safety clause

A safety clause may be contained in a listing. It provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect of the broker introduced to the property during the period of the listing.

sale-leaseback

An arrangement by which the owner-user of a property sells the property to an investor and then leases it back and continues to occupy the space as a tenant. Although the lease technically follows the sale, both will have been agreed to as part of the same transaction.

sales commission

The compensation paid to the agents for performing their duties in a commercial sales transaction. Sales commissions are customarily paid out of the proceeds of the sale at the close of escrow. Commission rates vary based on local market custom.

sales comparison approach

An approach to property valuation that uses sales of comparable properties as the basis for ascertaining a property’s value.

sales comparison value

A value indication derived by comparing the property being appraised to similar properties that have been sold recently, applying appropriate units of comparison, and making adjustments to the sales prices of the comparable based on the elements of comparison. [Appraisal Institute]

sales contract

A real estate sales contract contains the complete agreement between a buyer of a parcel of real estate and the seller. Depending on the area, this agreement may be known as an offer to purchase, a contract of purchase and sale, a purchase agreement, an earnest money agreement or a deposit receipt.

sales per square foot (entire retail facility)

The total sales for all tenants leasing owned space, except sales from department stores that are leased from the center, divided by the total leasable area these tenants occupy. [Adapted from ULI]

sales price

The amount of money required to be paid for real estate, according to a "contract," or previously paid. Example: The "sales price" consisted of $30,000 cash plus the buyer's "assumption" of a $70,000 "mortgage," for a $100,000 total.

salesperson

Any person who, for a compensation or valuable consideration, is employed either directly or indirectly by a licensed real estate broker to perform certain acts to 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 to negotiate leases thereof or improvements thereon.

sandwich lease

A leasehold estate in which the sandwich party leases the property from the fee owner or another lessee and then sublets to the tenant in possession, thereby maintaining a middle, or "sandwich," position. The sandwich party is the lessee of one party and the lessor of another; thus he or she is neither the fee owner nor the end user of the property. It is a lease occupying a position within three or more leasehold interests in a property.

satisfaction of mortgage

When all mortgage loan payments have been made and the note has been paid in full, a satisfaction of mortgage (also known as a release of mortgage or mortgage discharge) returns to the mortgagor all interest in the real estate conveyed to the mortgagee by the original recorded mortgage document.

savings and loan association (S&L)

A financial institution whose principal function is to promote thrift and home ownership. Depositors earn interest on their deposits, often at a higher rate than is offered at commercial banks. The S&L invests some of these deposits in residential mortgage loans, enabling more people to purchase and/or repair their homes. Savings and loan associations are active participants in the home loan mortgage market. (See thrift)

second-generation space

Refers to previously occupied space that becomes available for lease, either directly from the landlord or as sublease space. Also known as "secondary space."

saver-buyer

A property investor who seeks quality over yield.

second mortgage

A mortgage (or trust deed) that is junior or subordinate to a first mortgage; typically, an additional loan imposed on top of the first mortgage, taken out when the borrower needs more money. Because the risk involved to the lender is greater with the second mortgage, the lender's conditions are usually more stringent, the term is shorter and the interest rate is higher than for the first mortgage. (See mortgage)

secondary financing

A loan that holds a lower priority than one or more loans for repayment in the event of a foreclosure. Such a loan may be called a “second loan,” a “third loan,” and so on.

secondary mortgage market

A market for the purchase and sale of existing mortgages designed to provide greater liquidity for selling mortgages; also called secondary money market, not to be confused with secondary financing. (See primary mortgage market)

secret profit

Refers to a broker making an undisclosed profit at the seller's expense; for example, when the broker has an undisclosed relative buy the listed property and then resell it to a buyer whose earlier offer was never presented to the seller.

section(s)

As used in the government survey method, a land area of one square mile, or 640 acres. A section is 1/36 of a township, or each township contains 36 sections. Sections are numbered 1 through 36. Section 1 is always in the northeast or upper right-hand, corner. The numbering proceeds right to left to the upper left-hand corner. From there, the numbers drop down to the next tier and continue from left to right, then back from right to left. (See government survey system)

Section 1031 exchange

See tax-deferred exchange.

