveys.
It refers to the space required around a building or structure necessary for fire safety, maintenance, and emergency access. Clearance areas remain free of obstructions.
A clearance certificate is required to bear witness that a substance/individual has paid all dues and is clear of any liabilities that they held towards another entity/individual. Non-issuance of a clearance certificate holds a person liable to pay the individual the amount they owe to them.
It is the final stage of the real estate transaction. The date is agreed upon when the buyer and seller go under contract on the home. On the closing date, the property is legally transferred from seller to buyer.
These are the fees and expenses you need to pay when finalising a real estate transaction. These costs can include things like loan origination fees, appraisal fees, title insurance, property taxes, stamp duty, loan application fees, administrative charges, brokerage, prepayment charges and attorney fees. Typically, they range from 2% to 5% of the home’s purchase price and are paid at closing.
When you initiate the process of buying a home, you reach an accord with the developer regarding the closing date, i.e., the date the developer hands over the property to you. In other words, the closing date is when you become the legal owner of the property."
If a buyer is having trouble getting approved for a loan, they can elicit the help of a co-borrower. This person is usually a family member or friend who's added to the mortgage and guarantees the loan. They're listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to.
When there is more than one owner of a property, whereby each co-owner shares their interest in the property, it is called a co-owned or jointly owned property.
A common clause in retail lease contracts that allows tenants to get a reduction in rent from landlords if key tenants or a certain number of tenants leave the space. A large or key tenant (anchor tenant) is a big draw for traffic, especially in malls, and is often one of the major reasons a tenant chooses to locate in a specific mall. A co-tenancy clause provides the tenant with some form of protection in the form of reduced rent to compensate for the loss of traffic.
An official document issued by a local authority that allows construction to begin on a property. It confirms that the plans have been approved and that the builder complies with all zoning and building regulations. Obtaining this certificate is essential for ensuring construction is legal and safe.
This term refers to the period from when the property was launched in the market to the day when the buyer and the seller signed the contract to complete its sale. A strong market favouring sellers usually has a low average DOM compared to a weak market favouring buyers with a high average DOM.
The actual physical possession of the property.
Also called Juridical Possession, it means possession in the eyes of the law. This may not be accompanied by Defacto Possession. Even when the property is lying locked, the Dejure possessor is the Defacto possessor of the property.
The DSCR is calculated by dividing the annual net operating income (NOI) of the property by the debt service (annual debt payments including principal and interest). For example, a DSCR of 1.5 means the NOI must be 1.5 times (or 150%) the amount of the annual loan payments. From the lender’s viewpoint, the higher the ratio, the better.
A ratio is a number used by lenders determined by the total of your monthly debt payment, plus your monthly housing payment, divided by your gross monthly income, and multiplied by 100. A good DTI ratio is 36% or lower, up to a maximum of 43%.
A deed-in-lieu of foreclosure is a document transferring the title of a property from a homeowner to the bank that holds the mortgage. A homeowner might submit a deed-in-lieu of foreclosure if the bank has denied them a loan modification or short sale. However, the bank can deny the request for a deed-in-lieu (and often do).
A legal document which affects the transfer of a property interest, especially a lease, from one party to another.
Failure to make payments on time or comply with other requirements of the agreement.
Also known as Juridical Possession, means possession in the eyes of the law.
A mortgage is considered delinquent when a scheduled payment is not made. If a payment is more than 30 days late, a lender might begin collection or foreclosure proceedings.
A letter sent to the buyer by a builder requesting due payment. Also, a letter was sent to the borrower by the lender requesting an overdue payment.
A decline in the value of a property brought about by age, physical deterioration, or functional or changes in market conditions. According to the Income Tax Act, the depreciation rate for residential buildings is set at 5% whereas commercial buildings are applicable for depreciation of 10%.
An entrepreneur or company that initiates and sees through the development of a property. The main activities carried out by a developer include land acquisition, procurement of relevant approvals, fundraising, design, construction and marketing of the project.
A cash expenditure done to settle a debt.
When a house is sold, a seller must divulge certain information. In disclosure documents, the seller reveals information including the condition of the property.
Discount points are also known as mortgage points. They’re fees homebuyers pay directly to the lender at the time of closing in exchange for reduced interest rates which can lower monthly mortgage payments.
A compound interest rate used to convert expected future income into a present value income.
A valuation method used to estimate the attractiveness of an investment opportunity, whereby future inflows and outflows of cash associated with a particular project are expressed in present-day terms by discounting. The most widely used forms of DCF are the internal rates of return (IRR) and net present value (NPV). The techniques may be used for such purposes as the valuation of land and investment, and the ranking of projects or their components.
Money left over after all expenses have been met.
Seizure of a tenant’s property or other goods by the landlord to obtain payment of rent or other money owed.
A down payment is the initial amount of money a home buyer is expected to pay. It’s usually a percentage of the home’s purchase price which you pay upfront. It assures the home loan lender and real estate developer that you are serious about the purchase. The larger your down payment, the less you need to borrow, which can lower your monthly mortgage payments. Typical home loans require a 20% down payment. Some conforming loans will accept a 5% down payment, and FHA loans will accept a 3.5% down payment.
The disbursement of loan funds provided by the Bank.
If a buyer’s agent works for the buyer, and a seller’s agent works for the seller, a dual agency works for both. It is up to the buyer or seller to decide whether they want to opt for a dual agency or a single agency.
A block of land which is zoned in a way that two separate residences are permitted to be constructed there.
Due diligence refers to an elaborate procedure in which a property is thoroughly inspected for any possible issues. Only after performing due diligence on a seller, a buyer should make the final decision.
A due-on-sale clause protects lenders against below-market interest rates. It's a contract provision requiring the borrower to repay the mortgage in full when the property is sold. It is also called an acceleration clause.
A provision in a loan agreement that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the loan.
It refers to a house with two units sharing a common wall.
Earnest money is a deposit (usually 1-2% of the home’s total purchase price) made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer's interest in the property and is generally deducted from your total down payment and closing costs. The EMD is often held by an escrow company, or as otherwise provided for under the purchase and sale agreement (PSA).
Economic Obsolescence is the decrease in property value due to external factors like changes in the economy, increased crime rates in the area, new zoning regulations, etc.
The market rental value of a property at a given point in time, even though the actual rent may be different. Also known as “market rent”.
A Real Estate appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
Term used for an income-producing property, derived from the potential gross income, less a vacancy factor and a collection loss amount.
The gross rent payable per month by the occupiers which includes the base rent, maintenance charges, imputed costs of loss of interest on security deposit and rental advance. The effective rent indicates the total cash outflow of an occupier every month on account of leasing any property.
Artist's impression of the final look of a project.
The right of eminent domain gives the government the ability to use private property for public purposes. It's only exercisable when and if the government fairly compensates the owner of the property.
When a property owner violates the rights of a neighbour by building or adding on to a structure that extends onto a neighbour’s land or property line, that is called encroachment.
Encumbrance is a claim against a property by someone who is not the property owner. These are usually claimed when the property owner fails to pay the property taxes or easement charges on time. Encumbrances impact the free use of the property and the property owner is restricted from making any renovations, sale, or transfer of the property till the dues are cleared.
A report issued by the Registrar or Sub-Registrar's office after due verification of the relevant documents certifying that the property in question is free from mortgages, leases, easements or any other kinds of restrictions.
The Equal Credit Opportunity Act (ECOA) was enacted on October 28, 1974, and rules it unlawful for creditors to discriminate against applications because of race, colour, religion, national origin, sex, marital status, age, or because they receive public assistance.
EMI is the fixed monthly payment made towards repaying a loan. EMI is used to pay off both interest and principal each month so that over a specified number of years, the loan is fully paid off.
This is the investment a homeowner has in their home. To calculate equity, take the market value of the home and subtract any mortgages or liens against the property. The amount left over is the amount of equity you have in the home. If you buy a home worth Rs 250,000 for Rs 240,000, you gain what is known as instant equity, because there is a Rs 10,000 difference between the value and the cost. When you sell a home you bought for Rs 250,000 for Rs 260,000, you’ll get to keep the equity in the home after the close, once all the expenses are paid.
An account held by a neutral third party (often a lawyer or title company) during a transaction. Funds or deeds are held in escrow until all contractual obligations are met, at which point they are released to the appropriate party.
An escrow account is a temporary pass-through account held by a third party during the process of a transaction between two parties.
The escrow holder is the agent and depositary (impartial third-party) who collects the money, written instruments, documents, personal property, or other things of value to be held until the happening of specified events or the performance of described conditions, usually set forth in mutual, written instructions from the parties.
The total of all the real estate and personal property owned by an individual at the time of death.
The lawful expulsion of an occupant or tenant from real property, usually due to violation of lease terms or non-payment of rent.
A title examination reviews all public records tied to a property. It generally reviews all previous deeds, wills, and trusts to ensure the title has passed cleanly and legally to every new owner.
