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Real Estate Terminology

At Rollingwood Management Inc we realize some of the terms you've seen around our website, in forms, or heard in our office are not things heard in daily life.  In order to help provide some clarity we've put together a page with some key phrases and terms!  Have a question or a comment about something here on the page? Jump over to our Contact Us page and drop us a line!

Abatement

Free or reduced rent for a fixed period of time

ABOR

See Austin Board of Realtors

Accredited Buyer Representative (ABR)

The Accredited Buyer Representative® designation is held by more than 30,000 REALTORS® who work as buyers’ agents. ABR® designees complete an intensive two-day course that covers the legalities and issues surrounding representation as a buyer’s agent, as well as an elective advanced ABR® course (New Home Construction and Senior Real Estate Specialist). Students must achieve test scores of 80 percent or higher to obtain the designation. Individuals seeking the ABR® designation must be NAR® members and must verify five closed transactions in which they represented the buyer within a three-year time period. The ABR® is offered by the National Association of REALTORS®’ Real Estate Buyer’s Agent Council (REBAC®).

Austin Board of REALTORS©

The Austin chapter of the national REALTORS© organization, click here for more information about this great organization our agents and property managers belong to!

Click here to get more information!

As-Is Condition

The acceptance by the tenant of the existing condition of the premises at the time the lease is consummated, including any defects.

Assignment

A transfer by lessee of lessee’s entire estate in the property. Distinguishable from a sublease where the sublessee acquires something less than the lessee’s entire interest.

Affordable Housing

This type of housing is that of which a federal or state agency governs in an effort to offer assistance and control the rent to those who meet a certain predetermined criteria.

Amenities

Intangible and tangible features that are included in or on a property that enhance the desirability or value of the property.

Agent

An agent with a salesperson license who must work under direct sponsorship and supervision of a licensed broker in order to practice real estate. Agents may work with home buyers as a "buyer's agent" or with home sellers as a "seller's agent."

 

 

B

Base Rent

A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease.

Broker

A licensed agent who can sponsor agents below him and is responsible for said agents actions.  A broker also has completed a required amount of experience, training and testing in order to receive their license.

Buyer’s Agent

Describes a real estate agent who works for and represents a home buyer.

 

 

C

Condo/Condominium

A multi-unit building that allows for individual units to be owned by its dwellers. The common elements of this type of building are owned by all owners within the condominium.

Co-Signer

An additional signer on a lease or mortgage that is used in order to verify the identity of the principle owner or to provide a certain level of surety to the lender or landlord.

Common Area

Those areas within a building that are available for common use by all tenants or groups of tenants and their invitees (i.e. lobbies, corridors, restrooms, etc.).

Comparables or Fair Market Comparables

Lease rates and terms of properties similar in size, construction quality, age, use and are located within the same sub-market.  These are used as comparison properties to determine the fair market lease rate for another property with similar characteristics.

Customer

Is a principle in a transaction who is not represented by an agent. The customer is entitled to receive information but no advice. The Texas Real Estate Commission and NAR's Code of Ethics require agents to treat customers honesty and fairly.

Client

Is a principle in a transaction who is represented by an agent, and will receive advice in addition to honesty and fair treatment. The agent is bound to work for their principle to obtain the best results for their principle.

Certified Real Estate Brokerage Manager (CRB)

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.  CRB designees are better positioned to streamline operation, integrate new technology and apply new trends and business strategies.

Get more information here!

Certified Residential Specialist (CRS)

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.   The CRS designation is awarded to experienced REALTORS® who complete advanced training in listing and selling, and meet rigorous production requirements.

Get more information here!

Certified Residential Management Company (CRMC)

A designation provided by the National Association of Property Managers to property management companies that rank among the best in the nation!  This designation is only given out to a few companies, check to see if a CRMC company is operating in your area!

Click here for more information!

Certified Support Specialist (CSS)

A designation provided by the National Association of Property Manager to professionals that work with a NARPM member who has earned the RMP or MPM designations.  These individuals are actively engaged in supporting the companies property managers and aimed at improving the quality of their business.

Click here for more information!

Certified Maintenance Coordinator (CMC)

A designation provided by the National Association of Property Managers for maintenance coordinators showing that they’ve achiveved a higher level of quality.

Click here for more information!

Certified Residential Management Bookkeeper (CRMB)

A designation provided by the National Association of Property Managers for bookkeepers operating in the field of property management.  This shows that they’re trained and specialize in the financials of property management and are best suited to handle the unique requirements of this field.