securitization

The pooling of real estate mortgages and trust deeds to act as collateral for the sale of securities to public and private investors. (See secondary mortgage market)

security

Evidence of obligations to pay money or of rights to participate in earnings and distribution of corporate, trust or other property. A security is usually found where an investor subjects his or her money to the risks of an enterprise over which he or she exercises no managerial control.

security agreement

Security interests in chattels (personal property) are created by an instrument known as a security agreement. To give notice of a security interest, a financing statement must be recorded. (See personal property, Uniform Commercial Code)

security deposit

A deposit of money by a tenant with a landlord to secure the tenant's performance under a lease. This deposit can sometimes take the form of a letter of credit or other financial instrument.

see-through building

A vacant building. Example: The term originated with over-built glass office buildings in Houston during the late 1980s. Without "tenants" or furniture, looking from the outside you could see right through the glass facades of these buildings.

seller carryback financing

A sale of real property where the seller receives a portion of the sales price in the form of a promissory note secured by the real property purchased. An extension of credit by the seller.

seller financing

See purchase money mortgage.

seller representation

The term for when an agent (who, in this instance, is often referred to as the “listing agent” or the “seller’s agent”) represents only the seller in a sales transaction, and has a fiduciary obligation to their client, as well as certain obligations for disclosure to the other parties in the transaction.

seller's agent

An agent who represents the seller of real property. (See buyer's agent)

senior loan

A real estate loan in the first priority position. (See junior mortgage)

separate property

Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage. (See community property)

service space

Single story (or mezzanine) with 10 to 16 foot ceilings with frontage treatment on one side and dock-height loading or grade level roll-up doors on the other. Less than 15% office.

servient tenement

Land on which an easement exists in favor of an adjacent property (called a dominant tenement or estate); also called a servient estate. If property A has a right-of-way across property B, property B is the servient tenement. The servient owner may not use the property in such a way as to interfere with the reasonable use of the dominant owner. (See dominant tenement, easement)

set-up sheet

Also known as a "Annual Property Cash Flow Statement." Includes cash flow information about a listed rental property that is passed out to other real estate companies and/or given to prospective buyers.

setback

The amount of space local zoning regulations require between a lot line and a building line.

severalty

Sole ownership of real property.

severance

Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.

SF

"Square Feet." Sometimes written as "Sq. Ft."

sharecropping

In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale, actually sharing the crop. (See agricultural lease)

shared-appreciation mortgage (SAM)

A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the borrower receives when the property is eventually sold.

sheriff's deed

The deed given after a sheriff's sale. (See deed)

signage

The tenant's name or logo placed on a property's exterior. Signage is a very important criterion used by many retail tenants to evaluate potential locations. Retailers usually benefit from the visibility and identity created by good signage on the building, on a monument, and/or in the window of the store. Some office and industrial tenants also value "sign rights."

shopping center

A group of retail and other commercial establishments that is planned, developed, owned and managed as a single property. On-site parking is provided. The center's size and orientation are generally determined by the market characteristics of the trade area served by the center. The two main configurations of shopping centers are malls and open-air strip centers.

side core building

A building in which the elevators and service cores (i.e. restroom, mechanical shafts, etc.) are located on the side of the floor.

signatory

  1. Having signed or joined in signing a document.
  2. A signer or one of the signers of a document.

simple interest

A method of calculating the future value of a sum, assuming that interest paid is not compounded, i.e., that interest is paid only on the "principal." Contrast with "compound interest." Example: An account is established paying "simple interest" of 10% on a principal of $1,000. Each year, it accrues $100 in interest, resulting in a balance of $1,500 after 5 years.

single agency

The practice of representing either the buyer or the seller but never both in the same transaction. The single-agency broker may be compensated indirectly through an authorized commission split or directly by the principal who employed the agent to represent him or her. (See dual agency)

single-family, owner-occupied dwellings

A dwelling which will be owned and occupied by a signatory to the mortgage or deed of trust secured by such dwelling within 90 days of the execution of the mortgage or deed of trust.

single-phase electric

See three-phase electric.

site assessment (environmental)

An evaluation of a site, prior to acquisition of title to the property, for the existence of hazardous waste. Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (U.S.), as amended by the Superfund.

site development

The installation of all necessary improvements (i.e. installment of utilities, grading, curbs, gutters, etc.) made to a site before a building or project can be constructed upon the site.

site plan

A document which describes how a parcel of land is to be improved. It includes the outlines of all structures and site improvements, such as driveways, parking lots, landscaping, and utility connections. Example: The "site plan" indicates that the office tower will be set back 100 feet from the street and be surrounded by surface parking for 2,000 cars.

situs

The personal preference of people for one area over another, not necessarily based on objective facts and knowledge.

smaller properties

When used in the context of investment properties, these are generally properties up to $10 million in price and normally bought and sold by smaller, less sophisticated investors. The upper dollar value for properties classified as “smaller” can vary by market and may be below $10 million in smaller markets.

