Terms Beginning With - C
Property Development & Investment Glossary, Terms & Definitions
A land information system based on parcels.
A clause in a mortgage deed that allows the lender to accelerate the debt if a particular event occurs prior to the initial maturity date.
Lease provision that provides the tenant or owner the right, but not the responsibility, to terminate the lease before it expires.
A clause in a contract that gives the party the right to cancel the contract if a certain event occurs.
A regulated institution (such as a bank or building society) is required to maintain a particular minimum amount of capital in proportion to its risk profile. These regulated businesses may be able to achieve the capital adequacy requirement by securitizing their assets and removing them from their balance sheet without recourse, obviating the need to retain capital for the securitized assets.
Except for those specifically enumerated by the Commissioner of Internal Revenue, all assets held by a taxpayer (whether or not related to the person's trade or business). Assets that are fixed or permanent in nature, or those used in the operation of a business or trade.
An upgrade to a property that will persist longer than a repair. Rather than being expensed, this item is added to the property's base. An outlay of finances that extends the usable life of a capital asset or increases its value. Expenditures for replacements and changes to a structure (or improvement) that considerably extend its life and worth.
Raising loan or equity capital for real estate initiatives.
Capital gain tax rate
Raising The tax rate applied to the part of the taxable gain on sale that is related to an increase in the property's market value or equity capital for real estate initiatives.
The revenue or profits obtained from the sale of real estate are taxed at a lower rate than earned income.
Products that are intended to be used in the creation of other goods or services.
A loss incurred as a result of the selling of a capital asset.
The financial sector of the economy is responsible for allocating financial resources among consumers and businesses in need of financing.
The fraction of an overall capitalization rate that is made up of the owner's capital investment being recovered.
The difference between the value at the start of the measurement period and the value at the end of the measurement period.
Capital structure risk
The risk connected with the investor's funding arrangement. Increased utilisation of mortgage debt (financial leverage) in particular raises the riskiness of the equity investor's return.
The process of converting a revenue stream into a property value.
Divide net operating income by the expected value or resale price to get the current rate of return. A gauge of a property's value based on current rent, as well as an indicator of investor expectations. It's computed by dividing the year's net operating income (NOI) by the property's valuation. The link between a real estate investment's net income and its monetary value. This correlation is often stated as a percentage. The percentage is derived by dividing the revenue generated by a property (or a defined stake in a property) by the property's value or sale price ( or the specified interest in the property). (See also total capitalization rate.)
To increase a property's tax base by a certain amount.
The excess cash flow generated by a fund that will be dispersed to limited partner investors and the general partner sponsor in accordance with the conditions of the offering memorandum and limited partnership agreement. For example, a fund may agree to distribute 80 percent of the remaining cash flows to investors while keeping 20%. The carried interest of the investor is referred to as 80%, while the carried interest of the fund sponsor is referred to as 20%.
The maximum level of growth density or usage that an environment may tolerate without experiencing unwanted or permanent damage.
Those expenses incurred as a result of owning a property.
When cash is received, revenue is recognised, and when cash is paid out, expenses are recognised.
The discrepancy between the income generated by the property and the expenses incurred. The owner's net spendable income is represented by this cash flow.
Cash Flow Waterfall
The sequence in which the available cash flow is distributed to investors or holders of various classes of issued securities after all expenditures have been paid.
Cash-on-cash rate of return
The estimated after-tax cash flow in the first year divided by the initial cash expenditure necessary to buy the investment.
An investment's rate of return. Divide the cash flow by the down payment to arrive at this figure. The net cash flow obtained from the property divided by the equity invested in the property yields a measure of the short-term return on property investment.
Cash-Out Refinance Mortgage Loan
A mortgage loan obtained to refinance an existing mortgage loan when the new loan's size exceeds (by more than 1% ) the amount needed to satisfy the previous loan's payments, closing expenses, and any outstanding subordinate mortgage loans. The borrower is free to utilise the extra funds as they see fit.
After a preferred interest has been given, this type of promoted interest is used to achieve a certain return split between GP and LPs.
Caveat emptor (Latin) "Let the buyer beware."
The buyer must inspect the property before closing and does so at his own responsibility.
Central business district (CBD)
The hub of urban activity where products and services are traded. The primary business area in the heart of a city's downtown.
Central place pattern
A distribution pattern in which comparable economic units, such as a certain type of convenience service or retail outlet, are distributed uniformly over the market region.
Central place theory
The hypothesis that if the surrounding landscape were a flat, undifferentiated plane, centre sites would be positioned to minimise the distance between all locations in the tributary region. It goes on to emphasise that the greater the city, the larger the tributary area must be.
