Following is a list of words and terms that are
commonly used throughout this website and in the field of property management.
For your convenience and education, we have provided definitions for each of
these words and terms.
can navigate to a word quickly by using the drop-down menu:
Someone authorized by another (principal) to act for or in place of the
principal; one entrusted with another's business.
A feature of real property that enhances its attractiveness and increases the
occupant's or user's satisfaction, although the feature is not essential to the
property's use. Natural amenities include a pleasant or desirable location near
water, scenic views, etc. Man-made amenities include swimming pools, tennis
courts, community buildings, and other recreational facilities.
A room or a group of related rooms, among
similar sets in one building, designed for use as a dwelling.
Articles of Incorporation:
Document filed with the state which sets forth general information about a
corporation. The filing of this document creates the corporation. Specific rules
of the corporation are contained in the bylaws.
Fee or dues payable by members of an association, usually monthly. Assessments
are determined annually in advance by the board of directors as part of the
budgeting process and usually used to
cover expenses for improvements or maintenance.
Anything of monetary value that is owned by a person. Assets include real
property, personal property, and enforceable claims against others (including
bank accounts, stocks, mutual funds, and so on).
A non-profit corporation created for the purpose of managing a common interest
Balance Sheet: A financial statement that shows an individual or corporation's assets,
liabilities, and net worth as of a specific date.
A person, firm, or corporation that is financially unable to pay debts when due.
The debtor seeks relief through a court proceeding to work out a payment
schedule or erase debts. In some cases, the debtor must surrender control of all
assets to a court-appointed trustee.
A proceeding in a federal court in which a
debtor who is financially unable to pay debts when due seeks relief to work out
a payment schedule or erase debts.
Any congregation of a majority of the board members at the same time and place
to hear, discuss or deliberate upon any item of business scheduled to be heard
by the board.
Board of Directors:
The governing body of a corporation such as an association. The board is elected
by the members of the association who elect the officers. The directors and
officers have a duty to comply and enforce the governing documents of the
association and all applicable laws.
An interest-bearing certificate of debt with a maturity date. A real estate bond
is a written obligation usually secured by a mortgage or a deed of trust.
A violation of terms of any legal obligation.
A detailed plan of income and expenses expected over a certain period of time. A
budget can provide guidelines for managing future investments and expenses.
Building Code: Local regulations that specify minimum structural requirements for
design of, construction of, and materials used in a building or structure.
Building codes are based on safety and health standards.
The rules adopted for governing a corporation such as an association. The bylaws
address such things as elections of both directors and officers, the holding of
meetings, rights to notice and the powers of directors and officers.
CC&Rs (Covenants, Conditions and Restrictions)
or Declaration: A recorded document
that sets forth the restrictions on the use or enjoyment of any portion of the
common interest development.
CD (Certificate of
Deposit): A short- or medium-term,
interest-bearing, FDIC-insured debt instrument offered by banks and savings and
loans. CDs offer higher rates of return than most comparable investments, in
exchange for tying up invested money for the duration of the certificate's
maturity. Money removed before maturity is subject to a penalty. CDs are low
risk, low return investments, and are also known as "time deposits", because the
account holder has agreed to keep the money in the account for a specified
amount of time, anywhere from three months to six years.
(1) Money used to create income, either as an investment in a business or an
income property. (2) The money or property comprising the wealth owned or used
by a person or business enterprise. (3) The accumulated wealth of a person or
business. (4) The net worth of a business represented by the amount by which its
assets exceed liabilities.
The cost of an improvement made to extend the useful life of a property or to
add to its value. The cost of repairing a property is not a capital expenditure.
Capital expenditures are appreciated over their useful life; repairs are
subtracted from income for the current year.
Any structure or component erected as a permanent improvement to real property
that adds to its value and useful life.
Certificate Of Title:
A statement provided by an abstract company, title company, or attorney stating
who holds title to real estate based on the public record.
The conclusion or consummation of a transaction. In real estate, closing
includes the delivery of a deed, the signing of notes and security instruments,
and the disbursement of funds necessary to the sale or loan transaction. Also
referred to as settlement.
Closing Costs: Various expenses (over and above the price of the property) incurred by
buyers and sellers in transferring ownership of a property. Closing costs
normally include items such as broker's commissions, discount points,
origination fees, attorney's fees, taxes, title insurance premiums, escrow agent
fees, and charges for obtaining appraisals, inspections, questionnaires, status
letters and surveys.
Common Areas: Those portions of a building, land, and amenities owned (or managed) by
a planned unit development (PUD), condominium project or homeowners' association
that are used by all of the unit owners, who share in the common expenses of
their operation and maintenance. Common areas include swimming pools, tennis
courts, and other recreational facilities, as well as common corridors of
buildings, parking areas, means of ingress and egress, etc.
Common Area Assessments:
Payments required of individual unit owners in a condominium or planned unit
development (PUD) project for additional capital to defray association costs and
expenses and to repair, replace, maintain, improve, or operate the common areas
of the project.