A contract granting one broker the sole rights to represent and sell a property. Regardless of who finds the buyer, the broker earns the commission. This is the most common type of listing agreement.
A type of Infrastructure Development Charge, external development charges (EDC) are levied by some states by the state development agency to the developer/ coloniser in order to provide better public infrastructure facilities at the town level. External Development Works include water supply, sewerage, drains, necessary provisions of treatment and disposal of sewage, sullage and stormwater, roads, electrical works, solid waste management and disposal, slaughterhouses, colleges, hospitals, stadium/sports complex, fire stations, grid sub-stations etc. and any other work which the development agency may specify to be executed in the periphery of or outside colony/area for the benefit of the colony/area. The developer further passes on these charges to the property buyers.
Facility management or facilities management is an interdisciplinary field devoted to the coordination of space, infrastructure, people and organisation, often associated with the administration of office blocks, arenas, schools, convention centres, shopping complexes, hospitals, hotels, etc.
Enacted in 1970, ensures fairness, accuracy, and privacy of personal information contained in files maintained by credit reporting agencies. The goal of this act is to protect consumers from having misinformation used against them.
An estimate of the amount a property should rent for, based on current market conditions and comparable properties.
Fair market value is the reasonable selling price of the property in an open and competitive market, where the seller and buyer have a good amount of knowledge about it. This is the price that a buyer would likely pay for the property and the seller would make the trade without any pressure.
A building appurtenant to the agricultural land. A farmhouse may be used for dwelling purposes, or as a storehouse or an out-house.
Fee simple refers to the most common type of property ownership. It means the owner’s rights to the property are indefinite and can be freely transferred or inherited when the owner chooses. It is most often associated with single-family homes, as condominiums and townhomes are purchased with covenants, conditions, and restrictions.
FHA loans are part of a group of loans that are insured by the federal government. This means that instead of lending money, the FHA ensures banks and private lenders that they will cover losses they might incur if the borrower does not repay the loan in full or timely. Read our blog post for more detailed information on how FHA loans work.
A person legally appointed and authorised to hold assets in trust for another person. The fiduciary manages the assets for the benefit of the other person rather than for his or her profit.
A certificate covering matters of safety required under the legislation for hotels, boarding houses, factories, offices shops and railway premises, excluding those buildings containing less than a minimum number of employees. To obtain a fire certificate, one must apply to a fire officer, who then inspects the building and issues a list of requirements (eg. Fire escape doors/stairways). Once the fire officer is satisfied that those requirements have been met he will issue the fire certificate. It enables fire officers, in the event of an emergency, to have prior knowledge inter alia of the permitted number of people on each floor. It also informs officials if any authorised inflammable/explosives materials are found on the premises.
A lender’s agreement to make a loan to a specific borrower on a specific property.
Interior permanent furnishings required in a property including HVAC ducting, fire protection system, establishment of workstations and telephone/computer cabling among others, to make the property fit for usage.
An interest rate on a loan that remains fixed either for the entire term of the loan or for part of the term and does not increase or decrease with market fluctuations.
An interest rate that is fixed for a predetermined period after which it gets converted to a floating interest rate.
A building provides its occupants the flexibility of utilising the space. Usually, flex space provides a configuration allowing a flexible amount of office or showroom space in combination with manufacturing, laboratory etc.
Flexi-plan gives buyers the flexibility to pay the price of a property over a time period but the payments are time-linked rather than construction-linked.
A short-term real estate investment strategy in which an investor purchases properties to resell them for a profit. Profit is generated either through the price appreciation that occurs as a result of a hot housing market and/or from renovations and capital improvements. Investors who employ these strategies face the risk of price depreciation in bad housing markets. It is similar to trading in the stock market.
An interest rate that is allowed to move up and down with the rest of the market or along with an index. Also known as the variable market.
Pictorial representation that shows how an apartment would look after completion. It includes the placement of rooms in the flat, their dimensions and the super built-up area of the flat.
The ratio of a building’s total floor area to the size of the plot of land on which it is built. It determines how much construction is allowed on a specific plot. A higher FSI/FAR means more floor space can be developed on the land.
Force majeure is a legal term referring to an inevitable accident or ‘Act of God’ that prevents a party from fulfilling a contract. In real estate, for developers, it covers natural disasters that could delay or halt construction while for buyers it can be pandemics such as Covid-19.
In the event of nonpayment of a loan from a buyer, the lender recovers the balance amount by selling the property used as collateral. This process is called foreclosure.
Investment made by a foreign individual or company in the productive capacity of another country. Eg. investment made either to buy a factory or to construct it.
An act to regulate certain payments dealing in foreign exchange, securities, the import & export of currency and the acquisition of immovable property by foreigners. Under Section 31 (1) of the Act, it is mandatory for foreign corporations, which are not incorporated in India to obtain permission from the Reserve Bank Of India (RBI) to acquire, hold, transfer or dispose-off in any manner (except by way of lease for a period not exceeding five years) any immovable property in India.
It is an act to regulate the payments for foreign corporations to hold or transfer any kind of immovable property in India.
Each property consists of a building and the land upon which it stands. If both the building and land belong to a single owner, it’s called a freehold property.
Frontage is the full length of a plot of land or a building measured alongside the road onto which the plot or building fronts.
A Lease where the tenant pays rent to cover everything including utilities.
It is a modern residential community or housing estate with strictly controlled entrances for pedestrians and automobiles, often characterised by a closed perimeter of walls.
Where a seller agrees to sell to one buyer but then either sells to another buyer or raises the price when two or more buyers show interest.
The ratio of your own money and borrowed funds for investment.
A power of attorney is a legal document that authorises another person—called an agent—to act on behalf of the person who created the power of attorney—known as the principal—if the principal cannot make those decisions himself or herself. A general power of attorney gives broad authorisations to the agent. The agent may be able to make medical decisions, legal choices, or financial or business decisions. Also, check special power of attorney.
A value-added tax in India on goods and services sales. For real estate, it applies to under-construction properties but not to completed or resale properties. Rates can vary based on the type of property.
A type of long-term, typically for commercial property, lease in which the payments are variable and adjusted periodically to reflect changes in the property’s appraised value or changes in a certain publicised benchmark rate, such as the Consumer Price Index (CPI). The terms of a graduate lease can state that the payments automatically increase by a specified percentage or amount at regularly specified time intervals.
The person to whom an interest in real property is conveyed.
The person conveying an interest in real property.
An underdeveloped area of land away from urban areas, which is now proposed for development.
The total floor area of the building starting from the outer surface of exterior walls and windows including all vertical penetrations (e.g. elevator etc.) and basement area
Gross External Area (GEA) is the total area of a building's external walls, including walls, roof, terrace, roof shafts, etc but excludes any areas below ground level.
A term generally used in a commercial lease, the gross leasable area is defined as the total floor area designed for tenant occupancy and includes the tenant’s pro rata share of the building’s common areas, elevators, common bathrooms, stairwells, and other portions of the building that the tenant doesn’t occupy. It is equivalent to the Super Built-Up Area of the unit. Also, check the net rentable area.
A type of commercial lease where the landlord pays for the building’s property taxes, insurance and maintenance. A gross lease can be modified in many ways to best meet the needs of a particular building’s tenants (for example, a gross lease may or may not require the tenant to pay utility bills).
A guarantor is a person who guarantees to pay back a loan in case the primary borrower defaults or is unable to make repayments. For the advancement of home loans, a guarantor acts as a collateral security.
Residential properties that are suitable for occupancy. Local building codes ensure that structures are habitable through requirements for building permits and occupancy certificates.
Hard costs are direct costs incurred in relation to a specific construction project. Hard costs may be directly related to construction, including labour, materials, equipment, basic building services, shell features, interior enclosures, fit-out costs, mechanical services and electrical services. These costs are often borne directly by the project owner. Contrast to soft costs.
Hard money loans are a way to borrow without using traditional lenders. Hard money lenders finance the loan based on the property in question, not on your credit score, and typically require a large down payment and short repayment schedule.
The term generally refers to buildings higher than 7 or 8 stories. In the Central Business District, this could mean a building higher than 25 stories above ground level.
A renter who remains in a property after the expiration of the lease. If the landlord continues to accept rent payments, the holdover tenant can continue to legally occupy the property. If the landlord does not accept further rent payments, the tenant is considered to be trespassing if he does not promptly move out, and eviction may be necessary to force the tenant to leave.
HELOC provides a revolving credit line that can be helpful in paying for large expenses or consolidating higher-interest rate debt on loans -- like credit cards.
A loan made to a homeowner in which the home is used as collateral for the loan.
The term refers to the inspection of a home with regard to its condition and safety. A buyer arranges for a home inspection before the final nod to ensure that the property is devoid of any damage.
A home loan is money borrowed from a financial institution to buy, construct, or renovate/repair a house or residential property. The lender will consider the home or property as collateral for the loan.
