The monthly charge levied on owners by a cooperative corporation to cover the building's operating costs, real estate taxes, and the debt service on the building's underlying mortgage.
In New York City, most of the cooperative and condominium buildings are managed by an outside company, or managing agent, which is responsible for the building operations.
A mansion tax is a New York State tax of 1% of the selling price levied on the buyer of any residence costing in excess of $1,000,000.
The market value of a property is an estimation of the price for a property in relation to the current real estate market.
Martin Act is the New York State law regulating the conversion of properties to cooperative or condominium ownership, and is also referred to as Section 352eee and 352eeee of New York State's General Business Law.
A master deed is the instrument that legally establishes a condominium. It is also referred to as a condominium declaration.
A mechanic's lien is a statutory lien available to anyone supplying labor or material to the construction of an improvement of land that ahs not been properly compensated.
Metes and Bounds
Metes and bounds is a system of land description with distances and directions.
A monolithic slab is a type of foundation in which the footing and slab are poured at the same time.
A mortgage is a pledge of real estate collateral to secure a debt. Also, it is a legal document describing and defining the pledge. The mortgage may also include the terms of repayment of the debt. It is also referred to as a deed of trust.
A mortgage banker is an institution that performs services similar to those of a mortgage broker. However, a mortgage banker is also legally permitted to lend its own funds.
A real estate professional who represents an array of banks seeking to issue mortgages. The mortgage broker meets with a customer, assists with the application, and facilitates the mortgage process on behalf of the borrower and the bank. Generally, in the case of residential mortgages, the mortgage broker is paid a fee by the bank for this service.
Mortgage Insurance (or Private Mortgage Insurance / PMI)
Mortgage insurance is insurance that protects the lender in case the home buyer does not make their mortgage payments. Typically, a borrower would be required to pay a fee for mortgage insurance if their down payment is less than 20%.
A mortgage note is a document signed at closing which states the borrower's promise to re-pay a sum of money. The note states an interest rate and a fixed period of time (term) for repayment.
Mortgage satisfaction refers to the full payment of a mortgage loan.
The mortgagee is the lender in a mortgage transaction.
The mortgagor is the borrower in a mortgage transaction.
A multiple dwelling is a structure with two or more residential units.
Multiple Listing Service (MLS)
A MLS is a central service for real estate listings available to member brokers.
National Association of Realtors (NAR)
The NAR is the largest and most prominent trade organization for real estate brokers and agents.
This occurs when a loan permits the borrower to make a payment that is less than the full amount required to cover the interest charge on the open balance and the shortfall is added to the mortgage principal.
A negative pledge is when the condominium places restrictions on the unit deed and trust agreement restricting the right of an owner to finance a condominium unit for more than a specified amount.
A net lease refers to a type of lease in which the tenant pays a fixed rent plus the operational costs of the property.
A net listing is a method of establishing the listing broker's commission as the entire amount above specified new amount to the seller. This method of establishing a broker's commission is illegal in New York State.
Net worth is your assets less your liabilities.
A nonconforming use refers to the utilization of land that does not conform to the zoning ordinance for the area.
A nonrecourse note is a type of note in which the borrower has no personal liability for payment.
Some legal documents, including certain leases and contracts of sale, are notarized by a certified Notary Public to verify the authenticity of a signature.
Notice of Lis Pendens
Notice of lis pendens is a public record warning all concerned parties that title to a property is the subject of a lawsuit and any lien resulting from the suit will attaché to the title.
An offer is made to purchase a property at a specific price. Once an offer is accepted, then a contract of sale is issued by the seller's attorney.
Open-ended Listing Contract
An open-ended listing contract is a contract between a seller and a real estate broker that does not have a termination date.
An open-end mortgage is a mortgage that may be refinanced without rewriting the mortgage contract.
Origination is the first step in the mortgage loan process consisting of the completion of the application.
An ordinance is a law enacted by the local government.
An open listing is an apartment for sale for which the owner has not signed an exclusive agreement with a real estate broker. Many brokers may represent the seller, or the seller can promote the property independently.
Option to Renew
An option to renew is a provision in a lease that states the method and terms of a lease renewal.
The origination fee is a service charge by a lending institution for a mortgage.
Ownership in Severalty
Ownership in severalty is title to real property held in the name of one person only.
A parcel is a specific portion of land such as a lot.
Partition refers to the legal proceeding that divides property of co-owners so each will hold title in severalty.
Party wall refers to the wall in common between two adjoining structures, such as in townhouses and brownstones.
A passive loss is a loss generated by investment real estate when real estate is not the taxpayer's primary business. Loss in excess of income may not be fully recognized for tax purposes in the year it was incurred.