Cash flows determined by the certainty-equivalent approach should be substituted.
A technique aimed at establishing substitute cash flows that leave an investor indifferent between absolutely definite delivery of the substitute amounts and the anticipation of obtaining the point estimates, together with the associated risk.
Certificate of insurance
An insurance company's document confirming the property insurance coverage.
Certificate of limited partnership
To form a limited partnership, a paperwork must be filed with the proper state government.
Certificate of occupancy
A document provided by a local authority allowing a property to be occupied. The local building inspector's certification that a structure is safe to occupy.
Certificate of payment
A certificate provided by an architect to a contractor for the sum determined by the architect to be properly due.
Certificate of title
An attorney's opinion on the legal status of a property's title.
Certified historic structure
Any structure listed on the National Register of Historic Places or located in a registered historic district and designated as having historic value to the district.
A Latin phrase used by economics to emphasise that demand schedules are only valid if all factors influencing buyer behaviour other than price remain constant.
A land measurement of 66 feet in length used in surveying. There are 100 links in each chain.
Chain of title
From the time the initial patent was awarded until now, a history of ownership of a piece of property is kept. A collection of deeds and other papers that track the transmission of the fee, as well as any interests that may limit it, from the beginning to the current owner.
The date on which an ARM's interest rate is recalculated.
When the owner or architect authorises a change in the specifications, price, or time specified in the building contract in writing, an order is issued.
The delineation or portrayal of a site's fundamental traits or attributes.
A formal document that captures the project's rationale, objectives, scope, and approval.
Personal belongings that can be relocated.
A personal property-backed mortgage.
A grid system component specified as a 24 mile by 24 mile region utilised in a government rectangular survey.
A map made up of regions of varying sizes and shapes that indicate qualitative phenomena (for example, soil fertility) or quantitative phenomena (for example, elevation); it typically has a mosaic aspect.
The amount of space required to have adequate access to, from, and around work areas.
A technique for developing land use plans used by municipalities to achieve specific goals in the exploitation of land within the municipality.
An engineer who specialises in the design and building of public works such as highways, water and sewage systems, bridges, dams, and water retention systems.
The quantity of floor space that is not obstructed by columns.
A title that is unencumbered or unburdened by any flaws.
A person who hires another person to execute a service for them.
The overall or typical state of the atmosphere at a certain location on the planet.
An offering by a partnership that closes after the sale of a certain number of units unless the partnership is amended.
A real estate fund from which investors cannot demand that their capital be redeemed or given back, and from which new investors cannot generally subscribe for additional units for cash unless when formally capital raising. They are generally limited-life structures, but the name 'closed-ended' refers to the fact that, unlike an open-ended fund, a finite number of units will be issued for a lengthy period of time.
The completion of a real estate deal in which the buyer receives ownership rights in exchange for a monetary payment to the seller. The transfer of possession and title to real estate from one seller to another.
Expenses incurred as a result of the closing. Settlement costs are costs in addition to the purchase price of a property that typically include a mortgage origination fee, title insurance, an attorney's fee, and pre-payable items such as taxes and insurance payments that are collected in advance at closing and held in an escrow account until needed.
The date when a transaction is completed.
A document that lists all of the lender's and purchaser's costs and accounts for all of the proceeds from a real estate sale.
Cloud on title
A claim or encumbrance on a property that causes the title to be tainted.
A land development strategy in which buildings and infrastructure are clustered close yet huge continuous swaths of open space are left undeveloped.
A person who signs a mortgage as a co-signer.
Coefficient of correlation
A measure of how interrelated the values of variables in a sample or population are.
Coefficient of determination
A measure of the proportion of variation in the dependent variable caused by changes in the value of the independent variable. The word r-square is used in regression analysis.
Coefficient of multiple correlation
A percentage of the variance in the dependent variable that can be "explained" by variation in the independent variables.
Coefficient of Runoff
The proportion of rainfall converted to overland or surface flow as represented by a number assigned to a kind of ground surface.
Coefficient of serial correlation
A measure of how closely results in later times are connected. The coefficients that can be used vary from zero to plus or minus one.
Coefficient of variation
The anticipated outcome is divided by the standard deviation of the distribution of potential outcomes.
In a regression equation, the estimated associations between an independent variable and a dependent variable. The coefficient additionally considers the effect of other independent variables and indicates the explanatory variable's marginal contribution to the anticipated value.
A condition in an insurance policy that specifies the minimum percentage of value that must be insured in order to recover the entire loss amount.
