|
1. Abatement Notice
A notice served on the owner(s) or occupier(s) of a property from which a private
nuisance arises, warning them of the intention to enter on the land in order
to abate the nuisance.
2. Absolute Title
The right of ownership of a mortgage deed, which gives the right, in certain
specified circumstances, to demand repayment in full, of the outstanding debt
than the due date.
3. Agreement for Lease/Sale
A contract to enter into a lease (or sale), which in order to be enforceable
either must be evidenced in writing and signed by the person against whom action
is taken for the breach of the alleged contract and there must be a sufficient
act of part performance.
4. Alternative User Value
The value of land and buildings, which reflects a prospective use, which is
different from that of the current use
5. Amortisation
Payment of a debt in equal installments of principal interest, as opposed to
interest only payments.
6. Annuity
A sum of money paid each year during the life of the recipient. An annuity is
usually paid as a legal obligation under a contract or undertaking, as through
a pension scheme, and may be paid in installments more frequently than once
every twelve months.
7. Asset Valuation
In the property market this expression is applied to the valuation if land and
buildings or plant and machinery. The term is often used to describe an expert
opinion of the worth of a property, which may be incorporated into company accounts,
where the ownership of the asset is not necessarily to be transferred but the
valuation is required for the company takeovers, share flotation or mortgages.
8. Assignment
The transfer of a property interest, especially a lease, from one party to another.Top
9. Balloon Payment
A repayment of a loan bond, usually but not necessarily the final repayment,
which is larger in amount than other installments.
10. Basic Rent
A monthly rental net of maintenance and interest costs charged or quoted by
landlords for any property. The base rent comprises of only the payment made
for usage of the subject property under a lease agreement. Imputed costs such
as holding costs fit out costs and building service charges are not usually
included in the base rent.
11. Bayana
An Indian term used to denote the token money given to the landlord to informally
freeze negotiations on a particular property, after the initial terms and conditions
have been formalised.
12. Breach of Contract
An act, or omission, contrary to enforce specific performance to rescind the
contract and / or to claim damages, the remedy available depending upon the
nature of the breach.
13. Broker/Dealer
A person or company who acts as a medium of bringing owners and proposed buyers
together with a view to complete a real estate transaction.
14. Brokerage
Commission paid to a broker.
15. Building Contract
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, basis of remuneration,
time scale, and penalties, if any, for failure to comply with terms of the contract.
16. Buy-Out Rate
In a funding agreement between a developer and a prospective purchaser, the
pre-determined investment yield which will be used to capitalize the annual
income receivable at the time of sale to determine the buy out price. Top
17. Capitalisation
At a given date the conversion into the equivalent capital worth of a series
of net receipts, actual or estimated, over a period.
18. Clearance Area
An area that is to be cleared of all buildings. Generally promulgated by way
of a government declaration, which is normally followed by the acquisition of
the land and the clearance of the area.
19. Completion Certificate/Statement
A certificate issued by the local development authority certifying that all
necessary works have been completed and that the property is fit for occupation.
20. Conveyance
A document transferring title to land from one person to another.
21. Current Yield
The remunerative rate of interest, which is, or would be, a appropriate at the
date of valuation, assuming the property to be let at its full rental value.
It will be the same as the reversion yield where the reversion is to full rental
value, and the same as the term yield where the rent receivable under the lease
is full rental value. Top
22. Developer
An entrepreneur who has an interest in a property, initiates its development
and ensures, that this is carried out (for occupation, investment or dealing)
and from the outset accepts the responsibility for providing or procures the
requisite funds needed to finance the whole project.
23. Development Control
The powers of a local planning authority to control the development and use
of land, which includes inter alia, a. the refusal or grant (with or without
conditions) of planning permission, b. the issue of enforcement notices, c.
the making of revocation, modification or discontinuance orders, d. the grant
or refusal of listed building consents and e. The designations of conversion
areas.
24. Development Yield
In a valuation to ascertain a ground rent, the rate at which costs are de-capitalised
to find the annual deduction from the occupation rents.
25. Discounted Cash Flow Analysis
Techniques used in investment and development appraisal 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
rate of return (IRR) and net present value (NPV). The techniques may be used
for such purposes as the valuation of land and investment, the ranking of projects
or their components. Top
26. Effective Rent
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.
