Glossary - A-B, C-E, F-K, L-O, P-R, S-U, V-Z

Landlord
One who rents property to a tenant.

Landlord’s Lien or Warrant
A warrant from a landlord to levy upon a tenant’s personal property (e.g., furniture, etc.) and to sell this property at a public sale to compel payment of the rent or the observance of some other stipulation in the lease.

Landlord’s Lien
A type of lien that can be created by contract or by operation of law. Some examples are
(1) a contractual landlord’s lien as might be found in a lease agreement; (2) a statutory landlord’s lien; and (3) landlord’s remedy of distress (or right of distraint), which in not truly a lien but has a similar effect. See also ""Lien"".

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.

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.

Lease
A contract whereby the landlord grants the tenant the right to occupy defined space for a set period at a specific price (i.e., rent).

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).

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. See also “Tenant Improvements”.

Leasehold
The estate or interest a tenant has as stated in the tenant's lease.

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.

Legal Owner
The term is in technical contrast to equitable owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien. See also “Lien”.

Lessee
An individual (i.e., tenant) to whom property is rented under a lease.

Lessor
An individual (i.e. landlord) who rents property to a tenant via a lease.

Letter Of Attornment
A letter from the grantor to a tenant, stating that a property has been sold, and directing rent to be paid to the grantee (buyer). See also “Attorn”.

Letter Of Credit
A commitment by a bank or other person, made at the request of a customer, that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Letters of credit are often used in place of cash deposited with the landlord in satisfying the security deposit provisions of a lease.

Letter of Intent
An informal, usually non-binding, agreement among parties indicating their serious desire to move forward with negotiations, which outlines the general terms of a proposed lease or purchase. It becomes the basis from which a formal lease or purchase document is written.

Lien Waiver (Waiver of Liens)
A waiver of mechanic’s lien rights, signed by a general contractor and his subcontractors, that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. May also be required before the owner can receive a draw on a construction loan.

Lien
A claim or encumbrance against property used to secure a debt, charge or the performance of some act. Includes liens acquired by contract or by operation of law. Note that all liens are encumbrances but all encumbrances are not liens.

Like-Kind Property
A term used in an exchange of property held for productive use in a trade or business or for investment. Unless cash is received, the tax consequences of the exchange are postponed pursuant to Section 1031 of the Internal Revenue Code.

Limited Partnership
A type of partnership, created under state law, comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more special or limited partners who contribute capital and share in profits but who take no part in running the business and incur no liability over and above the amount contributed. See also ""General Partner"".

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. See also “Exclusive Listing Agreement”.

Listing
An employment contract between principal and agent that authorizes the agent (such as a broker) to perform services for the principal and his property.

Load Factor
That portion of the building which is shared by all tenants (ie. restrooms, enclosed stairwells) or is within the physical structure (i.e. columns) but can't be accessed by Tenants. Typical load factors are 6% to 13%. If a space is 1,000 square feet with a 13% load factor, it means the building is only 87% efficient. In real terms, that means a 1,000 Rentable square feet with zero load factor is 13% cheaper than the 13% load factored 1,000 rentable square foot space.

Long Term Lease
In most markets, this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option.

Loss Factor
What percentage of the gross area of a space is lost due to walls, elevator, etc. Rule of thumb in Manhattan is approximately 15%.

Lot
Generally, one of several contiguous parcels of land making up a fractional part or subdivision of a block, the boundaries of which are shown on recorded maps and “plats”.

Low Rise
A building with fewer than 4 stories above ground level.

Lump-Sum Contract
A type of construction contract requiring the general contractor to complete a building or project for a fixed cost normally established by competitive bidding. The contractor absorbs any loss or retains any profit.

Maker
One who creates or executes a promissory note and promises to pay the note when it becomes due..

Mandatory
A requirement that must be conformed to as specified in any written document.

Market Price
The actual selling or leasing price of a property.

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.

Market Study
A forecast of future demand for a certain type of real estate project that includes an estimate of the square footage that can be absorbed and the rents that can be charged. Also called “Marketability Study”.

Market Value
The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale with the buyer and seller each acting prudently and knowledgeably in the ordinary course of trade.

Marketable Title
A title which is free from encumbrances and could be readily marketed (i.e., sold) to a reasonably intelligent purchaser who is well informed of the facts and willing to accept such title while exercising ordinary business prudence. See also “Encumbrance”.

Master Lease
A primary lease that controls subsequent leases and which may cover more property than subsequent leases. An Executive Suite operation is a good example in that a primary lease is signed with the landlord and then individual offices within the leased premises are leased to other individuals or companies.

Mechanic’s Lien
A claim created by state statutes for the purpose of securing priority of payment of the price and value of work performed and materials furnished in constructing, repairing or improving a building or other structure, and which attaches to the land as well as to the buildings and improvements thereon.

Meeting of the Minds
When all individuals to a contract agree to the substance and terms of that contract.

