A real estate glossary may not be the first thing you want to read when involved in a property transaction. But with a multitude of words, terms and industry jargon thrown at you by the real estate ecosystem today, it maybe confusing what the terms actually mean and which ones actually rapply to you. Words like carpet area, built up area and super built up area are used interchangeably and at this point, and even after RERA, asking what they mean could be super embarrassing. So, if terms such as Allottee, Occupation Certificate and FSI make your head spin, we have just the blog post for you.
We’ve curated a list of commonly used real estate terms that shall come in handy when you’re ready to buy, sell or rent a property. This real estate glossary is also divided alphabetically into parts for easier understanding but still available in a single page for easier scrolling. Enjoy!
Chennai Real Estate Glossary: A – C
Interest dues that have accumulated as a result of non-payment in the past.
The cost of acquiring a property; includes purchase price and all other allied costs like insurance and legal fees, brokerage charges, etc.
A unit measure of land, defined by 43,560 square feet or 4,840 square yards or approximately 4.047 square meters. Also referred to as Acreage.
Also known as Real Estate Agent, Realtor or Broker. An agent plays the role of a facilitator for property transactions between a buyer and seller or tenant and landlord for a consideration.
Agreement for Lease/Sale
A contract by which land or any other property is leased or sold by one party to another.
The person who is allotted a property, either by government body/authority or by a developer.
Annual Percentage Rate (APR)
The cost of a loan expressed as a yearly rate on the balance of the loan.
An increase in the value of a property due to changes in market conditions or other causes over a period of time.
Balloon Payment A repayment of a loan or bond, usually but not necessarily the final repayment, which is larger in amount than the preceding or earlier installments. This kind of arrangement is referred to as “ballooning” a loan.
Binding Obligations The rights and duties agreed upon and described in an agreement executed between two parties that are binding upon the parties to the agreement (e.g. landlord and tenant or vendor and purchaser).
Brokerage The fee charge paid to a broker to act as an intermediary between the buyer/ lessee and the seller/ lessor. The activity of a broker in bringing together two parties in a transaction. Also referred to as Brokerage Commission or Service Charges.
Building Permit A permission granted by a bonafide authority to a builder granting permission to construct a proposed building.
Built-up Area (BUA)
1) Includes the carpet area and the space covered by the thickness of the inner and outer walls of the shell.
2) An area of urban development, also referred to as a Developed Area.
Business Park An integrated development whereby businesses are provided with common infrastructure, facilities and services.This results in lower costs and therefore greater competitiveness for individual businesses.
Clause in an agreement that sets out the condition under which a contract can be cancelled or terminated.
Capital Asset Pricing Model (CAPM)
Quantitative model explaining asset returns based on the relative risk of associated returns and the risk-free rate.
Proﬁts earned from the sale of capital assets.
Capital Gains Tax
A tax payable on capital gains resulting from property and other investments.
Carpet Area of a property is deﬁned as the net usable area from the inner sides of one wall to another.
A document that is certified by a competent authority to be a true copy of its original.
City Development Corporation
Entities formed by state government in order to boost development activities in the city. eg – CMDA. Their responsibilities include both commercial and residential development of the city.They are also responsible for the overall infrastructural development in the city.
City Municipal Corporation
Government bodies which provide civic services to the citizens in the city. They also provide services to rural and urban villages which might include resettlement colonies, regularising unauthorised colonies, squatter settlements and slums.
Unencumbered title to real property against which there are no claims, mortgages, voluntary liens, etc.
Traditionally used to mean some security in addition to the personal obligation of the borrower but commonly used to refer to a security provided in addition to the principal one.
The payment of a percentage of a deal value as compensation to a broker for professional services rendered.
Completion Certificate Statement
Certiﬁcate from the local authority stating that a building under construction is complete and ready for ﬁt outs.
Interest that is paid on the principal as well as on the interest that accumulates over time.
A report on the past history of a person or company in meeting his/her debt repayment obligations.
Chennai Real Estate Glossary: D – H
Legal document, usually pertaining to the ownership of a property.
An occurrence that lengthens the time taken to complete an activity or a project.
It is a term used to describe any method of attributing the historical or purchase cost of an asset across its useful life, roughly corresponding to normal wear and tear.
Window having two glass panes with air in between for improved thermal and sound insulation.
A sum of money which is a part of the purchase price, paid immediately when the option to a property purchase is exercised.