27. Equity Linked Mortgage
A mortgage whereby the interest on the principal in part or in whole is calculated,
usually yearly, by reference on the security, e.g. It may reflect annual increase
or possible decreases, in the annual return on, or the value of, the property
in which the mortgage is secured.
28. Escalation Clause
A clause specified in lease agreements wherein renewals of lease period are
built in. It involves an increment in the base rent at every renewal of a lease
agreement in the base rent at every renewal of a lease agreement and is generally
a percentage rate that is either pre agreed or negotiated before the renewal
of the lease agreement. Top
29. Facilities Management
The coordination of many specialist disciplines to create the optimum working
environment for staff.
30. Fair Rent
The rent determined by a rent officer (or, on appeal, by a rent assessment committee)
under a regulated tenancy and registered.
31. FERA
An act to regulate certain payments dealing in foreign exchange, securities,
the import & export of currency and acquisition of immovable property by
foreigners. Under Section 31 (1) of the Foreign Exchange Regulation Act (FERA)
of 1973, 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 (expect by way of lease for a period
not exceeding five years) any immovable property in India.
32. Fire Certificate
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. In order
to obtain a fire certificate, one must apply to a fire certificate, one must
apply to a fire officer, who then inspects the building and issues a list of
requirements (e.g. Fire doors). 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 inflammables /explosives materials on the premises.
33. Fit Outs
Relate to the interior permanent furnishings required in a property including
HVAC ducting, fire protection system implementation, establishment of workstations
and telephone/computer cabling among other, in order to make the property fit
for usage.
34. Force Majeure
A force, which cannot be resisted, in other words, something beyond the control
of the parties involved. It includes acts of God and acts of man, e.g. Riots,
strikes, arson. In many contracts and insurance policies, specific provision
is made for damage or injury arising from force majeure. For example, the financial
liability of a building contractor for failure to complete by a specific date
may be relieved to the extent it was caused be force majeure. This is a common
clause in most property contracts.
35. Foreclosure
The legal process by which a mortgagee can sell the mortgagors interest in the
property to satisfy debt.
36. Freehold
In general parlance this is used as shorthand for the tenure of an estate in
fee simple absolute in possession. Strictly speaking, however, freehold includes
fee simple, entailed interests and tenancies for life.
37. Frontage (Line)
The full length of a plot of land or a building measured alongside the road
on to which the plot or building fronts. In the case of contiguous buildings
individual frontages are usually measured to the middle of any party wall. Top
38. Greased Lease Back
The disposal by a freehold or leasehold owner of his interest on a property
or leasehold interest where the rent payable is geared to a fixed percentage
of some variables, often rack-rental value.
39. Green Field Site
An area of land, usually in the edge of a town or city or away from substantial
urban areas, hitherto undeveloped but for which development is now proposed.
40. Gross External Area (GEA)
The aggregate superficial area of a building taking each floor into account.
As described in the RICS/ISVA Code of Measuring Practice (UK), this includes:
external walls and projections, internal walls and partitions, columns, piers,
chimney-breasts, stairwells, and lift wells, tank and plant rooms, fuel stores
whether or not above main roof level and open-sided covered areas and enclosed
car-parking areas, terraces etc. Top
41. High Point Loading
A concentration of abnormally heavy floor-loading at one point or more particular
places in a building or other structure where extra support may be required. Top
42. Indian Stamp Act, 1899
A legal statute, which provides for the payment of stamp duty in case of all
real estate transactions to duty to the local government. The value of the stamp
duty depends on the rental payable and the lease term or the sale value as the
case may be. This duty is paid by purchasing non judicial Indian Stamp Paper,
on which the lease/sale agreements are documented.
43. Indenture
A deed between two or more parties, each party having his own copy. Originally
copies were all included in a single document from which each was torn or cut
along a wavy (intended) line.
44. Institutional Investors
These are generally taken to include banks, pension funds, insurance companies,
unit trusts and investment trusts, which are together commonly referred to in
the investment field as the "institutions".
