Balloon Mortgage – a mortgage not fully amortized at maturity and requiring a lump sum payment.

Band-of-Investment Analysis – a perspective on and a technique for estimating the discount rate.

Bearing Wall – a wall that supports a portion of a structure.

Before-Tax Cash Flow – amount of income remaining after deducting for operating expenses and debt service, but before income tax on operations is deducted.

Beneficial Estate – an estate of which the right to possession has not yet passed.

Betterment – an expenditure on a fixed asset that increases its value, which , under accepted accounting procedures, is reflected in an equivalent increase in the asset’s book value and that does not result in the acquisition of a new property or the enlargement of an old one. See addition.

Bill of Sale – a written document by which goods or chattels are transferred from one person to another.

Blanket Mortgage – a mortgage covering more than one property; used in, for example, subdivision development and cooperative apartment ownership.

Board of Appeals – a public body (other than a court) charged with the duty of hearing and deciding appeals taken by taxpayers or tax districts on assessments established by public officers or bodies other than the courts. Also called Board of Tax Appeals or Board of Review.

Board of Equalization – a public body (other than a court) having jurisdiction over two or more assessment districts which together make up a single tax district, charged with the duty of examining the assessment rolls of several assessment districts, and empowered, on appeal or on its own initiative, to revise assessments by district totals and/or by totals for particular classes of property.

Building Contract – an agreement between an owner and a builder, relative to the construction of a proposed structure.

Building Capitalization Rate – the sum of the recapture and return rates on an income producing property. The rate applies only to the improved portion of the property.

Building Data Line – a synopsis or summary of salient building features expressed as a line of information on a Property Data Record.

Building Permit – an official permit giving an owner the right to build a structure.

Building Residual Technique – a capitalization technique used when land value is known and residual income to the building or improvement is capitalized to obtain the building or improvement.

Bundle of Rights – the six basic rights associated with the private ownership of property: right to use; sell; rent or lease; enter or leave; give away; and refuse to do any of these.

C

Capital Gain – the profit realized through the sale of a property if the sale price exceeds the cost of acquisition and of any improvements the seller has added.

Capitalization of Income Method – method of estimating accrued depreciation similar to the sales comparison approach except that estimated market values (appraisals) based on the income approach are used instead of comparable sales. Reliability depends on accurate data and appropriate methods.

Capitalization  Rate – any rate used to convert an estimate of future income to an estimate of market value; the ratio of net operating income to market value.

Cash-Equivalent Sale Price – an indicator of market value that is a refinement over the raw sale price, in that the effects of unusual financing arrangements and extraneous transfers of personal property have been removed. Also called adjusted sale price.

Cash Flow – an amount of money left after subtracting operating expenses and debt service from rents collected.

Cash Flow Analysis – a study of the anticipated movement of cash into or out of an investment.

Certificate of Sale – a certificate, issued to the buyer at a judicial sale, that entitles the buyer to a deed upon confirmation of the sale by the court or if the property is not redeemed within a specified time.

Certificate of Title – a document that states that the title to the property is believed to be clear based on the examination of the abstract of title for the property.

Chattel – tangible personal property.

Closing – the act of finalizing a real estate transaction that executes and delivers a mortgage or property title documents.

Closing Costs – settlement fees and expenses incurred in transferring property ownership that are paid at the real estate closing.

Closing Statement – a listing of incurred closing costs of the buyer and seller in closing a real estate transaction.

Cloud on Title – any valid claim, encumbrance, or lien that may impair the title to real property.

Coding –  the act of reproducing a description of a unique object, such as a parcel of real estate, to set of one or more measures or counts of certain of its characteristics, such as square footage, number of bathrooms, and the like.

Common Area – the total area within a property that is not designed for rental or sale, which is available for common use by all tenants and owners.

Community Property – property which is acquired by either spouse during their marriage that becomes owned by them equally.

Comparable Sales; Comparables – (1) recently sold properties that are similar in important respects to a property being appraised. The sale price and the physical, functional, and locational characteristics of each of the properties are compared to those of the property being appraised in order to arrive at an estimate of value. (2) By extension, the term “comparables” is sometimes used to refer to properties with rent or income patters comparable to those of a property being appraised.

Condemnation – (1) the process by which property of a private owner is taken for public use without his/her consent but with just compensation  (2) the right of government to prohibit the use of a structure that has been found unsafe or unfit for further use.

Condominium – a separately owned unit of real property in the same structure with other such units; the unit owners hold an undivided interest in common elements of the property, such as a lobby, swimming pool, and grounds.

Conservator – a person designated by a court to take over and protect the interests of a minor or incompetent person.
Contract – a binding agreement between two or more persons.

Contract Rent – the actual amount of rent, per unit of time, that is specified in the contract (lease).

Conversion – changing a property’s particular use or ownership, such as converting a large residence into offices.

Conveyances – legal documents that transfer ownership of property such as a deed or will.

Cooperative – a business entity, usually a corporation, that holds title to realty and that grants rights of occupancy to its shareholders by means of proprietary leases or similar devices. A cooperatively owned apartment building is legally different from a building consisting of condominium units.

Cost Approach – (1) one of the three approaches to value, the cost approach is based on the principal of substitution-that a rational informed purchaser would pay no more for a property than the cost of building an acceptable substitute with like utility. The cost approach seeks to determine the replacement cost new of an improvement less depreciation plus land value (2) the method of estimating the value of property by: (a) estimating the cost of construction based on replacement or reproduction cost new or trended historical cost (often adjusted by a local multiplier); (b) subtracting depreciation; (c) adding the estimated land value. The land value is most frequently determined by the sales comparison approach.

Cost Manual – a guide, containing pictures, specifications of structures, and cost schedules, used to help classify construction quality and estimate the cost of replacing a structure.

Curable Obsolescence – the cost to restore the loss in value caused by the obsolescence is recoverable by the investor.