Criteria set by lenders that a borrower must meet to qualify for a home loan.
Home Loan Insurance covers the borrower and ensures repayment of the outstanding home loan amount in the event of the borrower's demise, ensuring that the family isn't burdened with loan repayment.
A home sale contingency is for a buyer to indicate to a seller that part of their condition to purchase the seller’s property relies on the buyer’s ability to finalise a close on their current property. This is often negotiated with a clause in a contract or with an addendum to a contract. An example of how such a contingency can be used would be if a buyer needs to sell their property in order to have the down payment required on the purchase of the new property, or would rather use their sale proceeds instead of their savings to make the down payment. Depending on the market, it could hamper negotiations with a seller when a contingency is part of the picture.
A group that manages a gated community. HOA community requires monthly or yearly fees. The HOA takes care of the common area, enforces community guidelines, and ensures the property is well-maintained, periodical repairs are promptly done and everyone follows the community rules.
When you purchase a home, it's also necessary to purchase homeowner’s insurance to cover any losses or damages you might incur, such as natural disasters, theft, or damage. It also protects the homeowner from liability against any accidents in the home or on the property. Insurance payments are usually included in your monthly mortgage payments.
Commercial properties used in the hospitality industry, like hotels, motels, and resorts.
House Tax is a type of property tax specific to residential buildings. This tax is levied by the local municipal bodies and is based on the value, size, and location of the house. The funds collected through this tax are used for the maintenance and development of local infrastructure and services within the municipality. Regular payment is often required, and the exact frequency (annually, bi-annually, etc.) can vary based on local regulations.
Housing finance companies provide financing for housing either directly or indirectly, primarily or as one of their main objectives. These companies are registered under the 1956 Company Act( 1 of 1956).
Refers to the heating, ventilation and air conditioning system installed in a building to regulate temperature.
With a hybrid loan, borrowers can get a combination of fixed and floating interest rates during the loan tenure. They will receive a fixed interest rate for an initial period of time, and after the expiry of this time period, the interest rate becomes floating, adjusting periodically for the rest of the loan tenure.
An iBuyer is a company that uses technology to make an offer on your home quickly or “instantly” as the term implies. iBuyers take on the burden of owning, marketing, and reselling your home. Depending on the service you choose, the benefit is the certainty of an all-cash offer and more control over when you move. Opendoor launched the iBuyer category in 2014. Read our in-depth guide “What is an iBuyer” to learn all about this new type of real estate business.
Immovable property refers to land and anything permanently attached to it, such as apartments, villas, commercial and other structures. Unlike movable property like furniture and cars, which can be easily transported, immovable property remains fixed in one location.
Generally, physical changes which enhance the capital value of land or buildings. These may include additional buildings, extensions to existing buildings, installation of new services, eg. central heating and air conditioning and infrastructure works. On the other hand, mere replacement by a modern equivalent if something worn out would normally be regarded as a repair rather than an improvement. The distinction has legal and taxation consequences.
This refers to a standalone house that is meant for the occupancy of a single family. It doesn’t share walls with any other residence and usually comes with its own plot of land.
The Indian Registration Act mandates the registration of certain documents, including those related to property transactions, to ensure the conservation of evidence, and public documents, and prevent fraud.
The act that regulates payment of stamp duty to the local government for real estate transactions, essential for the legal validation of any property-related document.
Areas used for the production, manufacturing, or distribution of goods. Examples include factories and processing plants.
An inspection happens when buyers pay a licensed professional inspector to visit the home and prepare a report on its condition and any needed repairs. The inspection often happens as part of the due diligence period, so buyers can fully assess if they want to buy a particular home as is or ask the seller to either complete or pay for certain repairs.
An organisation that invests money in real estate assets and various other types of investment properties.
The percentage of a loan amount you'll pay in interest over a year. Interest rates can significantly affect or influence the buyer’s ability to afford a home.
The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. The higher a project’s internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects considered for investment. Assuming all other factors are equal among various projects, the project with the highest IRR would probably be considered the best and undertaken first.
A property that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation.
One or two or more agents jointly instructed by a principal to act on his behalf. In the case of estate agents, this is normally on the basis that if any one of the agents effects the sale or letting, other joint agent(s) will share the remuneration in agreed proportions.
If the property is being developed by a builder on land owned by the previous owner or someone else, a Joint Development Agreement between the builder and the landowner should be in place.
When there is more than one owner for an immovable property, the status of the property is known to be of the Co-ownership or Joint Ownership type.
A type of property right where two or more people rent a property together, each with equal rights and obligations until one owner dies. Upon an owner’s death, that tenant’s interest in the property passes to the survivors without the property having to go through probate.
A major or primary tenant in an office building or shopping centre. Generally, such a tenant leases a significant amount of the available space.
It is a legal document that records property tax payments done by a resident to the municipality.
A Kick-Out Clause allows sellers to continue showing the property to potential buyers and ‘Kick out’ an existing offer should a better one come along. The clause allows the seller to sell to a second buyer without having to pay a fine to the first one.
Payment made to someone for referral of a customer or business. Generally speaking, kickbacks are illegal because, unlike a commission, a kickback is made without the customer’s knowledge.
A wall-like structure that supports roof rafters in timber roof constructions.
The “Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013” is a law that regulates the process of land acquisition by the Government for infrastructural development while ensuring that the landowners receive adequate compensation.
Conversion certificate certifies that the land use has been converted from agricultural to non-agricultural purposes.
Land conversion fees must be paid to the authorities to change the use of a piece of land (either from agriculture to residential or from residential to commercial use). The exact charges depend on the nature, location, and area of the property, and it can differ from state to state. For example, in Karnataka, a fixed amount of ₹327, ₹218, or ₹89 will be charged depending on the location of the land (i.e., 12km within City Corporation Limits, Taluk Centre, or rural areas respectively); 3% of the land value if charged in Andhra Pradesh, 10% of the land value in Bihar, ₹60 per sq yard to ₹200 per sq yard in Rajasthan, etc.
This term means that the buyers can own the house or the property, but they will have to pay rent for the land on which the property is built to the landowners. It is one of the complex real estate terms which must be thoroughly understood by all individuals active in the property sector.
Every piece of land is assigned a particular ‘survey number’ so as to stay a legal record of its location, shape, size and possession. A surveyor assigns a singular variety to each land parcel, which might be used at the time of legal disputes. A land survey is additionally vital for the registration and sale of the plot; and land acquisition method.
It is the state tax based on the value of a property (not the place of residence) paid by the owner.
A site plan is an Associate in Nursing drawing or a group of construction drawings of a given site/plot. It’s a graphic illustration of the assorted components to be made on a bit of land. This footprint might embrace options like the arrangement of buildings, parking tons, landscape and different civic amenities like emptying facilities, hygienic sewer lines, water lines etc. It’s sometimes conducted by professionals like accredited engineers or architects.
A written agreement between a landlord and a tenant granting a period of tenancy of a property under specific terms and conditions. At the end of the lease term, the asset is returned to its owner (lessor).
Ending a lease agreement before its specified term, which might result in penalties or charges for the tenant.
Both residential and commercial properties are rented out. At the end of the specified rental period agreed upon by both parties, the tenant has the option of buying the property – it is called the lease option.
A clause in a lease that allows the tenant the right to extend the lease term, often under predetermined conditions.
A lease/rent agreement written contract between a property owner and a tenant that outlines the terms under which the tenant can use and occupy the property, usually in exchange for rent.
Lease and Rent Control Laws aim to protect the rights of tenants and landlords by regulating the rules of letting out a property for rent, evictions, and rent increments as specified in the rental agreements. Each state has its own rent control laws which are based on the Rent Control Act, of 1948 which was passed by the Govt of India.
The duration for which the lease agreement is valid, such as six months, one year, etc.
Leasehold means you have the absolute right to occupy and use a property for a fixed period of time called the leasehold period (30, 60, 99 years), but you don’t have authority on the land the property is built on. A good example of a leasehold property is the land given to project developers or builders who construct apartments/townships.
A property “bought” for a certain period of time. The “owner” of such a property will have “bought” the property from the original landlord and is entitled lawfully to rent, lease or “sell” the property to a third party during the period of leasehold. After the leasehold period, the property goes back into the original landlord’s possession.
This allows a person to use a property for a period without transferring full rights over it, i.e., the leave and licence agreement grants only the permission to occupy the property. This is typically more flexible for homeowners and can be terminated more easily than a lease.
A lender is a financial institution or individual, mostly banks, that lends an individual home loan based on various terms and conditions. They assess your financial situation, including your credit score and income, to determine if you qualify for a loan. In return, borrowers agree to pay back the loan with interest within a stipulated time.
Lessor is the person (landlord) who leases out a property to a tenant or buyer (‘lessee’) of the property under a ‘Lease agreement’. Lessors define the rights and obligations of both parties in the lease agreement and spell out the ways in which the tenant/lessee can or cannot use the property, including special privileges like early termination, renewal of the lease, etc.
