Real Estate Glossary

WORD DEFINATION
WORD DEFINATION
Acre A unit to measure land. One acre is equivalent to 43,560 square feet or 4,047 square meters approximately. It is a commonly used term for larger land parcels in India.
Absolute title Title that proves that the property is free of any hindrances or deficiencies. Absolute title gives clear right of ownership to the titleholder, and cannot be disputed or challenged by anyone else.
Agent An agent is a person who plays the role of a facilitator for property transactions for a consideration. An agent is also referred as broker or intermediary.
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 the action is taken for the breach of the alleged contract and there must be a sufficient act of part performance.
Agreement to Sell It is an agreement between the buyer and the seller that details the price and terms of the transaction. (Should not be confused with Sale Deed/ Conveyance Deed) It precedes the execution of Sale Deed and acts as the basic document on which a Sale Deed is drafted. It is also referred to as Agreement for Sale.
Allotment Letter It is a letter which contains details such as the agreed price, payment dates, construction schedule, house plans, delivery date and builder's liability in case of late completion or problems after possession.
Allotee The person who is allotted a property by government or by a developer.
Amenities All the extra features of a property such as swimming pool, club house, party rooms, bike paths, community centers and other enticements offered by builders of planned developments which increase the property’s value.
Apartment It is a part of property, intended for any type of independent use, including one or more rooms or enclosed spaces located on one or more floors.
Appraisal Also known as property valuation or land valuation. It is an estimated value of a property as per market values and is prepared by a certified Real Estate appraiser or a valuer.
Appreciation An increase in the value of the property due to changes in market conditions over a period of time.
Approved Plans This refers to the plans of the building that is approved by the respective authorities of the city in which the project is being developed. This is a drawing of the layout of the project and the layout of the flats, row houses, independent villas, commercial units, premises etc. This is an important document as it can figure out any illegal constructions that may have taken place.
Assessed Valuation The value that a taxing authority places on real property for the purpose of determining the amount of taxation for that property.
Broker/ Dealer/ Agent A broker is a person or a company who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.
Brokerage A brokerage fee is a fee charged by an agent or agent's company to conduct transactions between buyers and sellers. The broker charges the brokerage fee for services such as purchases, sales, and advice on the transaction, negotiations or delivery (change the content with same meaning as I have copied on line)
Benami Ownership In Benami Ownership, the title of the property is in one party's name and the real ownership is in another party's name.
Beneficiary The person/persons/institution designated to receive the income from a trust, estate or a deed of trust. A contingent beneficiary has conditions attached to his/her/their/its rights.
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.
BHK BHK stands for Bedroom Hall Kitchen. 1 BHK stands for one bedroom, one hall and one kitchen. 2BHK stands for two bedrooms, one hall and one kitchen.
Balloon Loan A long-term loan, often a mortgage that has one large payment (the balloon payment) due upon maturity. A balloon loan will often have the advantage of very low interest payments, thus requiring very little capital outlay during the life of the loan. Since most of the repayment is deferred until the end of the payment period, the borrower has substantial flexibility to utilize the available capital during the life of the loan. The major problem with such a loan is that the borrower needs to be self-disciplined in preparing for the large single payment since interim payments are not being made. Balloon loans are often undertaken when refinancing or when a major cash flow event is anticipated.
Balloon Payment An oversized payment due at the end of a property loan, commercial loan or other amortized loan. Because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender.
Built-up area Built-up area denotes to the entire area of the floor including carpet area, walls, lobbies and corridors, atrium areas and basement. Always, check with your builder/agent on what concept they are using. In Mumbai, the basement, staircase, lift, and utility rooms like generator and electricity rooms are also taken as built-up area. In Delhi, the lift areas and staircase areas are included in the built-up area. In Chennai, the basement and atrium areas are excluded whereas, in Bangalore, the basement is not included in the built up area.
Bare Shell It is referred to a commercial or residential property with unfurnished interior usually without ventilations, air conditioning, lighting and plumbing. It means all the basic connections will be there but without appliances.
Base Rate Reserve Bank of India replaced Benchmark Prime Lending Rate (BPLR) system with Base Rate system with effect from July 1, 2010. The base rate is the interest rate below which banks cannot lend. The Base Rate includes all those elements of the lending rate that are common across all categories of borrowers. Banks are allowed to determine their actual lending rates on loans and advances with reference to the Base Rate and by including such other customer specific charges as considered appropriate. All categories of loans are priced only with reference to the Base Rate.
Breach of Contract Violation of any of the agreed-upon terms and conditions of a binding contract. This breach could be anything from a late payment to a more serious violation, such as failure to deliver a promised asset. A contract is binding and will hold weight if taken to court; however, proof of the violation is imperative.
Capitalization
  1. . At a given date the conversion into the equivalent capital worth of a series of net receipts, actual or estimated, over a period.
  2. A method of calculating a final purchase price for a development using an agreed formula to convert actual, or assumed, income from initial lettings into capitalism. Such capitalized sums may be offset against a purchasing fund's interim finance payments, any excess being paid to the developer.