A borrower's promise of marketable real or personal property as security for a loan. Assets that are valuable to both the borrower and the lender, and that the borrower commits to the lender as collateral for the monies borrowed. If the borrower fails to meet their responsibilities under the loan arrangement, the lender might use these pledged assets to compensate them. Property that has been offered as security for a debt.
Collateralized Debt Obligation (COO)
A securities backed by a pool of different forms of debt, such as corporate bonds offered on the capital markets, institutional lender loans to firms, and tranches 0£ securitizations.
A securities backed by a pool of different forms of debt, such as corporate bonds offered on the capital markets, institutional lender loans to firms, and tranches 0£ securitizations.
Mixing funds, such as combining personal and company funds in a same checking account.
Depository institutions that make short-term loans to firms for inventory finance and other working capital requirements.
Commercial Mortgage-Backed Securities (CMBS)
Securities backed by one or more pools of commercial real estate mortgages, such as retail malls, industrial parks, office buildings, and hotels. The note holders get all principal and interest from the mortgages in a set order.
Offices, motels, hotels, and retail stores are examples of real estate intended for commercial usage.
Commingled real estate funds
An investment advisor/fund manager pools investment cash from several pensior funds to acquire commercial real estate holdings.
The commission is paid to a real estate or mortgage broker for services, based primarily on a percentage of the cost. Payment received by a real estate salesperson for services done, generally represented as a percentage of the sale price of the property and not normally paid until the deal is finalised.
The act of committing to fulfil a commitment.
A fee given to a lender in exchange for a loan.
A letter to a prospective borrower in which a lender specifies the terms and circumstances under which the requested cash will be provided. Typically, a specific time period is mentioned during which the commitment stays in force. Promise letters often indicate the terms under which the lender may cancel the commitment and any further stipulations on which the commitment is reliant.
Hallways, lobbies, restrooms, and stairwells are examples of space that is not used or occupied by tenants.
Common area maintenance (CAM)
Typical commercial property expenses include maintenance and repayment charges, the cost of security personnel and alarm systems, and fees for common area management. A clause in a shopping centre lease requires the tenant to contribute to the common area operating costs.
Community development district CDD lien
A quasi-governmental entity with the authority to fund, build, run, and maintain infrastructure and related services inside a specific development or community. The CDD imposes taxes or assessments on landowners and has the authority to issue municipal, tax-exempt bonds. Its board is elected by the community landowners, and its actions are fully open to the public.
The husband and wife's natural claim to property obtained by their spouse during the marriage.
Community Reinvestment Act of 1977
A legislative legislation that encourages mortgage lenders to engage actively in their communities and compels financial institutions to assess the "fairness" of their lending practises.
Community shopping center
A medium-sized shopping centre with 50 smaller retail establishments and a small department store or supermarket as the anchor tenant. 150,000 square feet is the average size. A shopping mall that generally draws the majority of its customers within a driving radius ranging from IO to 15 minutes. Anchor tenants in community shopping malls are often a grocery store and a junior department store or a discount store. Retail space can range in size from 50,000 to 100,000 square feet. This sort of centre is a bigger version of a community retail centre and is frequently anchored by a bargain department store.
In the sales comparison technique, properties similar to the subject property were utilised to determine a single indicative value for the subject property.
Properties that are similar in terms of economics.
An economic theory created by economist David Ricardo that explains why certain locations prefer to concentrate on manufacturing a small number of commodities while sourcing much of their consumption from other areas.
Comparative market approach
A method of estimating a property's value based on recent selling prices of similar properties.
Comparative sales approach
An appraisal technique that examines recent sales data from comparable properties and derives conclusions about the worth of the property under assessment.
Comparative unit method
A method of estimating expenses by comparing them to similar structures whose construction costs are known. To make somewhat different-sized structures more directly comparable, expenses are represented in terms of some standardised unit of measurement, such as per square foot or per cubic foot.
Clustering is the best geographical pattern for goods and services.
Any year that is compared to the base year for the purpose of determining a rise or fall in operational costs during the period of a lease with an escalator clause.
Goods or services used concurrently with the object under consideration. When the price of one commodity or service changes, the demand curves for its complements adjust.
A formal agreement that guarantees the completion of a property's construction.
The total of principle and compounded interest during a certain holding period.
Interest is paid on both the original principle and the accumulated interest that has not been paid. Interest revenue is derived from a previously accumulated interest held on deposit.
Future value calculation based on assumptions about the quantity or amounts invested and the interest rate paid on the invested amounts.
The overall guidance to a community's growth and development provided by a local government based on the community's aims and objectives.
The amount of time it takes for a drop of rain to fall on the perimeter of a drainage basin and travel through the basin to the outflow.