A letter of intent (LOI) is a document outlining an agreement between two or more parties before the agreement is finalised.
An obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. Debt is a form of liability.
A life cap refers to the maximum amount an interest rate on an adjustable rate loan can increase over the lifetime of the loan. A life cap is also known as an absolute interest rate or interest rate ceiling and keeps interest rates from ballooning too high over the term of the loan.
An asset, cash or otherwise, that can be converted into cash.
A listing agent works with the sellers to find the best deals and prospective buyers for the seller's property. They are also actively involved and take part in negotiations.
An element in a building structure( usually a wall) with the capacity to support the weight resting on it in addition to its own.
Loading Factor is the percentage of common areas relative to the actual living space. An ideal loading factor would be 60%; if the loading factor exceeds this threshold it means that the Super Built-up Area is way larger than the Carpet Area. Note that the actual or minimum acceptable loading factor can differ from city to city. [Loading Factor = (Super Built-up area / Carpet Area) - 1]
The amount of loan an individual is eligible based on the net salary he earns.
Residential loan officers, or mortgage loan officers, assist the homebuyer with purchasing or refinancing a home. Loan officers are often employed by larger financial institutions and help borrowers choose the right type of loan, compile their loan application, and communicate with appraisers.
Loan origination is the process during which a borrower submits a loan application and a financial institution or lender processes that application. There is usually an origination fee associated with this process.
Loan processing fee is a one-time charge levid by the lenders (bank) for processing a loan application, which involves some administration costs ranging from 0.5% to 2.5% of the total loan amount.
Loan servicing is the process by which a finance firm maintains borrower loan from dispersal to full repayment.
Loan to Value Ratio is the loan amount to the market value of the property or collateral against which the loan is being borrowed. [LTV = Loan Amount ÷ Value of the property]. Higher your LTV, the riskier you’ll appear during the loan underwriting process because a low down payment denotes less equity or ownership in your property making you more likely to default on your loan.
A location arrangement could be a master development arrangement of a location, indicating the proposed/planned usage of a district or piece of land. it’s ordinarily used for a large geographic region like a city, village etc.
A lock-in period is a specified time duration agreed upon between the lender and borrower to repay the home loan with interest without making any changes. If you want to refinance or pay off the loan early during this time, you may face penalties. This period protects lenders from market fluctuations and ensures stable payments for borrowers.
A capital asset held by an assessee for nothing less than thirty six months immediately preceding the date of transfer.
In most markets, this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option.
A building with fewer than 4 stories above ground level.
A type of construction contract requiring the general contractor to complete a building or project for a fixed cost normally established by competitive bidding. The contractor absorbs any loss or retains any profit.
Additional charges or fees payable by the owners or occupants of a development complex ( residential/commercial / plotted) towards upkeep of all common areas and facilities. It is generally a monthly charge. Also, called Common Area Maintenance (CAM) charges.
A periodic charge that homeowners must pay, especially in multi-unit complexes, for the upkeep of common areas, security, etc. The builder is typically responsible for paying the maintenance fees until the buyer takes possession of the property.
Market rent is described as what a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay for the tenancy, in comparison with rent levels for similar properties in similar areas.
In real estate terms, market value indicates the value of a property at a specific time. Often it goes up with the passing of time, acquiring more and more value. But the market value can come down.
A Master Plan is the long-term perspective plan for guiding the sustainable planned development of a city, an area or an infrastructure project. This document lays down the planning guidelines, policies, development code, layouts and infrastructure & space requirements for various socio-economic activities during the plan period.
A building with between four and eight stories above ground level although in a Central Business District, this might extend to buildings up to twenty-five stories.
Properties that combine both residential and commercial units. For instance, a building might have shops on the ground floor and apartments above.
A legal agreement where a bank or other lender loans money at interest in exchange for taking the title of the debtor's property, with the condition that the conveyance becomes void upon the payment of the debt.
A mortgage banker, often understood as a direct selling professional or company, helps people obtain mortgage loans to buy homes. They work directly with borrowers to find the best loan options, handle the application process, and provide guidance throughout the transaction.
A mortgage broker shops several lenders, acting as a middleman between lending institutions and the borrower. A broker can compare mortgages from several different institutions, giving the borrower a better deal.
Mortgage insurance is a policy that protects lenders if a borrower defaults on their loan or dies. If your down payment is less than 20% of the home’s price, lenders usually require mortgage insurance.
Getting a mortgage pre-approval letter is important because it gives home buyers an idea of what they can afford. A mortgage pre-approval letter is issued by the lender and identifies the terms, loan type and loan amount the buyer qualifies for after checking the buyer’s debt-to-income ratios along with cash on hand and credit history. Many sellers or their agents require a mortgage letter with any home offer that isn’t all-cash since it acts as proof the buyer has been qualified to get financing.
As can be derived from the term, a multi-family property is where multiple families stay. A townhouse, an apartment complex, etc., are examples of a multi-family property.
A tall building with multiple floors, each housing individual or multiple residential units. It's classified as residential when units are primarily for living purposes.
A collaborative database/website where brokers list properties for sale. The MLS helps ensure broad exposure of properties for sale in their localities.
Mutation Mutation is the method of transferring or changing title possession from one person to another. It’s to be worn out in all cases of sale-purchase, gift, death of possessor or perhaps purchase created through the Power of a professional person (PoA). By doing this, the new owner gets the property title beneath their name, and therefore the government is in a position to keep their records updated and collect taxes from the correct owner.
National code (NBC) refers to a set of rules and laws for the development of buildings in an Asian nation (India). It’s a document set to standardise the development quality of properties in terms of building necessities, construction materials, structural necessities, hearth safety and plumbing necessities. It was developed by the Bureau of Indian Standards (BSI) and is a national instrument for guiding construction activities.
A report required by most states that discloses if a property is located in an area that has a higher risk of natural hazards. The report is typically paid for by the seller and given to the buyer during escrow. The following natural hazard zones are covered in an NHD report: potential flooding, high fire hazard, wildland that may contain substantial forest fire risk and hazards, earthquake fault, and seismic hazard.
Amortisation refers to the process of paying off a loan with regular payments so the amount you owe on the loan gradually decreases. Negative amortisation happens when the amount you owe continues to rise, regardless of regular payments, because you’re not paying enough to cover the interest.
Borrowing money to buy an investment asset without receiving enough income from the investment to cover the interest expenses and other costs involved in maintaining it.
Dialogue between two or more people/parties intended to reach a common agreement.
Income after taxes is deducted.
Net Operating Income (NOI) is used to calculate the profitability of a particular investment, excluding mortgage payments. [NOI = Revenue generated by the property – Operating Expenses]
In a time, series of cash flows, the difference between the present value of cash inflows and outflows. NPV is used in capital budgeting to analyse the profitability of an investment or project.
A term used in commercial leases, net rentable area is the actual square footage of the tenant’s space without including common areas of the building. It is equivalent to a carpet area of the unit. Also, check gross leasable area.
A no cash-out refinance is a type of loan used to improve the rate the borrower pays on the loan. It might also shorten the lifetime of a loan to benefit the borrower. In a no cash-out refinance, the borrower refinances an existing mortgage for equal to or less than the outstanding loan balance. The goal is to lower interest rates on the loan or change certain terms of the mortgage.
A no-cost mortgage is a type of home loan where the borrower is exempted from paying certain closing costs. Instead, these costs are included in the loan amount. This option minimises initial cash outlay while increasing monthly payments and interest rates.
A certificate issued by the concerned local authority that the building plans submitted by the developer are in order and conform to the guidelines. Simply put, the authority has NO OBJECTION to the commencement of construction.
A person who has the name in the title to the property but is not the actual proprietor or holder. Simply, a person who acts for or represents another person.
The use of a property which does not conform to the allocation of the area for planning purposes. Such a property may have been built in conformity with the planning requirement at the time and a policy change ensued; more usually, the property was constructed before planning control was introduced.
The note rate is the interest rate stated on a mortgage note. It is also commonly referred to as the nominal rate or face interest rate.
A formal written notice to a borrower by the lender that a default has occurred and that legal action may be taken. If the borrower does not pay, the lender may initiate the foreclosure process by issuing a public notice of default followed by a notice of sale for the property. In the case of a lease, a formal written notice to the tenant conveying the default in rent payments or breach of agreement terms and that further legal action may be taken by the landlord.
A written notice to a tenant to vacate the property.
That which cannot be legally enforced, as with a contract provision that is not in conformance with the law.
An occupancy certificate is an official document issued by a local authority that confirms a building is safe to occupy. It verifies that the construction has been completed according to approved plans, complies with building codes and regulations and has all the necessities in place such as electricity, water supply and sanitation.
A formal proposal by a potential buyer or seller detailing the terms and price at which they're willing to purchase a property.
