Glossary

A

Abstract of Title: A chronological summary of the recorded instruments and proceedings on the tile of a property.

Air Rights: The right to build above or add square footage to a structure. These buildable rights are determined by city zoning regulations and public need. Air rights can be sold to adjoining structures for a negotiated price between land owners. Many of the city’s taller structures have risen to their final height as a result of purchasing additional air rights from neighboring structures.

Appraisal: The process of determining the value of an apartment usually against values of apartments in the same building or similar-type buildings in the immediate neighborhood.

Assignment: The right to transfer a contract or a lease from one party to another. The term is often used to describe the process of assigning one’s primary lease to that of a second party until the end of the term.

Attended Elevator: Some older buildings in the city have manual elevators that need to be operated by an elevator operator on a full-time basis. In some pre-war buildings, these operators also serve as a form of full-time security for residents. Usually these operators also control access into the building by a video security system. In some of the city’s full-service buildings, the staff of the building will include elevator operators.

B

Building Amenities: Each building has something to offer its owners or tenants. These are called amenities. Amenities can be basic such as a doorman or as unique as high speed Internet access. Other common amenities include garages, valet services, health clubs, pools, recreational rooms, laundry facilities, etc. Built: Refers to the actual exterior dimensions of a building on a lot. For instance, a townhouse might be built 20′ x 70′ on a 20′ x 100′ lot. Today, city zoning regulations impose tough restrictions on how large a new building may be built on a lot.

C

Capital Improvement: An improvement on a piece of property which is going to increase the value of the property. Such an improvement may include a new roof, new windows or a new elevator.

Certificate of Occupancy (C of O): Each building in New York City possesses a Certificate of Occupancy which outlines the legal uses of the piece of property. The Certificate of Occupancy may allow a building owner to enjoy certain uses not allowed by the particular zoning in which the property falls.

Closing:

  1. The act of transferring ownership of a property from seller to buyer in accordance with a sales contract.
  2. The time when a closing takes place.

Co-Broke: Perhaps one of the most important terms used in the residential real estate market and the foundation for working with other brokers in the community. When a broker sends out his/her listings to the brokerage community at large, he/she does so on a co-broke basis. This means that the brokerage firm representing the owner of the property will split the commission on a 50/50 basis with the brokerage firm that brings the buyer or tenant to the property and is able to conclude a transaction.

Collect Your Own Fee: This is usually a rental listing distributed by a brokerage firm on the basis of the cooperating broker collecting the entire fee. A broker might do this because he/she feels that the apartment is overpriced or that in an effort to do an owner a favor (he/she may manage the unit), he has offered the brokerage community at large an inducement to rent the property quickly.

Commission: When a property is sold, the brokers involved in the transaction are entitled to payment in the form of a commission. In a sale transaction, the commission rate is usually set by the owner and is typically six-percent of the sales price. If the property is of great value, the owner and the broker(s) may agree to cut the commission to a lower percentage of the sales price. If the property for sale is a particularly difficult property to sell, the owner may increase the commission rate to a higher percentage of the purchase price.

Common Area: The area in a building that is shared by all of the tenants/owners of the building. This could include the lobby, a common courtyard or roof garden or the hallways.

Concierge: A concierge is an individual who sits inside the building lobby and acts as a clerk as well as a security person for the comings and goings in a building lobby. A concierge is not situated at the door and does not open the door for tenants. The concierge’s duties can include accepting packages, informing tenants of visitors, etc.

Condominium: A type of apartment ownership in which the owner owns real property, yet the apartment is part of a much larger building in which other owners own individual units. Condominiums are a very liberal type of ownership and are usually favored by foreigners looking to buy in Manhattan. The regulations regarding ownership are more lax than those in co-operative apartments. Condominiums usually allow owners to finance upwards to 90% of the purchase price; subletting rules and pet policies are more open than in co-operatives; individual owners are responsible for monthly Common Charges and monthly Real Estate Taxes.