Concentric ring model
E. W. Burgess developed a concentric ring concept of urban design in which the centre circle represents the core business area. It is next to a transition zone that has warehouses and other industrial land uses. This was followed by a ring of lower-income residential land use, which was then followed by a ring of middle- and upper-income land use.
Concentric zone model
Earnest W. Burgess created an urban economic model in the 1920s. The concentric zone concept was created to describe urban evolution by utilising transitional zones.
Discounts are offered in a lease or sales contract to entice a party to sign the contract. Lease terms, such as free rent, decrease the tenant's lease cost and thereby offer renters an incentive to lease the space from the owner.
Estates are parcels of land that have many owners.
The necessity that public facilities and services, such as roads, sewerage, and schools, be constructed at the same time as new development.
A government action in which property is taken for public use and the owner is compensated. The legal procedure involved in eminent domain, which is the government's right to purchase private property for public use without the owner's agreement in exchange for just compensation.
The result of a property owner's reluctance to voluntarily relinquish ownership at a price set by a government body seeking to convert the land to public use.
Certain terms in a contract on which the agreement's fulfilment is contingent.
Individuals have fee-simple title to a specific unit in a multi-tenant building in this form of ownership. Each unit owner has their own mortgage and pays a portion of the property's common area upkeep and operation costs. A kind of ownership structure in which title to specific sections of property vests in individual users but title to common areas vests in all users collectively. An ownership form that combines a fee simple estate for ownership of individual units with tenancy in common for ownership of common areas-describes a form of ownership rather than a style of building.
A condominium property's non-profit governing organisation. When you buy a condo, you instantly become a member of the association. An organisation is made up of all persons who own a condominium unit and acts as a governing and controlling body, generally through an elected board of directors.
Condominium ownership is governed by government rules and regulations.
Similar properties in terms of economics.
The authorising document allows for the formation of a condominium. The statement desires both individual and communal portions of the property and provides for owners to be assessed for the expenses of maintaining and insuring shared spaces. The master deed that creates or establishes the condominium organisation.
The legal entity that connects the originating loans of the lender (or lenders) to the eventual investor (s). The conduit acquires loans from third parties and pools them for sale in the CMBS market after a sufficient volume has been achieved. In the European CMBS market, the pool typically consists of fewer than twenty loans with a diverse set of properties. In the US market, on the other hand, the pool may contain anything from 50 to 100 loans backed by a variety of assets. Mortgage-pooling agencies and private entities that offer mortgage-backed securities, utilising the pool of mortgages created or acquired as collateral for the mortgage-backed asset.
Conforming conventional loan
A conventional loan that fulfils the requirements for secondary market purchase by Fannie Mae or Freddie Mac.
The exchange of money or services for property. The compelling basis for entering into a contract under contract law. In exchange for a promise, something of worth is offered. Anything of value is offered in exchange for convincing another party to engage in a contract.
Constant maturity rate
A typical index for adjustable-rate mortgages (ARMs). The one-year constant maturity rate, for example, is the average of the market yield on any existing U.S. Treasury debt with exactly one year remaining to ultimate repayment, regardless of initial term.
Constant payment loan
A loan in which all instalments are made at the same time throughout the payback period.
Any aspect or condition of the built or natural environment that interferes with projected land usage. Any constraint or impediment to the project.
A owner's contribution to the construction cost and/or alterations required to make a facility ready for a tenant's occupancy. This allowance may be a set amount or it may fluctuate depending on the kind of transaction.
The whole project cost, with usual overhead and profit, that must be paid.
Construction cost estimate
Prior to the commencement of construction, a number is presented that estimates the overall cost of the project.
Advances on a building loan on a regular basis.
A loan for the purpose of constructing a home, usually with a duration of fewer than three years. They're usually based on prime rates and are just paid interest with a balloon payment payable at the loan's maturity. Loans are used to cover the price of erecting the building or structures.
Developers use this person to manage day-to-day building activity.
Any interference by the landlord with the tenant's possession of the leased premises, rendering them unfit for habitation. In this instance, the renter is not responsible for any subsequent rent payments.
When a fact is a subject of public record, the legal assumption is that everyone knows about it. A legal doctrine that allows notice to be attributed even if a party is completely unaware of the facts. According to recording statutes, recording a document in the public record constitutes constructive notice to the rest of the world.
The finished result of the manufacturing process.
Consumer price index
An index that compares the current price to the price of a representative "market basket" of consumer goods in a given year.
When a fact is a subject of public record, the legal assumption is that everyone knows about it.
Consumer price index (CPI)
The U.S. Department of Labour's Bureau of Labour Statistics publishes a monthly index that shows the cost of a variety of consumer products and services.
A money set aside to cover unexpected expenses.