45. Investment Yield
The annual percentage return, which is considered to be for a specific valuation
in an investment being expressed as the ratio of annual net income (actual or
estimated) to the capital value. It is therefore a measure of an investor's
opinion about the prospects and risks attached to that investment. The better
the prospects and lower the risks, the lower the expected yield and thus the
greater the capital value. The required yield from an investment is estimated
in the light of such factor as -
a. the security in real terms of the capital invested, b. the security in real
terms and regularity of income, c. the ability to adjust the income to reflect
market conditions, d. the complexity and cost of management, e. the ease and
likely cost of realizing the capital and f. the tax position.
46. Internal Rate of Return (IRR)
The rate of interest (expressed as a percentage) at which all-future cash flows
(positive and negative) must be discounted in order that the net present value
of those cash flows should be equal to zero. It is found by trial and error
by applying present values at different rates of interest in turn to the net
cash flow. It is something called the discounted cash flow rate of return. Top
47. Joint Agent
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 effect the sale, letting or other joint agent(s) will share the remuneration
in agreed proportions. None of these agents would be entitled to a commission
if the transaction is concluded as a result of someone else's introduction.
48. Joint Sole Agent
One of two or more agents jointly instructed as the only agents entitled to
represent the principal. It is customary for the joint agents to share any commission
earned on an agreed basis, irrespective of which agent effects the sale or letting. Top
49. Land Assembly
The process of forming a single site from a number of land, usually for eventual
development or redevelopment. This will include acquisition of individual interest
the eventual development or redevelopment. This will include acquisition of
the individual interests, removal or discharge of any restrictive covenants
or other encumbrances and obtaining physical possession, when required, from
occupiers.
50. Landlord
The owner of an interest in land who, in consideration of a rent or other payment
(e.g. A premium), grants the right to exclusive possession of the whole or part
of their land to another person for a specific or determinable period by way
of a lease or tenancy.
51. Lease Agreement
An agreement, usually written, between the lessor and the lessee, who allows
for the conveyance of property to the tenant under a contract, and confers usage
and control rights to the tenant for the duration of lease. Apart from financial
terms and conditions, several clauses describing the other binding terms and
conditions of the agreement are also documented.
52. License
The lawful grant of a right to do something, which would otherwise be illegal
or wrongful. It may be gratuitous, contractual or coupled with an interest in
land. The grantor of license is the licensor and the grantee is the licensee.
A gratuitous ("Mere" or "bare") license can always be revoked
(i.e. Cancelled), but revocability of a contractual license depends on the terms
of the contract. A license coupled with an interest in land may be irrevocable
and unlike the other two categories, may be binding on successors in title of
the licensor. One example of license is permission, usually required in writing,
given specifically by an owner to a tenant, enabling something to be done which
otherwise would be in breach of a term of the lease. A license does not itself
transfer any interest in the land but may authorise the licensee to enter the
licensor's land for some specific purposes of the license; the licensor may
enter the land and use it in any way not inconsistent with the rights of the
licensee. However, a landlord may authorise by license some act or omission
by a tenant, which would otherwise be a breach of the terms of the lease.
53. Load Bearing
The capacity of an element in a building structure to support a weight in addition
to its own, whether vertically or laterally. Thus a load bearing wall is one,
which supports part of the structure in addition to its own weight.
54. Maintenance Top
In property parlance, the keeping of a building, structure or other physical
feature in a specified e.g. Wind and weather tight, condition. The approved
cost of maintenance may be deductible for income taxation.
55. Mortgage
The conveyance of a legal or equitable interest in freehold or leasehold property
as security for a loan and with provision for redemption on repayment of the
loan. The lender (mortgagee) has powers of recovery in the event of default
by the borrower (mortgagor). A mortgage is a form of land charge and can be
either legal or equitable. Top
56. Negotiation
Discussion, written or otherwise, between two or more parties no different sides,
the aim being to reach a common agreement.
57. Non Confirming Use
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.
58. Net Present Value Method (NPV)
A method used in discounted cash flow analysis to find the sum of money representing
the difference between the present value of all inflows and outflows of cash
associated with the project by discounting each at a target yield. Top
59. Open Market Value
The best price which might reasonably be expected to be obtained at arms' length
for an interest in a property at the date of valuation, subject to any statutory
assumptions which may be required.
