Real Estate Glossary

– A balloon mortgage is a mortgage that matures with an outstanding balance at the end of the term.

– Board approval is a condition in a co-op's bylaws that requires the seller to obtain the board's approval as a prerequisite to transferring shares or, in the case of a condominium, obtaining a waiver of the right of first refusal.

– Building codes are regulations established by the state or city government that detail the structural requirements for a building.

– Bylaws are the rules by which a cooperative corporation or condominium association operates.

– A Cancellation Clause is a provision in a lease or other contract that gives one or more of the parties to the lease the right to terminate the obligations of the party or parties under the lease upon the occurrence of the condition or contingency set forth in the clause.

– A capital improvement is a permanent improvement to real property that typically extends the useful life and value of the property.

– A Certificate of Occupancy ('CO') is a document issued by a government agency certifying that a building is ready and suitable for occupancy (also known as a 'TCO' or Temporary Certificate of Occupancy).

– Co-brokerage is an agreement between two brokerage firms to share listings and commissions. This is typically used when one of the brokers is the exclusive listing agent for the seller and the other broker represents the buyer.

– Collateral is the security given in exchange for a loan. It can be taken by the lender if the loan goes unpaid.

– A commitment letter is a letter issued by a lending bank legally obligating it to provide funds as specified, subject to written terms and conditions.

– Usually, a condo refers to a residential cooperative that operates under 'condominium-style' rules (alternatively, this term refers to a hybrid form of co-op/condo ownership designed to shelter income from, for example, commercial space owned by the building).

– A condominium is an apartment building in which each unit owner owns his or her own apartment plus a percentage of ownership in the common areas of the entire property. Each owner receives a unit deed as proof of this ownership.

– Unlike cooperatives, condominiums are owned outright as actual property. At closing, the buyer receives a deed to the condominium. Each owner is billed directly and is responsible for making individual real estate tax and mortgage payments, if any. Common charges for maintenance and upkeep are billed to owners on a monthly basis.

– A contract, also known as a purchase and sale agreement, is a written agreement between the seller and the buyer in which the buyer agrees to purchase certain real estate and the seller agrees to sell on the terms and conditions set forth therein.

– Conversion is a change in the nature or status of property. Example: A rental building may be converted to cooperative or condominium ownership. A commercial loft building may be converted to condominiums.

– A cooperative is a corporation that owns a building. Buyers receive shares in the corporation and a proprietary lease for their apartment.

– Co-op apartments represent approximately 70% of all resident-owned real estate in Manhattan. Instead of purchasing the apartment outright, the buyer of a co-op purchases a certain number of shares in a corporation. These shares entitle the buyer to a proprietary lease that confirms the buyer's right to occupy a specific apartment. Tenants/shareholders of a co-op pay monthly maintenance based on the number of shares to cover real estate taxes, the building mortgage, employee salaries, and general building maintenance.

– A covenant is an agreement written into a deed promising to do or not to do certain acts or prescribing certain uses or non-uses of the property.

– A deed restriction is a restriction imposed in a deed for the purpose of limiting the use of the property.

– Default is an act by either the buyer or the seller that breaches the contract of sale and gives rise to a claim for damages.

– Earnest Money, also known as a deposit or down payment, is made by a buyer of real estate as evidence of good faith.

– An easement is an interest in land/property owned by another that entitles the holder to a specific use or enjoyment.

– Escrow is the means by which money (a deposit or down payment) is held in trust by one person for another to secure the performance of an agreement. Typically, in a residential real estate sale, the seller's attorney is the 'escrow agent' for the earnest money that secures the deal until closing.

– An Exclusive Right to Sell Agreement is an agreement between a broker and a seller that designates the broker as the sole representative of the seller. Under this agreement, a commission is due to the broker even if the unit is sold directly by the owner.

– A Financing Loan is secured by personal property. The shares and lease of a cooperative corporation constitute such personal property. Real estate agents often refer to these financing loans as mortgages, although technically they are not.

– Fixtures are personal property that is attached to land or improvements so as to become part of the real property.

– A Flip Tax is a tax levied by a cooperative or condominium association on either the buyer or seller upon transfer of ownership.

– The Grantee is the party to whom title to real property is transferred.

– A Landmark is a designation given to a building that places it under protection for the purpose of preservation.

– A Lien is a legal right or claim against specific property that remains with the property until a debt is paid.

– A Listing is the term used by brokers for an apartment for sale after it has been 'listed' by the broker in their system.

– A Listing Agent, also known as an exclusive broker, is the broker who represents the seller's interests.

– With large open spaces and high ceilings, loft buildings are typically found in former commercial manufacturing and office districts. As a result, they are more prevalent in downtown Manhattan and parts of Brooklyn, although many new loft-style apartments are being developed throughout the city.

– Among the most affordable housing options in New York, low-rises are five or six-story buildings, usually without elevators or doormen, and with few, if any, amenities.

– Newer in vintage, today's modern towers offer sweeping views from very high floors, with floor-to-ceiling glass and state-of-the-art systems and amenities.

– Maintenance is the monthly fee paid by the co-op's tenants/shareholders to cover the building's operating expenses, real estate taxes, and debt service on the building's underlying mortgage.

– Fair market value is the most probable price that a property should fetch if it were offered for sale in the open market for a reasonable period of time, with both the buyer and seller being aware of current market conditions and neither being under any duress.

– A mortgage broker is a real estate professional who represents a number of banks that wish to issue mortgages. This person meets with a client, assists with the mortgage application, and handles the mortgage process on behalf of the borrower and the bank. Typically, the mortgage broker is paid a fee by the bank for this service.

– Net worth is your assets minus your liabilities. Liquid net worth (that which is cash or readily convertible to cash) is what cooperatives focus on.

– An Offering Plan, also known as a Prospectus, is a document issued by a sponsor in the process of converting a building to cooperative or condominium ownership (or developing a new building). Its purpose is to provide full disclosure of all data relevant to evaluating an investment in the property.

– Points are a payment made to a bank in exchange for issuing a mortgage. They are usually based on a percentage of the loan amount.

– Built after World War II, post-war buildings offer spacious, well-planned apartments with L-shaped living areas, wide picture windows, good closets and air conditioning. They rarely exceed 20 stories.

– A Power of Attorney is a written instrument duly signed and executed by a person authorizing an agent to act on his or her behalf to the extent specified in the instrument.

– A Pre-payment Clause is a clause in the mortgage that gives the mortgagor the privilege of paying off the mortgage debt before it is due.

– Built before World War II, prewar homes tend to have larger and wider rooms and often feature fireplaces, hardwood floors, high ceilings and crown molding.

– A Proprietary Lease is the lease issued by a cooperative corporation to each unit owner that establishes the right to occupy a specific apartment in accordance with the policies established by the building.