SMERF

A category of hotel customer: Social, Military, Educational, Religious, and Fraternal group.

soil contamination

The presence of hazardous materials in the ground. Soil contamination is of particular concern to industrial brokers and tenants because of the large potential costs to cure. Industrial agents and tenants are sometimes advised to request a Phase 1 environmental assessment from the landlord and review it before completing a lease transaction. (See hazardous materials, Phase 1 environmental assessment)

Soldiers and Sailors Civil Relief Act

A law prohibiting foreclosures while a person is serving in the military and within three months thereafter except by court order.

sole proprietorship

A method of owning a business in which one person owns the entire business and reports all profits and losses directly on his or her personal income tax return, as contrasted with corporate, joint or partnership ownership. A sole or individual proprietorship is easy to organize and flexible to operate. It is frequently used in real estate brokerage. An individual proprietor may run a brokerage company if he or she has a valid broker's license. The proprietor may use his or her own name or a fictitious name previously registered as required by state law. There is a growing tendency for sole proprietors to incorporate and thus take advantage of certain tax and fringe benefits, such as those provided by pension and profit-sharing plans.

sole tenancy

See tenancy in severalty.

space plan

A graphic representation of a tenant's space requirements, showing wall and door locations, room sizes, and possibly some furniture or equipment layouts. A space plan may be preliminary, for multiple prospective properties, or final, in which case it is sufficiently detailed to allow an accurate estimate of the construction costs. The final space plan will often become an exhibit to a lease negotiated between the parties.

special agent

One authorized by a principal to perform a particular act or transaction, without contemplation of continuity of service as with a general agent. The real estate broker is ordinarily a special agent appointed by the seller to find a ready, willing and able buyer for a particular property. An attorney-in-fact under a limited power of attorney is a special agent. (See agency, agent, general agent)

special assessment

A tax or levy customarily imposed against only those specific parcels of realty that will benefit from a proposed public improvement, as opposed to a general tax on the entire community. Because the proposed improvement will enhance the value of the affected homes, only those affected owners must pay this special lien. Common examples of special assessments are water, sidewalk and sewer assessments, or other special improvements such as parks and recreational facilities.

special limitation

A fee simple estate may also be qualified by a special limitation. The estate ends automatically upon the current owner's failure to comply with the limitation. The former owner retains a possibility of reverter. If the limitation is violated, the former owner (or his or her heirs or successors) reacquires full ownership, with no need to reenter the land or go to court. A fee simple with a special limitation is also called a fee simple determinable because it may end automatically. The language used to distinguish a special limitation-the words "so long as" or "while" or "during"-is the key to creating this estate.

special servicer

A loan servicing entity that specializes in the administration of mortgage loans that are in default. In order to maximize collections on behalf of the bondholders, special servicers use net present value to analyze various alternatives, including modification or sale of the loan, deed-in-lieu of foreclosure, foreclosure, or a negotiated payoff.

special warranty deed

A deed in which the grantor warrants or guarantees the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time. Such a deed is usually identified by the language "by, through, or under the grantor, but not otherwise." A special warranty deed is often used when a fiduciary such as an executor or trustee conveys the property of his or her principal, because the fiduciary usually has no authority to warrant against acts of his or her predecessors in title.

specific lien

A lien affecting or attaching only to a certain, specific parcel of land or piece of property. (See lien)

specific performance

A requirement compelling one of the parties to perform or carry out the provisions of a contract into which they have entered.

specifications

Detailed instructions provided in conjunction with plans and blueprints for construction. Specifications may stipulate the type of materials to be used, special construction techniques, dimensions, and colors. Examples: The building "specifications" state that: number 3 lumber shall be used for all framing, studs are to be on 16-inch centers, and all exterior surfaces shall be painted white.