60. Outgoings
Costs incurred by the owner of an interest in property, usually calculated on
a yearly basis. Eg. management, repairs, rates, insurance and rent payable to
the holder of a superior interest, as appropriate to his contractual or other
liabilities. It is prudent to make annual provision for future items involving
expenditure at intervals of more than one year. Top
61. Patwari
Usually denotes the 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.
62. Penal Rent
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.
63. Permitted One
1. A use authorised by a grant of planning permission or 2. A use allowed by
the deemed grant of planning permission under the local development control
norms.
64. Pre-Stressed Concrete
A type of reinforced concrete in which all or some of the ordinary steel reinforcement
is replaced by high-tensile steel bars or wires which are tensioned by 'pre-tensioning'
or 'post-tensioning'. The number and positioning of wires or tendons can be
arranged to eliminate all tension in the concrete, thereby preventing cracking
and so rendering the concrete water-tight and gas-tight as well as increasing
in durability. Pre-stressed concrete structures can achieve greater spans and
carry higher loading.
65. Premium Rent
A rent above the level which a property could reasonably be expected to command
in the open market on normal terms. 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.
66. Private Treaty
The most common method of disposal of real property, in which negotiations are
carried out between the vendor and prospective purchasers (or their respective
agents) privately and in comparative secrecy, normally without any limit on
the time within which they must be completed. Before contracts are exchanged.
Project Management (Development Management)
The leadership role which plans, budgets, co-ordinates, monitors and controls
the operational contributions of property professionals, and others, in a project
involving the development of land in accordance with a client's objectives in
terms of quality, cost and time.
67. Property Investment Trust
A public company, having certain tax advantages and complying with rules applicable
to its operation and investment activities, managed by a professional specialist
team and established for the purpose of acquiring mainly shares in property
companies-public or private. To such an extent, as is permitted legally, without
prejudicing its beneficial tax treatment; it may invest in other securities,
own property directly or undertake development. It provides shareholders with
an interest in a wide ranging portfolio and the reassuring knowledge that investment
policy is in the hands of experts.
68. Property Management
The range of functions concerned with looking after buildings, including collection
of rents, payment of outgoings, maintenance including repair, provision of services,
insurance and supervision of staff employed for services, together with negotiations
with tenants or prospective tenants. The extent of and responsibility for management
between landlord and tenant depend on terms of the lease(s). The landlord may
delegate some or all of these functions to managing agents.
69. Property Portfolio 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.
70. Pugree
An Indian term used to describe an interest free security deposit given to landlords
which is refundable at the expiry of the lease term to the outgoing tenant by
the successive tenant. Top
71. Qualified Covenant
A restriction contained in a legal document which limits the rights of a person
having an interest in the land but, by its wording envisages the possibility
of removing the limitation on terms agreed between the parties eg. a covenant
by a lessee not to assign or sublet without the landlord's written consent.
In certain cases, such as the one quoted, statute law strengthens the applicant's
position by importing such words as "such consent not to be unreasonably
withheld". Top
72. Rack Rent
A rent representing the full, or nearly the full, letting value of a property
on a given set of terms and conditions.
73. Refurbishment
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.
74. Rent Act(s)
Legislation promulgated by various states in India, which regulates the terms
and conditions of the rental market with a view to curb profiteering and hoarding.
Though its restrictive nature has not allowed owners to enjoy economic returns
from same categories of property, thereby allowing market inefficiencies.
75. Rent Free Period
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 c. or by
virtue of both a and b.
76. Rentable Area
The area of floor space for which rent is calculated even though other areas,
within or outside the premise, are lawfully used by the tenant. For example,
in an office building it is customary to exclude from the direct calculation
of rent the space used for corridors, atrium and stairways.
77. Rental Advance
Comprises a lump sum payment to the landlord at the beginning of the lease term,
which is thereafter adjusted in equal installments 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. Top
78. Sale and Leaseback
An arrangement whereby a freeholder or lessee sells his interest in a property
for an agreed sum and takes back a lease on the whole or part of the property
from the purchaser, generally either at a rack rent or at some lesser rent related
to the price paid.