Condemnation: (1) Declaration that a building is unfit for use or is dangerous and
must be destroyed; (2) taking of private property for a public use (such as a
park, street or school) through an exercise of the right of eminent domain.
A real estate project in which each unit owner has title to a unit in a
multi-unit building, an undivided interest in the common areas of the project,
and sometimes the exclusive use of certain limited common areas. Consists of an
undivided interest in real property, which is the common area, coupled with a
separate interest in space called a unit, the boundaries of which, are described
in the condominium plan.
Changing the ownership of an existing building (usually a rental project) to the
condominium form of ownership.
Condominium Hotel (aka Condotel): A condominium project that
has rental or registration desks, short-term occupancy, food and telephone
services, and daily cleaning services and that is operated as a commercial hotel
even though the units are individually owned.
A description of a condominium project indicating all dimensions in sufficient
detail to identify the common areas and each separate interest. The condominium
plan is a recorded document.
An oral or written agreement to do or not do something.
Cooperative (aka Co-op):
A type of multiple ownership in which the residents of a multi-unit housing
complex own shares in the cooperative corporation that owns the property, giving
each resident the right to occupy a specific apartment or unit.
A promise in a mortgage or deed that requires or prevents certain uses of the
property that, if violated, may result in loss or foreclosure of the property.
An amount owed to another.
The person or persons who signed or established the CC&Rs. This is nearly always
Declaration or CC&Rs:
(Covenants, Conditions and Restrictions)
A recorded document that sets forth the restrictions on the use or enjoyment of
any portion of the common interest development.
Deed: The legal document conveying title to a property.
Failure to make loan payments on a timely basis or to comply with other
requirements of a mortgage.
Failure to make mortgage payments when due.
Directors & Officers Liability Coverage:
Insurance coverage that protects board members in lawsuits due to actions taken
on behalf of the association. It also covers errors and omissions by board
A right of way given to persons other than the owner to access to or over a
Eminent Domain: The right of a government to take private property for public use upon
payment of fair compensation to the owner. Eminent domain is the basis for
A worker that performs services subject to the will and control of the employer,
both as to what will be done and how it will be done. The employer establishes
hours of work, may provide training and the worker may not assign anyone to do
the required work.
Encroachment: An improvement that physically intrudes or trespasses on another's
Anything that affects or limits the fee simple title to a property, such as
mortgages, leases, easements, deeds, or restrictions.
The ownership interest of an individual in real property. The sum total of all
the real property and personal property owned by an individual at time of death.
Professionalism: The system of moral
principles and rules that becomes the standards for professional conduct.
A legal proceeding by a landlord to recover possession of real property from the
Fair Housing Act:
The federal law that prohibits discrimination in housing based on race,
color, religion, sex, handicap, familial status, and national origin.
The legal, moral and ethical obligations a person has to fulfill
responsibilities to another. In an association, directors of the association
have a fiduciary duty to act in the best interests of the association.
The legal process by which a borrower's interest in mortgaged property is taken
because of a default on the loan. This usually involves a forced sale of the
property at public auction with the proceeds of the sale being applied to the
The loss of money, property, rights, or privileges due to a breach of legal
The CC&Rs, Bylaws, Rules and Regulations and Articles of Incorporation (or
Articles of Association).
A nonprofit association that manages the common areas of a residential
A building in which people live; residence for
HUD (Housing and Urban
Development): HUD's (US Department of
Housing and Urban Development) mission is to increase homeownership, support
community development and increase access to affordable housing free from
discrimination. To fulfill this mission, HUD will embrace high standards of
ethics, management, and accountability and forge new partnerships--particularly
with faith-based and community organizations--that leverage resources and
improve HUD's ability to be effective on the community level.
A worker hired to do a specific job over which the employer has no right to
control the manner in which the work is done. The worker is generally licensed
and offers services to the public. Independent contractors establish their own
hours and receive no training. Independent contractors are free to assign work
to others, if they determine to do so.
A contract that provides compensation for specific losses in exchange for a
periodic payment. An individual contract is known as an insurance policy, and
the periodic payment is known as an insurance premium.
A property that is not occupied by the owner and is generally rented to a tenant
to produce income.
A decree by a court of law that one person, a debtor, is indebted to another, a
creditor, in a specified amount. The court may place a lien against the debtor's
real property as collateral for payment of the judgment to the creditor.
Judgment Lien: A lien on the property of a debtor resulting from a judgment.
The penalty paid when a payment is made a stated number of days (usually 10-15)
after the due date.
A written or oral contract between a landlord
(the lessor) and a tenant (the lessee) that transfers the right to exclusive
possession and the use of the landlord's real property to the lessee for a
specified period of time and for a stated consideration (rent). By state law,
leases for longer than a certain period of time (generally one year) must be in
writing to be enforceable.
The term or duration of the lease that the
landlord (lessor) and tenant (lessee) agree that tenant will occupy, or have
possession of the real property.
The tenant that has the possession of the real
property for the lease term for a specified consideration (rent).
The landlord that has given possession of their
real property for the lease term for a specified consideration (rent).