speculative building

Land development or construction with no formal commitment from the "end users" of the finished product. Contrast with "custom building," where the builder is under contract to produce a specific structure. The speculative builder anticipates that a demand exists or will form for the product when it is put on the market. Example: a developer subdivides a tract and markets the lots; a builder produces houses and puts them up for sale; a developer converts a building into condominiums and looks for buyers; a builder constructs a shopping center and leases space.

speculative space

Any tenant space that has not been leased before the start of construction on a new building.

split-fee financing

A form of joint venture participation where the lender purchases the fee land under the proposed development project and leases it to the developer. The lender also finances the improvements to be constructed on this leasehold. (See joint venture)

spot zoning

Zoning of parcels not in conformance with the general zoning of an area. (See zoning)

sprinklers

A piped fire suppression system designed in buildings to avoid compartmentalization (division of large floor areas into smaller areas) and to provide additional fire protection.

Sq. Ft.

See SF.

square footage

The area, measured in square feet, of a piece of "real estate." Generally measured from outside the exterior walls, in the case of structures. Example: The outside dimension of a rectangular building is 200 x 450 feet. Its "square footage" is 90,000.

square-foot method

A method of estimating a building's construction, reproduction or replacement costs whereby the structure's square-foot floor area is multiplied by an appropriate construction cost per square foot.

squatter's rights

The legal allowance to use the property of another in the absence of an attempt by the owner to force "eviction;" this right may eventually be converted to "title" to the property over time by "adverse possession," if recognized by state law. Example: Various poor families take up residence in a vacant building, acquiring "squatter's rights." Since ownership of the property is uncertain, no one attempts to evict the families.

stabilized net operating income (appraisal)

Projected income less expenses that are both subject to change, but that have been adjusted to reflect equivalent, stable property operations.

stabilized occupancy

The optimum range of long-term occupancy which an income producing real estate project is expected to achieve under competent management after exposure for leasing in the open market for a reasonable period of time at terms and conditions comparable to competitive offerings. [Appraisal Institute]

standard coverage policy

A standard coverage policy normally insures the title as it is known form the public records. In addition, the standard policy insures against such hidden defects as forged documents, conveyances by incompetent grantors, incorrect marital statements and improperly delivered deeds. (See extended coverage policy, title insurance)

standby commitment

A "commitment" by a lender to make available a sum of money at specified terms for a specified period. A "standby fee" is charged for this commitment. the borrower retains the "option" of closing the loan or allowing the commitment to lapse. (see "standby fee.")

standby takeout commitment

An agreement by an interim lender to advance funds to take out a construction lender. (See interim financing)

stare decisis

The reliance of courts on previous decisions when judging disputes. (See common law)

stated interest rate

The full return or yield rate on the outstanding principal balance, expressed as a percentage per year. Also known as "face rate" or "coupon rate." A loan may have one or more stated interest rates.

statement of reasons

The Federal Equal Credit Opportunity Act (ECOA) (Title VII of the Consumer Protection Act) requires that a lender/creditor who denies an application for credit must provide the applicant with a statement of reasons, or written notification of the applicant's right to obtain a statement of reasons, within thirty days after receipt of a completed application for credit. (See Equal Credit Opportunity Act)

statute

(U.S.) A law established by an act of legislature. Example: When a bill is passed by the legislature and signed by the governor (U.S.), it becomes a state "statute." Similarly, when a bill is passed by Congress and signed by the president, it becomes a federal "statute."

statute of frauds

State law that requires certain contracts to be in writing and signed by the party to be charged (or held) to the agreement in order to be legally enforceable.

statute of limitations

That law pertaining to the period of time within which certain actions must be brought to court. The law is intended to protect the vigilant against stale claims by requiring the prompt assertion of claims; thus an action must be brought (i.e., the complaint filed) within a specified time of the occurrence of the cause of action. After the time period expires, the claim is said to be "outlawed" and may not be enforced in court. The theory behind the statute of limitations is that there must be some end to the possibility of litigation. It is said that stale witnesses and stale records produce little truth and result in accidental justice, if any.