Metes and Bounds
The boundary lines of land, with their terminal points and angles, described by listing the compass directions and distances of the boundaries. Originally, metes referred to distance and bounds referred to direction.

Mid-Rise
A building with between four and eight stories above ground level although in a Central Business District, this might extend to buildings up to twenty-five stories.

Minor
A person under a legal age, usually under 18 years old.

Mixed-Use
Space within a building or project providing for more than one use (i.e., a loft or apartment project with retail, an apartment building with office space, an office building with retail space).

Modified Gross Lease
Contrasted with a full service lease, a modified gross lease has the tenant paying directly some of the expenses. Typically, it is where the electric and water are seperately metered and the tenant pays directly to utility. This may be favorable in controlling expenses for frugal lessees. In comparing lease rates, make sure you consider who is responsible to pay for what.

Monument Sign
Signage that is normally not attached to the building. Often located at best street exposure for Tenant Identification.

Mortgage
A written instrument creating an interest in real estate and that provides security for the performance of a duty or the payment of a debt. The borrower (i.e., mortgagor) retains possession and use of the property.

Multiple Listing
An arrangement among Real Estate Board of Exchange Members, whereby each broker presents the broker's listings to the attention of the other members so that if a lease results, the commission is divided between the broker bringing the listing and the broker making the lease.

Net Absorption
The square feet leased in a specific geographic area over a fixed period-of-time after deducting space vacated in the same area during the same period. See also “Gross Absorption”.

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. See also “Gross Lease”.

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. (This is by the Building Owner and Manager Association - BOMA, Standard).

Net Square Footage (S.F.)
The space required for a function or staff position. Also see ""Circulation Factor and ""Usable Square Footage"".

Non-Compete Clause
A clause that can be inserted into a lease specifying that the business of the tenant is exclusive in the property and that no other tenant operating the same or similar type of business can occupy space in the building. This clause benefits service-oriented businesses desiring exclusive access to the building’s population (i.e. travel agent, deli, etc.).

Non-Disturbance Agreement
The tenant signs this to prevent himself from being evicted if the property owner does not pay its mortgage to the bank.

Non-Recourse Loan
A loan which bars a lender from seeking a deficiency judgment against a borrower in the event of default. The borrower is not personally liable if the value of the collateral for the loan falls below the amount required to repay the loan.

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”.

Notary Public
A public officer who is authorized to witness and verify certain documents (e.g., contracts, deeds, mortgages). Also, an affidavit may be sworn before this public officer.

Obligee
The person who will receive the outcome of an obligation.

Obligor
An individual who has engaged to perform an obligation to another person (i.e., obligee).

Open Listing
A listing given to any broker without liability to compensate any broker except the one who first secures a buyer who is ready, willing, and able to meet the terms of the listing, or secures the acceptance by the landlord of a satisfactory offer; the lease of the property automatically terminates the listing.

Open Space
An unimproved area of land or water, or containing only such improvements as are appropriate to the use and enjoyment of the open area, and dedicated for public or private use or enjoyment or for the use and enjoyment of owners and occupants of land adjoining or neighboring such open spaces.

Operating Cost Escalation
Although there are many variations of escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings. During the past thirty years, Landlords have developed the custom of separating the base rent for the occupancy of the leased premises from escalation rent. This technique enables the landlord to better ensure that the “net” rent to be received under the lease will not be reduced by the normal costs of operating and maintaining the property. The landlord’s definition of Operating Expenses is likely to be broad, covering most costs of operation of the building. Most landlords pass through proper and customary charges, but in the hands of an overly aggressive landlord, these clauses can operate to impose obligations which the tenant would not willingly or knowingly accept.

Operating Costs
Expenses related to the building and property. Typically includes electricity, water, gas, janitorial, parking lot sweeping, landscape maintenance, building maintenance (except major renovations), real estate taxes, insurance, and management fees. These items should be detailed in the lease document in order to avoid confusion.

Operating Expense Escalation
Although there are many variations of operating expense escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings.

Operating Expenses
The actual costs associated with operating a property including maintenance, repairs, management, utilities, taxes and insurance. A landlord’s definition of operating expenses is likely to be quite broad, covering most aspects of operating the building.

Option
A right given to purchase or lease a property upon specified terms within a specified time. If the right is not exercised, the option holder is not subject to liability for damages. If the holder of the option exercises it, the grantor of option must perform the option's requirements.

Options to renew
The right of a tenant to extend their occupancy beyond the original term. The rental rate may or may not be pre-set. Can be useful for a Tenant so they are not forced to re-locate.

Overages
This term refers to the increase in the cost to operate the property from one year over the last. If it cost $5 per foot per year (for electric, water, janitor, taxes, etc) last year, and $5.40 per foot this year, then the overages are $.40 per foot per year. The tenant would be responsible to pay this overage to the Landlord, based on the size of the space they have.

Owners Agent
A licensed Real Estate agent working to get the best deal for the Owner or Landlord. Frequently referred to as the Listing Agent.