A penthouse apartment refers to the apartment on the highest floor in a luxury, high-rise building.
A percentage lease refers to a lease that has a rental amount that is a combination of a fixed amount plus a percentage of the lessee's gross sales.
Percolation is the movement of water through soil.
Percolation (Perc) Test
A perc test determines if the soil is sufficiently porous for the installation of a septic tank.
Perfecting a Loan
When a loan is issued against a personal property, it is recorded in the county clerk's office against the name of the borrower. The recording process perfects a security position against the collateral.
A periodic tenancy lease automatically renews for successive periods unless terminated by either party. It is also called an estate from year to year.
A sale of real estate in which income is recognized for tax purposes but no money has been received correlating to the gain amount. This can occur when the property's basis has been depreciated below the property's mortgage amount.
Pied-a-terre is a term that refers to an apartment that is not the primary residence of the owner. The term refers to an apartment that is used only sporadically throughout the year.
PITI is an acronym for a mortgage payment that includes principal, interest, taxes and insurance.
A plat is a property map that is part of the public record.
Platform framing is the most common type of framing in residential construction in which the framing of the structure rests on a subfloor platform.
Points refer to the payment made to a lender as consideration for issuing a mortgage, usually based on a percentage of the loan amount. Each point is equal to 1% of the principal of the mortgage.
A post-war building is one that was built after World War II, typically between the 1950s and 1970s. They vary in size, but are usually taller than pre-war buildings, are often constructed of white, red or brown brick and have few architectural details. The rents are usually lower than in pre-war or newer buildings.
A powder room is also referred to as a half-bath, and only has a toilet and sink.
A pre-approval is a process in which a conditional commitment is issued after a loan profile is underwritten with all standard documentation except a property appraisal and a title search.
A pre-qualification is a process in which a loan officer calculates the housing-to-income ratio and the total debt-to-income ratio to determine an approximate maximum mortgage loan amount.
A pre-war building is one that was built before World War II, and mainly prior to 1929, since there were few residential buildings built during the 1930s. Buildings are less than 20 stories and usually have large rooms, mouldings, hardwood floors and high ceilings.
Price-to-Earnings Ratio (P/E Ratio)
The price-to-earnings ratio is the common metric used to assess the relative valuation of equities. To compute the P/E ratio in the case of a rented house, divide the price of the house by its potential earnings or net income, which is the market rent of the house minus expenses, which include maintenance and property taxes. This formula is:
House P/E Ratio = House Price / Rent-Expenses
Compare this ratio to the simpler but less accurate price-rent ratio.
It is the basic affordability measure for housing in a given area. It is generally the ratio of median house prices to median familial disposable incomes, expressed as a percentage or as years of income. This ratio, applied to individuals, and also referred to as "attainability", is a basic component of mortgage lending decisions.
The price-rent ratio is the average cost of ownership divided by the received rent income (if buying to let) or the estimated rent that would be paid if renting (if buying to reside). This formula is:
House Price-Rent ratio = House Price / Monthly Rent x 12
Generally, a primary residence of an owner or renter is one that they occupy the majority of time, usually considered to be 6 months and 1 day out of every year.
The principal in the mortgage is the amount that is borrowed and on which interest is paid or received.
Private Mortgage Insurance (PMI)
See Mortgage Insurance.
Processing is the second step in the mortgage application process which involves the verification of information stated on the application. Credit reports and the appraisal are also ordered at this time.
Current tax rules permit the profit on the sale of a primary residence to be tax exempt for up to $250,000 for an individual, or $500,000 for a married couple.
Property Condition Disclosure Form
This form is a comprehensive checklist pertaining to the condition of the property including its structure and any environmental issues in and around the property.
The property description is an accurate, legal description of the land.
The tax issued by a municipality on the ownership of a property.
The lease issued by a cooperative corporation to each tenant-shareholder prescribing his or her right to occupy a specific apartment and his or her general obligations as an owner and tenant.
In relation to a co-op, the pro-rata share is your apartment's share of the building's underlying mortgage. The share is determined by dividing the amount of the underlying mortgage by the number of shares in the building then multiplying the per-share amount by the number of shares for your apartment. The lower of either the appraised value or purchase price then divides that number.
A document issued by a sponsor in the process of converting a building to a cooperative or condominium ownership. It is intended to provide "full disclosure" of all relevant facts associated with evaluating an investment in the property, and is also referred to as the offering plan or black book.
A quadruplex is an apartment with four levels.
Radon is a colorless, odorless gas present in soil that enters a home through small spaces and openings.
A rate cap is the limit on interest rates during the term of an adjustable rate mortgage.
The rate lock is an agreement between the borrower and the mortgage lender that guarantees a rate for a set period of time (typically 30, 60 or 90 days).