statutory foreclosure

A foreclosure proceeding not conducted under court supervision. Contrast with "judicial foreclosure." Example: In many states (U.S.), deeds of trust are used as mortgage instruments. In these cases, foreclosure sales are handled through a trustee acting according to the law and the stipulations of the mortgage contract. This process is a type of "statutory foreclosure."

statutory law

The laws, rules and regulations enacted by legislatures and other governing bodies. (See civil law, common law, constitutional law)

statutory lien

A lien imposed on property by statute-a tax lien, for example-in contrast to an equitable lien, which arises out of common law. (See lien)

statutory redemption

The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges. (See equitable redemption)

steering

The illegal practice of channeling home seekers interested in equivalent properties to particular areas, either to maintain the homogeneity of an area or to change the character of an area to create a speculative situation. This practice makes certain homes unavailable to home seekers on the basis of race or national origin, and on these grounds it is prohibited by the provisions of the federal fair housing act. Steering is often difficult to detect, however, because the steering tactics can be so subtle that the home seeker is unaware that his or her choice has been limited. Steering could be a licensee's use of a word, phrase or act that is intended to influence the choice of a prospective property buyer on a discriminatory basis.

stepped-up basis

An income tax term used to describe a change in the "adjusted tax basis" of property, allowed for certain transactions. The old basis is increased to "market value" upon inheritance, as opposed to a "carry-over basis" in the event of a "tax-free exchange." Example: Dooley dies, leaving land worth $100,000. The land was purchased for $20,000, but the heirs receive a "stepped-up basis" to the "fair market value" at death. The $80,000 "unrealized gain" to Dooley escapes "capital gains" tax.

stigmatized property

A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang-related activity, illness or personal tragedy. Because of the potential liability to a licensee for inadequately researching and disclosing material facts concerning a property's condition, licensees should seek competent counsel when dealing with a stigmatized property. Some states restrict the disclosure of information about stigmatized properties. In other states, the licensee's responsibility may be difficult to define because the issue is not a physical defect, but merely a perception that a property is undesirable.

stock cooperative

Ownership of real property by a corporation where each stockholder is entitled to occupancy of a unit under a lease. (See cooperative)

stop clause

In a "lease," "stipulates" an amount of "operating expense" above which the tenant must bear. Often the base amount is the amount of expense for the first full year of operation under the lease. Example: The "stop clause" requires the tenant to pay all "utilities" in excess of $2,500 per year. If utilities are less than that amount, the landlord pays them.

stop date

Date on a term loan when the balloon payment is due. (See balloon payment)

stop notice

A notice given to a lender that a subcontractor has not been paid. Unless bond is posted, the lender must withhold moneys due a prime contractor.

store depth

The distance from a retail storefront to the back of the store space. Too much depth can become a disadvantage to a retailer, reducing frontage and visibility relative to leasable area, and thus reducing the rental value of such space.

straight (term) loan

A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.

straight note

A promissory note evidencing a loan in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity. A straight note is usually a nonamortized note made for a short term, such as three to five years, and is renewable at the end of the term. (See promissory note)

straight-line method

A method of depreciation, also called the age-life method that is computed by dividing the adjusted basis of a property by the number of years of estimated remaining useful life. The cost of the property is thus deducted in equal annual installments. 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 during the useful life of the asset. Prior to 1986, taxpayers sometimes used a form of accelerated depreciation such as 175 percent of straight line. The IRS had rules to recapture the amount of depreciation that was in excess of the straight-line rate. (See depreciation)

straight-line principal reduction loan

A mortgage which is paid off with periodic payments that always include the same amount of principal and an amount of interest based on the balance still owed.

straight-line recapture rate

The part of a "capitalization rate" that accounts for the annual erosion of a "wasting asset" by assuming an equal amount of loss in value each year of the "useful life" of the asset. Example: A retail building's "useful life" is estimated at 50 years. The "straight-line recapture rate" is 2% per year, which will recover the asset cost over its estimated useful life. The 2% should be added to the "discount rate" to derive the "capitalization rate."

stratified marketplace

The real estate market is a marketplace that is stratified based on price.