Contract Out: Refers to the moment in time when a buyer and seller have agreed to a price on an apartment and the parties’ attorneys have drafted a contract of sale and have sent it to the purchaser for signature.

Conversion: A term used to describe the change in usage of a building. A classic example is when an older, underutilized commercial space is converted into residential space. An owner of a building may do this in order to derive the best financial means from his/her property. A large commercial vacancy rate, a change in the make-up of a neighborhood, a tight residential market, or city tax incentives may lead an owner to alter the usage of a building.

Conversion (2): This term can have several meanings. A second use of the term in the local market is when a rental building is converted to a co-operative type of ownership. This occurs when an individual or a company plays the role of a sponsor in the conversion process.

Convertible: Refers to a situation when a large one or two bedroom contains a Dining-L which could be converted into another bedroom with the construction of a wall. In order to be transformed into a legal bedroom, these L-shaped areas need to contain a window.

Cooperative: A type of corporate ownership of real property whereby stockholders of the corporation are entitled to use a certain dwelling unit or other units of space. Special Income taxe laws allow the tenant stockholders to deduct interest and property taxes paid by the corporation.

D

Deed: A written document, properly signed and delivered, that conveys title to real property.

Deposit: Money paid in good faith to assure performance of a contract. In New York City, deposit for a residential sale is 10% of the selling price.

Duplex Apartment: An apartment that is spread out over two levels.

E

EIK: The acronym used to describe an Eat-In-Kitchen.

En Suite Bathroom: French term literally meaning ‘together’. In the realtor’s lexicon, this term refers to a bathroom that is one with the adjoining bedroom. In other words, one does not have to leave his/her bedroom in order to go to the bathroom. This type of setup is most common with Master Bedrooms.

Escrow: The procedure of placing money in an account where neither buyer nor seller can access the money without the consent of an escrow agent.

Excellent: In lieu of the term ‘mint’, some people use the word ‘excellent’ to describe the condition of an apartment that is in a superb shape.

Exclusive Listing: An exclusive listing is a listing promoted by a single broker for which he/she has been hired by an owner to market his/her apartment. In an exclusive right-to-sell arrangement, the individual broker has the right to earn a commission in the event that the property sells during the term of the exclusive. This type of arrangement precludes the owner of the apartment from selling the property on his/her own. Under the terms of an exclusive, the broker has the fiduciary responsibility to market the property to other brokers. The exclusive broker is accountable to the owner of the property and is responsible for seeing the transaction through its conclusion. The other type of exclusive is an exclusive agency. The only difference between an exclusive right-to-sell and an exclusive agency is that in an exclusive agency arrangement, the owner can sell his/her property on their own and exclude the broker from any commission.

F

Facade: This is the front of a building. The facade can consist of any number of building elements, such as limestone, brownstone, cement, glass, granite, marble, and or any combination of the aforementioned.

Financing Allowed: Each co-operative building allows shareholders to finance a certain portion of the purchase price of a co-operative apartment. This number can very greatly. Very often, the number is somewhere between 70% and 80 % of the purchase price. However, more prestigious and more established buildings can have a much lower number. Some co-operatives may allow no financing at all. This number is completely arbitrary and determined by the co-operative board of directors.

Fixed Rate: One of two types of rates offered by lending institutions. In a fixed rate scenario, the lender offers an interest rate which remains constant over the term of the loan.

FlipTax/Transfer Fee: Two different ways to say the same thing. A Flip Tax or a Transfer Fee is a tax imposed by the co-operative on the sale of a co-operative apartment. This fee could be a percentage of the gross sale, a percentage of the net sale, a percentage of the gain, a fee based on the number of shares held by the shareholder, or a fixed amount determined by the co-operative. These fees can be either paid by the buyer, the seller or shared by both parties in a transaction. Sometimes the co-operative pre-determines from whom they would like to receive these monies. The determination of who pays this fee can also be negotiated by the parties involved in the transaction. These fees are used by a building to increase the building’s reserve fund.

