Real Estate Glossary Terms Beginning With – S

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Terms Beginning With - S

Property Development & Investment Glossary, Terms & Definitions

S corporation

A corporate ownership arrangement with minimal liability. It is not, however, a separate taxable company; so, income and losses are taxed through stockholders.

A small domestic corporation that has chosen to pay taxes more like a partnership (designated IRS Form 2553). The S corporation, which used to be called a subchapter S corporation, lets a business run in the form of a corporation without having to pay a corporate tax. This way, the double taxation that comes with corporate ownership can be avoided. Stockholders have to pay taxes on their share of the company's income, whether or not they get any of it. In the same way, stockholders can report and deduct their share of the ordinary losses of the company on their own personal tax returns. Even though a S corporation can make as much money as it wants, it can't have more than 100 shareholders.

S corporations are not subject to the corporate alternative minimum tax or the rule that requires most corporations to report their gain or loss on liquidating sales and distributions as if the assets had been sold. Other major benefits of a S corporation include limited personal liability, easy transferability of ownership shares, centralized management, and relative ease of formation.

The main problem with it is that losses can only be passed on to shareholders in an amount equal to the cash paid for the stock plus any loans made to the company. So, the best way to use a S corporation to own real estate investments is for projects that aren't meant to be tax shelters.

Safe harbor rule

1. An area that is safe. For instance, the IRS has given real estate brokers certain rules to follow if they want to treat their salespeople as independent contractors. As long as brokers meet these conditions, they are in a "safe harbor" and the IRS can't go after them for not taking taxes out of their employees' paychecks.

2. IRS rules for a delayed 1031 exchange, in which an intermediary can hold title until the replacement property is found and bought within a set amount of time.

Sale

The custody and right of use of a particular object of value to both parties is transferred from one entity to another for a fee.

Sale and lease back

An investor purchases a property and leases it back to the seller, which is becoming more common.

Sale by the acre

The exact size of the land for sale is written in the sales contract and the instrument of conveyance (for example, 269 acres). Under a "sale-by-the-acre" contract, neither the buyer nor the seller has to worry about having too much or too little.

When selling a large amount of land, it is sometimes easier to say "269 acres more or less" instead of the exact amount (i.e., a sale in gross). In this case, if the exact number of acres conveyed was just a little bit different, neither party would get any money. But if there is an unusually large surplus or deficit, a court could give the person who was hurt equitable relief.

The real estate sales contract and all documents that follow must have a correct legal description.

Sale leaseback

A commercial financing approach in which the property owner sells it to an investor, who subsequently leases it back to the original owner.

A way to get money for real estate in which the owner sells the property to an investor or lender and then rents it back. Most of the time, a full-net lease is used, which lasts for a long enough time for investors to get their money back and make a fair profit on the investment. The arrangement lets the original property owners "pull out" their equity from the property, and the rents paid to the investors are fully deductible expenses in the year they are paid.

So, a seller/lessee gets many benefits, such as keeping possession of the property while getting the full sales price and, in some cases, keeping the right to buy the property back at the end of the lease; getting the money that was stuck in equity; keeping an appreciating interest in real estate that can be used to make money by subleasing or mortgaging the leasehold; and getting a tax deduction for the full amount of the rent, which is the same as taking depreciation. A lease also shows up as an indirect liability on a company's balance sheet, while a mortgage shows up as a direct liability and makes it harder for the company to get financing in the future.

The investor-landlord gets a fair return on their investment in the form of rent during the lease term. They also get to own a depreciating asset that is already being used by a reliable tenant. The investor is buying a stream of guaranteed income that may be protected by using depreciation allowances correctly, and the risk can be managed by the amount of rent the investor needs.

A sale-leaseback-buyback is a type of lease that gives the renter the option to buy the property at the end of the lease term. But care must be taken to set the buyback price at the fair market value at the time of sale. If not, the arrangement will be seen as a long-term installment mortgage, and the Internal Revenue Service will not allow any tax benefits that might have been enjoyed during the lease term. 

A property owner/user simultaneously sells the property to a buyer and leases it back from the buyer as a manner of financing needed real estate.

Sale of leased property

A deal in which the owner of a property who has rented it to someone else can sell it to someone else. The buyer, on the other hand, has to follow the terms of the existing lease. The sale deed usually says, "Subject to existing leases and rights of current tenants." This means that the seller cannot give the buyer actual possession of the property. Unless the seller has reserved the lease rents, the buyer has the right to collect rent due after the sale and to use any right of forfeiture for nonpayment of rent given in the lease.

Sales associate

Working for a broker as a licensed salesperson or broker.

Sales contract

A contract between a buyer and a seller in which the conditions of a sale are agreed upon.

Sales kit

A collection of information about available property. The kit is chosen and organised to acquaint the salesperson with the property being presented to a prospect as well as to assist the prospect in visualizing the property. The sales kit could be a small loose-leaf book with typewritten pages, a large loose-leaf book with maps and pictures, or an elaborate zippered briefcase containing photographs, building plans, maps, and other statistical data. Licensees are increasingly packaging the information into a slide presentation that is emailed to the buyer or placed on a Web site with a special access code for the prospective buyer.

Sales-assessment ratio

The relationship between how much a property is worth and how much it sells for.

Salesperson license

A state-granted license to work in real estate brokerage as an employee or agent of a real estate broker.

Salesperson(s)

Any licensed individual who, for compensation or valuable consideration, is directly or indirectly employed by a licensed real estate broker to perform the following acts: sell, offer to sell, buy, offer to buy; negotiate the purchase, sale, or exchange of real estate; lease, rent, or offer to rent any real estate, or negotiate leases thereof or improvements thereon. There are rules governing the licensing of those who sell, rent, or manage real estate in all fifty states. Multiple states have done away with the salesperson's license and now require all licensees to be broker-qualified. Most states, although not all, require the salesperson to work for a certain period of time under the supervision of a licensed real estate broker or other authorized individual.

A salesperson's license is granted based on the applicant's character, honesty, and ability, which must include an adequate understanding of real estate law, conventions, and usage. In addition, a number of states now mandate a criminal record check and/or fingerprinting.

In general, license rules differentiate between the real estate broker and the salesperson and limit the activities of the latter. A salesperson cannot, for instance, serve as an agent for another party, nor may they list or advertise property under their own name. Only those obligations allocated to them by the supervising broker may be carried out by salespeople.

Brokers may hire salespeople as either employees or independent contractors. The agreement between broker and salesperson should be documented in a formal contract that outlines their respective obligations and responsibilities. Whether a broker employs a salesperson or the salesperson operates as an independent contractor under the broker influences the broker's relationship with the salesperson and the broker's obligation to pay and withhold taxes on the salesperson's earnings.

Salvage value

1. For pre-1981 property, the estimated amount for which an asset can be sold at the end of its useful life. Because it provides a floor below which the improvement cannot be depreciated, the salvage value of an asset (improvement) limits the total amount of claimable depreciation.

2. The worth of a structure that will be relocated to another location. Typically used in highway condemnations to clear large areas.

The sum realized at the end of an asset's useful life when it is sold for the last time.

Sample

A collection of observations selected from a larger body of data (referred to as a population or universe) that are assumed to be representative of the larger body.

Sandwich lease

A sublease arrangement in which the original lessee collects payment from the new lessee and pays rent to the landlord in accordance with the terms of the previous lease agreement.

A leasehold estate in which the sandwich party rents the property from the fee owner or another lessee and then sublets it to the tenant in possession. This gives the sandwich party a middle, or "sandwich," position. The sandwich party rents from one party and gives rent to another. Because of this, the sandwich party is neither the free owner of the property nor the person who uses it in the end. It's a lease that is part of three or more leasehold interests in a piece of property.

When a lessee sublets his space, he becomes a lessor and has a lease.

Sanitary sewer system

A sewer system that only transports domestic water, typically using an underground pipe or tunnel to transport wastes and effluents.

Satellite city

A rare term referring to independent municipalities that are distinct from the larger city and are commonly referred to as suburbs.

Satellite tenant

A smaller shopping centre tenant who is relatively reliant on the ability of a larger anchor or prime tenant to attract business into the centre, such as a small shoe repair shop in a centre with a major department store.

Satisfaction

A debt or obligation, such as a judgment, must be paid. Satisfaction or fulfilment occurs when the vendee pays in full under a contract for deed and the vendor transfers legal title.

Satisfaction of mortgage

When a mortgage is paid in full, the mortgagee issues a certificate. The mortgage is "satisfied" when the debt secured by it is paid in full. This is a mortgage discharge or release, or a satisfaction piece. It describes the mortgage, specifies where it is recorded, certifies that it has been paid, and agrees to the discharge of record of the mortgage. Clear record title is almost as important as clear actual title, and in some real estate transactions, it may be more important. As a result, evidence of satisfaction must be documented.

Save harmless

To protect someone from loss, harm, or third-party claims by indemnifying them.

Savings and Loan Association (S & L)

A finance company that accepts deposits from members and makes real estate loans.

A savings association is a type of financial organization whose main goal is to encourage people to save money and buy their own homes. Depositors get interest on their money, and the interest rate is often higher than what commercial banks offer. Some of these deposits are put into mortgage loans for homes, which helps more people buy or fix up their homes. Savings associations take part in the market for home loans and mortgages.

The federal government or the state where the savings association is located must give all of them a charter. The Federal Reserve Board is in charge of setting rules for associations on a national level. All deposits at federal savings and loan associations and federal savings banks are covered by the Federal Deposit Insurance Corporation (FDIC).

Most savings associations are local because they are usually owned and run by the people who use them. Some capital stock and mutual associations, on the other hand, are big, statewide groups with hundreds of offices and billions of dollars in assets.

Even though savings associations have moved from a regulated savings market to a deregulated savings market, their main goal is still to give loans for real estate as well as repairs, construction, and improvements to homes. Associations offer many new savings accounts and services, such as consumer loans, trust services, debit and credit cards, and checking accounts that pay interest.

Historically, a depository institution specializing in residential mortgage loans. S&Ls today range in personality from mortgage lending experts to being extremely comparable to commercial banks.

Savings association insurance fund (SAIF)

A fund that used to protect the money that people put into savings and loan associations. In 2005, SAIF and the Bank Insurance Fund (BIF) were combined to make the Depositors Insurance Fund, which is an insurance fund (DIF).

Savings banks

Historically endowed with greater investment authority than S&Ls, the two institutional structures are now nearly indistinguishable.

At first, they were set up by state charters to provide safe deposit boxes for workers who were paid in cash. Most of them were owned by their depositors, who got dividends instead of interest, and most of them stayed in the northeast of the country. By the middle of the 1980s, groups of troubled savings and loan associations were given federal savings bank charters as a way to keep them from going bankrupt. Like commercial banks, banks with federal charters are required to have deposit insurance through the Depositors Insurance Fund and the FDIC. If they are eligible, state charters can join the federal deposit insurance fund.

Savings incentive match plan for employees (SIMPLE)

Self-employed individuals can also benefit from this sort of contribution savings plan, which is designed for those with lower self-employment income. If your company has less than 100 employees, SIMPLEs can be set up as individual retirement accounts (IRAs) or 401(k) plans, depending on your needs. Up to $8,000 in self-employment earnings can be deducted from SIMPLE deposits. The SIMPLE cap was raised to $20,000 in 2005 and then to $30,000 in 2007. When a company matches all of an employee's remuneration, such contributions are fully vested at the time they are made.

Scale

The link between a distance on a map, chart, or image and its equivalent distance on Earth.

Scarcity

A shortage of some kind of real estate that can't be easily fixed. When demand is higher than supply, value goes up because of scarcity.

Scenic easement

The right to keep a piece of land in its natural state. For example, the state can get a "scenic easement" over a nice piece of property through a "condemnation proceeding" to protect its beauty and, in effect, stop a developer from building on it. To keep the view, a landowner might buy a scenic easement over a neighbor's land.

Some owners of large pieces of land with natural or scenic beauty try to give a scenic easement over part of their land to the county or state because their taxes and assessments have gone up so much. If the landowner's gift is accepted, he or she may be able to get a tax break for being charitable and a lower real estate tax assessment. For income tax purposes, you can get a charitable deduction for giving a scenic easement or other partial interest in real estate that will be used for public enjoyment, preserving history, or keeping wild areas wild. The Federal Highway Beautification Act gives states incentives to buy scenic or open-space easements to protect the view of historical sites or unusual scenery.

Schedule

The scheduled dates for carrying out tasks as well as the dates for meeting milestones.

Scheduled gross income

The entire rental space multiplied by the property's rental rate.

Schematic design

Following a site survey and meetings with the architect's client, a design for the building programme is created. The client's demands and specifications, as well as local zoning rules and the anticipated building budget, are thoroughly examined.

Schematics

Preliminary architectural drawings and sketches are often made during the planning stages of a project. They are basic layouts that don't include all of the final design details. Schematic drawings may include a site plan, a plan with dimensions for each typical unit, elevations, a typical lobby and floor, mechanical facilities, and commercial-use areas. Architects' plans for a building or development are often the first thing that developers use to get the word out.

Scope

The total value of the items and services to be supplied by the project.

Scope change

Any alterations to the project's scope. A change in scope nearly always necessitates an adjustment to the project's cost and/or timetable.

Scope of authority

A principle of agency law that holds principals accountable to third parties for all wrongdoings committed by their agents in the course of conducting the principal's business. It is not required that the principal actually sanction the act; it suffices if the agent had apparent (ostensible) or implied permission to act on the main's behalf. The principal is not accountable for conduct of the agent committed beyond the limits of the agent's authority, and the broker cannot collect for services given outside of that authority.

In certain governments, an act is within the scope of power if it largely served the principal's interests rather than the agent's. A third party who knows he is interacting with an agent is obligated to determine the scope of the agent's authority.

The seller of real property is liable for affirmative misrepresentations made by the broker within the agent's area of authority, even if the seller was uninformed that the broker made them. For instance, when the broker is aware of a deficient condition in the house (such as a weak foundation), the innocent sellers are typically accountable to the buyer if the broker fails to disclose the fault. This is due to the fact that the sellers are considered as if they were aware of the agent's knowledge.