Click here for more information!

 

 

D

Duplex

A house that was designed to house two separate individuals or families within the same house. For instance, a house that has an upstairs for one family and a downstairs for another family is considered a duplex.

Dual Representation

Dual representation takes place when one broker represents both the buyer and the seller during a single transaction. The practice was formerly known as Dual Agency. Dual Agency is now illegal in Texas, but it has been replaced by the practice called Intermediary. Special rules are in place that require the agent to provide information about the Intermediary process, and to obtain the informed written consent of both principles. One of the major benefits of the Intermediary practice is that it allows for advice to be given to the principles through an appointment process. Under the old Dual Agency advice to the principles was not permitted. Be sure to ask your REALTOR® how she and/or her team conducts business so that you'll know what to expect. 

 

 

E

Equal Housing Opportunity

The opportunity for all citizens in America to be able to live in various housing communities regardless of race, gender, age, nationality, familial status or disability.

Escrow Account

The account that a broker establishes during a real estate transaction in order to hold onto the funds until the transaction has been completed or cancelled. This assures that the purchaser has the money that is needed to successfully complete the transaction upon approval.

Eviction

A process through legal means in an effort to remove a person from their home due to a violation of the agreement, whether the dweller has not paid rent/mortgage or if they have violated another form of the agreement, such as noise disturbances.

Eminent Domain

A power of the state, municipalities, and private persons or corporations authorized to exercise functions of public character to acquire private property for public use by condemnation, in return for just compensation.

Encroachment

A situation where a property owner violates the property rights of their neighbor by building something on the neighbor’s land or by allowing something to hang over onto the neighbor’s property.  Can also be known as structural encroachment.

Encumbrance

Any right to, or interest in, real property held by someone other than the owner, but which will not prevent the transfer of fee title (i.e. a claim, lien, charge or liability attached to and binding real property).

Exclusive Agency Listing

A written agreement between a real estate broker and a property owner in which the owner promises to pay a fee or commission to the broker if specified real property is leased during the listing period. The broker need not be the procuring cause of the lease.

 

 

F

Fair Housing Act

This law is of a federal status and was put in effect to stop the discrimination that occurs in housing because of race, age, color, handicap, sex, religion, national origin and familial status.

Fair Market Value

The sale price at which a property would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Also known as FMV.

Full Service Rent

An all-inclusive rental rate that includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increase in operating expenses over the base year amount.

 

 

G

Guarantor

One who makes a guaranty or promises to pay a third party’s obligations.

Graduate, REALTOR® Institute

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.   Agents with this designation have a higher level of skill level across the entire landscape of real estate and have received in-depth training in legal and regulatory issues, technology, professional standards, and the sales process. To earn the GRI designation, REALTORS® must complete the 90-hours of coursework in GRI Real Estate Brokerage, GRI Real Estate Finance, and GRI Real Estate Marketing.

Click here for more information!

 

 

H

HUD

The U.S. Department of Housing and Urband Development was established in 1965 to develop national policies and programs to address housing needs in the U.S.  One of HUD’s primary missions is to create a suitable living environment for all Americans by developing and improving the country’s communities and enforcing fair housing laws.

Housing and Urban Development

See HUD

Hold Over Tenant

A tenant retaining possession of the leased premises after the expiration of a lease.

HVAC

The acronym for “Heating, Ventilating and Air-Conditioning”.

 

 

L

Lessee

See Tenant

Lead Based Paint Disclosure

Requirements that became effective as of 1978 to ensure that families and individuals are made aware of homes that contain lead-based paint.

Lease Renewal

The renewal of a lease once the term of the lease has expired.

Lease Term

The amount of time that is agreed upon between the landlord and tenant in which the tenant will occupy the property.

Leasing Agent

A licensed real estate agent who leases property and has the authority to sign on the behalf of the lessor.

Lessor

The landlord who has agreed for the term of the lease. 

Lease

An agreement whereby the owner of real property (i.e., landlord/lessor) gives the right of possession to another (i.e., tenant/lessee) for a specified period of time (i.e., term) and for a specified consideration (i.e., rent). Click here to see a sample of the TAR lease that Rollingwood Management uses!

Lease Agreement

The formal legal document entered into between a Landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights.  Click here to see a sample of the TAR lease that Rollingwood Management uses!

Lease Commencement Date

The date usually constitutes the commencement of the term of the Lease for all purposes, whether or not the tenant has actually taken possession so long as beneficial occupancy is possible. In reality, there could be other agreements, such as an Early Occupancy Agreement, which have an impact on this strict definition.