Floating Rate: One of two types of rates offered by lending institutions. In a floating rate scenario, the lender offers an interest rate which fluctuates with the prevailing rates offered to lending institutions.

Floor-thru :An apartment that extends from a building’s façade to its rear wall, so that the unit exclusively occupies an entire floor.

Foreclosure: The process by which a lending institution takes back a property because the property owner can no longer meet his/her monthly mortgage payment.

Full Service Building: We use this term to describe a building which employs both a concierge and a full-time doorman.

H

Half-Bath: Refers to a bathroom with no bath or shower. A half-bath is also commonly referred to as a powder room.

High Ceilings: When we refer to high ceilings, one usally refers to ceilings with a height of nine feet or more. Most pre-war apartments and many of the newer, more expensive condominiums have high ceilings as do loft spaces.

I

In Contract: Refers to the moment in time when a buyer and a seller both sign a contract of sale.

Interest Rate: The amount charged by a lending institution to mortgage holders for the use of borrowed money. Rates can vary over time and are set by the Federal Reserve Board

K

Keyed Elevator: This terminology refers to a situation when an apartment occupies an entire floor in a building. In other words, the elevator opens up right into the apartment on into a foyer which leads directly to the particular apartment. This type of elevator can be seen in loft spaces where an apartment can occupy an entire floor or in high-end apartments where one must use a key to control access to a penthouse apartment.

L

Lease Assignment: When a lessee (tenant) must leave his/her apartment prior to the end of the particular lease and he/she remains responsible for the duration of the term. In such an instance, the lessor (owner) will allow the lessee to assign the remaining term on the lease to a new tenant. However, in most situations like this, a prudent owner/landlord will keep the original tenant on the lease and thus responsible for the remainder of the term. Whether or not the owner/landlord allows the new tenant to remain in the apartment is strictly at the discretion of the owner/landlord.

Lease: A legal document which outlines the responsibilities and parameters between a landlord and a tenant.

Listing(s): Brokers refer to available apartments as listings. These can be either sale or rental availabilities.

Loft Space: By definition, this term refers to space which has been converted from commercial usage to residential usage. This can include the conversion of office space, factory space or warehouse space. At present, there is a wave of conversion of downtown space from commercial office building space to residential loft or loft-like space. Some of the attributes of loft space may include high ceilings, open space, raw space, large windows, etc.

Lot: An individual parcel of land in the plat of subdivision. A buildable lot as proper zoning and is suitable for construction.

M

Maintenance: This refers to the amount of monthly charges paid by an individual co-operative owner to the co-operative as their proportionate share of the expenses of the building. Maintenance is comprised of three components: 1) The daily cost to run and operate the building; 2) The shareholders proportionate share of the building’s underlying mortgage and 3) the shareholders proportionate share of the building’s local real estate taxes.

Managing Agent: Most co-operative and condominium buildings will hire an independent company to manage the property. These firms are responsible for the daily maintenance of a property, the collection of rents or monthly maintenance charges, enforcing building policies, etc.

Mansion Tax: All properties that sell for $1 million or more in NY State are subject to a 1% of the sale price mansion tax paid by the buyer. The tax only applies to residential property so in a mixed use property the commercial portion is excluded from the calculation.

Mortgage Points: Often when a consumer takes out a mortgage, the lender will tack on points to the mortgage amount is an upfront cost of doing business. In otherwords, if the lending institution offers a mortgage rate at 2 points, you will be paying 2% of the total mortgage upfront as an added cost of doing business.

Mortgage: In order to purchase a property, an individual often will enter into an agreement with a lending institution to provide him/her with a loan to cover a large percentage of the purchase price. A mortgage is a very common vehicle used in the purchase of a home and most Americans use this type of financing throughout their lives when they purchase property. There are several components to a mortgage, including the interest rate due on the loan (this can be either a fixed or floating rate), the term of the mortgage in number of years (usually 15 or 30) and the amount that is being financed. Using simple math, one can figure out his/her monthly payments for the term of the mortgage. If the rate is fixed, the amount for each payment period will be identical and will be comprised of two components, principle and interest.

