Below, is a comprehensive list of Real Estate terms, which will be updated regularly. Readers are encouraged to become familiar with the terminologies used in context of Real Estate Transactions.
An increase in the value of a capital asset that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes. Long-term capital gains are usually taxed at a lower rate than regular income.
The actual usable area of an apartment minus wall thickness. Simply put, it is that area within the walls where you can actually lay a carpet.
Commercial area and its immediate radius of 6 kms, typically located towards the city centre, which forms the hub of all major commercial activity in a city. Most of the larger corporate entities, large retail outlets and financial institutions would be located in this area. The Real Estate prices here would be the highest compared to all the other locations in the city.
The official record of ownership of a property or asset. The chain of ownership gets its name from its successive nature; a chain of title traces historical title transfers from the current owner back to the original owner. Due to their critical importance in establishing ownership of a property or asset, rigorous and accurate title records are generally maintained by the Registrar’s Office.
Also known as clean title, a clear title is a title without any kind of lien from creditors or other parties and poses no question as to legal ownership.
The expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan processing fee, title searches, surveys & site visits, taxes, stamp duty, registration charges and credit report charges.
A party or individual who cosigns a mortgage loan. Co-borrowers are jointly liable with the other borrower for the balance of the loan period. Often the co-borrower will also receive a portion of the ownership in the asset in exchange for assisting with the loan. However, it is not necessary to be a co-owner of the mortgaged property in order to be a co-borrower.
When there are more than one owner for an immovable property, the status of the property is known to be of the Co-ownership or Joint Ownership type.
An asset that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
A percentage of the sale price of a property paid to a real estate agent or broker for negotiating a real estate transaction.
The maintenance fee that is paid collectively by the owners of individual units for the maintenance and upkeep of the common areas of a real estate complex. These areas are generally managed and maintained by Residents’ Welfare Association or an outsourced Facilities Management Company.
Common areas are the undivided parts of the commonly owned premises like parking lot, lawns, swimming pool, clubhouse, corridors, lobbies, elevators, etc. These areas are not owned by a single individual owner. The responsibility for upkeep and maintenance of these areas is either by the housing society, homeowners association or management.
A certificate/ statement issued by the local development authority certifying that all necessary works have been completed and that the property is fit for occupation. In case of private development, such certificate can be given by the builder to individual unit owners at the time of possession. Owners require a completion certificate to claim tax benefits.
A loan borrowed to finance the construction of a home and typically only interest is paid during the construction period. Once the construction is over, the loan amount becomes due and it becomes a normal loan. The money is advanced incrementally by the lender during construction, as construction progresses.
The act of transferring an ownership interest in real property from one party to another. Conveyance also refers to the written instrument, such as a deed or lease that transfers legal title of a property from the seller to the buyer.
Cooperative Housing is a form of housing scheme promoted by most states in which the land is purchased, developed and constructed by a Cooperative Housing Society. A group of people can form a cooperative housing society by registering with the state government department and apply for land. Land is generally allotted to the cooperative housing society by the state development agency on a first come first serve basis at concessional rates. Once, the land is allotted to a society, it appoints a construction contractor and upon completion of construction, individual flats are allotted to society members based on a draw system.