BACKFILL the replacement of excavated earth into a hole or against a structure.f
BACKUP CONTRACT a contract to Buy real estate that becomes effective if a prior contract fails to be consummated.
BALANCE, PRINCIPLE of In real estate appraisal, there is an optimal mix of inputs that, when combined with land, will result in the greatest land value. Inputs, or factors of production, include labor, capital, and entrepreneurship.
BALANCE SHEET A financial statement in table form showing assets, liabilities, and equity, in which assets equal the sum of liabilities plus equity.
BALLOON MORTGAGE A mortgage with a balloon payment.
BALLOON PAYMENT A large payment due on a loan. Generally a balloon payment is required when regular monthly or quarterly payments have not covered both the increase due and the principal of the loan
BAND OF INVESTMENT An income property appraisal technique where the overall interest rate is derived from weighting mortgage and equity rates.
BANKRUPT The condition when one is found to be unable to repay one?s debts by a court having proper jurisdiction. The bankruptcy may be one of two types; one that is petitioned g\by the debtor (voluntary) or petitioned by creditors (involuntary).
BASELINE Part of the Rectangular Survey or Government Rectangular Survey method of land description.
BASE PERIOD A point of time that serves as a benchmark for reflecting the change in an index.
BASE RENT A set amount used as a minimum rent in a lease which also employs a percentage or other allocation for additional rent.
BASE YEAR The year upon which a direct expense escalation of rent is based. See also "Escalation Clause".
BASIC INDUSTRY MULTIPLIER in economic base analysis, the ratio of total population in a local area to employment in basic industry. Basic industry is considered to be any concern which attracts income from outside the local area.
BASIS (TAX) the point from which gains, losses, and depreciation deductions are computed.
BASIS POINT one 100th of 1%.
BEARER INSTRUMENT a security that does not indicate the owner; payable to whoever presents it.
BEDROOM COMMUNITY a residential community in the suburbs, often near an employment center, but itself providing few employment opportunities.
BEFORE-AND-AFTER-RULE in an eminent domain award, many jurisdictions appraise the property value before the taking, then the property value after the taking, consideringenhancement or injury to the property that was the result of condemnation.
BEFORE-TAX CASH FLOW cash flow prior to deducting income tax payments or adding income tax benefits.
BEFORE-TAX EQUITY REVERSION same as after-tax proceeds from resale, except it does not consider income taxes
BEFORE-TAX INVESTMENT VALUE The sum of the present values of the mortgagor and mortgagee of a property.
BELOW GRADE Any facility or part of a facility located underground or below the surface grade.
BELOW-MARKET INTEREST RATE (BMIR) In some government-subsidized housing, the owner is charged a low interest rate with the requirement that savings be passed on to tenants in the form of reduced rent.
BENCHMARK A permanently affixed mark that establishes the exact elevation of a place; used by surveyors in measuring site elevations, or as a starting point for surveys.
BENEFICIARY The person who receives or is to receive the benefits resulting from certain acts.
BEQUEATH To specify by will the recipient of personal property. Compare devise.
BEQUEST That personal property given by the terms of a will.
BETTERMENT An improvement to real estate.
BIANNUAL Occurring twice a year. Same as semiannual. Contrast with biennial.
BIENNIAL Occurring every 2 years.
BILATERAL CONTRACT A contract under which each party promises performance.
BI-LEVEL A house built on 2 levels in which the main entrance is situated above the lower level but below the upper level.
BILL OF ASSURANCE The name given, in some states, to the total collection of restrictive covenants that apply to a group of contiguous lots.
BILL OF SALE A written instrument given to pass title of personal property from a seller to a buyer. Used when furniture and portable appliances are sold.
BINDER An agreement, accompanied by a deposit, for the purchase of real estate, to evidence good faith on the part of the purchaser.
BI-WEEKLY LOAN A mortgage which requires principal and interest payments at two-week intervals. The payment is exactly half of what a monthly payment would be. Over a year's time, the 26 payments are equivalent to 13 monthly payments on a comparable mortgage loan. As a result, the loan will amortize much faster than loans with monthly payments.
BLANKET MORTGAGE A single mortgage that covers more than one parcel of real estate.
BLEEDING A PROJECT (1) In new construction, overstating expenses and fees so as to divert a larger than normal amount of the project costs to the developer's profit. (2) Managing an existing piece of real estate so as to obtain the highest possible current income from it, to the extent that many normal operating expenses are forgone.
BLENDED RATE An interest rate, applied to a refinanced loan, that is higher than the rate on the old loan but lower than the rate offered on new loans.
BLIGHTED AREA A section of a city in which a majority of the structures are dilapidated.
BLIND POOL An investment program in which monies are invested into an association without investors knowing which properties will be purchased.
BLOCKBUSTING A racially discriminatory and illegal practice of coercing a party to sell a home to someone of a minority race or ethnic background, then using scare tactics to cause others in the neighborhood to sell at depressed prices.
BLUEPRINT A detailed set of plans used as the guide for construction of a building.
BLUE-SKY LAWS State laws requiring the offeror of securities to give full disclosure, and register the offering as required by federal and state law.
BOARD OF EQUALIZATION A government entity whose purpose is to assure uniform property tax assessments.
BOILER PLATE Standard language found in contracts. Preprinted material.
BONA FIDE In good faith, without fraud.
BOND A certificate that serves as evidence of a debt and of the terms under which it is undertaken.
BOOK VALUE The carrying amount of an asset, as shown on the books of a company.