Seal

A metal die that makes a raised impression on paper. This can be used to prove the authenticity of a document or a signature, like with a corporate or notary seal. The name of the company, the date, and the state where it was founded are all written on the corporate seal. After a signature, the letters L.S. are sometimes used. This stands for "locus sigilli," which means "under seal" or "in place of seal" in Latin.

In the early days of common law, a seal was used instead of writing out the terms of a contract. In most states, the common-law effect of this seal has been taken away, except as a way to prove who you are. So, if it comes down to it, a party must still show that they paid something. It is a good idea to ask for the seal of a company that is signing a contract. The seal shows that the document was signed by a company's authorized officers or agents. Under the Uniform Commercial Code, using a seal has no effect on the transaction. It "does not constitute the writing," and the law about sealed instruments does not apply.

Sealed and delivered

A phrase that means a transferor has been treated well enough, as shown by the transferor's willingness to hand over the property. The word "sealed" gives the document more weight because, under old conveyancing law, an official seal stood in for "consideration." Most of the time, the term is just a formality and has no legal weight.

Seasoned loan

A loan obtained by someone who has a stable and consistent payment history under the terms of the loan. The term indicates that the mortgage or land contract is not new and may be a good buy risk.

A mortgage loan with a large number of installments received.

Second

1/60 of a degree or 1/3600 of a circle, as used in a mete-and-bounds legal description. The symbol 11• denotes a second. For example, an angle of 97° 00' 25" would read "ninety-seven degrees, zero minutes, twenty-five seconds."

Second mortgage

A second mortgage lien, like a first mortgage lien, is secured by the borrower's property that has been pledged as security for the loan. The lender holding a second mortgage, on the other hand, is second in line behind the holder of the first mortgage to collect the proceeds of a foreclosure auction. As a result, the second lender is in a riskier situation.

A mortgage or trust deed that comes after a first mortgage. Usually, it's an extra loan on top of the first mortgage that the borrower takes out when they need more money. The amount of risk is based on the difference between the property's appraised value and all of its prior liens. This is because any senior mortgage or lien holder, like a mechanic's lien or a tax lien, can wipe out the second mortgage.

With a second mortgage, the lender is taking on more risk, so the terms are usually stricter, the term is shorter, and the interest rate is higher than with a first mortgage. When closing on a second mortgage, there are usually separate costs for the appraisal, title report, credit check, writing and recording of documents, and other steps.

There may be a clause in a second mortgage that says it will stay behind any new first mortgage as long as the amount of the new mortgage doesn't go over the amount of the first mortgage. With this kind of lifting clause, the borrower can "lift out" the first mortgage and replace it with a new first mortgage without changing the position of the second mortgage, which is still in second place.

If the first mortgage isn't paid, the second mortgagee can either pay off the first mortgage and foreclose on the property under the second mortgage, or add the amount advanced to the second mortgage. The second mortgagee should ask to be told if there is a problem with the first mortgage. If the second mortgage is in default, the first mortgagee can also foreclose on the borrower because its security has also been threatened. So, the second mortgagee can put a lot of pressure on the borrower to pay. However, by doing this, it runs the risk that the net proceeds from a foreclosure sale won't be enough to pay off the second mortgage after the first mortgage note has been paid off.

Before getting a second mortgage, the parties should look into state usury laws and local laws that prevent banks and savings and loan associations from giving second mortgages or limit the amount that can be borrowed or the interest that can be charged.

Second-generation leasing

A term used in the shopping centre business to describe renting space in a building that was already built and lived in by someone else.

Secondary data

Data used in a research study that was previously collected for another purpose.

Secondary financial markets

Markets comprised contracts for the purchase and sale of existing financial instruments.

Secondary financing

A second mortgage on a property that helps pay for the purchase price. For example, a seller might take back a purchase-money second mortgage to help a buyer who can't make a big down payment.

Most government loan programmes (FHA, VA) let you get a second loan, but there are some rules.

A loan that is backed by a second mortgage on real estate.

Secondary Market

Existing securities are retraded on a secondary market (as opposed to a primary market in which assets are originally sold by the entity that made those assets).

Secondary mortgage market

Existing mortgage notes are exchanged in this market.

Mortgage originators can sell their shares in this market, and existing mortgages are resold.

A market for the purchase and sale of existing mortgages, with the goal of increasing liquidity for mortgage sales; also known as the secondary money market; not to be confused with secondary financing. Mortgages are purchased as long-term investments by secondary (or resale) mortgage market lenders or investors, as opposed to other types of securities.

Many existing mortgages are purchased by Fannie Mae and Freddie Mac, freeing up funds for mortgagees to lend. Ginnie Mae is also active in the secondary mortgage market, particularly in federally subsidized projects.

When lenders package mortgages and sell securities representing shares in these pooled mortgages, mortgage pools are formed. The pooled mortgages are actually removed from the originators' balance sheets, and the buyers of the securities become joint owners. The regular mortgage payment and any prepayments are collected and distributed to the holders of the securities by the originators (who usually continue to service the mortgages).

Secret profit

Refers to a broker making an undisclosed profit at the expense of the seller. For example, a broker might have a relative buy the listed property and then resell it to a buyer whose earlier offer was never shown to the seller. The seller can sue the broker to get the profit back. This is called "disgorgement." Also called being too old.

Section

The ability to pay off a mortgage before it matures. The right to prepay is determined by the law of the state in which the property is located as well as the specific mortgage contract.

One square mile, or 640 acres, is the official government survey unit. A township is divided into 12 sections, each of which is known as a section.

Section 1231 property

Trade or company property held for longer than a year, as defined in Internal Revenue Code Section 1231.

Section 1244 corporation

Section 1244 of the Internal Revenue Code says that a company met the requirements. For a corporation to qualify, it must be a "small business corporation," which means that its paid-in capital must be less than $1 million. Shareholders in a Section 1244 corporation can treat any loss on their capital stock investments as an ordinary loss instead of a capital loss. This is important when the corporate form of ownership is used in a risky venture where there is a high chance of loss.

Section 203 loan

A square mile that has been specifically surveyed and identified within the framework of the rectangular survey system.

Section 203(B)

The most important part of the Federal Housing Administration's mortgage insurance. First-time homebuyers and other borrowers who wouldn't qualify for a conventional mortgage on affordable terms have more chances to own their own home. People who live in underserved areas, where it may be harder to get a mortgage, can also use Section 203(b). Lenders are protected by the FHA's Mutual Mortgage Insurance Fund, which is paid for entirely by borrower premiums.

Section 8 program

A federal programme that helps people with low and moderate incomes pay their rent is split into two parts: the tenant-based programme and the project-based programme. Families can choose to rent from a private owner with Section 8. Most of the time, the public housing authority pays the landlord the difference between a payment standard set by HUD and the fair market rent, which must be fair. The Section 8 Housing Choice Voucher Program is another name for it.

Section of land

A square mile is one square mile.

Sector model

Homer Hoyt advocated an urban layout with radial corridors or wedges, particularly for higher income residential land usage.

Sector theory

Homer Hoyt's idea, based on the fact that successive waves of residential construction within a particular socioeconomic class tend to spread outward from the urban centre in a wedge-shaped manner.

Secured party

The holder of the security interest, including the mortgagee, the purchaser, and the pledgee.

Securities

Instruments that represent a share of a company or a limited partnership's ownership.

Securities and exchange commission (SEC)

An independent government agency that is part of the federal executive branch and is in charge of making sure that federal securities laws are followed (i.e., stocks and bonds). The Securities and Exchange Commission (SEC) works to protect investors and make sure that the securities markets are fair and honest. It can punish people who break securities laws, and the United States Court of Appeals can look over its decisions.

The Securities Exchange Statute of 1934 established a federal agency to oversee the act. Misrepresentations in securities offers are prohibited under the statute.

Securitized investments

Investment instruments that aggregate investment assets and allow investors to purchase a piece of the pool of assets.

Security

A loan secured by an asset, generally a house

Lenders use this security over the money they loan to make sure their debt can be paid back.

Proof that you have to pay money or that you have the right to share in the profits and distributions of a business, a trust, or other property. Usually, when investors buy a security, they put their money at risk in a business over which they have no control.

Securities are ruled by both state and federal laws. Monitors keep an eye on transactions in which promoters go to the public for risk capital. This is to stop fraud and protect the public from schemes that people don't know about.

Security agreement

A security document that puts a lien on personal property (chattels), including chattels that are meant to be attached to land as fixtures. Before the Uniform Commercial Code, this was called a "chattel mortgage" (UCC). Instead of recording the security agreement, the UCC lets you file a short form called a "financing statement" with a notice (Form UCCI). The financing statement needs to be filed in order for a security interest to be complete. So, it shows up as a lien on the real property under search on a title report. In the sale of business opportunities, brokers often have to deal with security agreements.

Security deposit

Money deposited by or on behalf of the tenant with the landlord, to be held by the landlord for the following reasons: 

to make up for tenant defaults for damage to the premises (accidental or intentional), for failure to pay rent due, or for failure to return keys at the end of the tenancy;

to clean the dwelling so that it is in as good a condition as when the tenant took possession, taking into account normal wear and tear; and 

to make up for damages caused by a tenant. The security deposit is not considered to be liquidated damages. Instead, it is a fund held in trust for the tenant that the landlord can use to pay for damages caused by the tenant. It is not taxable to the landlord until it is used to fix any problems caused by the tenant. The renter can't use the deposit as a tax break either. In some states, the security deposit money has to be put into an account that pays interest for the lessee.

The tenant has a better right to the money from the security deposit than any of the landlord's creditors. The claims of a trustee in bankruptcy are an exception.

The Uniform Residential Landlord and Tenant Act, which many states have signed on to, keeps the security deposit, but it limits it to one month's rent and makes it illegal to misuse it. Depending on state law, the landlord must return security deposits to tenants within a certain amount of time and explain all claims to any part of the deposits. Disputes about security deposits can be quickly settled in small claims court, and the law has penalties for a landlord who doesn't follow the rules. The act doesn't put any limits on paying rent ahead of time, which is different from putting down a security deposit. It also doesn't say that the landlord has to pay interest on security deposits.

The lease should make it clear whether a payment is a security deposit or a rental payment in advance. If it is a security deposit, the renter cannot use it to pay for the last month's rent. If the rent is paid ahead of time, the landlord must pay taxes on it when he or she gets it. Many state laws say that the security deposit should not be seen as the tenant's payment for the last month's rent. When the owner sells the property, the sales contract should say how the security deposit money should be handled (i.e., debit seller and credit buyer).

In a sales situation, the security deposit is not the same thing as the earnest money deposit.

Amount due at the start of the lease term by a renter to cover any damage to the property that is not covered by regular wear and tear.

Security interest

A security interest in real estate that is used as collateral.

Seed money

Money required to start a real estate deal.

Segmentation

The segmentation of a demographic group for the aim of identifying marketing subgroups.

Seisin | Seizin

A person who claims to own a freehold interest in a piece of property must be in actual possession of that property. A person is in possession of property when they have the right to do so and want to claim a freehold estate. Seisin, which is pronounced "seize-in," is now usually used as a synonym for "ownership." The idea comes from feudal times, when no one could own their own property. In the Middle Ages, a landowner in England was said to be "seized" of his land, because the king was thought to own all land in England. Also spelled seizen.

In the covenant of seisin, which is part of a general warranty deed, the grantor promises that she has the estate or interest she claims to be giving away. For the covenant to be met, the grantee must have both title and possession at the time of the grant. In case of a breach, the buyer can get back costs up to the amount they paid for the property.

A warranty deed covenant in which the grantor promises that he or she actually owns the rights or interests being transferred.

Seizure

When the government takes someone's property because it is being used to do something illegal, like selling drugs. Under the federal rule, the government takes the property and then files a lawsuit to get the title taken away. The property is then sold. To stop the property from being taken away, the owner must show that he or she did not know that the tenant was doing illegal things on the property.

Self-amortizing mortgage

A mortgage loan that will pay off itself over time by making periodic principle and interest payments.

Self-contained appraisal report

Includes all of the details and information relevant to determining market value or other findings in the report. The "narrative" reporting option is used in the majority of self-contained appraisal reports. The narrative appraisal report is the most formal and longest format for presenting and explaining appraisal conclusions, and it includes a step-by-step exposition of the facts and procedures utilized to determine value. In evaluations of big income-producing properties, self-contained narrative reports are common.

Self-help

Nonjudicial remedies used by a property owner to reclaim possession of their property. For example, a landlord whose tenant has not paid the rent may attempt to cut off the utilities, force entry, or change the locks in order to force the tenant to pay the rent or move out. Most courts oppose self-help remedies and require landlords to follow statutory eviction procedures. 

Seller financing

The owner or seller of the property gives the money and takes back a secured note.

Seller's market

A situation in which there are more people who want to buy something than there are people who want to sell it.

When there are more buyers than sellers in a real estate market, the seller might achieve a higher sales price.

Selling broker

The middleman who finds the buyer. Most of the time, this is the cooperating broker. However, in an in-house sale, the listing broker and selling broker are sometimes the same person. Don't mix up this person with the seller's broker (the listing broker).

Selling expenses

Expenses linked with the sale of a property.

Those expenditures incurred by the seller during the money raising or sales phase on a specific piece of property.

Selling group

The syndicate manager appoints a group of dealers to underwrite the offering.

Semiannual

Taking place twice a year, as in tax payments that are made every other year.

Semidetached dwelling

A home that shares a wall with a building next door.

Senior mortgage

A mortgage that takes precedence over all others.

Senior real estate analyst (SREA)

The Society of Real Estate Appraisers confers this professional qualification.

Senior real property appraiser (SRPA)

The Society of Real Estate Appraisers bestows this professional qualification. Commercial and industrial appraisers are given the SRPA certification.

Senior residential appraiser (SRA)

The Society of Real Estate Appraisers bestows this professional qualification. Commercial and industrial appraisers are given the SRPA certification.

Sensitivity analysis

Financial analysis in which all variables except one are maintained constant and the impact of changing the remaining variable on the outcome is examined.

Multiple evaluations of future cash flow, resale, and rates of return on an investment, each with a different set of assumptions.