Structures specifically designed to house businesses and corporate operations. They become commercial properties when leased out to businesses to generate rental income.
When it comes to the interiors of a home, there are two types of plans – an open plan and a closed plan. In an open floor plan, the living space has minimal or no separation from other major rooms of the house.
Land which has not had improvements such as buildings and other structures added to it. Such land is often left in a subdivision by a developer or stipulated by a local authority for recreational use or for personal use by the owner.
Escalation Clause intended to adjust rents by reference to external standards such as published indexes, negotiated wages or expenses related to buildings.
(Texas only) A termination option period (known as “option period”) is a form of a due diligence period, however, it is only available to a buyer who separately purchases this right for a negotiable amount of money and for a negotiable period of time. When a buyer has purchased this right to terminate, they are strongly encouraged to get all of their inspections and other due diligence performed during this option time frame, although doing so during this time is not required. If the buyer chooses to terminate the contract within the option period, then the earnest money shall be released back to the buyer.
The original principal balance is the amount owed on a mortgage before the first payment has been made.
The fee a borrower pays a lender to cover the costs of processing their loan application.
Costs incurred by the owner of an interest in the property, usually calculated on a yearly basis. Eg. management, repairs, rates, insurance and rent are payable to the holder of a superior interest, as appropriate to his contractual or other liabilities. It is prudent to make annual provisions for future items involving expenditure at intervals of more than one year.
Any person who has a valid and legal right, title and interest in the property.
A person appointed by a local government or land authority to maintain and update land ownership records for a specific area as well as to undertake the collection of land taxes.
A financial punishment of a tenant for failing to honour his obligation to pay rent at the proper time, taking the form of a vastly higher figure being payable during the period of default.
A sale is considered “pending” if all contingencies have been met and the buyer and seller are moving toward closing. At this point, it’s unlikely the sale will fall through, and the buyer or seller risks losing the earnest money if they walk out on the deal at this point.
A luxurious apartment unit located on the topmost floor of a building, often offering panoramic views and exclusive amenities. However, the definition of a penthouse is changing in current times and now refers to a living unit that has a different layout from the other living units in the building, offering ample outdoor space and good views, but not necessarily on the top floor.
Per square foot rate refers to the cost of a property calculated based on its total size. For example, if the per square foot rate is Rs. 300 and if a buyer has opted for 1,500 square feet home, the price can be calculated by multiplying 300 x 1,500.
Percentage Lease is a lease where the tenant has to pay base rent plus a percentage of the tenant’s revenue. It is a term used in commercial real estate. Percentage lease agreements can often decrease the base rate while simultaneously providing the lessor with additional upside potential.
Physical infrastructure could be a set of infrastructure sector associate degreed sometimes includes basic physical structures that are very important for the functioning and survival of an economy, town and neighbourhood. Transportation networks like roads, rail, airports mass transit; communication telecommunication services etc. are components of the physical infrastructure.
PITI stands for principal, interest, taxes, and insurance, and refers to the sum of each of these charges, typically quoted on a monthly basis. These costs are calculated and compared to the borrower’s monthly gross income when approving a mortgage loan. A borrower's PITI should generally be less than or equal to 28% of their gross monthly income.
A housing community made up of single-family residences, townhomes, and condominiums -- as well as commercial units. PUDs offer many common areas owned by the HOA and amenities beyond what normal apartment buildings or townhomes offer, including tennis courts, outdoor playgrounds, and video intercom systems.
A planning area refers to a designated area earmarked by local authorities for future development. Lands that commonly fall under planning area are agricultural, non-agricultural, and railway land which is further divided into residential, commercial, plotting and mixed-use.
Total covered area of the apartment or commercial property unit i.e. area within & including outside walls of the unit. It can be calculated by adding carpet area, areas of utility ducts within the property unit and internal & external walls of the unit.
A document issued by the local municipal authority that confirms a builder's completion of a project as per approved plans, allowing the buyer to take possession.
This plan is made in 2 – 4 phases. About 20 – 25 per cent of the payment is made at the time of booking, 30 – 35% is paid in the next instalment after a fixed time period, another 30 – 35% after another fixed period and the remaining amount is paid after possession of the property.
Power of attorney is a legal document authorising another person (known as an agent) to take actions and decisions on behalf of the principal (the person who created the power of attorney).
A lender thoroughly checks the financial background of the buyers including their debt-to-income ratio, ability to repay and creditworthiness before granting loans. The lender can give the buyer a letter stating the exact loan amount they have been pre-approved for and the total sales price they are approved for. The letter will usually indicate the buyer’s estimated down payment and the potential interest rate.
A pre-approval letter is a letter from a lender indicating that a borrower qualifies for a certain loan amount based on their financial history and that the lender is (tentatively) willing to lend the money as loan. However, this does NOT mean a guaranteed loan offer; the lender will thoroughly look into the borrower’s credit history, income, and expenses to make a final decision.
A type of home loan repayment plan where the borrower is required to pay only the interest on the loan amount disbursed by the bank as per construction progress. Actual EMI starts after possession of the said property.
A property in a project which is in the planning stage and does not have all the approvals yet but is soon expected to get all approvals. Generally, in order to raise public funds, many developers offer huge discounts in the pre-launch stage. However, investors should be cautious of the risks involved.
Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of a Certificate of Occupancy.
The satisfaction of a debt or installment payment before its official due date. A prepayment can be for the entire balance or for any upcoming payment that is paid in advance of the date for which the borrower is contractually obligated to pay it. Examples of prepayment come in the form of rent or early loan repayments.
Additional fee imposed by some loan agreements where a borrower retires a loan before its scheduled pay-off date. It is meant to compensate the lender for not realising the anticipated interest income and for the possibility of reinvesting the loan amount at a lower interest rate. The penalty is usually based on a percentage of the amount pre-paid.
The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.
New age construction technology where parts of a building like slabs etc. are manufactured at an industrial unit and then assembled on-site.
These are additional costs that need to be paid by homebuyers for the flat or villa that has a certain location advantage over other units in the project.
Property available for purchase before its official launch. It is generally cheaper and may or may not have the requisite approvals from government authorities.
Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of an Occupancy Certificate.
A preliminary report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title. It gives details such as ownership history, liens, and easements. The title company gathers this report by searching existing property records at the county recorder’s office. This report is required for a title insurance company to issue a title insurance policy. Most lenders require borrowers to purchase title insurance coverage to protect their interest in a property. It’s customary in many areas for a seller to pay for this policy, although it is a negotiable item. Also see our blog post for more details.
A rent above the level that a property could reasonably be expected to command in the open market on normal terms. Sometimes a tenant may be particularly anxious about the property and hence may pay premium rent. Such rents may be justified in instances where the tenant receives a present or future benefit against the market. Eg. in inflationary conditions where upward-only rent reviews are normally required at three-yearly intervals, the tenant may be prepared to pay a higher rent if fixed for a longer period of say, 5 years.
Market of new properties. Investing in the primary market would mean purchasing a property directly from the developer.
The prime interest rate is typically awarded to a U.S. bank’s best customers. It’s the best-available loan rate and is usually three points above the federal funds rate: the rate banks charge each other for overnight loans.
The principal amount is the original sum of money borrowed in a loan or invested, excluding interest.
A private treaty sale is a type of property sale, where an ‘Asking Price’ is quoted by an estate agent on behalf of the Vendor. This type of sale is normally preferred by a business that wants to sell assets but does not have the time or resources to handle the sale themselves. Many companies find the private treaty sale an ideal way to realise the maximum value of an asset without the need to dedicate valuable resources to finding a buyer.
A probate sale happens when a homeowner dies without writing a will or leaving a property to someone. In such situations, the probate court would authorise an estate attorney, or other representative, to hire a real estate agent to sell the home. The total process will usually be a bit more complicated and therefore will take more time than a conventional sale.
A written promise to repay a specified amount over a specified period of time.
When you make an offer, sellers will require you to submit proof of funds. If you’re buying a house with a mortgage, it shows them that you have the cash available for your down payment and closing costs. If you’re paying all cash, your proof of funds shows you actually have the money. The following documents qualify as proof of funds: Original or online bank statements with bank letterhead, a Copy of a money market account balance with the bank’s logo or letterhead, and Certified financial statements, such as an income or cash flow statement that’s been signed off on by an accountant, An open equity line of credit
A property card could be legal proof of the possession of land in a geographic region. It contains the history of possession of a land parcel. The document is employed in case of court litigations associated with land at intervals within the town limits.
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialised forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or boiler insurance.
The administration of residential, commercial and/or industrial real estate. The property manager acts on behalf of the owner to preserve the value of the property while generating income. Managed properties include residential and vacation properties, commercial retail space or industrial warehouse space. Property managers are typically paid a fee and/or a percentage of the rent brought in for the property while under management.