Construction technique in which little or no water is used in the erection of the walls inside a building. Pre-fabricated or other sheets are used for these walls.
A provision in a contract which calls for an increase in price in the event of an increase in certain costs. For e.g. an escalation clause may specify that rent due will increase with inflation.
The front face of a building.
The rate of interest and other service charges needed to obtain a loan.
Fixed Rate Mortgage
A mortgage where the rate of interest remains constant.
Flexible Interest Rate
A rate that fluctuates between due payment, as opposed to a fixed interest rate which is set for the entire life of the loan or a predetermined period.
Floor Space Index (FSI)
Also called Floor Area Ratio (FAR); it is the quotient of total covered area on all floors of all buildings on a certain plot to the area of the plot.
It is a pavilion structure, often octagonal, commonly found in parks, gardens and spacious public areas. Gazebos are freestanding, or attached to a garden wall, roofed and open on all sides; they provide shade, basic shelter, ornamental features in a landscape and a place to rest.
Contractor who assumes responsibility for completing a construction project, under contract to the owner and hires, supervises and pays all subcontractors.
A common term used to describe a building that is designed, built or operated in a way that is more sustainable, minimising its negative impact on the natural environment.
A person who makes or gives a guarantee.
An agreement by which one person assumes the responsibility of assuring payment or fulfillment of another’s debts or obligations
The acronym for Heating, Ventilating and Air-Conditioning.
A unit of area measurement equaling 2.471 acres or about 107,637 square feet or 10,000 square meters.
Chennai Real Estate Glossary: I – O
Real estate, such as rental properties, which generate income.
The setting of the land surrounding a building or structure. Nowadays, this is often done artificially to increase the value of the property.
A person who plans and designs the decoration of the land surrounding a building that usually involves features like water bodies, pavements, gardens, etc.
Lease / Rent
A contract by which an owner of a property (known as lessor) gives the right of possession and use to another person (lessee), for a specified term and against a specified consideration.
Lease Agreement or Rental Agreement
An agreement recording a lease between a lessor and a lessee.
Lock In Period
A period mentioned in an agreement during which neither party can terminate the agreement.
A charge billed to an end user for installation, addition, or removal of equipment, services, repairs, or management services.
Document that describes, in narrative and with maps, an overall development concept including both present property uses as well as future land development plans. The plan may be prepared by a local government to guide private and public development or by a developer on a specific project.
The due date when a home loan must be paid.
Balcony or low ceiling overhang just above the main floor and below the next storey.
Mixed Use Development
Project which incorporates two or more property uses e.g. an offices and residential buildings with a retail offering.
The deliberation which takes place between two or more parties prior to an agreement. That which transpires in the negotiation makes no part of the agreement, unless introduced into it.
Notice to Quit
A certain and reasonable notice required by law, custom, special agreement or statute, served to the tenant to vacate rented property.
Occupancy Certificate (OC)
A document issued by the local municipal authority building proposal department that provides no objection to occupy the building under reference for its specifed use. An OC is issued only once the building has been completed in all respects and can be occupied. A corporate can carry out its commercial activity only once the premises/building has received its OC.
Development of land adjacent to a property to make it habitable such as side-walks, paved access roads, sewers, etc.
Directly enhancing the physical nature of a property such as renovating a building, installing a new driveway and parking lot and gardening.
A statute enacted by a city or town especially enactments of the legislative body of a municipal corporation or a country.
Chennai Real Estate Glossary: P – S
A low, protective wall or railing along the edge of a roof, balcony or similar structure.
An area adjoining the house that is paved with concrete, flagstone, brick, etc. and is used for relaxation or recreation purposes.
Decline in the value of property due to physical damage to the property such as wear and tear or lack of maintenance.
Power of Attorney
A legal instrument authorising one to act as another’s attorney or agent.
A technique whereby large units of a building or parts of it are produced in factories to be assembled, on the building site.
The future worth of a property or a sum of money discounted to its present-day equivalent, taking account of all relevant circumstances, including inflation.
The range of functions concerned with looking after a building, including collection of rents, payment of outgoings, maintenance including repair, provision of services, insurance and supervision of staff employed for services, and negotiations with tenants or prospective tenants.The extent of responsibility for management between landlord and tenant depend on the terms of the lease(s). The landlord may delegate some or all of these functions to managing agents.