Separate accounts

To allow for personalized investments for each customer, an investment manager acting on behalf of numerous clients manages each client's assets in a separate account rather than as part of a commingled fund.

Separate property

Property purchased previous to the marriage by the husband or wife, as well as gifts or inheritance received during the marriage, are considered community property in community property states.

Property that is owned by one person, as opposed to property that is owned by two or more people.

Septic System

A sewage system that stores and/or treats wastewater in a septic tank; usually, an on-site (small-scale) sewage disposal system that relies on the soil for wastewater treatment.

Septic tank

A sewage settling tank where some of the sewage is turned into gas and liquid before the rest of the waste flows by gravity into an underground leaching bed. Many local planning commissions won't let a developer use septic tanks because they worry about pollution. Instead, they want the developer to provide a sewage disposal system. But unlike cesspools, septic tanks are usually a good way to get rid of waste in low-density developments.

Sequestration order

A writ enabling the seizure of land, rents, and/or profits owed by a defendant in a current or concluded lawsuit in order to compel the defendant's compliance with a court order. An example would be a court order to hold rental payments pending the result of litigation.

Serial bonds

Secured debt instruments that are retired in the order in which their serial numbers were assigned.

Serial correlation

A measure of how long it takes for causative factors to have an effect on outcomes spanning two or more time periods.

Service of process

The legal process of telling the defendant that a lawsuit is coming and giving the defendant the summons and complaint in the case. Most of the time, the sheriff delivers a certified copy of the summons and the plaintiff's complaint to the person who is being sued. If the defendant can't be found in the state, the court may allow service by certified mail or by publication, usually in a local newspaper, at least once a week for four weeks or longer.

Under the rules of many state license laws, out-of-state brokers who want to get registered must name the public official in charge of real estate registration as their agent to receive any legal process in any noncriminal real estate-related case. Some states require out-of-state sub-dividers or foreign corporations to follow a similar rule in order to be able to do business in that state.

Serviceability

In this case, the applicant's ability to pay back (or "service") the loan.

Servicing

As loan correspondent, a mortgage banker's duties are laid out in a servicing agreement and are done for a fee. Most of the time, this means getting payments from the borrower for the note's interest, principal, insurance, and taxes, according to the terms of the note. It can also include things like accounting, bookkeeping, making insurance and tax records, following up on loan payments, following up on loans that haven't been paid, and analyzing loans. An investor and a mortgage loan correspondent usually have a written agreement that spells out each party's rights and responsibilities. The servicing fee is between 0.5% and 5% of the amount of the loan.

Servient estate

A servient tenement is a piece of land that has an easement or other right that benefits a property next to it. This property is called the dominant estate. If property A has a right-of-way across property B, then property B is the "servient estate."

The servient owner can't use the property in a way that makes it hard for the dominant owner to use it.

Servient parcel

An easement appurtenant to a piece that restricts or reduces its size.

Servient tenement

An easement appurtenant to land that bears the burden of the easement.

Servitude

A charge or debt against an estate. A personal servitude, like a license, benefits the person to whom it was given and ends when that person dies. A real servitude, like an easement, helps the owner of one property, who gets to use a part of another property. A real servitude lasts as long as the land does.

Set-aside letter

A letter from a lender to a project's contractor saying that the lender will put money aside for the contractor. This is meant to encourage the contractor to finish a troubled project.

Setback

The shortest distance between a structure or facility and an edge, such as a property boundary.

Zoning laws say how much land needs to be around improvements and how much space needs to be between the lot line and the building line. These rules, which are called setbacks and side yard restrictions, can be written into local zoning laws or written into restrictive covenants in deeds and subdivision general plans, which are usually written on the recorded subdivision plat.

Setback rules are meant to keep buildings away from streets and give people more light, air, and less noise, smoke, dust, and risk of fire spreading. In some cases, they also give people a better view at street corners. It is important to define what is meant by "building," such as whether the rule applies to eaves, steps, bay windows, porches, awnings, walls, or fences.

Setoff

A claim that a debtor can make against a creditor to reduce or cancel the amount owed.

Settlement

The end of the sale transaction. Finally, all the money is paid at settlement in exchange for the right documents. In the end, the buyer can own the house.

The procedure of a broker accounting to the principle for the earnest money and deducting his real estate commission using a kind of closing or settlement statement during the closing of a real estate deal.

1. Adjusting and dividing up the different credits, charges, and settlement costs in order to close a real estate deal. Many brokers call this part of the process "closing" instead of "settlement."

2. The act of making a deal in a dispute or court case. Usually, doing something like this is not an admission of liability.

Severalty

Only one person owns a piece of land.

Severance

Getting rid of something that is attached to land or ending a relationship. When a fence is taken down, the fence is cut off from the property. So, the fence goes from being a part of the land (a fixture) to being something you own.

When one joint tenant gives up her share of the property, the joint tenancy ends. The other person who owned the property with the new transferee is then a "tenant in common" with that person. A tenancy by the entirety can only be broken if the husband and wife get a divorce or sell the house together.

Severance damages

A payment for the loss of value in the remaining property caused by the state, federal, or local government's use of its power of eminent domain to take some real property. The property owner is entitled to severance damages if the partial taking lowers the property's highest and best use or limits how the rest of the property can be used.

In some states, the value of any special benefit given to the part that wasn't taken is taken out of severance damages or offset against them. But if the benefit is more than the severance damages, it is not taken out of the value of the part that was taken. When the federal government takes something, the amount taken can be made up for by special benefits.

Shake shingle

Split wood shingles, commonly used for roofing or siding, are made from this type of wood.

Shall

In legal terms, this means what the law says must be done.

Shared appreciation mortgage (SAM)

A type of participation mortgage in which the lender gets a share of the increase in value of the property when it is sold. In some cases, the borrower agrees to share with the lender the increase in the home's (or business property's) value in exchange for a reduction in the current market interest rate of up to 40 percent. The normal limit is ten years, with long-term financing guaranteed at the market rate after that or a share of the money when the house or business property is sold. Under Superfund regulations, lenders who are taking part need to be careful about how they might be responsible for cleaning up dangerous situations.

A mortgage in which the lender lowers the interest rate below market and then participates in the property's future appreciation.

Shared equity mortgage (SEM)

An external investor contributes all or part of the required equity and receives a portion of the property's future profits.

Shear wall

Permanent structure wall that gives stability on the sides.

Shell lease

A contract in which the tenant promises to complete construction by adding ceilings, plumbing, heating, air-conditioning, and electrical wiring, as in a new shopping mall. Under a shell lease, the landlord and tenant must agree on who will pay the real property taxes on the premises. Numerous shell leases stipulate that all improvements remain the tenant's personal property and that the tenant is responsible for paying taxes on the improvements.

Sheriff's deed

A deed that a court gives to make sure that property is sold to pay off a judgment.

Sherman antitrust act

The 1890 act is the main federal law about competition. Most courts define competition as "a state of the economy in which prices are set by market forces without interference from private interests and most businesses are reasonably open to new customers." Section I of the Sherman Antitrust Act, which is enforced by the Federal Trade Commission, says that "every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states or with foreign nations is declared to be illegal."

Shift in demand

The effect of a change in the price-quantity relationship.

Shoe molding

A thin piece of wood that covers the joint between the baseboard and the floorboards. The shoe molding makes the room look better and helps keep draughts out.

Shop drawings

Building drawings are representations of elements on the contract agreements created by various construction trades. Workplace drawings communicate both the language of the trade and the language of the shop where the job will be executed.

Shoppers' goods

The segmentation of a population group in order to identify marketing subgroups.

Shopping

The process of making a deal and then looking for another one with better terms.

Shopping center

Integrated and self-contained shopping centre managed by a single entity, typically in the suburbs.

Modern stores that are grouped together and have parking off the street. They have to follow a uniform development plan, and the right mix of stores is usually carefully thought out. After World War II, large swaths of land in the suburbs that had been empty were turned into shopping centres. This was done because retail and consumer service stores followed their customers to the suburbs.

Most neighborhood centres have a supermarket, a variety store, a gas station, and a few smaller shops that sell only one thing. They are made to serve the people in the area. The "strip centre" is the simplest and most common type of shopping centre. Stores are built in a line facing the street or parking lot, and there is an anchor store at each end, like a supermarket and a large drugstore.

There are usually supermarkets, department stores, variety stores, drugstores, and clothing shops in community centres. They are designed to serve the whole community and are bigger than neighborhood centres.

Regional centres are big, planned areas with up to 50 or more stores, some of which are national chains. Sometimes they are inside malls. Regional shopping centres are a way of life in many suburban areas because they are easy to get to, have free parking, and have a lot of things to choose from.

Most shopping centre leases are net leases, which means that the rent is based on a percentage. The percentages that apply to different types and sizes of stores vary a lot. For example, large department stores pay a lower minimum rent per square foot and a lower percentage than smaller stores. All tenants must be members of a merchants' association, which advertises the shopping centre through its members. Stores must be open during set hours and only be used for the things that are allowed in the lease. Tenants must pay their fair share of taxes, maintenance, and insurance, agree to have their books checked, and sometimes use a special type of register to show the landlord that the gross sales on which the percentage ratio is based are being recorded correctly. The landlord might even hire spot buyers to make sure that all sales are recorded correctly in the register.

Most shopping centre leases have a "radius clause" that says the landlord can't rent space to the tenant's competitors within a certain distance of the shopping centre or that the tenant can't open another store within a certain distance of the centre. But the Sherman Antitrust Act says that these noncompetition clauses are against the law because they stop people from doing business in a fair way.

A group of retail establishments with a shared parking lot.

Shoreline

On beachfront property, the line between private land and the public beach. The U.S. Supreme Court has ruled that the shoreline boundary should be set by the "mean high-water mark." Some coastal states, on the other hand, now think of shoreline property up to the high wash of the waves as public land. This can be seen by the plant line.

Because of these court cases, a smart seller of waterfront property will carefully describe the land area in approximate terms, like "approximately 10,000 square feet" or "10,000 square feet, more or less," and a smart buyer will insist that the property be resurveyed to find out the correct land area.

A seller who wants to be safe can add clauses like the ones below to a sales contract:

Buyer agrees that the property being sold is a beachfront lot and accepts that there could be a disagreement about where the property's shoreline boundary is exactly. Buyer agrees not to sue the seller if there is a dispute or if the size of the property gets smaller because of how the dispute is resolved.

Shoring

The use of timbers to prevent earth from sliding adjacent to an excavation. Shoring is also the use of timbers as bracing against a wall to support loads temporarily during construction.

Short rate

A higher rate is charged for a shorter period of time than what was originally agreed upon. The higher premium that an insurance company charges when a policy is canceled early. This is to make up for the fact that the original rate was based on the full length of the policy. This higher fee affects a buyer's decision about whether to take over the seller's existing homeowners' hazard insurance policy or to cancel it and get a new policy.

A sale of secured real estate that brings in less money than is owed to the lender. This is also called a "short pay," because the lender releases its mortgage or trust deed so that the new buyer can buy the property free and clear. In essence, the lender decides to cut its losses by agreeing to a negotiated sale instead of going through the time and cost of a foreclosure action, which could lead to the lender owning the asset and putting it on its books as "real estate owned." Since the housing crisis of 2009, there are more short sales than there used to be. Even though the lender's name isn't on the title, it often has the power to tell the brokers how to handle their commissions before the sale goes through.

Short-form document

A short document that mentions a contract, like a mortgage (called a fictitious mortgage), lease, option, or sales contract, and just says that a contract has been made between the parties covering certain described premises. This meets the requirements for recording, but the main terms and conditions of the transaction are kept secret. For example, a short-form lease might say something like, "This lease has been made based on the rents, terms, covenants, and conditions in a certain other agreement or lease between the parties here to and bearing the same date as this one."

Short-term capital gain

Gain from the sale or exchange of an asset held for less than one year is referred to as short-term capital gains tax. As a result, ordinary income tax rates apply to short-term capital gains (after subtracting short-term capital losses).

Short-term capital gains

Gains on the sale of capital assets held for six months or less are taxable.

A profit on the sale of a capital asset kept for the required amount of time in order to obtain a long-term capital gain.

Should

Common language in laws that means something is suggested but not required.

Sick building syndrome (SBS)

Indoor air quality problems in commercial and industrial buildings cause symptoms in at least 20% of building occupants that go away when they leave the building and can't be traced to specific pollutants or sources in the building. These problems are called "indoor air pollution." Some of the signs are headaches, tiredness, and irritation of the skin and eyes. Formaldehyde, which is used in carpets, paints, and pressed wood, pesticides, heated fragrance oils, which are biological organisms made from petroleum, and combustion-promoted pollutants are often thought to be pollutants. Buildings that are sealed to save energy also add to the problem. 

Siding

Boards that are nailed to the vertical studs, with or without sheathing in between, to make the outside surface of the building walls. Wood, metal, or masonry sheets can be used to make siding.

Sight-line

A viewing plane or channel. The Covenants, Conditions, and Restrictions (CC&Rs) of some subdivisions have requirements meant to maintain maximum sight lines on lots with view potential.

Sign restriction clause

A clause in a lease limiting the use of certain types of signage.

Signage

This is a slang word for signs, and it is usually used to talk about whether there are any rules about the size or location of signs on the property.

Signature

Use of any name, including a trade or fictitious name, on an instrument, or any word or mark used as and meant to be a written signature. A signature can be written by hand, typed, printed, stamped, or made in any other way, even with a pencil. But for a document to be recorded, it usually has to be signed in black ink and have the full name of the person who wrote it (i.e., the name used to sign checks). If a person can't write, they can use a mark instead, like "John X (his mark) Brown." "Amanuensis" is the word for this type of signature. All but the X can be typed, but the X has to be written by hand. In some states, a witness must be present when a deed or contract for deed is signed.

Under the statute of frauds, a real estate sales contract must be "in writing and signed by the person to be charged with it."

"This signature doesn't have to be at the end of the paper, but it usually is. But if a law says a document has to be signed, it has to be signed at the end. For example, at least two witnesses to a will must sign their names at the end of the will in front of the person who wrote the will, who has already signed above their names.