Leasehold Improvements

Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by Landlord.

Legal Description

A geographical description identifying a parcel of land by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion thereof that is subject to an easement or reservation.

Letter Of Intent

A preliminary agreement stating the proposed terms for a final contract. They can be "binding" or "non-binding". This is the threshold issue in most litigation concerning letters of intent. The parties should always consult their respective legal counsel before signing any Letter of Intent.

Listing Agreement

An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation.

Listing Agent

Sometimes referred to as a "seller's agent," this term describes a real estate agent who works for and represents a home seller.

 

 

M

Market Rent

The rental income that a property would command on the open market with a landlord and a tenant ready and willing to consummate a lease in the ordinary course of business; indicated by the rents that landlords were willing to accept and tenants were willing to pay in recent lease transactions for comparable space.

Master Property Manager (MPM)

A designation provided by the National Association of Property Manager to property managers who achieve the highest standard of quality and pass other set requirements.  Property managers with this designation have at least 5 years of experience as a real estate agent, over 500 unit years of experience managing properties achieved in 5 or less years, 24 hours of NARPM coursework and much more!

Click here for more information!

 

 

N

NARPM

See National Association of Residential Property Managers© below.

National Association of Residential Property Managers©

A national trade organization founded in 1988 dedicated to training, educating and connecting property managers across the nation.  This organization focuses on holding it’s property managers to the highest level of service, while providing resources for these property managers to become even better at what they do.

Click here to get more information!

Net Lease

A lease in which there is a provision for the tenant to pay, in addition to rent, certain costs associated with the operation of the property. These costs may include property taxes, insurance, repairs, utilities, and maintenance. There are also “NN” (double net) and “NNN” (triple net) leases. The difference between the three is the degree to which the tenant is responsible for operating costs.

Net Rentable Area

The floor area of a building that remains after the square footage represented by vertical penetrations, such as elevator shafts, etc., has been deducted. Common areas and mechanical rooms are included and there are no deductions made for necessary columns and projections of the building.

Normal Wear and Tear

The deterioration or loss in value caused by the tenant’s normal and reasonable use. In many leases the tenant is not responsible for “normal wear and tear”.

NAR

See description of National Associations of REALTORS®

National Associations of REALTORS®

The National Association of REALTORS® is America’s largest trade association, representing of 1.1 million members!  This membership is comprised of residential and commercial REALTORS® who are brokers, salespeople, property managers, appraisers, counselors, and others engaged in the real estate industry.  The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its Strict code of Ethics.

 

 

P

Property Management Agreement

The agreement between the landlord and the management company that discusses the details on how the property will proceed with being managed. This agreement also includes other details that pertain to criteria and payments to the management company.

Property Manager

This is the person who manages a piece of real estate that belongs to another person in exchange for compensation. Some of the duties as a property manager include keeping up with all of the accounting details, maintaining the property and collecting rent from the tenants.

Preleased

Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of a Certificate of Occupancy.

Prime Tenant

The major tenant in a building or, the major or anchor tenant in a shopping center serving to attract other, smaller tenants into adjacent space because of the customer traffic generated.

 

 

R

Renewal Option

A clause giving a tenant the right to extend the term of a lease, usually for a stated period of time and at a rent amount as provided for in the option language.

Rent

Compensation or fee paid, usually periodically (i.e. monthly rent payments, for the occupancy and use of any rental property, land, buildings, equipment, etc.

Rent Commencement Date

The date on which a tenant begins paying rent. The dynamics of a marketplace will dictate whether this date coincides with the lease commencement date or if it commences months later (i.e., in a weak market, the tenant may be granted several months free rent). It will never begin before the lease commencement date.

Residential Property

A type of leased property, containing either a single family or multifamily structure, that is available for occupation for non-business purposes.

Residential Rental Property

A type of property that derives more than 80% of its revenue from dwelling unites

Residential Management Professional (RMP)

A designation provided by the National Association of Property Managers to property managers who achieve a high standard of quality and pass other set requirements.   These property managers must have 2 years of being a real estate agent, 100 unit years of experience over 2 years, 18 hours of NARPM coursework, and much more!

Click here for more information!

Rentable Square Footage

Rentable Square Footage equals the Usable Square Footage plus the tenant’s pro rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. The pro-rata share, often referred to as the Rentable/Usable (R/U) Factor, will typically be at least 1.10 and may be higher for more inefficient buildings (such as historic rehabilitations) or for partial floors.