  3. In relation to a company's reserves, the conversion into capital of money, which is then distributed as a capitalization issue.
Capital Gain An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes.
Carpet Area The actual usable area of an apartment/office unit/showroom etc. minus Wall thickness. Simply put, it is that area within the walls where you can actually lay a carpet.
CBD or Central Business District Commercial area and its immediate radius of 2 - 3 km, typically located towards the city centre, which forms the hub of all major commercial activity in a city. Most of the larger corporate entities, large retail outlets and financial institutions would be located in this area. The Real Estate prices here would be the highest compared to all the other locations in the city.
Clear Title A clear title is a title without any kind of lien or levy from creditors or other parties and poses no question as to legal ownership. It is also known as “clean title,” “just title,” “good title” and “free and clear title.”
Collateral An asset such as land or home that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract. In a housing loan scenario, collateral would mean additional security over and above the security of the property being financed.
Commencement Certificate A certificate issued by the appropriate local authority certifying the construction may commence. Typically, this is done after the concerned party has obtained the sanction of plans for the construction of a multi-storied building and has put the columns in place indicating the building boundaries.
Commercial Property A building/property which is used for the purposes of carrying out commercial activity.
Commission A proportion (usually a percentage) of the sale price of a property paid to a real estate agent/ broker for negotiating a real estate transaction
Common Areas The total area within the residential community that is not designed for sale or rental but that is available for common use by all the owners or tenants of the that community , their invitees and guests .
Comprehensive Development Plan (CDP) It is the master plan of a real estate project approved by the designated authority.
Condominium A Real Estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. Each individual owner may sell or encumber his/her own unit.
Co-ownership When there is more than one owner of an immovable property, the status of the property is known to be of the Co-ownership type. A co-owner can do whatever he wishes with his part of the property as long as he does not affect the share of the other co-owners.
Conveyance It is referred to the act of transferring or conveying the rights, title, ownership & interests of a property from one person to the other, who is purchasing the property. Any property whether immovable or movable should be transferred to the buyer using this agreement.
Covenant A clause in a mortgage that obligates or restricts the borrower on the use of land or promising certain acts and if violated, can result in legal action against a violator.
Credit Score It is a statistically derived score of a person’s credit worthiness, which is generally used by money lenders to know the likelihood of that person repaying his/her debts. It is usually based on the person’s past credit history
Completion Certificate/ Statement A certificate/ statement/ occupancy certificate issued by the local development authority certifying that all necessary works have been completed and that the property is fit for occupation. In case of private development, such certificate can be given by the builder to individual unit owners at the time of possession. Owners require a completion certificate to claim tax benefits
Credit History A record of an individual’s current and repaid debt which is usually used by a lender to assess the risk of a potential borrower. In India, credit history is managed by CIBIL.
Common Area Maintenance The contribution or fee paid collectively by the owners of individual units for the maintenance and upkeep of the common areas of a real estate complex. These areas are generally managed and maintained by Residents’ Welfare Association or an outsourced Facilities Management Company.
Distress Sale The sale of property which is below market price and under less than favourable conditions. Usually, the seller is experiencing financial difficulties and is under extreme pressure to sell.
Sale Deed The sale deed transfers the ownership of the property/properties in exchange for a price paid or considered. This document is required to be registered compulsorily.
Deed A legal document conveying title to a property
Deed of Assignment A legal document which affects transfer of a property interest, especially a lease, from one party to another.
Deposit A sum of money given to bind the sale of Real Estate or a sum of money given to ensure payment or an advance of funds in the processing of a loan. The deposit could also be the deposit paid to a landlord as part of a rental transaction.
Depreciation A decline in the value of property brought about by age, physical deterioration, functional or economic obsolescence, etc.
Developer An entrepreneur or company that initiates and sees through the development of a property. The main activities carried out by a developer include land acquisition, procurement of relevant approvals, fund raising, design, construction and marketing of the project
Due diligence Verification of the authenticity of the title of the property
Age of the building A Real Estate appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
Escrow Account An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties.
Encroachment A situation in real estate where a property owner violates the property rights of his by building something on the neighbour’s land or by allowing something to hang over onto the neighbour’s property. Encroachment can be a problem along property lines when a property owner is not aware of his property boundaries or intentionally chooses to violate his neighbour’s boundaries. This is also known as structural encroachment.
Exclusive Listing A written agreement between a real estate broker and a building owner in which the owner promises to pay a fee or commission to the broker if specified real property is sold or leased during a stated period. The broker may, or may not be the cause of the sale or lease
Encumbrance Certificate A report issued by Registrar of Assurances or Sub-Registrar's office after due verification of the relevant documents certifying that the property in question is free from all encumbrances such as mortgages, leases, easements or restrictions.
Earnest Money Deposit (EMD) A deposit made to a seller showing the buyer’s good faith in a transaction. Earnest money allows the buyer additional time while seeking financing. Earnest money is typically held jointly by the seller and buyer in a trust or escrow account.
Fair Market Value The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept. In other words, a value decided by the market forces.