A real estate contract cannot be signed by an attorney-in-fact unless that person has a written power of attorney (under the equal-dignities rule). When the two parties want to record the documents, they should also record the power of attorney. The right way to sign is for the attorney-in-fact to put the name of the principal first, then sign his own name as attorney-in-fact: "John Fred Principal, by John William Agent, his attorney-in-fact." "

Only the person who will be charged needs to sign a listing agreement. So, if the husband gives the broker a listing that the wife doesn't sign, the broker still has a valid employment contract against the husband. All co-owners, including a husband and wife, must sign the necessary transfer documents in order to sell a property. However, they don't have to all sign the same document; they could sign separate deeds instead.

Lessors must sign written leases in order for them to be valid, since they are giving up possession. Even though lessees don't have to sign the document if they agree to the terms and take possession of the leased property, it is best for both the lessor and lessee to read the document and sign it to avoid disagreements.

When signing a document, a fiduciary needs to say what role they are signing in. For example, "Angelo Domini, as legal guardian of Charlie Sanchez, a minor," is how a guardian should sign. Also, a trust document should say "Angelo Domini, as trustee for the Charlie Sanchez Trust, and not as an individual.

Signs

Printed display boards are often used to let people know that a house or apartment is for sale. Many communities make it illegal to put up signs that say "For Sale, Sold, or For Rent" to stop blockbusting, protect the value of existing homes, and stop the impression that there are too many homes for sale in the area. Even though the First Amendment gives people the right to free speech, the U.S. Supreme Court has thrown out at least one local law that made it illegal to put up "For Sale" signs in a community. Putting up signs like "Brookshire Condo Complex-Tum Right Three Blocks" on public land or a public right-of-way is usually against the law.

As a form of advertising, signs must follow all rules, such as federal laws about being honest about loans and real estate licenses. Usually, you need permission from the owner to put a "For Sale" sign on their property.

Silent partner

A business partner who doesn't do anything.

Silent second

A second mortgage that is not recorded and is usually kept secret from the owner of the first mortgage.

Sill

The house frame's lowest horizontal member, which sits atop the foundation wall and serves as a foundation for the studs. The term can also refer to the lowest horizontal member in a window or door frame.

Siltation

Sedimentation in water caused by soil erosion and rainwater runoff.

Simple interest

Interest is calculated only on the principal balance, not on unpaid but previously earned interest.

Simple linear regression

A statistical approach for determining the relationship between two variables.

Simplified employee plan (SEP)

Both the employer and the employee can put money into this type of pension plan. It is easier to set up and run than most Keoghs and can be used by people who work for themselves. Since 2003, self-employed people can deduct investment contributions up to the limit for profit-sharing Keoghs, but not more than that. Employees need to be a part of the plan. SEP-IRA lets the taxpayer set up the plan early in the year and get a tax break for the year before.

Simulation

The creation of a model that serves as a simplified depiction of reality, allowing the influence of numerous aspects to be identified and quantified.

Single agency

Representing either the buyer or the seller in a transaction, but not both at the same time. The person who hired the single-agency broker to represent him or her can pay the broker directly or through an authorized commission split.

When one of the broker's buyer clients wants to buy one of the broker's own listings, the broker does not act as a dual agent. Instead, the broker will suggest that one of the parties (usually the buyer) find another broker or go through with the deal on their own.

Single licensing

The previous way of regulating salespeople and brokers has been replaced by a state statute requiring all real estate agents to hold the same license. The state of Colorado was the first to implement a single license.

Single-factor asset pricing model

A model for calculating needed risk-adjusted rates of return that divides investment risk into two categories: systematic (or macroeconomic) risk and property-specific risk ( or microeconomic).

Single-family housing

A single-family home that is either attached or detached and has direct access to a street. It does not share heating or other important building facilities with any other home.

A single-family home is a form of residential housing.

Single-family residence

A building that is kept up and used as a single dwelling unit for one family, like a private home. This is the opposite of a condo, an apartment building, or a PUD. Most of the time, a subdivider only lets single-family homes be built on subdivided lots. If the subdivider wants to make sure that someone doesn't use the property for a duplex, they should make sure that it can only be used for single-family detached homes.

"Even if a dwelling unit shares one or more walls with another dwelling unit, it shall be considered a single-family residence if it has direct access to a street or thoroughfare and does not share hot water equipment or any other essential facility with any other dwelling unit," says the typical landlord-tenant code.

Zoning laws can limit the number of people who can live in a place or make it so that only one family can live there, but they can't define "family" in a way that is arbitrary or unfair. For example, a commercial boarding house might not belong in a single-family residential zone, but a situation where people live together, like when several elderly couples share a house, might not be considered wrong. Some laws define a "family" as a group of people living together as a unit, even if they are not married. This includes unmarried people and their children.

Single-load corridor

A building term for a building design in which apartments are only on one side of a corridor and a wall runs along the other side. The other option is to have apartments on both sides of the hallway, like in a lot of hotels.

Sinking fund

A money placed aside that, when compounded, will equal a certain amount after a certain length of time.

A fund that is set up to slowly save up enough money to pay off a debt or meet a certain need; a fund that is set up to have a certain amount of money at the end of a certain amount of time, like a fund to pay off debentures. The sinking fund method of depreciation involves making regular investments of the same amount of money into an account that earns compound interest. At the end of the improvement's useful life, the investment plus the compound interest is used to replace the improvement.

Example: Let's say a store owner signs a 20-year lease with an option to buy the store for $100,000 at the end of the lease. To have $100,000 at the end of the term, the operator would have to put aside the principal amount of $3,024 each year in a sinking fund, assuming a 5 percent compounded annual return ($100,000 times 0.03024, the factor in a sinking fund table for a 5 percent compound return over 20 years). The reinvestment method is another name for it. This is one way for a condo association to set up a fund for maintenance needs.

Sinking fund factor

The amount that must be deposited on a regular basis at a particular interest rate for a specified time period in order to total $1.00 at the conclusion of the period.

Sinking fund payments

Payments extracted from a fund put aside from property revenue that, plus interest accumulated, will ultimately pay for the replacement of the improvements.

Sinking fund recapture technique

A recapture computation that entails calculating the recapture rate so that the total of recovered capital and compound interest will accrue an amount equal to the wasting asset's cost throughout the useful life of the asset.

Site

How a piece of land is set up, where it is, or where it is.

A piece of property.

Site office

A temporary location, other than the main office or branch office, where real estate activities pertaining to a specific piece of real property (open house), real estate condominium project, or real estate subdivision are handled. To be designated a site office, the office must be located on or near to the specified property, condominium project, or subdivision, and it must comply with city and county regulations regarding temporary land use. Typically, neither a particular license nor a broker in control of the office are required for a brokerage firm to run a site office.

Site plan

Structures, parking, streets, and other aspects of a development or subdivision project are depicted on a map.

Site value

the value of an unencumbered piece of land, less any improvements, at the time of a municipal valuation; the land component of a developed property

SiteSeeker

An online database of accessible buildings and locations, as well as research parks and decommissioned military bases.

Situs

1. The way people feel about a certain place.

2. The place where something exists or comes from; the place where the law says something (like a right) is located.

Sky lease

A contract for the use of the airspace above a property.

Skylight

A window is an opening in a roof that is made of glass and is meant to let light in.

Slab

A flat, horizontal area made of reinforced concrete. It is usually the floor of a building, but it can also be the outside or the roof.

Between the beams, supporting columns, and the walls is a reinforced concrete floor.

Slander of title

A tort or civil wrong in which someone says hurtful, untrue things about someone else's property rights with the intent to hurt them. The bad thing can be said out loud or written down, but it must be told to someone else (s). Some statements, like a lis pendens pleading filed in the right court, are protected. A slander of title action could be filed if a satisfied judgment lien is not removed even though the debt has been paid.

Sleeper note

Interest and principal are due at the same time on a future date in a promissory note.

Slum

A section of a city where the housing stock is degrading.

Slum clearance

The removal of old, dilapidated structures so that the land can be put to better, more productive use. This is usually done to get rid of subpar and often unsanitary living conditions. HUD is actively involved in slum clearance, frequently replacing dilapidated structures with new low-income housing.

Small business administration (SBA)

A government agency that was made to take over the Reconstruction Finance Corporation's work with small businesses. An administrator who is chosen by the president runs the SBA. Its job is to run the programme that the federal government has set up to help small businesses stay open and grow. The SBA is allowed, among other things, to give loans to small businesses to help them build, convert, or expand their plants, or even buy land. These loans can be made directly by the government or with the help of private lenders. Before the SBA can make a direct loan, it has to try to get a private lender to join the loan.

Small claims court

A part of the district court that only handles cases with claims that don't go over a certain amount, such as $1,000 before interest and costs. The goal of the small claims court is to give people a place to settle small disagreements quickly and cheaply. One of the most important things about these courts is that lawyers are usually not allowed to take part in the proceedings.

If a landlord and a tenant disagree about whether or not the landlord has the right to keep all or part of the security deposit, either one of them can start a case in the small claims section of the district court.

Smart growth

Existing community regeneration, compact design, walkable neighborhoods, feeling of place, protection of open space and crucial environment, and community involvement in development are all part of the planning philosophy.

Social obsolescence

A decrease in value caused by an area's socioeconomic circumstances.

Soffits

1. The outside bottom of eaves, beams, and overhangs.

2. The space between the ceiling and the cabinets in a kitchen that has been finished.

Soft construction costs

Other than the expenses of the actual physical construction, the costs of constructing and leasing a building.

Soft costs

Permits, legal fees, finance and insurance fees, architectural and design fees, other professional fees, and marketing charges are all included in construction costs.

Soft dollars

Prepaid interest or fees paid to the seller are examples of money that does not strengthen the payor's equity position.

Soft money

1. The amount of the purchase price that will be funded with a buy money mortgage.

2. Costs incurred while holding an unimproved property or while construction is taking place that can be deducted from your taxable income. As a result, soft money does not raise the company's equity position in the same way as hard money payments would. (Carrying charges.)

Soil bank

Farmers sign contracts with the Commodity Stabilization Service of the U.S. Department of Agriculture to stop growing crops that aren't needed and instead use the land for conservation. The government pays these people rent every year for this land.

Soil Profile

A soil's series of horizons or layers.

Soils engineer

An engineer who specializes in soil analysis and soil load-bearing ability, as well as establishing appropriate footing and foundation requirements for a construction.

Solar easement

An easement that protects a property owner's right to light and sun. No one has a right under common law to light and air on their property. So, if a neighbor's tree or a proposed nearby condo blocks the sun and makes an owner's solar heating system useless, the owner would have no legal recourse other than to try to buy an easement to stop the tree or condo from blocking the sun.

Some places are trying to pass laws about solar easements to encourage property owners to use energy systems that are more efficient. A law in California says that plants that block the sun from a solar collector are a "nuisance." In some places, builders who make sure that solar panels can be used are rewarded. For example, a builder could get a density bonus of up to 20% if he or she planned streets, lots, and buildings so that people could get to the sun.

Solar Gain

The quantity of solar energy absorbed by a landscape surface or environment.

Solar Heating

The process of producing heat by absorbing sunlight.

A way to heat your home that uses the sun's energy. There are both local and federal tax breaks for homeowners who use these energy-efficient systems.

Sole proprietorship

All cash flow and income tax consequences go directly through to the individual's income tax return, avoiding taxes at the entity level.

In contrast to corporate, joint, or partnership ownership, a method of business ownership in which one person owns the entire business and reports all profits and losses directly on a personal income tax return.

A sole proprietorship or sole proprietorship is widely used in real estate brokerage since it is simple to form and flexible to operate. Individual proprietors with a valid broker's license may operate a brokerage firm. As required by state law, proprietors may use their own name or an already registered false name.

There is an increasing trend for sole proprietors to incorporate their businesses in order to take advantage of certain tax and fringe benefits, such as pension and profit-sharing programmes.

A type of ownership in which just one person owns the property.

Solstice

The dates when the sun's declination is at 23.27 degrees north latitude (the Tropic of Cancer) and 23.27 degrees south latitude (the Tropic of Capricorn) are June 21-22 and December 21-22, respectively.

Sources and applications of funds

The financing study looks at where the money comes from and how it is used.

Space analysis

An examination of a current office scenario in order to identify problem areas and offer a foundation for making decisions about substantial adjustments. It might also take the shape of a planning tool that the customer will utilize to construct a planned situation.

Space plan

Draft by an architect that shows how the floor plan of a rented space will be set up to meet the needs of the tenant.

Space planning

The act of planning out and creating space to meet the demands of a tenant.

Space time

A four-dimensional idea that combines three dimensions of space and a fourth dimension of time. Real estate services are often offered in units of space-time.

Spatial Data

Data containing implicit or explicit location information.

Spec home

1. A house that was built on a guess.

2. A model home.

Special agent

One whose power to act is restricted to a certain job or duty. Typically, a real estate broker serves as a special agent.

A person who has been given authorization by a principal to undertake a certain business transaction or perform a specific role. Special agents are real estate brokers and salespeople.

One who is given permission by a principal to do a specific act or transaction, but not for long-term service like a general agent. The real estate broker is usually a special agent hired by the seller to find a buyer for a property who is ready, willing, and able to buy. A limited power of attorney makes the attorney-in-fact a special agent.

Special assessment

A legal levy levied against real property by a governmental body to pay for public amenities such as lamps, sidewalks, and other street improvements.

A tax or levy that is usually only put on the specific pieces of property that will benefit from a proposed public improvement, as opposed to a general tax on the whole community. Because the proposed change will make the affected homes more valuable, only the owners of those homes must pay this special lien.

The main difference between special assessments and property taxes is that property taxes are used to pay for the government's general functions, while special assessments are used to pay for specific local improvements like streets, sewers, irrigation, and drainage. Special assessments are often used to pay for things like water, sidewalks, sewers, and parks and other recreational facilities. In some cases, improvement districts charge special assessments on a regular basis. In other cases, only the city and county charge special assessments for a specific work or improvement.