strict foreclosure

In a strict foreclosure procedure, after a delinquent borrower has been notified and the proper papers have been filed, the court designates a specific period during which the balance of the default must be paid in full. If the payment is not made, the borrower's equitable and statutory redemption rights are waived and the court awards full legal title to the lender. There is no deficiency judgment in strict foreclosure cases. (See foreclosure, judicial foreclosure, nonjudicial foreclosure)

strict liability

An owner of a property is responsible to an injured party without excuse. (See liability)

strip center

Any shopping area, generally with common parking, comprised of a row of stores, but smaller than the neighborhood center anchored by a grocery store.

structure

Any constructed improvement to a site.

sub-agency

The relationship under which a sales agent tries to sell a property listed with another agent. This situation is common under a "multiple listing service (MLS)." A listing contract is taken by a listing broker and entered into the MLS, from which any member broker may sell the property. The listing broker and the selling broker split the commission.

sub-agent

An agent of a person who is already acting as an agent for a principal. The original agent can delegate authority to a subagent where such delegation is either expressly authorized or customary in the trade. For example, it is customary for listing brokers to delegate certain functions of a ministerial nature to subagents, such as to show property and solicit buyers.

sub-divider

One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.

sub-lessee name

A person or identity to which the rights of use and occupancy under a lease have been conveyed, while the original lessee retains primary responsibility for the obligations of the lease.

sub-mortgage broker

A defined term in the Mortgage Brokers Act. Basically, an individual employed by a mortgage broker who satisfies any one of the following requirements: a) Carries on a business of lending money secured in whole or in part by mortgages, whether the money is his own or that of another person; b)Holds himself out as, or by an advertisement, notice or sign indicates that he is, a mortgage broker; c)Carries on a business of buying and selling mortgages or agreements for sale; d)In any one year, receives an amount of $1,000 or more in fees or other consideration, excluding legal fees for arranging mortgages for other persons; or e)During any one year, lends money on the security of 10 or more mortgages.

subcontractor

A contractor working under and being paid by a general contractor. Often a specialist by nature, such as an electrical contractor, plumbing contractor, etc.

subdivided land law

A disclosure law enacted to protect buyers of subdivided parcels. A public report is required for subdivisions of five or more parcels. (See public report, subdivision)

subdivision

Any land that is divided or is proposed to be divided for the purpose of disposition into two or more lots, parcels, units or interests. Subdivision refers to any land, whether contiguous or not, if two or more lots, parcels, units or interests are offered as part of a common promotional plan of advertising and sale.

subdivision and development ordinances

Municipal ordinances that establish requirements for subdivisions and development.

Subdivision Map Act

An act providing for local control of subdivisions. Cities and counties are required to adopt an ordinance to regulate subdivisions. (See subdivision)

subjacent support

The right of land to be supported by land which lies beneath it. (See lateral support)

subject property

In "appraisal," the property being appraised.

sublease

The leasing of space (or property) by an existing lessee (tenant) to a sublessee (subtenant); the tenant becomes a sub-lessor to the new tenant.

sublessee

One who leases space from an existing tenant, as distinguished from leasing directly from a landlord. The sublessee pays rent to the sublessor, who in turn pays rent to the landlord. Also called a "subtenant."

sublessor

A tenant who leases space to a sublessee. The sublessee pays rent to the sublessor, who in turn pays rent to the landlord.

submarket

A geographic area typically smaller than and part of a city or metropolitan area, comprising one type of commercial property (office, industrial, or retail), in which the individual properties tend to be bound by similarities of demographic, quality, user, and economic characteristics as well as by location. (See market)

subordinated ground lease

A "lease" where the "mortgage" has priority over the "ground lease." Example: Pruable holds a $3-million "mortgage lien" on a "shopping center." The "property" owner, Dealmaker, sells the land to Subaru for $1 million and agrees to "lease" it back for $100,000 annual "rent" over 30 years. When Dealmaker fails to pay Pruable the interest due, Pruable "forecloses" on the entire property. Because of the "subordinated ground lease," Pruable gains "title" to the land and building.

subordination

The process of placing one financial position in an inferior position to another for purposes of repayment in the event of a default. Secondary financing on property is subordinated to primary financing. A lease may be made subordinate to a mortgage loan on a property.

subordination agreement

An agreement by which the priority of a tenant, mortgage lender, land owner, or lessor is relinquished in favor of that of a lender that would otherwise be junior in status. A tenant generally accepts a leased premises subject to any recorded mortgage or deed of trust lien and all existing recorded restrictions, and the landlord is often given the power to subordinate the tenant's interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises.