Farmhouse The concept of a farmhouse is nothing but the building appurtenant to the agricultural land. A farmhouse may be used for dwelling purposes, or as a storehouse or an outhouse.
Farm Property Farm Property is the general name given to the agricultural property.
Freehold Provides the owner the right to use the real estate for any lawful purpose and sell when and to whom the owner wishes
Freehold Property A property where title paramount has conveyed the property in favour of the purchaser by conveyance/ sale deed with no restriction on the right of the holder of the property to further transfer the property. Record of ownership of the freehold property can be ascertained from the office of the sub-registrar. It can be transferred by registration of sale deed.
Floor Space Index (FSI) / FAR or Floor Area Ratio The maximum amount of construction allowed on a given plot or land. This is purely dependent on the plot/land area and would vary from one locality to another based on factors such as the road width. Floor Space Index or FSI calculation is the actual ratio between the total built-up area and the available plot / land area permitted by the Government for a specific locality. A higher FSI will have a higher built-up area
General Power of Attorney A power of attorney is a legal document giving one person (called an "agent" or "attorney-in-fact") the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal's property and finance. The power of attorney is frequently used in the event of a principal's illness or disability, or when the principal can't be present to sign necessary legal documents for financial transactions.property
Heir The person who is the lawful obvious inheritor of an estate or a property.
Immovable Property Includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops not grass.
Industrial Property Any property used for a manufacturing purpose. Areas, where industrial activity may be carried out, are specified by the respective local authorities.
Inventory Inventory or stock refers to the real estate area in square feet or number of property units that a company or individual holds for the ultimate purpose of selling or leasing.
Joint Ownership When there is more than one owner of an immovable property, the status of the property is known to be of the Co-ownership or Joint Ownership type.
Joint Ownership Agreement An agreement between owners defining their rights, ownership, monetary obligations and responsibilities.
Leasehold Real property held by a tenant (lessee) under a lease for a fixed term, after which it returns to the freehold owner (the lessor) freehold ownership property rights including the right to occupy the land, earn income from the property/land, erect buildings on the land, lease the land, sell the land, subdivide the land, use the land/property as security for loan purposes. In other words, freehold ownership gives total unencumbered ownership.
Lease Hold Property A property "bought" for a certain period of time. The "owner" of such a property will have "bought" the property from the original landlord and is entitled lawfully to rent, lease or "sell" the property to a third party during the period of leasehold. After the leasehold period, the property goes back into the original landlord's possession.
Loan-to-Value Ratio (LTV) The amount of the loan financed as a proportion of the property value expressed as a percentage.
Lock-in Period When a buyer books an under construction property with a builder, some builders put the lock-in clause which means that the buyer cannot sell the property for a particular time period or till the handover. Such time period is known as lock-in period.
Market Value The price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price.
Mortgage A legal document that pledges a property to the lender as security for payment of the loan.
No Objection Certificate or NOC A certificate issued by the concerned local authority that the plans are in order and conform to the guidelines and rules in force. In other words, the authority concerned has NO OBJECTION to the commencement of construction.
Occupancy Certificate or OC A certificate issued by the local development authority certifying that all necessary works have been completed as per the sanctioned plans and that the property is fit for occupation. The OC is issued after clearance from the water, electricity, sewerage, fire fighting authorities etc.
Owner Any person who has a valid and legal right, title and interest in the property.
Realtor Synonym of "Real Estate Agent".
Refinancing The process of paying off one loan with the proceeds from a new loan using the same property as security.
Registration A legal documenting and subsequent recognition of a transaction under the State. This can either be a rental or capital transaction and there is a fee attached to registering a transaction, which varies from state to state.
Residential Property Any property, which is used for residential purposes. These areas are specifically earmarked as such by the concerned local authority.
Security In lending, security refers to the collateral given, deposited or pledged to secure the payment of the loan.
Super Built-up Area The plinth area along with a share of all common areas proportionately divided amongst all unit owners makes up the Super Built-up area. The common areas include corridors, balconies, swimming pool, garden, clubhouse, the lift wells etc.
Tahsildar Revenue authority or officer empowered to impose and collect revenue from a particular jurisdiction.
Tenant One who is not an owner but enjoys possession of a property from the owner on certain specified terms and conditions for a temporary period.
Title The document that provides legal evidence that the person has the right to the possession of the land.
Title Search An investigation of public records into the history of ownership of a property to check for liens, unpaid claims, restrictions etc. to prove that the seller can transfer free and clear ownership.
Transaction Any activity that leads to an exchange between two parties - buyer and seller/landlord and tenant etc.
Under-valuation A value of the property that is lesser than the fair market value. The registration fee for a property is based on the value of the property in case of capital transaction or rent in case of rental transaction.
Urban Land Ceiling and Regulation Act (ULCRA) Popularly referred to as ULC Act. This is basically a legislation that was enforced to prevent profiteering and hoarding in the urban land market as well as prevents urban congestion.
Zone Parts of a city or town are allocated and categorized into zones, which in turn will have a bearing on factors like type of property that can be constructed, number of floors allowed for construction, etc.