Rental Concession

Concessions a landlord may offer a tenant in order to secure their tenancy. While rental abatement is one form of a concession, there are many others such as increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many.

Rent-Up Period

That period of time, following construction of a new building, when tenants are actively being sought and the project is approaching its stabilized occupancy.

REALTOR®

Some brokers and sales agents choose to become REALTORS®, which means they must adhere to the National Associations of REALTORS®' (NAR) Code of Ethics and be a member in good standing of the local, state and national association. For this reason, all REALTORS® are real estate agents, but not all real estate agents are REALTORS®. 

 

 

S

Sublessee

Person who holds a sublease.

Section 8

A voucher program that increases the amount of choices that are available to families who are considered to be in the low-income category. This allows them to choose homes that are privately owned.

Security Deposit

A deposit of money by a tenant to a landlord to secure performance of a lease. This deposit can also take the form of a Letter of Credit or other financial instrument.

Slab

The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building or laid slab-on-grade in the case of a non-structural, ground level concrete slab.

Sponsoring

"Sponsoring" an agent means a broker holds the agent's real estate license and is legally responsible for the business conduct of that agent. The broker supervises the agent's activities and provides additional services and facilities in return for a portion of the agent's commission.

Seller’s Agent

The agent who lists the property for sale or lease.

Single agency

Single agency takes place when broker/agent represents either the home buyer or the home seller, but never both during a single transaction. 

Subagent

The agent who represents the owner in cooperation with the listing agent.

Senior Real Estate Specialist® (SRES®)

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.   The SRES® designation helps real estate professionals develop business-building skills and resources for specialization in the 50+ real estate market by expanding knowledge of how life stages impact real estate choices.

Click here for more information!

Seller Representative Specialist (SRS)

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.   Agents who acquire this designation are part of an elite group of trained seller client advocates equipped to effectively represent homeowners in the selling process.  SRS designees adhere to the highest level of professional ethics and business practices in delivering “client level” services with integrity.

Click here for more information!

 

 

T

Townhouse

A row of houses that are simply joined together by sidewalls.

Tenant Damages

Damages that are considered outside of normal wear and tear is done during the term of the lease.

Tenant (Lessee)

One who rents real estate from another and holds an estate by virtue of a lease.

Tenant At Will

One who holds possession of premises by permission of the owner or landlord, the characteristics of which are an uncertain duration (i.e. without a fixed term) and the right of either party to terminate on proper notice.

Tenant at Sufferance

A tenant at sufferance is the situation when a tenant of real estate continues to occupy the premises without the landlord’s consent after the lease or rental agreement between the landlord and the tenant has expired.  A tenant in this situation is also referred to as a holdover tenant.

Tenant Improvements

Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord.

Time Is Of The Essence

Means that performance by one party within the period specified in the contract is essential to require performance by the other party.

Trade Fixtures

Personal property that is attached to a structure (i.e. the walls of the leased premises) that are used in the business. Since this property is part of the business and not deemed to be part of the real estate, it is typically removable upon lease termination.

TREC

See Texas Real Estate Commission

Texas Real Estate Commission

The state agency that governs real estate practices in the state of Texas.  This agency regulates Real Estate Brokers, Sales Agents, Real Estate Inspectors, Education Providers for Real Estate and Inspection Courses, Residential Service Companies, Timeshare Developers, and Easement or Right-Of-Way Agents.  TREC requires all members to meet and maintain specific levels of education and deal with the public in a competent and honest manner.

Get more information here!

Texas Residential Leasing Specialist (TRLS) Certification

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.   Agents who acquire this designation show a dedication to providing top level service with an in-depth knowledge of the leasing process and are best equipped to help clients in the leasing process.

Click here for more information!

Texas Residential Property Manager (TRPM) Certification

A designation available from the Austin Board of REALTORS© for REALTORS© that meet the set requirements.   This certification tells property owners that the agent has the experience and knowledge to manage their property professionally.  Upon completion of this certification, property owners can rest assured that the agent has undergone rigorous coursework and has the experience necessary to professionally and knowledgeably manage owner’s residential rental property.

Click here for more information!

 

 

V

Vacancy Rate

The total amount of available space compared to the total inventory of space and expressed as a percentage. This is calculated by multiplying the vacant space times 100 and then dividing it by the total inventory.

 

 

We hope this list has helped provide some clarity on some of the tricky terms, organizations and designations impacting the renting and property management world!  Please note this list is not a legal guideline and some definitions may be incorrect or not apply to certain situations.  Check your personal lease or legal documents for accuracy.