Real Estate Glossary
This glossary was created by a team of real estate professionals. It contains terms regarding real estate buying and selling, home finance, home improvement, as well as legal terms. For your convenience, the glossary is searchable alphabetically.
Amortization in which the payment made is insufficient to fund complete repayment
of the loan at its termination. Usually occurs when the increase in the monthly
payment is limited by a ceiling. The portion of the payment which should be paid
is added to the remaining balance owed. The balance owed may increase, rather
than decrease over the life of the loan.
A commercial real estate lease in which the tenant regularly pays not only for
the space (as he does with a gross lease) but for a portion of the landlord’s
operating costs as well. When all three of the usual costs--taxes, maintenance
and insurance--are passed on, the arrangement is known as a "triple net lease."
Because these costs are variable and almost never decrease, a net lease favors
the landlord. Accordingly, it may be possible for a tenant to bargain for a net
lease with caps or ceilings, which limits the amount of rent the tenant must pay.
For example, a net lease with caps may specify that an increase in taxes beyond
a certain point (or any new taxes) will be paid by the landlord. The same kind
of protection can be designed to cover increased insurance premiums and maintenance
expenses. Contrast with gross lease.
A price, which must be expressly agreed upon, below which the owner will not sell
the property and at which the broker will not receive a commission; the broker
receives the excess over and above the net listing price as commission. The broker
in this type of listing will have a very hard time maintaining his fiduciary responsibilities
to his seller since his interests are potentially at odds with the interests of
Typically, mortgage lenders require escrow accounts for property taxes, hazard
insurance, and sometimes, homeowner's association dues. Monthly contributions
to these accounts are rolled into a lender's mortgage payment. Most lenders only allow non-escrowing
loans on mortgages with an 80% or lower, loan-to-value ratio. Property taxes can
be paid as late as January 31st of the following year before interest and penalties
begin to accrue. If the borrower has the discipline to save the monies for taxes
and insurance independently, a non-escrowing loan would be the smart choice. Most
lenders charge a one-time fee at closing for selecting the non-escrow option.
Non-escrowing loans also have lower closing costs since the lender does not collect
reserves, which place a 2-3 month cushion of pro-rated payments in the escrow
account. Additionally, the seller's pro-rated share of the year's property taxes
is applied directly to the buyer's closing costs, instead of being placed into
the escrow account.
A written instrument of credit attesting to a debt and promise to pay.
Something that interferes with the use of property by being irritating, offensive,
obstructive or dangerous. Nuisances include a wide range of conditions, everything
from a chemical plant's noxious odors to a neighbor's dog barking. The former
would be a "public nuisance," one affecting many people, while the other
would be a "private nuisance," limited to making your life difficult,
unless the dog was bothering others. Lawsuits may be brought to abate (remove
or reduce) a nuisance. See quiet enjoyment, attractive nuisance