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Glossary of Real Estate Terms
This Glossary has
been provided as a courtesy to assist you in
gathering information relative to real estate.
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Debenture (Bond):
A long-term bond or note issued by governments
and/or corporations and not secured by a
mortgage or lien on any specific property. Since
there is no specific property securing the
debenture, the ability to repay the debt is
based solely on the financial strength of the
issuer. |
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Debt Service Coverage Ratio (DSCR):
The relationship between the annual net
operating income (NOI) of a property and the
annual debt service of the mortgage loan on the
property. Both Lenders and Investors calculate
this ratio to assist them in determining the
likelihood of the property generating enough
income to pay the mortgage payments. From the
lender's viewpoint, the higher the ratio, the
better. |
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Debt Service:
The periodic payment (monthly, quarterly, or
annually) necessary to pay the interest and
principal on a loan which is being amortized
over a longer term (usually 25-30 years). |
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Dedicate:
To appropriate private property to public
ownership for a public use. |
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Deed:
A legal instrument transferring title to real
property from the seller to the buyer upon the
sale of such property. |
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Deed In Lieu Of Foreclosure:
A deed given by an owner/borrower to a lender to
satisfy a mortgage debt and avoid foreclosure.
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Deed Of Trust:
An instrument used in many states in place of a
mortgage by which real property is transferred
to a trustee by the borrower (trustor), in favor
of the lender (beneficiary), to secure repayment
of a debt. |
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Default:
The general failure to perform a legal or
contractual duty or to discharge an obligation
when due. Some specific examples are: 1) Failure
to make a payment of rent when due. 2) The
breach or failure to perform any of the terms of
a lease agreement. |
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Defeasance:
In defeasance, the lender replaces the cash
flows of the original loan with actual Treasury
Securities. The borrower pays the lender enough
money to buy these securities and the lender
goes out in the bond market and buys the right
combination of bonds. After this is done, and
the lender has a security interest in the
treasuries, the property is released as
collateral for the loan and the treasuries
become the new loan collateral. |
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Deficiency Judgment:
Imposition of personal liability on a borrower
for the unpaid balance of mortgage debt after a
foreclosure has failed to yield the full amount
of the debt. |
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Demising Walls:
The partition wall that separates one tenant’s
space from another or from the building’s common
area such as a public corridor. |
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Design/Build:
A system in which a single entity is responsible
for both the design and construction. The term
can apply to an entire facility or to individual
components of the construction to be performed
by a subcontractor; also referred to as
“design/construct”. |
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Depreciation:
Spreading out the cost of a capital asset over
its estimated useful life or a decrease in the
usefulness, and therefore value, of real
property improvements or other assets caused by
deterioration or obsolescence. |
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Discount Rate:
The rate of interest charged to banks who buy
money from the Federal Reserve System. An
increase in the rate not only discourages the
banks from borrowing, but it also serves as a
signal that interest rates are probably going to
increase. Also, a compound interest rate used to
convert expected future income into a present
value income. |
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Distraint:
The act of seizing (legally or illegally)
personal property based on the right and
interest which a landlord has in the property of
a tenant in default. |
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Dollar Stop:
An agreed dollar amount of taxes and operating
expense (expressed for the building as a whole
or on a square foot basis) over which the tenant
will pay its
prorated share of increases. May be
applied to specific expenses (e.g., property
taxes or insurance). |
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