Owners usually either pay the special assessments in full or in installments over a few years. If there is a sales contract, it should say who is responsible for paying any assessments at the time of closing. Most of the time, though, the seller pays for all improvements that are mostly done by the closing date. This is because the improvements usually make the property worth more. Most of the time, the buyer takes responsibility for improvements that have been approved or are in the process of being done. In any case, this is something that the buyer and seller can talk about.

Most of the time, special assessments are divided up based on the benefits received rather than the value of the land and buildings being assessed. This is called the "assessment-roll spread" most of the time. In a residential subdivision, for example, the cost of installing storm drains, curbs, and gutters is calculated by the front foot. The property owner is charged for each foot of his or her lot that is next to the street that is being fixed.

At the moment, you can deduct real estate taxes from your income tax. Special assessments, on the other hand, are not directly deductible because they raise the value of the property and, like any other capital expenditure, add to the cost or basis of the property. The assessment, on the other hand, is not usually eligible for depreciation. In some cases, an investor or taxpayer can deduct a special assessment if they can show that all or part of the assessment is for maintenance, repairs, or interest charges.

A charge established by a government entity against real estate to cover the proportionate cost of an improvement, such as a street or sewer.

Property taxes levied to fund specific improvements for the benefit of neighboring property owners. For example, property owners in a subdivision could be compelled to contribute to the cost of installing sanitary sewers on their property.

Special benefit

The value that a government improvement adds to a certain property or a small number of properties. Some courts use the market value of the property taken plus severance damages, minus any special benefits, to figure out what is fair compensation for a property that is taken in part by condemnation. Other courts may think that just compensation is the difference, if any, between the property's value before the crime and its value after the crime, taking into account any special benefits. So, if the state takes a part of a property to make an improvement and the improvement actually raises the value of the rest of the property, the court may take into account the value of the special benefit and reduce the just compensation in the same way.

Special conditions

Before a real estate sales contract becomes legally binding, many conditions must be met. The following are examples of typical circumstances:

  • Purchaser takes out a first mortgage of $95,000 at a maximum interest rate of 7% for a maximum amortization period of 30 years.
  • A written credit report from the buyer must be submitted within [number of calendar days] after the buyer accepts this offer.
  • All agreed-upon repairs [or additions] must be completed and approved in writing by the buyer and seller prior to the closing date.
  • Written inventory items such as furnishings, plants, and the like must be accepted by the buyer.
  • Closing with all of the appliances, plumbing fittings, and electrical systems functioning properly
  • If a reliable pest control provider provides a Wood Destroying Insect Inspection Report showing that no termites or other wood-destroying insects have infested the improvements, the seller must provide it.

Special lien

A mortgage, an attachment, or a mechanic's lien are all examples of liens or charges against specific parcels of property. Also known as a specific lien. A general lien, on the other hand, is a charge against all of the debtor's property.

A lien that solely affects or is linked to a single plot of land or a single piece of property.

Special purpose building

A facility, such as a restaurant or a bowling alley, that is intended to meet the specific demands of its occupants.

Special purpose property

A piece of land with buildings on it that can only be used for one thing because of how it was built. This could be a church, nursing home, school, post office, or hospital.

Special use permit

Zoning authority permission to allow a special exception in the zoning ordinance to be used on a specific piece of land. For example, a residential zoning ordinance may permit churches, hospitals, or country clubs to use specific special uses, provided that a permit is first obtained. The difference between a variance and a special use is that the latter is a permitted exception to the zoning ordinance, whereas the former is not. For a variance, the requirements are much more stringent than the requirements for a special-use permit." "Variance" refers to a deviation from the norm.

Special warranty deed

A deed in which the grantor warranties or guarantees title only against flaws that arise during his or her possession of the property and not against prior problems.

The covenant against encumbrances is similar to that of a general warranty deed, except that it only applies during the grantor's ownership of the land.

A deed in which the grantors only guarantee the title against problems that come up during the time they own the property and not against problems that were already there before they bought it. Most of the time, the words "by, through, or under the grantor, but not otherwise" are used to describe this kind of deed. A special warranty deed is often used when a fiduciary like an executor or trustee transfers the property of the principal because the fiduciary usually doesn't have the power to guarantee against the actions of his predecessors in title. This is sometimes used in a divorce decree when one spouse gives property to the other spouse.

The grantor does not assure against any title defects in a deed in which the grantor confines the title warranty offered to the grantee to anybody claiming by, from, through, or under him, the grantor.

Specialty shopping center

Many of these institutions are located in downtown neighborhoods or refurbished historic structures and have a distinct theme or image. A variation on this subject is outlet malls.

Specific asset syndication

A sort of syndication in which the promoter acquires possession of a property and then brings together a group of investors.

Specific lien

Property tax and assessment liens, mortgages, and mechanics' liens are all examples of liens that arise directly from events relating to a property.

Specific performance

When a party defaults on a contract, a legal action is brought in an equity court to compel that party to carry out the full obligations of the contract rather than settle for damages, for example.

An action taken in a court of equity to force a party to adhere to the terms of a contract in exceptional circumstances. When a seller breaks a real estate contract, an equity court has jurisdiction because land is unique and legal damages alone will not be enough to compensate the buyer. If a broker agrees to find a buyer, the courts can't specifically enforce the agreement; nor can they enforce a contract that is illegal, ambiguous or lacking sufficient consideration.

Buyers have the right to ask a court to enforce a contract and force a seller to deed the property under threat of contempt of court if a seller refuses to sell to them as stipulated in the contract of sale. In the same way, a deceased seller's heirs can be compelled by a judge to carry out a contract of sale by the buyer.

If land values have dropped, a seller may be able to compel a defaulting buyer to buy the property. It is difficult to prove that money damages are not adequate relief in most cases, and a seller must show this inadequacy in order to obtain specific performance relief from a buyer.

An activity that compel the fulfillment of a contract.

Specifications

Materials, measurements, colours, and other elements of a proposed structure are included in written directions to a building contractor. The designs and working drawings are supplemented by specifications.

A set of instructions that includes working drawings that show the materials used and how the property will be built.

Specified fund

A fund where the properties to be bought have already been chosen.

Speculation

Assumption of business risk in the aim of profit; acquisition or sale of assets with the hope of profiting from market swings.

The purchase of a property with the intention of reselling it for a large profit within a short period of time.

Speculative building

A structure that is being constructed without the participation of a major tenant or tenants.

Speculative construction

A business technique in which a developer/builder begins building before any residences are sold in the hopes of generating enough market demand to make the project viable.

Speculator

A gambler who buys property with the intention of later selling it for a bigger profit.

1. A person who studies the real estate market and buys properties with the hope that prices will go up a lot and make them a lot of money when they sell. Many states have laws that stop certain kinds of land speculation. Some states tax the profit from the sale or exchange of land that has been owned for less than a certain amount of time ("anti speculation tax"). The tax goes up the more money you make and the less time you own the land before you sell it.

2. An owner-builder who builds homes without a specific buyer in mind (called "spec homes") and hopes to sell them when they are done. People often call this "building on spec."

Spend thrift trust

A trust is set up to provide a source of money for the maintenance and support of a specific beneficiary and to protect the property from the beneficiary's carelessness or lack of responsibility. Real estate that brings in money is sometimes put into a spendthrift trust. These trusts have rules against the beneficiary or creditors taking the money out of the trust.

Spin-off

Transfer of an organization's assets to a newly formed subsidiary. A corporation may swap a portion of its assets to a new corporation in exchange for stock in the new business, which is subsequently distributed to the parent company's investors.

Spite-fence

A fence that a neighbor doesn't like because of its height or style. Some states have laws that say fences can't be higher than, say, ten feet. Some people don't agree on whether or not a fence that was put up illegally and is shorter than the law allows can be taken down.

Split-fee financing

A type of joint venture in which the lender buys the fee land that will be used in the development project and rents it to the developer. The lender will also pay for the changes that will be made to this leasehold.

Split-level

A house with two or more floors that are usually right on top of each other and one or more floors that are at a different level right next to them.

Split-loan

In a split loan, more than one part of the total loan amount is split up, so that different loan features can be used on different parts of the loan. A loan could be split up so that some of it has a fixed interest rate and some of it has a variable rate.

Split-rate

Capitalization rates were used to figure out the value of land and improvements separately.

Splitting fees

The act of distributing money. Only the buyer or seller, another licensed broker in the broker's own state, or a broker from another state who did not participate in any talks within the first broker's state can split a commission with a broker in another state. The broker's license could be suspended or revoked if he or she pays any compensation to an unlicensed person for suggesting a client. This means that the money must be transferred through the salesperson's employing broker in order for brokers to split fees with licensed agents. See collaborating broker, finder's fee for further information.

Spot loan

A loan made on a specific property, usually a condominium unit, by a lender who has never financed a condominium project before. Many lenders are unwilling to lend money for a single unit in a large condominium development due to the extensive background work and investigation required to investigate the entire condominium project and inspect all relevant documents. Other lenders make spot loans to cover legal and other service fees incurred while analyzing the loan.

Spot survey

It's a survey that shows all of the structures, improvements and easements on a property, including any adjacent property lines that might encroach on the property being surveyed. A spot survey and a legal description of the land may be required by a lender before lending money to a project, particularly a large one.

Spot zoning

A change in the local zoning ordinance allowing a particular use that is inconsistent with the area's zoning classification; the reclassification of a small area of land in such a way that it disturbs the tenor of the surrounding neighborhood, such as a change to allow one multi unit structure in an area zoned for single-family residential use; also known as a variance.

The law does not favor spot zoning. Spot zoning is vulnerable to challenge and will not be permitted by the courts if it affects only a small area and is not consistent with the comprehensive general plan for that area (for example, a chemical factory in a residential neighborhood). A permissible spot zone might allow a small grocery store or convenience store to provide easy access to nearby residential areas. Also known as contract zoning.

Sprawl

A derogatory word for several characteristics of suburban development. A more limited definition of the word refers to unregulated real estate growth outside of key urban centres, as well as "leap-frog" development.

Spread

The gap between home loan interest and interest given to depositors by financial intermediaries.

The difference between an investment's predicted yield and that of a riskless Treasury instrument with a similar maturity.

Spreading agreement

A deal to "extend" or "spread" an existing mortgage lien over more than one property so that the lender has more security on the loan.

Spur track

The section of rail track that branches off a main line or drill track to serve an industrial facility or site and is typically owned by the industry that uses it.

Square

In the government's (rectangular) survey of land, a 24-mile-by-24-mile area is sometimes called a "quadrangle."

Square foot method

Construction cost per square foot multiplied by the floor area of a building to get an estimate of its construction, reproduction, or replacement expenses.

Square footage

The size of the area is expressed in square feet.

Squatter's right

The right of a person occupying real property in an unlawful manner. There must be an actual, open, obvious, exclusive and continuous period of time for a squatter's possession to be deemed legal.

Stabilization

When a new property has reached its goal occupancy level.

Staging

1. A temporary structure that workers and materials stand on while building.

2. The process by which a licensed real estate agent or a staging specialist helps the seller choose, design, rearrange, or make changes to the home so that it looks better to buyers and, hopefully, sells for more money. This is also called "prepping a property."

Staging area

A place outside at a construction site or inside a building, usually near the loading doors, where materials, tools, equipment, or goods are gathered or put together before being moved to where they will be used or stored.

A location where items and equipment can be stored and worked on before being moved into the space where they will be utilized.

Stakeholder

Individuals and/or organizations participating in or affected by project activity.

Staking

A method for defining the borders of a parcel of property that involves inserting stakes or pins in the ground or painting markers on stone walls or rocks. As opposed to a border survey, staking does not reveal the property's total dimensions (or the existence of potential encroachments).

Stamp duty

Stamp duty is a fee that must be paid to the state government when you buy a house. The amount of money you have to pay varies from state to state.

Standard deduction

The amount of deductible expenses that a taxpayer may claim in lieu of itemizing authorized personal expenditures, as determined by Congress.

Standard deviation

A measure of dispersion around the mean of a probability distribution that is widely used to assess the risk of an investment endeavor. The variance's square root.

The square root of the variance is used to calculate the dispersion of a distribution around its anticipated value.

Standard error (SE)

A statistic's standard deviation, such as an estimated mean value or a regression coefficient, is the sampling distribution's standard deviation.

Standard error of the forecast

The level of confidence in a projected value for a dependent variable. Similar in concept to the same metric determined in basic linear regression.

Standard metropolitan statistical area (SMSA)

A federally declared geographically defined metropolitan region characterized by consistent patterns of trade, communication, employment, and transportation.

A very important label that the federal Office of Management and Budget gives to counties that have at least one city with 50,000 or more people living in its centre. Instead of whole counties, SMSAs in New England are made up of groups of cities and townships. A lot of government grants, like the Community Development Block Grant, use the SMSA designation as a qualification standard.

Under the Interstate Land Sales Act, the buyer of a subdivision with fewer than 300 lots whose main home is in the same SMSA as the subdivision may be able to get out of having to register the subdivision.

Standard parallel

In the government's (rectangular) system for describing land, one of a series of east-west lines that are usually 24 miles apart and run north and south of the base lines and parallel to them. Parallels like these are used to set township boundaries every 24 miles and fix mistakes caused by the earth's shape. They are also called "correction lines."

At 24-mile intervals, imaginary lines running parallel with base lines (east-west lines) are utilized as reference points in surveys using the rectangular survey technique.

Standard tenant improvement allowance

A provision for the construction of tenant improvements at no additional expense to the tenant.

Standard variable rate (SVR)

In this case, the rate that lenders charge for their "premium" home loans. It has features like a redraw facility, portability, a salary account, and a mortgage offset.

Standards of practice

A set of moral rules made by the National Association of REALTORS Professional ®'s Standards Committee. Some parts of the REALTORS® Code of Ethics are expanded in these Standards of Practice. A charge that a REALTOR® is accused of breaking the Code of Ethics should say that the REALTOR® is accused of breaking one or more articles of the code. You can only bring up a Standard of Practice to prove that the article was broken.

Standby fee

A large amount paid by a borrower when a standby commitment letter is issued. This is to compensate the lender for the risk and responsibility of agreeing to the loan. If the loan is not paid off within a certain amount of time, the standby fee is lost. Most courts agree that the forfeiture of the standby fee is a legal form of damage and not an unfair punishment. 