The unified management of a group of properties which are held in one ownership. Decisions taken in respect of any issue are reached on the basis of achieving the maximum benefit for the owners, having regard to the effect on the portfolio as a whole rather than on an individual property.
Registration Charges are the fees paid to the local government to officially register a property under the buyer's name, giving legal ownership to the buyer. The registration charges are determined by the market value of the property, often ranging from 1% to 3%, and can vary from city to city.
Property Tax is an annual recurring tax levied on property owners by the local government. The amount is usually based on the value of the property and location. It funds public services like roads and schools.
Property tax receipts serve as proof that the annual taxes related to the property, that must be paid to the local government or municipal corporation, are up-to-date.
The process of verifying a property's legal status by checking its title, ensuring there are no disputes, and confirming ownership.
All operating expenses or any kind of expenses are considered prorated expenses. Property taxes, for example, are considered as a prorated expense.
A person who represents another, particularly in some meeting. Also, the document giving to another the authority to represent.
Public Housing Government-owned housing projects made available to low-income individuals or families at nominal rentals.
A hindi term for the security deposit given to landlord before renting a property. It is refundable at the expiry of the lease term to the outgoing tenant.
A purchase and sale agreement is commonly referred to a written contract between the buyer and seller, which outlines the terms of the parties to sell and purchase real property.When a home is “under contract” it usually signifies that the Buyer and Seller have formalised their commitment to sell and purchase the real property.
A purchase-money mortgage, also known as owner or seller financing, is issued to the buyer by the seller of a home during the purchase transaction.It is done to bypass a typical mortgage broker or lending channel and allows the buyer to assume the seller’s mortgage.
A restriction contained in a legal document limits the rights of a person’s interest in a piece of land.
A quitclaim deed is a document transferring ownership of property from one party to another. It transfers the title of the property -- but only transfers what the seller actually owns. If two people own a home jointly, one person could only transfer half of the property via quitclaim. This type of transaction is commonly used when property is being transferred between family members not using traditional real estate channels.
A rent representing the full, or nearly the full, letting value of a property on a given set of terms and conditions
An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a loan for a specified time period protecting them from market fluctuations. Generally, such a locked-in interest rate is slightly higher than the floating market rate.
The figure upon which property tax is charged in India. This value is determined by the tax authorities and thereafter the tax liability is charged to the owner(s) of the property on the basis of certain pre-determined tax slab rates.
Unimproved land that remains in its natural state.
A property which is ready to occupy i.e. which is complete in all respects including all utility connections and has received a completion certificate.
Physical or tangible assets that have value, due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land and oil.
Land and anything permanently affixed to the land, such as buildings, fences and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items that would be personal property if not attached. Real estate can be grouped into three broad categories based on its use: residential, commercial and industrial.
A real estate agent, often referred to as a real estate broker, is a licensed professional who represents buyers or sellers in real estate transactions. They provide market insights, help price properties, conduct viewings, negotiate deals, guide clients through the transaction process and ensure client satisfaction.
A security that sells like a stock on major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
It is a company that offers real estate shares to the public. Simply put, REIT stock is similar to any other business stock.
A designation given to properties which are owned by a lender due to an unsuccessful foreclosure sale at auction. REO properties can sometimes present an opportunity for a buyer to be purchased for below market value as most banks would prefer to reinvest the proceeds, rather than waste time marketing the property for an extended period. Additionally, the bank will often market the property “as-is” meaning they are unwilling to make any repairs to the property, which can make financing tricky.
RERA in relation to Real Estate (Regulation and Development) Act, 2016, aims to protect buyers' interests as well as encourage real estate investment. It requires developers to register their projects and provide clear information on project timelines and deliverables. Launched on March 10, 2016, this regulatory framework promotes transparency and accountability in the real estate sector.
RESPA requires lenders to provide disclosures to borrowers informing them of real estate transactions, settlement services, and relevant consumer protection laws. Its goal is to regulate settlement costs, prohibit specific practices such as kickbacks, and limit the use of escrow accounts.
A general term used for Real Estate professionals including real estate brokers, salespeople, property managers, appraisers, counsellors and other real estate professionals.
Real property, property consisting of houses and land.
A loan where the borrower can make additional payments to reduce interest amount and then access those funds when required. There may be a minimum redraw amount.
Refinancing replaces an existing loan with a new one usually with better terms, a lower interest rate or a faster loan term. Debt is not eliminated when a borrower refinances. You can refinance a loan, mortgage, or investment.
Improvement and modernisation of a building falling short of rebuilding or redevelopment and thus not normally requiring planning permission (other than for alterations to the external appearance), except in the case of listed buildings.
The legal documentation and subsequent recognition of a transaction under the State. This can either be a rental or a capital transaction.
Registration of a property makes the customer the legal owner. Without it, the legal rights of the property still are unconditional with the developer. to induce a property registered, the customer needs to pay the required stamping and registration prices. These prices vary from state to state. On the mean, in India, the registration charges vary between 3-8% of the overall registered value of the property, depending on the precise location and registrar jurisdiction.
An extensive renovation of a building or project which is intended to cure the obsolescence of such building or project.
A renovation loan is a loan taken to cover the repairs and/or renovation of residential property. It is primarily disbursed to carry out civil work like plumbing, doing up the kitchen or painting the flat.
Regular payments made by a tenant to a landlord in exchange for living in or using their property.
Legislation that regulates the terms and conditions of the rental market to check profiteering and hoarding.
Rent-back, or leaseback, refers to an arrangement whereby the buyer, who is now the new homeowner, agrees to allow the seller, the now-tenant, to stay in the house beyond the close of escrow. The terms are negotiated prior to the situation occurring and will often involve a lease deposit, a daily rental rate, and a length of time allowable. The rate can sometimes be determined by looking at the new homeowner’s monthly out-of-pocket for the mortgage as well as the possible inconvenience this may cause them in delaying their own move, all factoring into a daily rate.
Rent control is regulated by Government regulations that limit the amount landlords can charge for rent and protect tenants from sudden or unreasonable rent increases.
An agreed period, usually for several weeks or months, during which a lessee is allowed to occupy the subject premises without payment of rent: in consideration for the tenant incurring expenditure on such matters as fitting out premises or carrying out repairs or improvements.; to reflect market conditions which favour tenant eg. where the space available for letting exceeds the total tenant demand in that area or; by virtue of both (1) and (2)
Comprises a lump sum payment to the landlord at the beginning of the lease term, which is thereafter adjusted in equal instalments over the lease term against the monthly base rental payable by the tenant. The advance amount generally ranges between 3 to 18 months depending on the city, type, location of property and the period of the lease.
A percentage that shows the annual return from renting out a property in comparison to its market value.
Refund. The act of returning money received previously.
Replacement Cost is the cost to be paid to replace an existing property or asset with a similar asset of similar quality and functionality, at the current market price.
It is the rate (discounted) at which RBI lends money to commercial banks in the event of any shortfall of funds.
An agreement between the owner of a property and a real estate broker giving the broker the authorisation to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation.
The formalised Request for Proposal represents a compilation of the many considerations that a tenant might have and should be customised to reflect their specific needs. Just as the building’s standard form lease document represents the landlord’s wish list, the RFP serves in that same capacity for the tenant.
A process where the buyer requests additional information about the title of the property from the vendor.
Generally referred to as an under-construction property which is put in the market for sale by the investor.
The minimum price which a seller will accept at auction.
Any property, which is used for residential purposes. These areas are specifically earmarked as such by the concerned local municipal body.
A market where sellers sell goods or services directly to the end user.
Retail real estate are properties that are designed to sell goods to the public. Examples include malls, shopping centres, and standalone shops. They're considered commercial when they're used primarily for business purposes and generate income.
Return on Investments (ROI) may be a gain ratio. it is used to verify the profit one will earn over their investments in proportion.
The revenue department of a state carries out a diverse variety of functions including magisterial matters, revenue courts, issue of various statutory documents, registration of property, the conduct of elections, relief & rehabilitation, land acquisition and various other tasks.
A type of mortgage (loan) in which a homeowner can borrow money against the value of his or her home. No repayment of the loan (principal or interest) is required until the borrower dies or the home is sold. This product is particularly useful for retired people who can convert the equity in their home into cash and use that cash to meet their expenses. The loan is called a reverse mortgage because the traditional mortgage payback stream is reversed. Instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower.
If a property owner receives an offer from a third party to buy or lease their property, the person with the right of first refusal (often a tenant or neighbour) gets the first chance to match that offer under the same terms before the owner can sell or lease to the third party.
The right of egress is a person’s legal right to exit a property. The right of ingress is the right to enter a property. It is generally used in rental or easement situations in which the tenant or person to which easement has been granted needs access to a shared driveway, a private road to the property, etc.
The right of survivorship is employed most often when there is joint ownership or tenancy of a property. It ensures that the surviving owner automatically receives the deceased owner’s share of the property becoming the sole owner of the property.
