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Easement. A right to use the land of another for a specific purpose, such as a right-of-way or for utilities; a non-possessory interest in land. An easement appurtenant passes with the land when conveyed.

Economic age-life method of depreciation. A method of computing accrued depreciation in which the cost of a building is depreciated at a fixed annual percentage rate; also called the straight-line method.

Economic base. The level of business activity in a community-particularly activity that brings income into the community from surrounding areas.

Economic life. The period of time during which a structure may reasonably be expected to per- form the function for which it was designed or intended.

Economic obsolescence. (See external obsolescence)

Economic rent. (See market rent.)

Effective age. The age of a building based on the actual wear and tear and maintenance, or lack of it, that the building has received.

Effective demand. The desire to buy coupled with the ability to pay.

Effective gross income. Estimated potential gross income of a rental property from all sources, less anticipated vacancy and collection losses.

Egress. A way to leave a tract of land; the opposite of ingress. (See also access.)

Eminent domain. The right of a federal, state or local government or public corporation, utility or service corporation to acquire private property for public use through a court action called condemnation, in which the court determines whether the use is a necessary one and what the compensation to the owner should be.

Encroachment. A building, wall or fence that extends beyond the land of the owner and illegally intrudes on land of an adjoining owner or a street or an alley.

Encumbrance. Any lien (such as a mortgage, tax lien or judgment lien), easement, restriction on the use of land, outstanding dower right or other interest that may diminish the value of property to its owner.

Entrepreneurial profit. The amount of profit attributable to the development function.

Environmental obsolescence. (See external obsolescence)

Equalization The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.

Equilibrium. (See neighborhood life cycle. ) equity. The interest or value that an owner has in real estate over and above any mortgage or other lien or charge against it.

Equity capitalization rate. A rate that reflects the relationship between a single year's before- tax cash flow and the equity investment in the property. The before-tax cash flow is the net operating income less the annual debt service payment, and the equity is the property value less any outstanding loan balance. The equity capitalization rate, when divided into the before- tax cash flow, gives an indication of the value of the equity. Also called cash on cash rate, cash flow rate or equity dividend rate.

Equity dividend rate. (See equity capitalization rate. )

Equity investors. Investors making use of what is termed venture capital to take an unsecured and thus relatively risky part in an investment.

Escalator clause. A clause in a contract, lease or mortgage providing for increases in wages, rent or interest, based on fluctuations in certain economic indexes, costs or taxes.

Escheat. The reversion of property of a decedent who died intestate (without a will) and without heirs to the state or county as provided by state law.

Escrow. The closing of a transaction through a disinterested third person called an escrow agent or escrow holder, who holds funds and/or documents for delivery on the performance of certain conditions.

Estate. The degree, quantity, nature and extent of ownership interest that a person has in real property.

Estate in land. The degree, quantity, nature and extent of interest a person has in real estate.

Estate in remainder. The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate; for instance, when an owner conveys a life estate to one party and the remainder to another. (For a case in which the owner retains the residual estate, see estate in reversion. )

Estate in reversion. An estate that comes back to the original holder, as when an owner conveys a life estate to someone else, with the estate to return to the original owner on termination of the life estate.

Excess income. (See excess rent.)

Excess rent. The amount by which scheduled rent exceeds market rent.

Expense. The cost of goods and services required to produce income.

Expense-stop clause. Lease provision to pass increases in building maintenance expenses on to tenants on a pro-rata basis.

External obsolescence. Loss of value from forces outside the building or property, such as changes in optimum land use, legislative enactments that restrict or impair property rights and changes in supply-demand relationships.

Externalities. The principle that outside influences may have a positive or negative effect on property value.

Feasibility study. An analysis of a proposed subject or property with emphasis on the attainable income, probable expenses and most advantageous use and design. The purpose of such a study is to ascertain the probable success or failure of the project under consideration.

Federal Reserve Bank System. Central bank of the United States established to regulate the flow of money and the cost of borrowing.

Fee simple. The greatest possible estate or right of ownership of real property, continuing with- out time limitation. Sometimes called fee or fee simple absolute.

Fee simple defeasible. Any limitation on property use that could result in loss of the right of ownership.

Fee simple qualified. Ownership of property that is limited in some way.

FHA. The Federal Housing Administration. Insures loans made by approved lenders in accordance with its regulations.

Final value estimate. The appraiser's estimate of the defined value of the subject property, arrived at by reconciling (correlating) the estimates of values derived from the sales comparison, cost and income approaches.

Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). Federal legislation that mandates state licensing or certification for appraisers performing appraisals in certain federally related transactions.

First mortgage. A mortgage that has priority as a lien over all other mortgages.

Fixed expenses. Those costs that are more or less permanent and do not vary in relation to the property's occupancy or income, such as real estate taxes and insurance for fire, theft and hazards.

Fixed-rate mortgage. (See amortized mortgage.)

Fixture. Anything affixed to land, including personal property attached permanently to a building or to land so that it becomes part of the real estate.

Foreclosure. A court action initiated by a mortgagee or lienor for the purpose of having the court order that the debtor's real estate be sold to pay the mortgage or other lien (mechanic's lien or judgment).

Form appraisal report. Any of the relatively brief standard forms prepared by agencies such as the Federal Home Loan Mortgage Corporation and Federal National Mortgage Association and others for routine property appraisals.

Freehold. An estate in land in which ownership is for an indeterminate length of time.

Frequency distribution. The arrangement of data into groups according to the frequency with which they appear in the data set.

Front foot. A standard of measurement, being a strip of land one foot wide fronting on the street or waterfront and extending the depth of the lot. Value may be quoted per front foot.

Functional obsolescence. Defects in a building or structure that detract from its value or marketability, usually the result of layout, design or other features that are less desirable than features designed for the same functions in newer property.

Functional obsolescence-curable. Physical or design features that are no longer considered desirable by property buyers but could be re- placed or redesigned at relatively low cost.

Functional obsolescence-incurable. Currently undesirable physical or design features that are not easily remedied or economically justified.

Going concern value. The value existing in an established business property compared with the value of selling the real estate and other assets of a concern whose business is not yet established. The term takes into account the goodwill and earning capacity of a business.

Grant deed. A type of deed in which the grantor warrants that he or she has not previously conveyed the estate being granted to another, has not encumbered the property except as noted in the deed, and will convey to the grantee any title to the property the grantor may later acquire.

Grantee. A person who receives a conveyance of real property from a grantor.

Grantor. The person transferring title to or an interest in real property to a grantee.

Gross building area. All enclosed floor areas, as measured along a building's outside perimeter.

Gross income. (See potential gross income)

Gross income multiplier. A figure used as a multiplier of the gross income of a property to produce an estimate of the property's value.

Gross leasable area. Total space designed for occupancy and exclusive use of tenants, measured from outside wall surfaces to the center of shared interior walls.

Gross lease. A lease of property under the terms of which the lessee pays a fixed rent and the lessor pays all property charges regularly incurred through ownership (repairs, taxes, insurance and operating expenses).

Gross living area. Total finished, habitable, above-grade space, measured along the building's outside perimeter.

Gross market income. (See potential gross in- come. )

Gross rent multiplier. (See gross income multi-

Ground lease. A lease of land only on which the lessee usually owns the building or is required to build as specified by the lease. Such leases are usually long-term net leases; the lessee's rights and obligations continue until the lease expires or is terminated for default.

Ground rent. Rent paid for the right to use and occupy land according to the terms of a ground lease.

Growing equity mortgage (GERI). A type of loan that rapidly increases the equity in a property by increasing the monthly payments a certain percentage each year and applying those increases to the principal.

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