REAL ESTATE GLOSSARY (Nomenclature)
Acre – Unit of measurement of land, 1 acre is equivalent to 4048.32 square meters and 43560 square feet.
Allotee – The person who is allotted a property, either by government body/authority or by a developer.
Agent – Also known as Real Estate Agent, Realtor or Broker. An agent plays the role of a facilitator for property transactions for a consideration.
Apartment – Means a part of any property, intended for any type of independent use, including one or more rooms or enclosed spaces located on one or more floors or any; part or parts thereof, in a multi-storied building to be used for residence or office or for the practice of any profession or for the carrying on of any occupation, trade or for business.
Appraisal – A written report of the estimated value of a property prepared by a certified Real Estate appraiser or a valuer.
Appreciation – An increase in the value of a property due to changes in market conditions or other causes over a period of time.
Atrium – An entrance hall of a building, often rising through a number of storeys and containing lifts, reception areas and plants.
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.
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.
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.
Brokerage – Commission paid to a broker against the activity of a broker in bringing together two parties in a transaction.
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.
Built-up Area – Includes the carpet area, the wall thickness.
Carpet Area – The actual usable area of an apartment/office unit/showroom etc. minus wall thickness.
Clear Title – A title that is free from claims or legal questions and all other encumbrances about the ownership of the property.
Collateral – An asset (such as a car/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.
Commercial Property – A building / property which is used for the purposes of carrying out commercial activity or trading.
Common Areas – Those portions of a building, land and amenities owned (or managed) by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance.
Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings and parking areas.
Comprehensive Development Plan (CDP) – The Master Plan approved by an 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 are more than one owner for 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.
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.
Deed – The legal document conveying title to a property.
Defacto Possession – Also called Constructive Possession; the actual physical possession is called Defacto Possession. The actual possession should be held without force or fraud.
Dejure Possession – Also called Juridical Possession, it means possession in the eyes of the law. This may not be accompanied by Defacto Possession. Even when the property is lying locked, the Dejure possessor is the Defacto possessor of the property.
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. 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.
Earnest Money Deposit or EMD – A nominal sum of money given as a token to the vendor, signifying the assent to a contract of sale or the like, that the parties are in the earnest or have made up their minds.
Encroachment – The physical intrusion of a structure or improvement on the land of another. For example, a neighbor’s fence or construction that crosses over your property line.
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.
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 out-house.
Farm Property – Farm Property is the general name given to the agricultural property.
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.
F S I or Floor Space Index / F A R or Floor Area Ratio
The maximum amount of construction allowed on a given plot of land. This is purely dependent on the plot area and would vary from one locality to another based on factors such as the road width. For example, in Delhi in a 400 sq. yard plot the area is 40% the distribution being 20% for the backspace and 20% for the front. In case of a 1000 sq. yard area the area set aside is 60% for the back and the front spaces.
Hi-tech building (high technology building) – Primarily a modern industrial building which is particularly suited to the flexible uses and space needs of business organisations engaged in modern technologies
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.
Investment Property – Real Estate owned with the intent of supplementing one’s income and is not intended for owner occupancy (i.e. rental houses, apartment buildings, etc.).
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.
Joint Ownership Agreement – An agreement between owners defining their rights, ownership, monetary obligations and responsibilities.
Landlord/Owner – Any person who has a valid and legal right, title and interest in the property.
Lease – Lease is where there are no two kinds of payments made to the landlord by the tenant unlike a rental transaction. A sum of money is paid to the landlord at the beginning of the lease tenure, which is repaid without interest when the tenure ends. No monthly payments are made.
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.
Lease agreement – An agreement, usually written, between the lessor and the lessee, which 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.
Lock-in – Rate Lock Option. A written agreement guaranteeing the homebuyer a specified interest rate provided the loan is closed within a set period of time, usually within 60 days.
M
Maintenance Charges – Charges payable by the owners / occupants of a development (apartment complex / commercial complex / plotted development etc) towards upkeep & maintenance of all common areas and facilities. It is normally a monthly charge and the amount payable is dependent on the kind of amenities that are part of the project.
Mortgage – A legal document that pledges a property to the lender as security for payment of the loan.
Mutation – Mutation means transfer/change of name in the records of the Corporation for the concerned property.
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.
Negotiation – Discussion, written or otherwise, between two or more parties of different sides, the aim being to reach a common agreement.
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.
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.
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.
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.
Real Assets – Real Estate or real property owned by an individual or business.
Realtor – synonym of “Real Estate Agent”.
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 Deposit – In lending, security refers to the collateral given, deposited or pledged to secure the payment of the loan. 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
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 walls etc.
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 lessor and the lessee.
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 or problems, 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. 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 prevent 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.
ABBREVIATIONS
BSP – BASIC SALE PRICE
PSQFT – PER SQUARE FEET
DP – DOWN PAYMENT
CLP – CONSTRUCTION LINKED PLAN
PLP – POSSESSION LINKED PLAN
PLC – PREFERRED LOCATION CHARGE
FSI / FAR – FLOOR SERVICE INDEX / FLOOR AREA RATIO
NCR – NATIONAL CAPITAL REGION
BR / BHK – BEDROOM / BEDROOM HALL KITCHEN
BBA – BUILDER BUYER AGREEMENT
IFMS – INTEREST FREE MAINTENENACE SECURITY
FFC – FIRE FIGHTING CHARGES
ESC – ELECTRIC SUBSTATION CHARGES
GHS – GROUP HOUSING SOCIETY
LOI – LETTER OF INTENT