A right of one property or the general public for access to or across another property.
This clause may be contained in a building contract. It provides for an upward or downward contract price which correlates to the movement of prices, wages or other factors specified in the clause.
A recorded document of all sale events of the property. It is a legal document that both the buyer and the seller sign to keep a record of the sale. No real estate transaction can be considered valid without executing the sale deed.
A sale-leaseback occurs when a buyer closes on a home and then leases back tenancy to the seller. This usually occurs when the seller needs more time to vacate the home, in which case, the buyer becomes a sort of landlord and receives payment from the seller for every day they remain in the home.
A sanction plan is an officially approved layout of a building or development project, authorized by local government or regulatory authorities. Developers must submit a range of documents such as site plan, service plan, parking, floor plan, circulation plan, building plan, structural plan and so on to get sanctioned.
A second mortgage is when a property owner borrows against the value of their home. They are also commonly referred to as HELOCs and draw on the market value of the home to provide the borrower with funds to use however they wish. They are granted in a lump sum or a line of credit that can be paid back using rate choices that help plan payments.
A market where investors purchase properties from other investors, rather than from developers directly. Resale properties and ready-to-move properties are part of the secondary market.
A loan secured by collateral to reduce the risk associated with lending. For eg. A Home loan is secured by a house mortgage as collateral towards the loan. If the borrower defaults on repayment, the bank seizes the house, sells it and uses the proceeds to pay back the loan.
A monetary deposit given to a bank, seller or landlord as a safeguard for damages or unpaid rent or loan, usually returned at the end of the lease, minus any deductions. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction.
A seller carry-back is financing in which the seller acts as a bank or financial institution financing some or all of the transaction. The buyer will sign a promissory note agreeing to pay a specific amount (like a mortgage) to the seller, and the seller transfers the title to the new owner. If the buyer is unable to make their monthly payments at any time, the seller can legally foreclose and take back the property.
Sellers may offer concessions to incentivize buyers to purchase the home, or sweeten the deal. Concessions are most readily seen as a contribution towards the buyer’s closing costs, up to certain limitations and approvals by a buyer’s lender, which ultimately leaves more money in a buyer’s pocket when all is said and done.
A seller’s disclosure is a disclosure by the seller of information about the property, or which could affect a buyer’s decision to purchase the property, all of which to the best of the seller’s knowledge. A seller must also indicate items which are not specific to the property itself but related to a person’s enjoyment of the property, such as pest problems, property line disputes, knowledge of major construction projects in the area, military base-related noises or activities, association related assessments or legal issues, unusual odours caused by a nearby factory, or even recent deaths on the property as permitted by law."
Working with the seller, a seller’s agent’s job is to make the transaction process easier for the seller. A seller’s agent identifies the right buyer and helps in closing the deal smoothly.
When demand for property is greater than supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price. Contrast with Buyer’s Market.
Apartments equipped with hotel-like amenities, such as housekeeping. While they can be used for short-term stays, they're considered residential when used for longer-term accommodation, blending the comforts of a home with the services of a hotel.
Properties meant for providing services, such as car service stations, salons, or dry cleaners.
A mortgage servicer manages the daily administrative work around a loan, including processing loan payments, responding to borrower inquiries, and tracking principal and interest paid.
Loan servicing is the process by which a company (mortgage bank, servicing firm, etc.) collects interest, principal and escrow payments from a borrower.
The distance from a curb, property line or other reference point, within which building is prohibited.
Settlement (Closing) is the final step in executing a real estate transaction when final payment is made by the buyer, sale deed is signed, title is transferred to the buyer by registration of sale deed, loan documents come into effect, costs are paid and the new owner takes possession of the property.
Shared office space refers to fully equipped and furnished offices ready for quick setup for a branch office or entrepreneur who doesn’t want to work from home. Also knows as business centers and executive suites, these facilities provide mail, telephone and Internet services. Sharing office space can provide professional facilities at a lower cost than traditional office rents and even offer the possibility for outside input and referrals from others that utilize the same arrangement.
A short sale occurs when a homeowner sells their property for less than what’s owed on the mortgage. A short sale allows the lender to recoup some of the loan that's owed to them but must be approved by the lender before the seller moves forward.
A single-family home is a stand-alone residential building. Single-family homes don’t have shared walls and hence offer more privacy.
A detailed plan of land showing the boundaries and physical extent of the land included in a particular parcel. It may also show any existing buildings or the proposed layout of a development.
The set of infrastructure sector which has social services like academic establishments, health care facilitates, retail and amusement avenues etc is termed social infrastructure.
Soft Cost is a term used in construction for an expense that is not considered direct construction cost. Soft costs include architectural, engineering, financing and legal fees, and other pre- and post-construction expenses. Contrast with Hard Costs.
A soft launch is the release of a real estate project to a limited audience. In this stage, usually, all approvals are in place for the project but construction is yet to start. Soft-launching is a method for gathering feedback on a project, its pricing and acceptance in the marketplace, before making it generally available as a hard launch or grand opening. Generally, prices offered in the soft launch stage are slightly lower than the actual planned launch.
A power of attorney is a legal document that authorizes another person—called an agent—to act on behalf of the person who created the power of attorney—known as the principal—in the event that the principal cannot make those decision his or herself. A special power of attorney narrows the choices the agent can make. One can even make several different POAs, with different agents for each. Also check general power of attorney.
Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of a property rather than attempting to profit from long term gain factors. Many speculators pay little attention to the fundamental value of the property and instead focus purely on price movements.
Square footage is an area measured in square foot. To get the square footage of a room, first measure the length and width of it, and then multiply the numbers with each other.
Tax paid on legal document during the transfer of any asset or property. Stamp duty charges generally range from 4% to 10% of the property value or the circle rate, whichever is higher.
Stamp duty for female owners is much lower than for male owners.
Stamp Duty Tax paid on legal document during the transfer of any asset or property. Stamp duty charges generally range from 4% to 10% of the property value or the circle rate,whichever is higher.
A housing complex where the ground floor is reserved for parking.
Spaces rented out to individuals or businesses to store goods. Though smaller than warehouses, they are commercial when used for business storage.
Stratum Title is a mix of company share and strata title where the owner has title to a piece of the building (apartment or unit) but a company owns the common areas such as the club, swimming pool, play areas, garden etc. Individual lot owners have a Certificate of Title to their lot as well as shares in a service company. This service company owns all the common land, which is known as the residual land, around the building and the service company has a title to this land.
A compact living unit where the bedroom, living room, and kitchenette are combined into a single open space. It is considered residential property when used as a primary dwelling space for an individual or a couple.
A method wherein, the primary lessee of a property has the right to further lease out a part or whole of the property to another occupier or lessee. Essentially, the right to sub lease is decided beforehand at the time of signing the main lease agreement and is with the consent of both the lessor and the lessee.
Sub-registrar of Assurances is the authority through which the Sale Deed has to be registered by four months of the execution of the document.
A tract of land divided into individual lots for a housing development.
Subject to inspection, or submit offers subject to inspection, means that the seller is not allowing the property to be viewed without an accepted offer. Some common reasons for this are privacy concerns of the occupants or uncooperative tenants.The thought of buying a property sight unseen can be daunting for the traditional buyer, which can be used to your advantage as this will inevitably drive overall interest down. It’s also not as bad as it seems as, under the standard purchase contract, you will have an inspection period, during which you can cancel the sale with no penalty.
An arrangement where the original tenant rents out the property (or a portion of it) to another party. The primary lease with the landlord remains in the name of the original tenant.
Super Built Up Area means built-up area of a unit plus common areas proportioned to a unit. Common areas include lobby, lift ducts, staircases, pipe ducts/ shafts, air ducts, covered community centres/clubhouses, swimming pools, and other covered common facilities. It does not include open areas such as parks, gardens, roof terraces, etc.
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.
Revenue authority or officer empowered to impose and collect revenue from a particular jurisdiction.
The assessed valuation of all the real property that lies within the jurisdiction of a taxing authority, which is then multiplied by the tax rate or mill levy to determine the amount of tax due.
The Income Tax Act, 1961 specifies that any lease transaction for not less than 12 years or any sale transaction, above a prescribed transaction value limit tax, has to undergo a clearance process from the appellate body known as the Income Tax Appropriate Authority, constituted under the Income Tax Act. A joint application by the parties involved in the transaction is submitted along with processing fees to the Income Tax Authority, which takes up to a maximum of three months to grant the clearance, without which the sale transaction is not complete. This procedure is popularly known as the 37-(I) clearance, which is the application form number used for this purpose.
1% of the property value is deducted as TDS on the sale of a property if the property value is greater than ₹50 Lakh. Under Section 194-IA of the Income Tax Act, the buyer is responsible for deducting this tax from the amount payable to the seller and paying it to the government. This is a way to ensure tax collection at the source of the transaction.
