Real Estate Glossary

Real Estate Glossary

There are 19 entries in this glossary.
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Glossaries

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Term Definition
Earnest Money

The monetary advance by purchaser of part of the purchase price as evidence of good faith. The earnest money is used to bind the parties to the contract of sale. Also known as "Deposit."

Easement

A right to use the property of an other created by grant, reservation, agreement, prescription or necessary implication. It is either for the benefit of land "appurtenant," such as the right to cross A to get to B, or "in gross," such as public utility easement.

Economic Feasibility

A project's feasibility in terms of costs and revenue, with excess revenue establishing the degree of feasibility.

Economic Rent

Calculations or analysis to determine market rental value of a property at any given time, even though the actual rent may be different.

Effective Rent

The rental rate actually achieved by the landlord after deduction the value of concessions from the base rental paid by a tenant, usually expressed as an average rate over the term of the lease.

Efficiency Factor

The number resulting from dividing the Usable Area by the Gross Building Area in a office building, providing a benchmark measurement for the building's use as an office building.

Eminent Domain

A right of the government to acquire private property for public use by condemnation, in return for just compensation. See Also: Condemnation

Encroachment

Generally, a structure which extends impermissibly over a property line, easement boundary or building setback line.

Encumbrance

Any right to, or interest in, real property that may exist in one other than the owner, but which will not prevent the transfer of fee title. A claim, lien, charge or liability, attached to and binding real property.

Environmental Impact Report

A report generally prepared by an independent company detailing the probable environmental effect of it development on the surrounding area.

Equity

The value of one's interest in a property, consisting of its fair market value less any outstanding debt or other encumbrances.

Equity Kicker

Also called a participation loan. Under this kind of loan--often used by non-bank lenders with start-up businesses--the lender gets not only interest payments and principal repaid, but the right to buy equity (part ownership in the company) as well. Equity participation is generally required for riskier deals or in return for lower rates.

Equity of Redemption

Not the same as the redemption period after a foreclosure sale, which is a right established by statute. Properly, the right to pay off the mortgage lien in default by payment of the principal, interest and costs due.

Equity Participation

The participation by a lender in the equity ownership of a project as one of the conditions for granting a loan. Used by financial institutions to partially offset the effects of inflation. Also called "Equity Kicker."

Escalation Clause

A clause in a lease providing for increased rent at a future time. May be accomplished by several means such as (1) fixed increase - A provision that calls for a definite, periodic rental increase; (ii) Cost of living - A clause that ties the rent to a government cost of living index, with periodic adjustments as the index changes; or (iii) Direct expense - Rental adjustments based on changes in expenses paid by the landlord, such as tax increases, increased maintenance costs, etc.

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