Mortgage broker: An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker  gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval.  The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or a yield spread premium from the lender as compensation for its services.

Murphy Bed: A bed which is built into a wall or attached to a wall and can be pulled down when needed. One can find Murphy Beds in smaller apartments. These beds can provide for great space saving and often resemble wall units so that when they are not exposed they are hardly if at all noticeable.

N

Negative pledge: A “Negative Pledge” co-op loan is a loan which exceeds the financing limit permitted or recognized by a co-op corporation. Because the co-op board does not approve or recognize any portion of the loan which exceeds the board’s financing limit, the lender’s rights, in the event of a default, are severely limited with respect to the unrecognized portion of the loan. Essentially, the bank’s rights against the stock and proprietary lease, in the event of a default, are subordinate to the co-op corporation’s rights to collect back maintenance and control the sale of the apartment. Consequently, only the most sophisticated banks are able to analyze and underwrite these negative pledge loans…for very well qualified borrowers.

New Windows: When a building replaces its windows. The monies for this type of capital expenditure comes from either the building’s reserve fund, a building wide assessment or a maintenance increase. A building will change its windows for a variety of reasons. These include noise abatement, aesthetics, and the ability to keep out silt from the city traffic.

No Board Approval: This terminology can refer to two situations: The first is when a prospective purchaser of an apartment does not have to go through the scrutiny of a board approval process when purchasing a co-operative apartment. The second situation is when a prospective renter does not have to go through the board approval process when renting an apartment from a co-operative owner.

P

Parlor Floor: This is the second floor in a townhouse. In its original form, the building’s front steps accessed the parlor floor. The parlor is traditionally the grandest floor in the townhouse and almost always has the building’s highest ceilings. Historically, these floors were primarily used for entertaining with two rooms separated by a staircase. These rooms were usually Living Rooms, Libraries or Formal Dining Rooms.

Partial Views: This term refers to views that offer partial vistas of Central Park, the Hudson River or the East River.

Pass-through Kitchen: This term refers to a Kitchen with an opening from the Kitchen into another room in the apartment, usually a Dining Area or Living Room.

Pet Policy: Each building has a pet policy particular to that building. This can vary from a strict no pet policy to a more liberal pet policy in which tenant or owner can harbor as many pets as he/she desires. Some particularisms to different pet policies may includes the following: No dogs, weight limits on dogs, no pets on sublets, board interviews of pets or pets by written permission of the board.

Pied à terre:Translated literally from the French, pied à terre means foot on the ground. In English, we would call it a “landing pad.” A pied à terre is a small, comfortable apartment maintained by someone who resides in another city. Usually, the owner has a career that requires them to be in New York several days per month, or even per week. The pied à terre allows its owner to avoid the daily commute, or to spend occasional late nights in the city. However, these apartments can also be kept by the well-heeled who simply enjoy having access to the exciting culture and glamorous society found in major cities.

Possession: This term refers to the time (month and day) that a new purchaser or a new tenant can actually take possession of an apartment.

Post-War: Refers to buildings built after World War II. Post-war building needs and modern building techniques dramatically altered the composition of the middle and upper-class apartment house. Apartment houses were built in a “plain vanilla” style with lower ceilings, fewer moldings and details, an absence of fireplaces and reduced room proportions. The exterior of the New York apartment house also saw dramatic change. Plain red and white brick exteriors replaced the ornate limestone detailing of the pre-war apartment house.

Powder Room: Refers to a bathroom with no bath or shower. A powder room is also commonly referred to as half-bath.

Power of Attorney (POA):

  1. The authority to act for another person in legal or financial matters.
  2. A legal document giving such authority to someone.

Pre-War: Refers to buildings built prior to the start of World War II. Some common elements of these structures include hardwood floors, moldings, high ceilings and fireplaces.