A charge that a borrower pays to a lender in exchange for a standby loan.

Standby financing

A loan agreement in which a lender commits to maintain a particular amount of money available to a potential borrower for a set length of time.

Standby forward commitment

An arrangement to acquire mortgage notes in the future at predetermined yield rates. These commitments are sold by Fannie Mae and are obligatory on them, but they are voluntary for the holders of the commitments.

Forward commitments in mortgage lending in which the mortgage banker has the right, but not the responsibility, to sell a predetermined dollar amount of a specific loan type to the seller of the commitment at a predetermined price.

Standby loan

For a set period of time, the lender commits to maintain a particular amount of money available to the borrower, usually a developer. To put it in layman's terms, the developer has the right to borrow money but is not compelled to do so. Standby commitments normally include onerous conditions in order to dissuade the developer from exercising their loan, therefore it amounts to a promise of future loans if the borrower can't secure better financing elsewhere. Non-institutional lenders are the most common source of standby loans, which typically have a period of 18 to 24 months. The annual standby cost is normally between 2% and 3% of the loan amount. As part of the standby loan agreement, developers should be aware of any situations that will exempt them from their obligations, such as building site condemnation or a building permit refusal.

A loan that is made accessible to a borrower at a certain interest rate for a set length of time in the future.

Standby loan commitment

A binding option sold by a lender to a borrower for a non returnable standby fee under which the lender agrees to lend a particular amount on specified terms to the borrower at any time during a specified future period. The borrower has the choice to exercise it or not.

Standing loan

1. A promise made by interim or construction lenders to keep the money they have already invested in the project for a specified period of time after the interim loan expires, usually until permanent takeout financing is secured. For example, a lender may agree to provide an interim construction loan for one year and a standing loan for two years from the date the one-year loan is terminated. This typically allows the borrower to construct and rent a shopping centre or office building prior to obtaining permanent financing, increasing the likelihood of obtaining favorable permanent financing.

2. A straight mortgage (one that requires only interest payments and no amortization during the term, with the entire principal due at maturity). Until satisfied, the entire principal "stands."

Start date

The starting point of an action, frequently characterized by one of the following terms: actual, planned, estimated, scheduled, early, late, goal, baseline, or current.

Starter

1. A mention of an older title report on a certain piece of real estate. Many title companies keep copies of older policies in their title plants. If there is a starter on a property, the title searcher doesn't have to go back to the original source of title again. The person doing the search only needs to look through all relevant records from the date of the starter up to the date of the search for things that affect the title.

2. A person's first home or any other investment in real estate.

Starts

A term used to describe the number of residential units started in a given time period.

State-certified appraiser

An appraiser accredited or licensed in accordance with state certification requirements that are consistent with those defined by the Appraisal Qualification Board of the Appraisal Foundation and authorized by the federal Financial Institutions Examination Council. The certificate may be general or residential.

Statement of condition

Before moving in, a renter signs a paper that identifies any prior damage to the flat.

Statement of record

If you plan on selling your subdivided land via interstate commerce, you'll need to submit this document with your HUD registration application. Detailed information about the property, the site, and the developer is required in the lengthy statement of record, including the names and addresses of anyone with an interest in the property, a legal description of the property, general terms and conditions of contracts, prices, and descriptions of access to the property and public utilities, as well as any and all liens. Also needed are copies of the developer's corporation or partnership documents and other instruments pertaining to the property. The developer is required to provide financial statements in addition to the statement of record (certified in certain cases).

Statement of work (SOW)

A narrative description of the goods or services to be provided under the contract.

Statistical induction

Using data from a sample to draw conclusions about a larger group.

Statistical inference

Making predictions about the future based on a measured record of the past.

Statue of frauds

A state legislation that requires certain types of contracts, engagements, and/or transfers of real estate interest to be in writing in order to be enforceable in court.

Statute

A law made by Congress (federal law) or a state legislature (state law), as opposed to judicial or common law; statutory law, as opposed to case law.

Statute of frauds

All states have approved a provision stating that all deeds, long-term leases, and mortgages must be in writing in order to be legally binding. The term derives from the original Statute of Frauds, which was established in 1677.

For certain contracts to be legally binding, they must be in writing and signed by the person that will be held responsible for the agreement. The original English Statute for the Prevention of Frauds and Perjuries is the model for the majority of state fraud statutes ( 1677). In most cases, contracts for the sale of land or any interest therein (and some listings) must be in writing. For a period of one year or less, oral leases are generally enforceable. It is not necessary to have one formal contract; it is sufficient to have a memo-randum of the contract or numerous pieces of correspondence if the material terms agreed upon are specified. On the back of one broker's business card, the commission terms were scrawled down and signed by the seller. An earlier oral contract may be confirmed by a written agreement ("this letter is to confirm our prior telephone understanding").

Written agreements can be voided by subsequent oral agreements, according to the law. This is because the statute of frauds only applies to contracts that have been signed.

As long as the real estate contract is not in writing, the parties to it may have a legally binding agreement (i.e., one that contains all of the essential parts). Only the remedy is covered by the statute of frauds, not the contract itself. To put it another way, the statute of frauds does not apply to parties to a fully executed or completed oral agreement. If you are suing for the enforcement of an oral contract, the Act can only be used as an affirmative defense.

In order to protect against fraud, the statute of frauds is designed to prevent the enforcement of a contract that was never signed; it is not designed to prevent oral contracts from being fulfilled. The statute of frauds does not apply in all cases, primarily when asserting the statute of frauds as a defense against an oral contract would result in fraud, unjust enrichment, or unconscionable harm to the other party involved. Sometimes, the statute of frauds can be avoided if an oral agreement is partially fulfilled. For example, if the buyer, in reliance on a seller's oral commitment to sell the property, pays part or all of the purchase price, takes into possession, and makes major renovations on the property, the contract will be "taken out" of the statute of frauds. Some courts do not allow the seller to invoke the statute of frauds as a defense against the buyer's action to force the seller to execute the terms of the oral agreement to sell.

Contracts for the sale of personal property exceeding $500 must be in writing, according to the Uniform Commercial Code. Regardless of whether the fixture is worth $500 or less, it must be indicated in the contract that the seller intends to retain it.

Statute of limitations

Those rules governing when certain actions must be taken to court and how long they must last. An action must be brought (i.e., the complaint must be filed) within a predetermined time of the occurrence of the cause of action to protect the vigilant from stale claims. The claim is said to be "outlawed" and can no longer be enforced in court after the time period has passed. It is the belief of the statute of limitations that litigation must come to an end at some point in the future. People say that stale witnesses and stale records produce little truth and lead to unintentional justice, if any is achieved at all.

It is possible to make a partial payment and restart the time period before it has expired. Unless the payment is made subsequently, the debt will remain barred and unable to be paid back.

Statutory exemption

The amount of income that is not subject to the alternative minimum tax.

Statutory law

Unlike case law, which is made by a judge's decision, statute law is made by the government.

Statutory right of redemption

A legislative entitlement that gives a defaulting mortgagor a second chance to reclaim repossessed property. State legislation sets a time limit.

This is the privilege given to a defaulting mortgagor in foreclosure to reclaim the foreclosed property for a period of time following the foreclosure sale by paying the full amount of the defaulted debt plus the foreclosure legal expenses. This option isn't available in every state. It can last anywhere from a few days to several years in states where it exists.

Steering

A place outside at a construction site or inside a building, usually near the loading doors, where materials, tools, equipment, or goods are gathered or put together before being moved to where they will be used or stored.

Step-up lease

A lease with a fixed rent for the first part of the term and rent increases at set intervals or based on regular evaluations. Step-up leases are usually longer than fixed leases because their main goal is to protect against inflation. It takes into account increases in taxes, insurance premiums, and maintenance costs, as well as inflation ( often keyed to federal cost of living indexes). A step-down lease is a contract that says the rent will go down at certain times.

Stepped-up basis

For federal estate tax purposes, the value of property transferred on the date of death, or at an alternate valuation date (six months after the date of death), or the fair market value if no federal estate tax return is filed, is equivalent to the new basis of property received from a deceased.

A change in the adjusted tax basis of property, which is allowed for certain transactions, is referred to as a change in the adjusted tax basis.

Stick-built

Wood frame building is a method of construction.

Stick-built on-site

A term for a builder who works on-site and builds with raw materials that are brought to the site. This is also known as "built from scratch." Then, skilled craftspeople measure, cut, and put the parts together.

Stigmatized property

A set of moral rules made by the National Association of REALTORS Professional ®'s Standards Committee. Some parts of the REALTORS® Code of Ethics are expanded in these Standards of Practice. A charge that a REALTOR® is accused of breaking the Code of Ethics should say that the REALTOR® is accused of breaking one or more articles of the code. You can only bring up a Standard of Practice to prove that the article was broken.

Stipulations

A contract's terms and conditions are spelled down in writing.

Stop clause

A lease condition that specifies a maximum amount of running expenditures that the tenant is responsible for.

Straight note

Payments of interest are only made periodically over the duration of the note, and the principal payment is due in one big sum at maturity. Short-term non amortized notes are known as "straight notes," and they can be renewed at the end of the period. Term mortgages, often known as straight-term mortgages, are used to secure a single note.

Straight-line depreciation method

The Internal Revenue Service (IRS) allows for depreciation to be computed by dividing the depreciable base by the useful life as established by the Internal Revenue Code.

Straight-line method

A technique of calculating depreciation or cost recovery allowances that claims the allowance in equal yearly increments.

A way to figure out the amount of depreciation is to divide the property's adjusted basis by the number of years the property is expected to be useful for. This method is also called the age-life method. So, the cost of the property is taken out in equal amounts each year. For example, if the depreciable basis is $100,000 and the estimated useful life is 25 years, the annual depreciation deduction is $4,000 for each year of the asset's useful life.

Strata Title

The title system used for units, flats, apartments, and some townhouses and villas, which limits title to each individual unit while putting ownership, administration, and upkeep of the block's exterior and common property areas under the responsibility of the body corporate.

a title for a section of a property, such as a flat, unit, or office, that has multiple owners. 

Units that are part of the owner's company are called "units."

Straw man

A person who buys property on behalf of another person who prefers to remain anonymous.

A person who buys property on behalf of another in order to conceal the identity of the true buyer; a dummy purchaser; a nominee; a front.

Previously, an owner who wanted to change a title from severalty to joint tenancy had to convey the property to a straw man, who would then convey it back to the owner and joint tenant. Many states no longer require joint tenancy to be created simultaneously by the same instrument. Thus, without using a straw man, an owner can convey to himself and another party as joint tenants, or convey to herself and a spouse as tenants by the entirety.

When several parcels of land are being assembled for development, confidentiality is important, which is why nominees and straw men are useful. However, a federal court has ruled that if the nominee misrepresents the identity of the principal, knowing that the seller would not have negotiated if the true facts were known, the seller has the right to cancel the transaction. Furthermore, if the nominee or straw man has any managerial control over the property, he may be considered the true owner for tax purposes.

If a broker or salesperson attempts to use a straw man to purchase property listed by the broker or salesperson, this relationship with the buyer must be explicitly disclosed to the seller in writing. Failure to do so may result in the suspension or revocation of your license.

In a condominium presale, a developer must typically achieve a certain percentage of purchases before a lender commits to lending money; straw men are occasionally used to meet this minimum requirement, though this practice is clearly against the lender's policy and would be illegal in connection with VA and FHA loans.

Stream Order

A stream's relative position, or rank, in a drainage network. Streams with no tributaries, generally minor ones, are considered first-order; streams with two or more first-order tributaries are considered second-order; and so on.

Street

A road that goes all the way through and serves local or minor collector traffic.

Strict foreclosure

Foreclosure is performed by transferring the title of a defaulting mortgagor straight to the mortgagee.

Stringer

1. One of a staircase's sloping enclosed sides that supports the treads and risers.

2. A horizontal beam connecting the uprights of a frame.

Strip center

A straight line of stores in a retail shopping complex, generally narrow in proportion to its length.

Structural alterations

Any modification to the supporting parts of a building, such as bearing walls or partitions; columns, beams, or girders; or any structural modification to the roof, but typically excluding extension or enlargement.

Structural defects

Damage to the load-bearing portion of a house that prevents it from being used as a residence because of the effect it has on the home's load-bearing function. In addition to earthquake and flood-related damage, shifting soil can also result in property loss.

Structural density

The relationship between the total area of a building's ground floor and the total area of its land. About one-third of the space in a general-purpose industrial building is taken up by people.

Structural engineer

An engineer who specializes in the design of buildings and other structures that are functional while also meeting sturdiness and safety criteria.

Structure

Any site enhancements that have been built.

One that has been put in place and improved upon. "anything that is more than 18 inches from the ground and cannot be lifted by a person without mechanical aid," or "any production or piece of work, artificially built up, or formed of parts and put together in any prescribed manner," are examples of local building codes. A building permit is required before any construction can begin.

A poorly written limitation prohibiting the construction of any structure without developer approval raises an intriguing question, such as whether a swimming pool, fence, or tennis court constitutes a structure.

Stucco

A wall covering made of cement or plaster that is applied wet and dries to a hard surface. Several lawsuits have been filed because of property damage caused by certain synthetic materials.

Stud

When building a wall, these are the vertical pieces that the horizontal pieces are attached to. Studs are spaced 16 to 24 inches apart and hold up the roof and/or second floor.

Sub-agreement of sale

Contract for deed between the original seller and the new buyer of an agreement of sale. With such a deal, there is no legal connection between the new owner and the purchaser (subvendee) (original vendor).

It is a transfer to the new buyer of the previous vendor's rights, title or interest in that arrangement, which is called an assignment. Although the original vendor and the new buyer are bound by the terms of the original agreement of sale, a sub-agreement is a totally new contract. It is important that the sub agreement of sale does not include clauses that are detrimental to the original vendor; otherwise, the original vendor may withhold their assent and prolong the transaction.

It is recommended by many attorneys that all parties sign a new contract outlining their rights and responsibilities, as well as a collection account to manage all the payments, in order to avoid potential issues.