A statutory lien, existing in favour of the state or municipality, for nonpayment of property taxes which attaches only to the property upon which the taxes are unpaid.
States are divided into districts, and a few districts are divided into Tehsils. Tehsildars are revenue officers chargeable for the collection of taxes from Tehsils.
Tenancy in common describes a type of joint ownership of a property, whether a single-family property or a commercial building. The tenants in common all own the property but in different ratios. Depending on the property type will determine the ease or difficulty in securing financing. Also to note, tenants in common do not have the right to survivorship (the surviving owners do not get to split up the deceased tenant’s property interest), and instead, the deceased tenant’s ownership interest/percentage actually falls to their own estate, as defined by their will or the governing law.
A process where the landlord checks a potential tenant's background, financial stability, and rental history.
Improvements to land or buildings to meet the needs of and carried out wholly or partly at the expense of the tenant.
The co-owners of an undivided interest in real property. Tenants in common each own a separate and undivided interest in the same real property and each has an equal right to the possession and use of the property. Upon the death of one tenant, his or her undivided interest passes to heirs through a probate proceeding; the interest does not pass to another tenant in common unless the surviving co-owner is an heir or a purchaser.
Termites are small, pale, soft-bodied insects that feed on wood, and can be highly destructive. The WDI (wood-destroying insect) report, also known as the Termite Report, includes a diagram of the property and the location of active and/or previous WDI activity. The report can also and sometimes include what may be necessary to resolve such possible infestations such as spraying or tenting. The WDI report will rarely if ever include the cost for such items, as that may be considered a conflict of interest.
A legal declaration by which a person, the testator, names one or more persons to manage his estate and provides for the distribution of his property at death. Same as a will.
A title document is a legal proof that states who is the legal owner of a property. When you buy a home, the title shows that you have the right to own and use it. Before closing, a title search is done to ensure there are no claims or liens against the property, making sure the ownership is clear.
A title deed is a formal, legal document explaining how a property is transferred, inherited, owned, or allotted by a government authority. It outlines the information on the amount of land owned by a person and the rights of ownership
Title insurance unequivocally proclaims that the ownership of a property belongs to a single individual and no one else has any claim on it. Before issuing title insurance, the concerned authority ensures that the property has an absolute title.
A title search examines public records for the history of the home, including sales, purchases, and tax and other types of liens. Generally, a title examiner will conduct a search using title plants, and sometimes the county records, to see who is listed as the record owner of the property. Such information, along with any liens or encumbrances that are recorded against the property, will be listed in the Preliminary Report for the parties to review prior to the close of escrow.
A planning system utilised by the government for the development and use of land and the control of its implementations in urban and rural areas by district and country planning authorities.
Personal property that is attached to a structure (i.e. the walls of the leased premises) that is used in the business. Since this property is part of the business and not deemed to be part of the real estate, it is typically removable upon lease termination.
Any activity that leads to an exchange between two parties – buyer and seller/landlord and tenant etc.
In real estate, transfer of ownership refers to the transfer of a property’s deed and title from the seller to the buyer at closing.
This act details the rules and regulations regarding the transfer of property in India. Transfer of Property Act defines how a rightful owner can transfer his movable and immovable property to another.
Transfer tax is a transaction fee levied by the state authority upon the transfer of a property’s title on the seller unless otherwise agreed upon during the transaction. it is based on the property’s value and classification.
The treasury index is published by the Federal Reserve Board and is based on the average yield of Treasury securities. Financial institutions often use this index as the basis for mortgage notes.
A lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the property being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which is how this term got its name.
A trust sale means that the home is being sold by a trustee of a living trust – and not a private party. More often than not this is because the original homeowner has passed away, or has placed their assets in a living trust. The trustee may not be as emotionally attached to the property as a traditional owner, which could translate to them accepting a less attractive offer as the trustee may prefer to offload the property.
A person who holds or controls property for the benefit of another.
The construction of a project in which a third party, usually a developer or general contractor, is responsible for the total completion of a building (including construction and interior design) or, the construction of tenant improvements to the customised requirements and specifications of a future owner or tenant.
A property which has received all necessary approvals from authorities, raised funds from private investors or financial institutions, appointed the construction contractor and is currently under construction.
A home is “under contract” when a seller has accepted an offer from a buyer but the transaction has not yet closed.
A value of the property that is lesser than the fair market value. Registration fee for a property is based on the value of the property in case of capital transaction or rent in case of a rental transaction.
A term generally used in the financial services industry that refers to the process by which a large financial service provider (bank, insurer, investment house) would accept some of the risks on a given venture (say initial public offering of shares) in exchange for a premium. In real estate, underwriting is a process by which an underwriter commits to the developer of a project to sell a certain number of units within a specified period of time at a specified rate else the underwriter has to purchase a certain number of units itself.
A person who claims the right to a piece of property after the death of an owner without a will.
UDS is the share of land every living accommodation is allotted during a housing society. This share is registered in the living accommodations owner’s name.
An asset or property that is free and clear of any encumbrances such as creditor claims or liens.
A one-sided contract. If one party makes a promise to do something, the second party is not legally required to perform. If the second party does comply, however, the first party is obligated to keep its promise.
A loan that is not backed up by collateral.
Popularly referred to as ULC Act. This is basically a legislation that was enforced to prevent profiteering and hoarding in the urban land market as well as prevent urban congestion
Private or public service facilities such as gas, electricity, telephone, water, and sewer are provided by the government agencies as part of the development of the land.
A VA loan is a loan guaranteed by the government (Department of Veteran Affairs) and available to the military, active and retired, and even for some eligible spouses, at low-to-no-down payment scenarios with competitive rates and fees.
A traditional Indian architecture and design system, which specifies the detailed methodology of designing buildings, buying land etc. to maximise benefits, from the same for the occupier. This system relies on harmonising any real estate development with the five elements of Indian Mythology namely air, water, earth, fire and space.
A formal communication in writing made from either landlord or tenant signalling the intent to end the lease and indicating the date by which the property should/will be emptied.
The process of determining the property’s potential to appreciate over the years. The most important factor is location Accurate valuation helps ensure fair pricing and informed decisions.
A large single-storey attached residence.
A virtual office provides communication and address services that allow users to reduce traditional office costs while maintaining business professionalism. Not to be confused with the business centre or executive suite.
A Virtual Tour is a scaled 3D replication or a sweeping viewpoint of a location. It is made using various comprehensive pictures or videos. The 360 tour can be enhanced using audio and video additions to make it more immersive.
Tiles having the lowest porosity.
A warehouse is a storage place where manufactured goods stocks or raw materials are stored
It provides a warranty by the Landlord that it has the legal ability to convey the possession of the premises to the Tenant; the Landlord does not warrant that he owns the land.
The weighted average ratio of unequal rental rates across two or more buildings in a market. It is calculated as the total market rent of all tenants (which is the sum of the total tenants’ sizes multiplied by each tenant’s own market rate) divided by the total area of all the tenants.
An assumption made to estimate the fair market value of a property i.e. when the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy, and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.
The set of plans for a building that indicate the manner in which a project is to be built. It also includes a set of specifications for the building or project.
Individual rooms or areas within an office building, meant for businesses. These spaces are commercial when they're rented or owned by companies for business operations.
The value of an asset after making deductions for depreciation against capital cost or present value of an asset.
A notation made by an individual who doesn't know how to write or is physically unable to write, to show intent to sign an instrument such as a deed or will. In regard to the conveyance of real property, such a person would be required to make such a mark or at least a thumbprint as intent to sign and have it witnessed.
A garden walk embarked by trees.
A gained/profit/income by an investor on an investment, expressed as a percentage of the amount invested
Give up possession, especially by the tenant at the end of a lease.
A defined area of land or part of a building which is allocated for a particular purpose, eg. development plans may allocate areas of land for different uses or values of a property may distinguish between areas of floorspace of a building and ascribe different values to them.
Division of city or town into smaller parts. This enables authorities to set structural, architectural and usage standards for each building in the zone.
Local municipal authorities and councils regulate the development and use of real estate in a particular area with the help of Zoning Laws. Zoning laws limit industrial or commercial zones ensuring manufacturing and other types of businesses are at a safe distance from residential localities.
Refers to the set of laws and regulations, generally, at the city or county level, controlling the use of land and construction of improvements in a given area or zone.
Head Office : 156, 1st & 2nd Floor, 17th Main,
HSR Layout, Sector – IV, Bangalore – 560102
Ceyone Homes Real Estate LLC,Office No: 144,Corridor 8,
Mezzanine Floor, Unique World Business Center P O Box 87556,
Hamsah-A, Ansar Gallery Complex, Al Karama, Dubai, UAE.
91 Spring board Lvs arcade, Madhapur 71,
Jubilee enclave Hitech city,
Hyderabad Telangana 500081
BANGALORE
PRM/KA/RERA/1251/309AG/180727/001045
HYDERABAD A02200002211
DUBAI 32375