Professional Space: Office space set aside in a residential building for use by professionals usually in the medical field. Professional space does not refer to attorneys or architects. The strict interpretation is for the medical profession. Similar to maisonette’s these spaces can have separate street entrances as well as lobby entrances.

R

Real Property Transfer tax: RPTT is imposed on grants, assignments, transfers, or surrenders of real property in New York City. This includes the sale or transfer of at least a 50 percent ownership interest in a corporation, partnership, trust, or other entity that owns or leases real property; initial transfers of stock shares  in cooperative housing by the sponsor; and subsequent transfers of co-op stock.
RPTT applies whenever the consideration (amount of value) for the sale or transfer exceeds $25,000.

Recessed Lighting: This term refers to lighting that is located above the ceiling and does not have alight fixture hanging from the ceilings. This type of lighting provides a very clean and contemporary look to an apartment.

Rental Building: These buildings are owned by an individual or a company and the apartments are available on a rental basis only.

Rental Commission: A broker earns a rental commission on the rental of an apartment. The prospective tenant typically pays this commission which can range from ten to fifteen percent of a year’s aggregate rent. In a hot rental market, these fees will tend to be in the neighborhood of fifteen percent. In a soft market, one may induce a real estate agent to reduce his/her fee in order to conclude a transaction.

Rental Sublet: When a tenant in a rental building decides that he/she must rent out their apartment for a short period of time because they are leaving New York, they have an opportunity to assign their lease to another tenant for the period of time that they will be out of town. These types of sublets are usually furnished and last for less than a year in duration.

Reserve Fund: Each co-operative and condominium maintains a reserve fund. The objective of the board of directors or the board of managers is to grow this reserve fund so that the building has the ability to pay for the monthly expenses involved in the upkeep of the building as well as for those expenses that are out of the ordinary (such as elevator, repairs, roof repairs, new boilers, etc.).

Right of first refusal: The opportunity of a party to match the terms of a proposed contract before the contract is executed.

Room Count: Every apartment has a room count. Straight Studio, Petite Kitchen: One room. Straight Studio, Full Kitchen: Two rooms. Alcove Studio, Full Kitchen: 2.5 Rooms. Junior-One, Full Kitchen, No Wall: 2.5 Rooms. Junior-One, Full Kitchen, Wall: 3.0 Rooms. One Bedroom, Living Room, Kitchen: 3 Rooms. Junior-Four, Living Rooms, Kitchen, Dining Alcove: 3.5 Rooms. Convertible-2, Living Rooms, Kitchen, Dining Alcove, No Wall: 3.5 Rooms.

S

Security Deposit: A rental tenant will put down a security deposit on an apartment so that the owner of the apartment has security against any potential damages in the apartment during the term of tenancy. This security deposit is not in lieu of a tenant paying his/her last month’s rent.

Shares: Each apartment in a co-operative actually owns shares in the co-operative (The same way that an individual might own shares in a publicly traded cooperation). These shares represent the proportion of the building that is owned by that individual shareholder. This is determined by the size of the apartment, the floor on which the apartment is located and if there are any particular special features associated with a particular apartment. Two identical apartments located on different floors will possess a different number of shares.

Short Sale: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

Short-Term: Many apartments are available on a short-term basis ranging from 1-6 months. These apartments are typically furnished and offer the tenant a less expensive alternative to weekly hotel bills. These apartments are typically not subject to New York City Hotel taxes and average out to be far less expensive on a per diem basis.

Shortfall: A situation in which a building owner is unable to meet the operating expenses of a building because the building’s income is less than the building’s expenses. In a co-operatives where there is sponsor maintaining unsold shares, there is a good chance that the tenants occupying unsold share apartments are paying below-market rents while the sponsor is responsible for the maintenance payments to the co-operative for the particular apartment. There is a tremendous likelihood that the difference between the collected rent and the maintenance due the co-operative can create a long-term financial burden for a sponsor. This is referred to as a shortfall. Obviously, the more unsold shares owned by a sponsor the greater the financial strain.