Subagency

A broker's agency position is extended to one or more other brokers, who also become fiduciaries for the principal and are authorized to act on his or her behalf. Any commission earned by the subagent is split with the original broker. In the case of multiple-list services, this agency chain may extend through numerous agents.

Subagent

One assigned by an agent to execute some function related to the agency, in whole or in part.

A person who acts as an agent for a person who already has an agent. The original agent can give power to a subagent if doing so is either explicitly allowed or common in the trade. For example, it is common for listing brokers to give subagents tasks that are more like errands, like showing the property and looking for buyers.

Many multiple listing services were built on the idea that a listing is an offer of subagency to members and that members who work on such listings do so as subagents of the listing broker. In 1993, they made an offer to work together and pay them.

When it's clear that the principal gave the agent permission to hire subagents, the subagent and the principal have the same relationship as the principal and the agent. A lawfully appointed subagent works for the principal in the same way as the prime agent. Some courts say that the main agent is not responsible for what the sub-agent does to third parties.

Subchapter S corporation

The ownership structure of a corporation is determined by a federal tax election made with the unanimous approval of the shareholders. An S corporation provides the same limited liability protection for its stockholders as a C corporation, but it is not treated as a separate taxable entity by the Internal Revenue Service.

A corporation having a small number of investors that chooses to be taxed differently than a conventional corporation. Individual stockholders can profit from the tax advantages. Limited liability for corporations is still available.

Subcontractor

A person who works on a contract basis for someone who has a larger contract to do the job. For example, electrical work on a new house may be done on a subcontract for the contractor who is in charge of the entire construction of the house.

Companies or individuals who specialize in specific construction operations such as the installation of heating, ventilation, and air-conditioning systems, elevator systems, painting, carpet installation, and a variety of other building components are classified as specialty contractors.

A builder or contractor who makes a deal with a developer or the prime contractor to do a specific part of the construction work, like wiring, plumbing, or installing air conditioning. The subcontractor does not work directly with the owner. However, if the main contractor does not pay the subcontractor, the subcontractor can file a mechanic's lien against the property within a certain amount of time after a notice of completion is posted.

Subdivider

A person who buys undeveloped land wholesale, divides it into smaller chunks, and sells it retail.

The owner of land that has been divided into two or more lots and is for sale. Under the Uniform Land Sales Practices Act, a subdivider can also be a dormant owner's main agent. When a subdivider makes improvements to the property in the future, they become a developer.

Subdivision

A lot, tract, or parcel of property divided into two or more lots, tracts, or parcels for sale or development.

A plot of property subdivided into smaller title lots, typically for residential construction

the subdivision of a piece of land into construction lots; this obviously necessitates multiple governmental permissions.

A parcel of land is subdivided into building lots. Streets, parks, schools, utilities, and other public infrastructure may also be included.

Land that is split or is planned to be split into two or more lots, parcels, units, or interests so that it can be sold. Subdivision is usually used to describe any land, whether it's connected or not, where two or more lots, parcels, units, or interests are sold as part of the same marketing and sales plan. So, the law would apply to the sale of a half's undivided share of a big piece of land.

A person who wants to build a subdivision must first follow the subdivision rules of the county or city where the property is. After getting approval from the local government and putting up any required completion bonds for improvements, the subdivider usually has to register the subdivision with the right state agency before he or she can start selling. Under the federal Interstate Land Sales Full Disclosure Act, the person who is dividing the land may also have to register the subdivision.

A parcel of property that has been surveyed and subdivided into smaller lots for selling or development.

Subdivision controls

Regulations implemented by several levels of government to regulate or restrict subdivision operations.

Subdivision registration law

Laws that require subdivision registration protect potential buyers from the tricks and abuses that used to be common when more unimproved lots were sold without any rules. There are usually a lot of ways to avoid having to register, like if the consumer is protected enough by other rules (like condo laws or local building codes) or if there are only a few buyers or lots.

If there are fewer than 100 lots in the subdivision and the U.S. mail or another form of interstate commerce is used to sell the lots, the subdivider may have to register the subdivision with the federal Department of Housing and Urban Development (HUD). The subdivision doesn't have to follow HUD rules if each lot is at least 20 acres in size, including any easements.

To register a subdivision, the sub-divider must send a form application to the right state regulatory agency. The application must include a legal description of the property, the names, occupations, and interests of the applicant's officers and directors, a current title policy, copies of all proposed documents the prospective buyer is to sign, a statement of zoning, advertising materials, the proposed public offering statement, and a current financial statement.

If the registration is accepted, the subdivider can sell the lots using a public offering statement. This statement is meant to tell a potential buyer all the important and relevant facts about the subdivision in a full and accurate way. As with any disclosure tool, there is a constant back and forth between the subdivider, who sees the public offering statement as a marketing tool, and the attorney who prepares it, who sees it as insurance against future lawsuits for failing to disclose accurate material facts. If the subdivider does not use the current public offering statement, the regulatory agency can issue a cease-and-desist order to stop all sales and revoke the registration. Most of the time, it is illegal to sell or offer an interest in nonexempt, subdivided land without first registering the subdivision, giving the potential buyer a current public offering statement, and giving them a chance to look at it and sign a formal receipt.

Most of the time, a buyer who gets hurt can get back what he or she paid, plus interest from the date of payment, property taxes paid, costs, and reasonable attorney fees, minus any income received. Under these laws, the scope of liability is very wide and usually includes not only the subdivider but also all officers, employees, real estate salespeople, and brokers. All of these people are jointly and severally liable unless they can prove that they did not know about the facts that are said to be the reason for the liability.

Subflooring

As a foundation for the finished flooring, boards or plywood sheets are fastened directly to the joists. Although some houses have concrete subflooring, it is more common to find rough planks.

Subjacent support

The support that the earth's surface gets from the layers below it.

Subject matter expert (SME)

The persons who have the requisite (technical) skills for the project.

Subject property

The item for which a fair market value appraisal has been prepared.

The location and/or building that is being studied or appraised.

A reference to the subject matter of the discussion or the subject matter of the appraisal.

Subject to

When a buyer purchases a home that already has a mortgage loan and begins making the required payments without taking personal responsibility for the loan.

To purchase a home with an existing mortgage while avoiding personal liability for the loan.

Subject to clause

The provision in a contract for sale that specifies any contingencies or special conditions of purchase and sale, such as an offer made and accepted contingent upon obtaining financing, receiving approval for leases, and securing particular zoning criteria. The seller may sell the property subject to existing leases, specific liens, particular restrictions, or other restrictions. If exceptions are not specified in the "subject to" clause, any encumbrance renders the title unmarketable, and the seller may be required to clear the encumbrance.

Subject to mortgage

When a grantee acquires a piece of property "subject to" a mortgage, the mortgagee is not obligated to collect from the grantee. It is possible to lose property and equity if the grantor/mortgagor fails to pay the note, but this is a rare event.

For example, if Dudley had a $50,000 mortgage on a farm valued at $75,000, he could sell it to Eugene for $75,000, subject to the loan. The monthly mortgage payments would be covered by Eugene's earnings. If Eugene defaults, the bank cannot sue him for any unpaid mortgage debt; he would only be evicted from the property.

Fortunately, most mortgages include acceleration provisions that allow the mortgagee to choose between declaring the debt due upon sale, allowing for assumption (usually at a fee), or permitting the borrower to sell the property while still owing on the loan. The term "alienation" or "subject to clause" are both used to describe this particular acceleration clause. Obtaining an estoppel or reduction certificate from the lender is the best way to ensure that the loan has not been defaulted on, that all payments and interest have been made, and that the interest rates are consistent with the seller's claims.

As is customary in a contract for deed or a wraparound mortgage, the sale is also "subject to" the existing mortgage obligations.

Because they plan to resell the property in the near future and don't want to be associated with too many mortgages, real estate agents will sometimes purchase real estate subject to existing mortgages. To ensure that the sellers are aware of all the possible consequences of selling a property with a mortgage, brokers must be especially vigilant.

Subjective probability distribution

An opinion or prediction as to the likelihood of each conceivable outcome of an unknown event for a collection of possible outcomes of an uncertain event.

Subjective value

The worth of an asset to its current owner or a prospective buyer. This is analogous to the economic concept of value in use.

The amount of money a certain person would be willing to pay to own a property. This is also called "personal value." Compare subjective value with objective value, which is what a reasonable person would pay for the same thing.

Sublease

Occurs when the original tenant (lessee) transfers a portion of his or her rights under the lease to another tenant while the original tenant (lessee) remains responsible to make payments.

A property that has already been leased is leased again, but only for the remainder of the original lease term.

A lease granted by a tenant to another for a portion of the leased premises or for a specific period of time.

A lease that a lessee gives for a portion of the leasehold interest while keeping some reversionary interest for himself. As long as the lessor still has some interest in the property, the sublease can be for all or part of the property, for the whole term or for part of it. Most leases have a clause that says you can't sublet without the landlord's permission. The rent is usually paid by the sublessee to the lessee and then from the lessee to the lessor. The lessee is still responsible to the lessor for the rent. The sublessee does not have to pay rent to the original lessor because of a contract.

But if the lessee gives away all of her rights to the lease, this is called a "assignment of lease." In an assignment, the person who gets the property is in privity of estate with the person who gave it to them. This means that they are both responsible for the terms of the original lease that run with the land. 

Submarket

A market segment or part in which all of the properties are regarded as near substitutes by a reasonably homogeneous group of potential buyers; properties that provide equal utility or satisfaction.

A geographical area surrounding a property that will supply a significant share of the clients for a real estate project.

Submittal notice

Notification in writing from a broker to a seller, noting that the broker has showed the seller's property and specifying the prospect's name, address, and the selling price suggested. The broker and seller have a listing agreement with the broker. Such a warning is especially crucial in open listing situations in order to avoid difficulties in obtaining a cause of action.

Subordinated ground lease

A ground lease in which the owner subordinates his rights to the structure to those of others, such as the construction or permanent mortgage loan holder.

Subordinated sale-leaseback

A financing device used by developers to finance the purchase or ownership of unimproved land. To raise funds, the developer sells the land to an investor, who leases it back to the developer. After that, the developer seeks funding for the improvements, and the lessor-investor agrees to subordinate the lease to the mortgage.

Subordination

Being secondary means that a mortgagee or lien holder is ready to take payment after another creditor under terms of a mortgage.

Subordination agreement

A phrase in a mortgage or lease that states that the holder's interest is secondary or subordinate to a future encumbrance.

A contract in which the owner of a mortgage with a higher priority agrees to give up that priority to a current or expected future lien. Subordination agreements are often used in development projects where the seller of the land to be developed takes back a purchase-money mortgage and agrees to subordinate the mortgage or become subject to a construction loan. This allows the developer/buyer to get a first mortgage loan to improve the property. So, the subordination agreement changes the normal rule that the first recorded mortgage has the most weight. So, even though it was recorded after the purchase-money mortgage, the construction mortgage is now the first mortgage.

Many interim lenders won't lend any money if all previous loans and other agreements don't have a subordination clause. So, most contracts to buy condos before they are built have a clause that says the buyer's right to buy the condo (called an "equitable lien") comes after any interim construction mortgage given by the developer. So, if the borrower didn't pay, the lender could cancel the purchase agreement if it wanted to.

A person who wants to build on a leasehold property will usually try to get the fee owner to put the fee behind a construction loan. In this case, the word "subordinating" is misleading because you can't put a fee below a leasehold mortgage. In reality, what the fee owner is doing is agreeing to put a burden on the fee. When a fee owner partially subordinates the fee, the landlord or owner is telling the lender that no ground rent will be due if the property goes into foreclosure. In this case, the owner is not risking the fee, just the ground rent.

Some states have laws that say subordination agreements have to be in a certain way and tell you certain things. If a broker writes a subordination clause, they might be doing something that is against the law.

Subordination clause

A clause that lets the owner of a mortgage let another mortgage come before it. Giving up priority is the act of subordinating. This clause says that if a previous mortgage is paid off or renewed, the junior mortgage will stay in second place and won't become a higher or first mortgage automatically. Most junior mortgages have a subordination clause because the junior mortgagee gets a higher interest rate and usually doesn't care that the mortgage is in a lower position. A sample subordination clause might say: "This mortgage shall be and remain subordinate to the present first mortgage or any renewal thereof, or in the event of its payment, to any new mortgage, provided that the excess, if any, of said mortgage over the amount of the present first mortgage be applied to reduce the principal of this mortgage."

A broker should make sure to explain to a client what any subordination clauses in the mortgage documents mean for all parties and suggest that the client hire an attorney to make sure that the preliminary subordination language in the contract of sale between the buyer and seller is clear, certain, and not open to interpretation.

A mortgage clause that prevents a mortgage from being recorded at a later date that would take precedence over an existing mortgage.

Subpoena

A court order requiring a witness to testify under pain of perjury. Anyone who defies a court order is subject to arrest.

Subpoena duces tecum

An order from the court to show books, records, and other papers.

Subprime loan

A loan given to people with lower credit scores than normal loans will allow. This is because lenders can negotiate the interest rate and discount in order to make a lot of money. But the risk is higher, and it takes careful underwriting to make it work. Recent changes to how credit scores and appraisals are done have given lenders the tools they need to make these loans.

Loans offered to homeowners who do not meet the requirements for conventional (prime) mortgages. Subprime loans can include hefty fees and costly prepayment penalties, thereby "locking" the borrower into a high interest rate.

Subrogation

In relation to a legal right, interest, or duty, the act of replacing one individual with another. Substituting, for example, an insured ceding claim rights to the insurance provider in exchange for immediate loss payment.

The process of putting a third person in place of a creditor whose rights the third person takes over. For example, if a title company pays for a loss that is covered by its policy, the buyer can't sue the seller for that loss. Most insurance policies have clauses about subrogation. When a judgment is paid with money from a state real estate education, research, and recovery fund, the fund takes over the rights of the person who was hurt.

If the Department of Veterans Affairs makes advances to the mortgagee because the veteran-mortgagor is behind on payments, the VA takes over the mortgagee's rights against the mortgagor up to the amount of the advances.

