Real Estate & Mortgage Terms/Glossary
acceleration Clause: A Clause in a mortgage which allows lender to demand payment of the balance mortgage.
adjustable-rate mortgage (ARM): A mortgage in which interest changes periodically.
amortization: The amount applied to principal increases in subsequent loan installments until mortgage is paid off (amortized) in specified time
amortization schedule: A table that shows changing portions of the interest and principal during amortization until loan is paid off
appraisal: Price estimate based on an analysis of comparable sales of similar properties in the neighborhood
appreciation: The increase in property value due to market condition
assessment: Value assessed on property by the assessor
assumable mortgage: A mortgage that can be assumed by the qualified property buyer
chain of titles: A sequence of transfers of title over the years
closing: When transaction documents signed, money changes hands and transaction completes
closing costs: Prepaid items and non-recurring cost in completion of a transaction
cloud on title: Any condition that adversely affects the title to real estate
co-borrower: Any additional individual who is obligated on the loan
Commercial Real Estate Terms
Unlike residential real estate, commercial real estate is primarily considered a business transaction. Learn the terms and you’re well on your way to moving smoothly through the process.
According to Value: The value of the property when computing property taxes.
Build to Suit: A customized design and build approach for a single tenant space usually resulting in a single occupant building which is then leased or sold to the tenant.
Certificate of Occupancy: Issued by a city building department and is a necessary requirement prior to moving into the space.
Common Area Maintenance: Typically an annual charge assessed to tenants based on their percentage of occupancy to pay for maintenance of parking lots, bathrooms and open areas.
Demising Wall: A wall between two separate suites in a building with multiple tenants. In many states, the demising wall must meet specific fire safety standards.
Flex Space: A building providing mixed-use space such as an area combining an office and warehouse.
Gross Square Feet: Usually refers to gross footage of a building. GSF is typically arrived at by calculating the footage from the outside of exterior walls multiplied by the vertical footage.
HVAC: Refers to the climate control systems for a building including heating and air conditioning.
Mechanic’s Lien: A legal claim typically filed by a subcontractor to obtain payment for services rendered. The claim arises under state law and is dependent on each states particular law.
Operating Expenses: Just as it sounds, operating expenses are those costs associated with operating a commercial property. Contract and state law typically govern the exact nature of the operating expenses.
Partition Wall: A wall built in the internal area of a suite to divide the general space. For instance, offices built during a tenant improvement project with have partition walls separating them.
Punch List: A punch list runs part and parcel with a walk through of completed construction work. The construction company and client will walk through the area and complete a punch list of items that need to be fixed or modified. .
Shell Space: The interior of a commercial building that has been completed, but does not yet have any tenant build outs. The shell space generally refers to this gross square footage regardless of whether tenant improvements have occurred or not.
Substantial Completion: Notice given by a contractor to the client indicating the property has been completed to the point where a walk through and punch list review are appropriate.
Usable Square Feet: The square feet in a building, suite, warehouse and so on that can actually be used by tenants. Due to building regulations and design issues, certain amounts of a space in a tenant suite may not be usable and such footage is excluded from this calculation.