Lien: A legal claim against a property that must be paid off when the property
is sold. Is a recorded claim against a property, including Assessment Liens,
Deeds of Trust and unpaid taxes.
Liquid Asset: A cash asset or an asset that is easily converted into cash.
The care or upkeep of a property or unit. This usually does not increase
the value but keeps the property in good working order (i.e. grass cutting,
minor plumbing repair, fixing leaking gutter, etc.).
The contract between an association and property management company setting
forth the rights and obligations of the parties. These agreements may be “full
service” or “financial service” contracts.
Master Association: A homeowners' association in a large residential development that is
made up of representatives from separate associations covering specific areas
within the joint residential development. In effect, it is a "second-level"
association that handles matters affecting the entire development, while the
"first-level" associations handle matters affecting their particular portions of
Meeting of Board:
Any congregation of a majority of the board members at the same time and place
to hear, discuss or deliberate upon any item of business scheduled to be heard
by the board.
Money Market Account:
A savings account that provides bank depositors with many of the advantages of a
money market fund. Certain regulatory restrictions apply to the withdrawal of
funds from a money market account.
Money Market Fund: A mutual fund that allows individuals to participate in managed
investments in short-term debt securities, such as certificates of deposit and
A legal document that pledges a property to the lender as security for payment
of a debt.
Properties that provide separate housing units for more than one family,
although they secure only a single mortgage. Typically a 2-4 unit property.
Non-Liquid Asset: An asset that cannot easily be converted into cash.
An official authorized by law to attest and certify certain documents by his or
her hand and official seal.
A regulation adopted by a board of directors that applies generally to the
management and operation of the Association or the conduct of the business of
Personal Property: Any property that is not real property or is not permanently fixed to
land or structure.
A common interest development other than a condominium or cooperative. The
common area is often owned by the association, however, it may also be owned in
common by the owners of the separate interests. The separate interest is a lot,
parcel, area or space, not a unit.
Primary Residence: The place someone lives most of the time.
An annual budget for the association setting forth the estimated revenue and
expenses along with a summary of the association’s reserves based upon the most
recent reserve study.
A piece of land or real estate, including any
permanent fixtures attached to the land or real estate.
Property Management Agreement:
The contract between an association and property
management company setting forth the rights and obligations of the parties.
These agreements may be “full service” or “financial service” contracts.
Someone who manages real estate for another person or corporation for
compensation. Duties include collecting Association fees, maintaining the
property via independent contractors, and providing the Board of Directors with
appropriate accounting for Association.
The power granted by one person to a representative to vote for the person. A
proxy form is often completed by an owner who is unable to attend an Association
meeting so that a quorum can be achieved at the meeting.
PUD (Planned Unit
Development): A project or
subdivision that includes common property that is owned and maintained by a
homeowners' association for the benefit and use of the individual PUD unit
owners. It is a newer concept in housing designed to
produce a high density of dwellings and maximum use of open spaces. The concept
is an "overlay" zoning, which enables a developer to obtain a higher density
(and sometimes a mixed use for commercial and industrial) than is permitted by
the underlying zoning.
Real Estate Agent: A person who is normally licensed by the state and who, for a commission
or a fee, assists in negotiating a real estate transaction.
Real Property: Land and appurtenances, including anything of a permanent nature such as
structures, trees, minerals, and the interest, benefits, and inherent rights
A fixed, periodic payment made by a tenant of a
property to the owner for possession and use, usually by prior written agreement
of the parties.
Improvements made on properties that enhance the
value or fix something outdated or broken.
A written report which identifies all of the major components which the
association is obligated to repair, replace, restore or maintain having a
remaining useful life of more than two years and less than 30 years as of the
date of the study. The report estimates the remaining useful life of each
component and the amount of funds the association must set aside each month
(Reserves) in order to have the cash available to make all necessary repairs and
The funds set aside for repairs and replacements to be made by an association as
determined by a reserve study.
A property occupied part-time by a person in addition to his or her primary
Security Deposit: A payment by a tenant, held by the landlord during the lease term, and
kept (wholly or partially) on default or destruction of the premises by the
Single Family Residence:
A residential structure designed to include one dwelling.
An assessment made usually for a special project or in response to a large
Refers to the load-bearing components of a building as opposed to the screening
or ornamental elements.
A housing development that is created by dividing a tract of land into
individual lots for sale or lease.
A drawing or map showing the precise legal boundaries of a property, the
location of improvements, easements, rights of way, encroachments, and other
Is not a legal form of ownership, but an architectural style. Townhouses may be
condominiums or planned developments. Townhouses are multi-level homes, usually
built in rows with individual garages. The homes are not stacked one on top of
another so that no owner lives above or below another owner.
A legal document evidencing a person's right to or ownership of a property.
Title Company: A company that specializes in examining and insuring titles to real
Refers to the type of ownership interest that the owner of a separate interest
has in the common area. In a condominium or planned development, this undivided
interest consists of a tenancy in common which means that each owner having an
undivided interest may use all or any portion of the common area, subject to any
restrictions set forth in the Declaration or CC&Rs.