ABATEMENT: A reduction, decrease, or diminution; usually applies to the forgiveness of rent or a decrease of assessed valuation of ad valorem taxes after the assessment and levy.
ABOVE BUILDING STANDARD: Specialized design and engineering services and all construction; necessary to personalize tenant space above and beyond the standard tenant finish designed for the particular building.
ABSORBED SPACE: Is the net change between two dates, in leased space.
ABSORPTION: (1) The rate at which land or buildings will be sold or leased in the marketplace during a predetermined period of time, usually a month or a year. (2) The filling of space, such as the rental of units or sale of a tract. The time or rate must be estimated and considered as part of the owner’s (usually the builder) costs.
ABSORPTION PERIOD: The number of months required to convert vacant space into leased space assuming there is no new delivered space. It is computed by dividing the average monthly absorbed space, during a recent period, by the current vacant space.
ACCELERATION CLAUSE: A contract provision that allows a lender to require a borrower to repay all or part of an outstanding loan if certain requirements are not met. An acceleration clause outlines the reasons that the lender can demand loan repayment.
ADD-ON FACTOR: Considered a loss factor, the percentage of gross rentable square footage that is lost due to the tenant’s physical occupancy.
AD VALOREM TAX: (According to value) Used in reference to general property tax, which is usually based on the official valuation of property.
ALLOWANCE OVER BUILDING SHELL: An arrangement used for financing tenant improvements (finishing out office space to accommodate a tenant, such as walls, doors, carpeting, etc.), often used in a yet-to-be-built building whereby the landlord’s expenditure is capped at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price. Tenants may ask for a contingency in the event the actual build-out costs are less than the allowance, requiring the landlord to return the savings in the form of rent abatement or other concessions.
AM: Accredited Member (designation offered by the American Society of Appraisers).
ANNUAL PERCENTAGE RATE (APR): APR reflects the cost of a loan on a yearly basis. It may be higher than the note rate because it includes interest, loan origination fees, loan discount points, and other credit costs paid to the lender.
ANTICIPATORY BREACH: Occurs when one party to a contract prior to the time of performance informs the other of his or her intent not to perform. For example, when a buyer informs the seller before the closing date of his or her intent not to buy, an anticipatory breach has occurred.
APPRAISAL: Also known as property valuation or land valuation is the process of valuing Real Property. The value usually sought is the property’s Market Value, which is used for comparison. (1) The estimation and opinion of value placed upon a piece of real property based upon a factual analysis by a qualified professional. (2) The process of estimation and the appraisal report itself.
APPRECIATION: An increase in the value of property caused by an improvement or the elimination of negative factors.
A.S.A: Accredited Senior Appraiser (designation offered by the American Society of Appraisers).
AS IS CONDITION: “As is” denotes that the seller is selling, and the buyer or tenant is buying or leasing a property in whatever condition it presently exists, and that the buyer or tenant is accepting the property “with all faults”, whether or not immediately apparent. This is the classic “Caveat Emptor” or buyer beware situation, where the careful buyer should take the time to examine the property before accepting it, or obtain expert advice. In real estate, there are larger potential problems than issues with the structure itself, which can be drawn out with an inspector. Buyers of real estate, and their respective improvements, may be faced with other complicated property law issues if a deed is conveyed as a result of a contract with an “as is” clause.
ASSESSMENT: (1) An estimate of property value for the purpose of imposing taxes. (2) A fee imposed on property, usually to pay for public improvements such as streets and sewers.
ASSET-BASED LENDER: A lender who loans money based primarily on the values of an asset – accounts receivable, inventory, a place of equipment, real estate – rather than on the financial strength of the business which is the primary decisive factor for banks.
ASSIGNMENT: A transfer of interest between parties of title to any property, real or personal, or of any rights or estates in the property. Common assignments include leases, mortgages, and deeds of trust.
ATTACHMENT: Legal procedure to aid in the collection of a debt. Usually the court issues a writ to seize the property of a debtor and holds it pending the outcome of a lawsuit, keeping the property available for sale to pay any money judgment entered in such a lawsuit.
ATTORN: To turn over or transfer money or goods to another. To agree to recognize a new owner of a property and to pay him or her rent. (See also Letter of Atornment.)