79. Security Deposit
Comprises of an interest free lump sum payment to the landlord at the commencement
of the lease, which is refundable at the end of the lease term. Though the deposit
amount varies depending on city, property type, location and the period of the
lease, it may range anywhere between 6 to 18 months of monthly rental. It is
not uncommon for some landlords to provide a bank guarantee to the tenant as
security for the repayment of the initial deposit amount.
80. Site Plans
A drawing of an area of land, on a horizontal plane, 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.
81. Sub Leasing
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 leasor and the leasee.
82. Suspended Ceiling
A ceiling, not being part of the structural framework of a building, installed
below the level of the underside of the floor above or of the roof. Commonly
used to provide space for services eg.
· cables, recessed lighting and piping;· to reduce the cost of
heating in a room;· to improve the acoustics;· or to produce more
aesthetically pleasing proportions. Top
83. Tax Clearance [37-(I)]
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 upto 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.
84. Tenancy
The interest of a person holding property by any right or title or an arrangement,
whether by formal lease or informal agreement, whereby formal lease or informal
agreement, whereby the owner (the landlord) allows another (the tenant) to take
exclusive possession of land in consideration for rent, with or without a premium,
either: for an agreed period of on a periodic basis until formally terminated.
85. Tenant's Improvements
Improvements to land or buildings to meet the needs of and carried out wholly
or partly at the expense of the tenant.
86. Turnover Rent
A rent which is calculated as a proportion of the annual turnover of the lessee's
business. Usually, it does not fall below a base rent. More commonly used in
the USA, although in recent years being applied with increasing frequency in
the Europe and the mature markets of Asia, especially in the case of he more
profitable retail outlets. Top
87. Uplifted Rent
A rent which reflects lease terms which are more beneficial to the tenant than
prevailing commercial terms, eg. a higher rent to reflect, say, 14-yearly reviews,
rather than the more common five-yearly reviews.
88. Urban Land Ceiling and Regulation Act (ULCRA)
A legislation promulgated in 1976 as a social equity measure with a view to
curb profiteering and hoarding in the urban land market as well as prevent urban
congestion. Urban centers i.e. cities were classified into categories such as
A, B and C and a ceiling on the maximum permissible usage on land by respective
owners was set under provisions of the act.
89. User
A person who uses, enjoys or has a right over a property. Top
90. Vaastu Shastra
A traditional Indian architectures and design system, which specifies the detailed
methodology of designing buildings, buying land etc. in order to maximise benefits
from the same for the occupier. This system relies in harmonising any real estate
development with the five elements of Indian Mythology namely air, water, earth,
fire and space.
91. Valuation
The process of making an estimate of worth of real property or real property
or other assets for a particular purpose eg. Letting, purchase, sale, audit,
rating, compulsory purchase or taxation. That purpose and the relevant circumstances
will determine assumptions and facts that are appropriate and hence the process
used.
92. Value
The price that might an interested in property or some other asset might reasonably
be expected to fetch if disposed of at right.
93. Vertical Slice Participation
A method of multi-participation in a venture, usually a development, whereby
each of the participants owns a separate legal interest in the whole of the
property concerned by way of he freehold, head lease or a subordinate interest.
The documentation normally ensures that rental and other income and /or capital
receipts as well as the cost of any revenue or capital liabilities are shared
by the participants in predetermined percentages related to their respective
contributions, whether financial or otherwise. Top
94. Willing Seller-Willing Buyer
An assumption sometimes made for valuation purposes that the owner of the property
concerned is willing to dispose of his interest therein and that there is at
least one genuine purchaser in the market for that interest, whether or not
such is actually the case at the date of valuation.
95. Written-Down Value
At a given time, the result of making one or more annual of periodic deductions
for depreciation against capital cost or worth. Top
96. Yield Up
Give up possession, especially by the tenant at the end of a lease. Top
97. Zone
A defined area of land or part of a building which is allocated for a particular
purpose, e.g. development plans may allocate areas of land for different uses
or values of property may distinguish between areas of floor-space of a building
and ascribe different values to them.
98. Zoning
In planning terms, the dividing of an area by a local planning authority into
zones for particular uses or activities. Top
|