BOOT Unlike property included to balance the value of like properties exchanged.
BOTTOMLAND (1) Low land near a river, lake, stream, which is often flooded. (2) Land in a valley or dale.
BOUNDARY Same as property line.
BOY Beginning of year.
BREACH OF CONTRACT A violation of the terms of a legal agreement; default. Breach of contract allows the non-breaching party to rescind the contract, sue for damages, or sue for performance of the contract.
BREACH OF WARRANTY The failure of the seller of real property to pass title as either expressed or implied by law in the conveyancing document.
BREAK-EVEN POINT The amount of rent or the occupancy level needed to pay operating expenses and debt service. Also called default point.
BRIDGE LOAN Mortgagee financing between the termination of one loan and the beginning of another loan.
BROKER A state-licensed agent who, for a fee, acts for property owners in real estate transactions, within the scope of state law.
BROKERAGE (1) The business of being a broker. (2) The commission received by a broker for his services.
BUDGET MORTGAGE A mortgage that requires monthly payments for taxes and insurance in addition to interest and principal.
BUFFER A strip of land established as a transition between distinct land uses. May contain natural or planted shrubs, walls or fencing, singly or in combination.
BUILDERS AND SPONSORS PROFIT AND RISK ALLOWANCE (BSPRA) an amount above the cost of apartments that is allowed to be included in the project cost for purpose of determining the loan amount in certain government-sponsored programs.
BUILDER WARRANTY A guarantee on the quality of construction offered by the developer or building contractor.
BUILDING CAPITALIZATION RATE in appraisal, the capitalization rate is used to convert an income stream into one lump sum value. The rate for the building may differ from that for the land because the building is a wasting asset.
BUILDING CLASSIFICATIONS Class "A" Building has excellent location and access to attract the highest quality tenants. Building must be of superior construction and finish, relatively new or competitive with new buildings, and providing professional on-site management. Class "B" Building with good location, management, construction land tenancy. Can compete at low end of Class A. Class "C" Generally an older building with growing functional land/or economic obsolescence. Class "D" An older building in need of extensive renovation as a result of functional obsolescence or deterioration.
BUILDING CODE A set of regulations established by local governments/city ordinance regulating the design, materials and construction of buildings.
BUILDING LINE A line fixed at a certain distance from the front and/or sides of a lot, beyond which the building may not project.
BUILDING LOAN AGREEMENT an agreement whereby the lender advances money to an owner at specified stages of construction.
BUILDING PERMIT permission granted by a local government to build a specific structure at a particular site.
BUILDING RESIDUAL TECHNIQUE an appraisal technique whereby income to land is subtracted from net operating income to result in the building income. Building income is capitalized into building value.
BUILDING RESTRICTIONS provisions in building codes that affect the orientation, size, and appearance of a building.
BUILDING STANDARD A list of construction materials and finishes used in building out office space for a tenant that the landlord contributes as part of the tenant improvements. Examples of standard building items are: doors, partitions, lights, floor covering, telephone outlets, et. May also specify the quantity and quality of the materials to be used and often carries a dollar value.
BUILDING STANDARD PLUS ALLOWANCE One of the three arrangements often used for financing tenant improvements (finishing out office space to accommodate a tenant such as walls, doors, carpeting, etc.) Under this arrangement, the landlord lists in detail all materials and costs to make the premises suitable for occupancy and provides a negotiated allowance for the tenant to customize or upgrade materials.
BUILD-OUT The cost of configuring and finishing new or relet space in accordance with a tenant?s specifications.
BUILD-TO-SUIT An arrangement whereby a landowner offers to pay to construct on his or her land a building specified by a potential tenant, and then to lease land and building to the tenant.
BUILT-INS Appliances, machinery, and other equipment that are constructed as part of a building rather than left freestanding and moveable.
BULLET LOAN Also known as a Construction Loan. Any of a variety of short-term (generally five to seven years) financings provided by a lender to a developer to cover the costs of construction and lease-up of a new building with the expectation that it would be replaced by long-term (or permanent) financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.
BUNDLE OF RIGHTS THEORY The theory that ownership of realty implies a group of rights such as occupancy, use and enjoyment, and the right to sell, bequeath, give, or lease all or part of these rights.
BUREAU OF LAND MANAGEMENT An agency of the U.S. Department of the Interior that oversees the management of much of the land owned by the U.S. government, particularly national forests and other relatively undeveloped land.
BUSINESS DAY A standard day for conducting business. Excludes weekends and holidays.
BUSINESS RISK The uncertainty associated with the possible profit outcomes of a business venture.
BUY-BACK AGREEMENT A provision in a contract under which the seller agrees to repurchase the property at a stated price upon the occurrence of a specified event within a certain period of time.
BUY DOWN (1) The action to pay additional discount points to a lender in exchange for a reduced rate of interest on a loan. The reduced rate may apply for all or a portion of the loan term. (2) A loan that has been bought down by the seller of the property for the benefit of the buyer.
BUYER'S BROKER An agent hired by a prospective purchaser to find an acceptable property for purchase. The broker then represents the buyer and negotiates with the seller in the purchaser's best interest.
BUYER'S MARKET A situation where buyers have a wide choice of properties and may negotiate lower prices. Often caused by overbuilding, local population decreases, or economic slump.
BUY-SELL AGREEMENT A pact among partners or stockholders under which some agree to buy the interests of others upon some event.
BYLAWS A set of regulations by which an organization conducts its activities.