subordination clause

A clause in which the holder of a mortgage permits a subsequent mortgage to take priority. Subordination is the act of yielding priority. This clause provides that if a prior mortgage is paid off or renewed, the junior mortgage will continue in its subordinate position and will not automatically become a higher or first mortgage. A subordination clause is usually standard in a junior mortgage, because the junior mortgagee gets a higher interest rate and is ofter not concerned about the inferior mortgage position. (See junior mortgage)

subprime lenders

Lenders who specialize in B, C, or D category paper. (See B, C, or D paper)

subrogation

The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to recover any claims they have paid.

subscribe

  1. To give, pay, or pledge (a sum of money) as a contribution, investment, etc.
  2. To append one's signature or mark to (a document), as in approval or attestation of its contents.

substantive law

The part of law which creates, defines, and regulates legal rights and obligations.

substitution

An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution. (See appraisal)

substitution of entitlement

Replaces one eligible veteran with another on an existing Veterans Administration loan. The entitlement is restored to the original veteran. (See Veterans Administration loan)

subsurface rights

Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property. (See surface rights)

subtenant

See sublessee.

subterfuge

A clever trick or strategy used to evade a rule, escape a consequence, hide something, etc.

successors

Those who succeed to or to whom the corporation's rights in the property are transferred. (See heirs)

suit for possession

A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.

suit for specific performance

If a seller breaches a real estate contract, the buyer may sue for specific performance. The buyer asks the court to force the seller to go through with the sale and convey the property as previously agreed. The buyer may choose to sue for damages, in which case the buyer asks that the seller pay for costs and hardships suffered as a result of the seller's breach.

suit to quiet title

A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

summary possession

Same as "actual eviction"

sump

A reservoir that collects and holds water or some other liquid, which is subsequently disposed of using a pump.

super regional center

Similar to regional centers, but because of its larger size, a super regional center has more anchors, a deeper selection of merchandise, and draws from a larger population base. As with regional centers, the typical configuration is as an enclosed mall, frequently with multilevels.

superfund

Popular name of the hazardous waste cleanup fund established by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) as amended by the Superfund Amendment and Reauthorization Act of 1986 (SARA). Superfund focuses on the cleanup of releases of hazardous substances on property. It creates significant legal exposure based on strict liability for owners, landlords and, sometimes, lenders.

Superfund Amendments and Reauthorization Act (SARA)

An amendatory statute that contains stronger cleanup standards for contaminated sites increased funding for Superfund and clarifications of lender liability and innocent landowner immunity. (See Comprehensive Environmental Response, Compensation and Liability Act)

supplemental work letter

A document which would include the above plus any additional items to be paid for by the landlord or by the tenant, with an indication as to who is responsible for each item.

supply

The amount of goods available in the market to be sold at a given price. The term is often coupled with demand, supply and demand. The appraisal principle that follows the interrelationship of the supply of and demand for real estate. As appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace just as is any other commodity. (See appraisal, demand)

support

The term for the right to have one's ground supported so that it will not cave in when an adjoining owner makes an excavation. Support is of two kinds, lateral and vertical.

surety

One who guarantees the performance of another.

surety bond

An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts or obligations contracted for by an insured party; in essence, a policy insuring one's personal and/or financial integrity. In the real estate business a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be per formed as stated.

surface rights

Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).

surrender

Giving up leasehold rights by a tenant in exchange for a release from future obligations under a lease.

survey

The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements.

survivorship

The right of surviving joint tenants to the ownership interest of another joint tenant upon the latter's death. (See joint tenancy)

sweat equity

The value added to a property due to "improvements" as a result of work performed personally by the owner. Example: The Watsons purchase an old house for $20,000. Working in their spare time, the Watsons repair and repaint the structure to the point that the property is valued at $30,000. The $10,000 increment is "sweat equity."

syndicate

A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate the parties own and/or develop property, with the main profit generally arising from the sale of the property.

syndication

A descriptive term for a group of two or more people united for the purpose of making and operating an investment. A syndication may operate in the form of a REIT, corporation, general partnership, limited partnership or even as tenancy in common.

syndicator

A person in business who sells an investment in shares or units.