REIT (Real Estate Investment Trust)
A REIT is a corporation or trust that uses pooled capital of many investors to purchase and manage real estate assets and / or mortgage loans. REITs are traded on major stock exchanges as normal stocks and are often also granted special tax considerations. Key benefits of REITs are their inherent liquidity and their instant pricing. REITs enable investment in all major asset types including shopping centres and other commercial or industrial properties.
Every Sale Agreement/ Rental Agreement in India has to be registered with the office of the sub registrar of assurances (local authority) for it to be enforceable by law. This is an obligation of the seller / licensor/ lessor/ landlord. However, the cost towards registration of the agreement is usually paid by the buyer / licensee/ lessee.
Charges levied on the registration of a property. This charge can vary from districts and states.
Refers to the process of transferring people/entities from one location/region to another location/region.
Residential houses within a housing estate having two or three floors, constructed next to each other, having common walls, foundations and facilities.
The Floor area exclusively allocated to the unit including balconies and verandahs but excluding common areas such as stairs, lift shafts, lobbies, etc. The saleable area is measured from the exterior of the enclosing walls of the units and to the center line of the party wall between two units.
Urban settlements that come up around a big city and replicate on a smaller scale most of the amenities and facilities that are available in the big city. The main purpose of satellite cities is to decongest the main city around which they grow.
A payment required by a landlord to ensure that a tenant pays rent on time and keeps the rental unit in good condition. If the tenant damages the property or leaves owing rent, the landlord can use the security deposit to cover what the tenant owes.
A market in which the dynamics are such that the seller has an advantage over a potential buyer to the extent that he can command a higher price than otherwise would be obtainable.
A unit of area that is 1 foot long on all sides. The calculation is 1 foot x 1 foot = 1 square foot.
A fixed tax chargeable on the execution of documents pertaining to sale and rent transactions. Varies by state.
A legal paper on which stamp duty has been paid. The applicable amount of stamp duty paid on the documents in franked onto the legal paper, which shows the amount of stamp duty paid.
Super Built-up Area (Super BUA)
Super built-up area is what builders often quote. It is an all-inclusive term and takes into account carpet area, built-up area and the proportionate area under the common spaces of a building like lobby, staircase and elevator.
Chennai Real Estate Glossary: T – Z
Anyone, including a corporation, who rents real estate property from an owner (called the landlord). The tenant may also be called the “lessee.”
One who is not a party to a contract and who is able to hold a neutral position as to the object of the contract.
The legal right of ownership interest in a property. Legal document which shows ownership of a piece of real estate.
A survey of an area by mapping the physical features of the region.
Topography describes the nature and characteristics of an area, such as its contours, flatness, mountains, etc.
A parcel of land generally held for subdividing and development into residential units.
Taxes, legal fees and other costs incurred in transacting property.
The process of making an estimate of the worth of real estate property or other assets for a particular purpose, e.g. letting, purchase, sale, audit, rating, compulsory purchase or taxation. That purpose and the relevant circumstances will determine assumptions and facts that are appropriate and hence the process used. A statement, usually in writing, setting out the facts, assumptions, calculations and resultant value.
Value-Added Tax (VAT)
Value-added tax was a form of sales tax before the new GST regime. A tax was levied on the added value that resulted from each exchange/sale of goods and services.
1)A measure of length, equaling three feet or 36 inches.
2) An enclosure usually a small place in front of, or around, a house or barn as a courtyard a front or backyard; a barnyard.
3) An enclosure within which any work or business is carried on as a dockyard; a shipyard.
The return on an investment compared to the total cost of investment over a given period of time; e.g. if an investment of INR 2 crore in a house gives rental returns of INR 2 lakhs in one year, the yield on the investment is 10%.
Term used in urban planning for land use regulation which involves the practice of designating permitted uses of land based on mapped zones which separate one set of land uses from another. The primary purpose of zoning is to segregate uses that are thought to be incompatible. Zoning may include regulation of the kinds of activities which will be acceptable on particular lots (such as open space, residential, agricultural, commercial or industrial), the densities at which those activities can be performed (from low-density to high-density), the amount of space structures may occupy, the location of a building on the lot (setbacks), the proportions of the types of space on a lot (for example, how much landscaped space and how much-paved space), and how much parking must be provided.
We hope you enjoyed this post of important real estate terms to know! Let us know if you think there are any other crucial terms we’ve left out in the glossary.