Ratios are guidelines applied by the lender during underwriting a mortgage loan application to determine how large a loan to grant an applicant. The ratios the lenders use are generally the Loan-to-Value Ratio, Housing-to-Income Ratio, and Debt-to-Income ratio.
Real Estate Broker
A real estate broker is an individual employed on a fee or commission basis as an agent to bring buyers and sellers together and assist in negotiating real estate contracts between them.
Real Estate Investment Trust (REIT)
An REIT is a trust owned by shareholders that buys and initiates mortgage loans.
Real Estate Salesperson
A real estate salesperson performs any of the acts of a real estate broker but while associated with and supervised by a broker.
Real Estate Settlement Procedures Act (RESPA)
RESPA is a federal law that regulates the activities of lending institutions in making mortgage loans.
Real Property Tax Lien
This lien is a tax levied against real property by the local government and has priority over all other liens.
When investment real estate has been depreciated for tax purposes, the gain on the sale includes a "recapture" of the previously written-off depreciation as gain. In certain cases, this can result in a tax liability that exceeds the cash received. See "Phantom Gain".
A recognition letter is a letter from the cooperative corporation's board of directors recognizing the secured rights of a lender to the shares of stock and the proprietary lease on a specific apartment.
Recording is registering the ownership, lien, or claim of a party to a specific parcel of real estate with the local county.
Recording fees are the fees charged by the recorder's office to record a document such as a mortgage, deed of trust, deed and UCC Financing Statement.
Redlining is the resistance of lending institutions to make loans for the purchase, construction, or repair of a dwelling due to the socio-economic conditions of the property's location.
A referral fee is a percentage of a broker's commission paid to another broker for the referral of a buyer or seller.
Refinancing are the proceeds of a new loan used to pay off an existing mortgage on the same property.
A rental is the possession, but not ownership, of a property for a limited duration of time under defined terms and conditions.
A rental building only has apartments for rent and not for purchase.
A form of rent regulation, rent control occurs when an apartment has tenants that have been in continual residence since July 1, 1971, or other qualified occupants that have been in residence with the original tenant continuously for either two years (immediate relative) or five years (non-relative). Rent control limits the amount of rent landlords can charge for apartments and restricts their ability to evict.
Another form of rent regulation, rent stabilization usually applies to buildings built before 1974 and apartments removed from rent control. After the rent has legally been raised to over $2,500 per month, or the household income of the tenants is over $200,000 per year, rent stabilization is no longer in effect. The amount that landlords are legally allowed to increase the rent every year is regulated by the NYC Rent Guidelines Board. It also covers buildings that receive J-51 and 421-A tax benefits, so there are newer buildings with apartments that have higher rent that also are regulated by rent stabilization.
A reserve fund is the amount reserved to provide funds for future expenses in order to maintain a cooperative or condominium building and is managed by the building's board.
Residential Lead-based Paint Hazard Reduction Act
This act stipulates procedures to be followed in disclosing the presence of lead-based paint in the sale or rental of properties built prior to 1978.
Reverse Annuity Mortgage
A reverse annuity mortgage is a type of mortgage that retirees on fixed incomes can use to generate income out of the equity in their homes while they continue to live in the home.
R-Factor or R-Value
The R-Factor is a rating that measures the degree of resistance to heat transfer.
A rider is an addendum to a document that covers supplemental issues.
A ridge beam is the highest part of framing in a structure and forms the apex of the roof.
Right of Assignment
The right of assignment allows the lender to sell a mortgage at any time and obtain money invested rather than wait for the completion of the loan term.
Right of First Refusal
A condition contained in many condominium master deeds that permits the board to review any party seeking to purchase or rent an apartment and to refuse the applicant if it so desires. If the board refuses the applicant, it must thereafter purchase or rent the apartment under the same terms and conditions stipulated in the contract.
Right of Survivorship
The right of survivorship is the right of an owner to receive the title to a co-owner's share upon death of the co-owner, as in the case of joint tenancy and tenancy by the entirety.
Right-of-way is an easement allowing someone to use the land of another for a specific purpose.
Riparian rights are the rights of an owner of property adjoining a watercourse such as a river, including access to and use of the water.
Apartment size may be described by number of rooms. A room in NYC must be at least 100 sq. ft. and have a window, except in the case of a kitchen. Most kitchens are counted as rooms, unless they are Pullman types, which are part of the living room. Baths are not counted as rooms. A three room apartment consists of a living room, bedroom and kitchen. A four room apartment could have two bedrooms, or a bedroom and dining room, a living room and kitchen.
Running with the Land
Running with the land refers to rights that are passed with the title of property from the grantor to the grantee.