Square Footage: When referencing square footage in the Manhattan residential marketplace, the term can mean almost anything. Measurements are usually approximate and most often done by the subjective eye of the real estate broker or the apartment owner. Brokers should always use the term approximate when describing the square footage of an apartment. In the sale of condominium units, square footage is measurements are fairly accurate because people refer to the condominium offering books where by law these measurements need to accurately reflect the square footage of the units.

T

Tax Abatement: The city of New York often offers developers tax breaks in the form of abatements in order to induce development in a particular area of the city. Most recently the wave of development in the downtown area has been spurred on by tax incentives offered by the city for the conversion of commercial space to residential housing.

Tax Deductibility: Each co-operative has a yearly number that reflects an amount that each individual shareholder is allowed to deduct from his/her personal taxes each year. This number will be in the form of a percentage. The number reflects the shareholders proportionate share of the building’s underlying mortgage and the New York City real estate taxes paid in that particular year.

Term: Each rental lease is for a duration of time. This period of time is called the term and will range from one month to a two or three years. Typically an unfurnished apartment will rent for a term of 12-24 months.

Terrace: By definition, a terrace is a roof or part of a roof in a building. In Manhattan, terraces can be found when there is a setback on a high-rise. These terraces are also enjoyed for the private use of an individual apartment owner. We categorize a terrace as outdoor space. A terrace and balcony are often confused and the terms are used interchangeably.

Title: Evidence that the owner of land is in lawful possession thereof, evidence of ownership.

Title insurance: A contractual arrangement entered into to indemnify loss or damage resulting from defects or problems relating to the ownership of real property, or from the enforcement of liens that exist against it.

Townhouse: This type of structure was pre-eminent in the 1900s and up through the 1930s. The townhouse primarily built as private residences for its occupants with one family owning and occupying the entire structure. These structures were usually built in groups and were commonly referred to as row houses. They were built four to five stories high and enjoyed many common design elements. Typically, the houses were built with an English basement level (slightly below street grade) which housed the kitchen at the front of the building underneath the building stoop (or stairs) and was entered via a service entrance. At the rear of the first level was usually a Dining Room leading to the private garden. The second level, commonly referred to as the Parlor Floor was the garden floor and used for entertaining. Visitors entered the townhouse via the steps leading to this floor.

Townhouse brownstone: A brownish-red sandstone used for building usually having 4 or 5 stories with a stoop leading up to the first floor.

Triple-Mint: This terms refers to the condition of an apartment. In this case the ‘triple’ refers to the general condition of the apartment, the condition of the kitchen and the condition of the bathroom.

Triplex Apartment: An apartment that is spread out over three levels.

U

Unsold Shares: This term pertains to shares in a co-operative apartment building that have not been sold to shareholders (owners of individual apartments). These shares (apartments) remain as assets of the co-operative sponsor. When a building is converted from a rental property to a co-operative apartment building, there are almost always rental tenants who do not wish to purchase their apartments, but would rather remain in the apartments and continue to pay the sponsor rent (as opposed to the maintenance charges on the apartment). These shares remain ‘unsold’ until the tenant either changes his/her mind on purchasing the apartment, the tenant moves out of the building, the sponsor offers the tenant a monetary sum or incentive so that he/she moves. Another scenario facing a sponsor is one in which market conditions prohibit the sponsor from selling the unsold shares at a profit margin that he deems financially acceptable. In such a case, the sponsor may rent out these apartments for a period of time until the market shifts in favor of selling the units at a profitable margin.

Utilities Included: In some buildings you will find that Electric and Gas (sometimes Cable TV) is included in the monthly maintenance charges.

W

Walk-up Building: A building without an elevator. This term usually refers to four to six story pre-war buildings that were built without an elevator. Today it is uncommon to see new construction without the incorporation of an elevator.