Subscribe

Putting one's name at the bottom of a document. Most documents don't need to be signed up for. For example, it's enough to write "I, George Smith, promise to pay Tash Lee $100,000" on a promissory note. Some laws, on the other hand, require subscribing witnesses, which are people who sign at the end of the document after the main signer. In many states, a will is only valid if two people who have no interest in it sign it as witnesses.

Subscription

Agreement to purchase a newly-issued security

The signing of a legally binding contract to buy a syndicated security interest.

Subscription agreement

In a limited partnership structure, a document that outlines the relationship between the limited partners and the sponsoring general partner.

Subsequent bona fide purchaser

One who buys a stake in a piece of real estate without being aware, either directly or indirectly, of any other rights that come before theirs. The laws about recording are meant to protect people who buy property for money without knowing about other, unrecorded interests in the property. So, a transfer that isn't recorded isn't valid against any later buyer (lessee, mortgagee) who records another transfer without knowing about the one that wasn't recorded. Possession of property under a deed that hasn't been recorded gives notice to a buyer who later records a deed. The second buyer wouldn't be a real one, so the recording act wouldn't protect them. A later donor or someone who gets something from a will are also not protected because they are not buyers.

Subsidized housing

Private landlords who rent to low-income families get help with their housing costs. The U.S. Department of Housing and Urban Development is in charge of running the Housing Choice Voucher Program.

Subsidy

1. Money given by the government or another organization to lower the cost of one or more of the parts of housing (land, labor, management, or materials) so that the cost of housing for the person living there is lower.

2. If it's a buyer's market, a seller or developer might offer a subsidy to make the deal more appealing.

Subsidy rent

The gap between the developer's cash out-of-pocket annual expenses allocated to a specific tenant space and the tenant's minimum rental. In an effort to attract more customers, some shopping centre developers subsidize the rent of some specialist tenants, such as banks and post offices. In actuality, both the developer and the other tenants subsidize the rent, as the financial deficit of one tenant must be covered by other tenants before the developer can generate any profit.

The Housing and Urban Development Act of 1968 and its following amendments, the Housing Act of 1969 and the Emergency Home Finance Act of 1970, contain a number of programmes that enable low-income families to rent or purchase housing through subsidized programmes. These statutes indicate Congress's interest in fulfilling the housing demands of a growing population, establishing an urban policy, and encouraging and supporting healthy real estate development, including new community and intercity development.

Substantial improvement

A building improvement may be considered for tax purposes if it is made at least three years after the building was put into service; over a two-year period, the amount added to the building's capital account (not repairs) must be at least 25% of the building's adjusted basis on the first day of that period;

Substitute basis

The original tax basis of property obtained through a like-kind exchange. The substitution basis accounts for any postponed gain or loss on the property exchanged.

Substitution

A value principle that says the maximum value of a property is usually set by how much it would cost to buy or build another property that is just as desirable and valuable. This is assuming that there won't be any expensive delays in making the switch.

Substitution clause

The section of the work letter that states what materials may be substituted for the landlord's standard building materials.

Substitution of collateral

It's possible to get a release of the original collateral in a mortgage by substituting it with another appropriate security.

Subsurface easement

An easement authorizing the use of belowground space for purposes such as power lines, sewers, and tunnels; also known as a subsurface right.

Suburb

A town or city that is close to a central city and has economic ties to it.

Successors and assigns

Limiting words that are used in deeds to talk about the third parties to whom the rights to the property can be given later.

Sum of the years' digits depreciation method (SOVD) 

A depreciation technique that allows depreciation based on the inverted scale of the sum of digits for the years of the useful life, resulting in a larger depreciation than straight line depreciation.

The Economic Recovery Tax Act of 1981 made it illegal to use a method of accelerated depreciation that was meant to give the most depreciation in the first few years of ownership.

Summary appraisal report

The findings of the appraisal are summarized in this report. The majority of the data and methodologies utilized in the appraisal are saved in the appraiser's work file. The "form" reporting option is used for the majority of summary appraisal reports. Forms reports are far shorter than narrative reports, and their regular standardization promotes efficiency and ease. Mortgage lenders typically need form reports when a household buys or refinances a single-family home.

Summary possession

Landlords can utilize this legal process to reclaim their property from a tenant who has breached the terms of the lease or who is still using the property after the tenancy has ended. If a landlord-tenant relationship occurred, and the tenant is wrongfully hanging on to the deeded property after tenancy has terminated due to forfeiture or termination under the lease's terms, then summary possession proceedings can be brought against the tenant.

Nonpayment of rent, abandonment, prolonged tenancy, and violations of governmental or landlord use laws are among the most common reasons for summary possession. Without prior notification and demand for rent, the summary procedure cannot be started for nonpayment.

Summation approach

When you add the estimated value of the improvements to the estimated value of the site as of the date of the appraisal, you get the value.

Summation technique

A technique for calculating capitalization rates that is based on the premise that investors must be rewarded in order to invest their money, and that additional compensation is necessary for risk bearing and illiquidity.

Summons

A legal notice that a lawsuit has been filed against a defendant and that a default judgment will be made against the defendant if the defendant doesn't answer the complaint within a certain amount of time (usually 20 days).

Sump

A hole or reservoir that is used to collect and hold water (or another liquid) before it is drained, usually with a pump.

Sun Angle

The angle created by an incoming solar radiation beam and a plane on the earth's surface.

Super-regional center

A method of depreciation that uses an inverted scale of the sum of digits for the years of usable life, resulting in a higher depreciation than straight line depreciation.

Superadequacy

An upgrade or structural component that costs more than it is worth, leading to functional obsolescence, is referred to as a "over improvement" (for example, gold faucets in a kitchen; high ceilings in an office).

Superfund

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as changed by the Superfund Amendment and Reauthorization Act of 1986, is often called "Superfund" (SARA). Superfund's main goal is to clean up places where dangerous substances have been dumped. It puts owners, landlords, and sometimes lenders in a lot of legal danger because of strict liability.

Superregional malls

These shopping malls house up to five or six main tenants as well as hundreds of minor tenants.

Superregional shopping center

A shopping mall that attracts customers from a very vast geographic region and houses a huge concentration of retail establishments. Superregional malls often have retail space ranging from 500,000 to 750,000 square feet. As anchor tenants, they could have up to four major department stores.

Supply

The relationship between the price and quantity of a product that suppliers place on the market during a specified time period, at all possible prices.

Supply and demand

The idea states that when a product's supply is reduced, prices will rise, and when there is an overabundance, prices would fall.

A principle of economics that says the market value of something is based on how the forces of supply and demand work in the market at the time of the appraisal. This principle says that price goes up when demand goes up and down when supply goes up (i.e., supply is low, price is high). On the other hand, when there is a lot of supply and not much demand, the price is low.

Supply to sell

Desired reduction in a market participant's inventory of a product at a certain price.

Support deed

A deed used to transfer property that says the buyer will take care of the grantor for the rest of his or her life as payment. If the right kind of support stops, the courts will not let the deed stand.

Surcharge

1. Extra rent is charged to tenants who use more gas, water, or electricity than the lease allows.

2. An extra fee that the Federal Reserve Bank charges member banks that borrow too much money.

Surety

There are those who take on the role of "guarantor." The most common form of a surety bond is a contractor's completion and performance bond. Because a surety company would not bond a contractor if they were not financially and professionally sound, the owner's assurance is that the contractor will be able to complete the project in a timely manner and to a high standard. The principal is the contractor, the obligee is the owner, and the surety is the bonding company.

Rather than a savings fund, the bond premium is more like a service charge. The surety of a completion bond will step in if the bonded contractor fails to finish the job to the customer's satisfaction. A surety under a performance bond would have similar defenses if the owner defaulted, and thus might not be compelled to complete the contract, as the contractor.

To put it simply, in an assumption of mortgage the grantee of the mortgagor takes on the role of a surety, making him personally and principally liable to the mortgagee for any deficiency judgment that results from a foreclosure sale Under an assigned lease arrangement, the lessee serves as a guarantee.

The state real estate commission in some states requires brokers to post surety bonds.

One who ensures another's performance.

Surface water

Unlike a stream, which has a concentrated flow, storm water spreads out. Most of the time, property owners have the right to let water flow through their yard and onto the lot below, as long as the water flows in sheets and is not concentrated on the lot below by the property owner. Under common law, landowners can do anything (like regrading or paving) to protect their land, even if it hurts a neighbor's land in the process.

Surge

A massive and frequently devastating wave created by high air pressure and strong winds.

Surmortgage

To prevent a mortgagee from foreclosing, certain states require that the defaulting mortgagor present evidence as to why the mortgagee should not proceed.

Surrender

A premature conveyance of a possessory estate to a person with a future interest, such as when a lessee surrenders a leasehold interest to the owner of the reversion interest, the lessor, prior to the lease's normal expiration - as opposed to a lease abandonment.

If the lessor accepts the surrender, the lessee is no longer obligated to pay rent. If the tenant abandons the premises without a formal surrender, the landlord can usually collect either the rent due for the entire term of the rental agreement, or the rent for the time it takes to rerent the dwelling unit at a fair rental plus the difference between the fair rental and the rent the tenant was paying, plus a rerenting fee.

It should be noted that an oral surrender agreement is generally only valid if the remaining rental period is one year or less. An oral agreement is unenforceable if the balance is for more than one year.

If the lease was recorded, the parties should execute and record a written surrender agreement to clear the title if the lease expires before its normal expiration date.

A lease surrender clause governs what happens to the improvements when the lease expires.

Survey

the precise measurement and description of a plot of land, frequently with structures and contours shown

The process of measuring boundaries and figuring out the size of land; the on-site measurement of lot lines, dimensions, and the position of houses on a lot, including figuring out any encroachments, easements, party walls, and setback requirements.

At the time of the listing, the broker should look at the property to see if there are any survey stakes that can be seen. If not, the broker should tell the seller that he or she may have to pay for a survey. (Sometimes, the buyer will choose to pay for a new survey of the property.) The survey may find easements and encroachments that are not in the public records. If there are any differences between the original survey and the new survey, the seller should have to fix the problem and pay for the survey.

Before lending money to buy or build on certain properties, lenders often want to see a survey that is accurate. As the building goes up, a "date-down" survey must be done to make sure that the new building doesn't go past the building or lot lines.

Most surveys fall into three main categories. The geodetic survey is used to figure out how big and what shape the earth is. Cadastral surveys map out the edges of parcels to show who owns them. Topographic surveys are used to measure the shape of the land (hills, valleys) and where roads are. When figuring out what a survey means, "bearings" are compass readings, "distances" are linear measurements, and "courses" are the directions of a line.

A surveyor's measurement and description of a piece of land.

The process of precisely defining the boundaries of a plot of real estate.

Surveyor

A person who compiles a survey.

Survivorship

Following the death of another joint tenant, a joint tenant or renters have the right to continue to own the property.

Survivorship, right of

The unique part of a joint tenancy in which the title, rights, and interests of a joint tenant who has died in certain property automatically pass to the joint tenants who are still alive, free from claims by the decedent's heirs and creditors. When a joint tenant dies, that person's share of the property is taken away, and the remaining joint tenants get an equal share of the property. Under the Uniform Partnership Act, which is used in many states, the partners who are still alive have certain rights to the property they own together. When a tenant in common dies, however, all of their rights, titles, and interests go to their heirs according to their will or the laws of intestacy if they don't have a will.

Suspension

A time when one is compelled to do nothing. Suspension of a real estate license is possible by the real estate commission following an investigation into a violation of licensing regulations. The licensee is not allowed to work in real estate for the purpose of earning a commission or fee while the suspension is in effect. In order for salespeople to continue working in the real estate industry while their licenses are suspended, they must find new firms to switch to.

Sweat equity

A common term for the equity that a buyer or borrower adds to a piece of property by doing work or labor on it. It makes the property worth more in a direct way.

The equity created by the investor as a result of his or her effort.

Sweetheart contract

This is a slang term for when a developer hires a subsidiary company that is barely disguised to manage the developer's project. Most state condo laws have rules about sweetheart contracts and say that the homeowners' association can cancel them.

Swing loan

A bridge loan is a short-term loan that lets someone buy a new home with the equity from the home they are selling.

Switching fee

There is a fee that is charged if someone already has a loan from one type and wants to switch to another type (e.g. variable rate loan to fixed rate loan).

Symmetric probability distribution

A probability distribution with two sides that are mirror images of each other.

Syndicate

A group of two or more persons who have banded together to make and manage an investment. A syndicate might be organized as a corporation, general partnership, or limited partnership.

A collection of people or legal organizations who join forces to carry out a certain investment activity.

a collection of investors (individuals or corporations) that pool their resources to invest in a financial project that requires more capital than each individual has.

Any general or limited partnership, joint venture, or other type of organization created solely for the goal of profitably investing in real estate.

Syndication

A word that describes a group of two or more people who work together to make and run an investment. A syndication is not a legal way to own something. Instead, it is a term for when more than one person owns an investment. It is mostly a mix of money and management, and it is often thought of as a security for real estate.

A syndication can take the form of a REIT, corporation, general partnership, limited partnership, or even tenancy in common. Some of the parties are involved in making and running the investment, while others are not. Usually, the only thing they do is give money.

Most real estate syndications are set up as limited partnerships, with the syndicator as the general partner and the investors as limited partners. This lets the partnership act as a way to pass through high depreciation deductions directly to the individual investors and avoid the double taxation that comes with corporate ownership. Small investors often have the chance to take part in a real estate investment that will be managed by people with more experience through syndication. The Internal Revenue Code says that you can't deduct money you spend to set up a partnership or help sell shares.

Syndication is also used to describe the process of putting listings on the Internet with the help of a national syndicator's services and technology.

The syndicate's actions in acquiring a property.

Syndicator

A person who makes a living selling real estate partnership investments.

Systematic risk

Even in a huge portfolio, there are some risks that cannot be mitigated by diversification. Exposure to macroeconomic risk factors leads in this form of risk.

Systems built

This is a word used by luxury home builders to describe factory-built housing in order to avoid the negative connotations associated with prefabrication or manufactured homes.

Glossary Index

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