Air Rights to Alteration

 

Air Rights

The legal principle of air rights refers to a property owner’s right of legal ownership of space above a parcel of land, within a building or above any real property. For example, developers may negotiate for control air rights above urban railways and then construct buildings above these railways.

The most common applications of air rights are urban developments over railroad tracks and condominiums. For example, in many cases, condominium unit owners only own the air space within the unit walls.

Alcove

The alcove is a small room, recessed from a larger room or hallway.

Alienation Clause

Also called a “due on sale” clause, the alienation clause is a feature in mortgage deeds that allows the lender to demand full repayment of the current principal balance if the title is ever transferred or substantially altered — without prior consent from the lender.

This provision technically prohibits loan assumptions and title assignments, which typically involve the transfer of real estate—without the existing lender’s authorization.

Alienation of Property

The legal term alienation of property refers to the the transfer of property from the current owner. An “alienation” can either be voluntary (as in the case of a lease or sale) or involuntary (as with a foreclosure).

Alimony

The term alimony refers to income payments from an ex-spouse, arranged through a divorce settlement. Alimony, child support and separate maintenance are acceptable as qualifying income for mortgage loans. However, applicants must show that (1) they have been receiving that income and (2) that income will continue for at least three years.

Alkaline Soil

Soil that contains a high level of mineral salts, making agricultural more difficult. More specifically, alkaline soil has a pH level greater than 7.0.  Soil that has a pH level lower than 7.0 is considered acidic. It’s easier to make soil more alkaline than it is to make it more acidic. One way to decrease the pH level of alkaline soil is to add sulfur.

Alligator Investment

Alligator investments are any that generates negative cash flow. Your investment losses are basically eating into your property’s equity. If you sell the property in the short term, your losses will translate to very low or non-existent net equity.

All-Inclusive Encumbrance

See the Wraparound Mortgage entry.

All-Inclusive Trust Deed

See the Wraparound Mortgage entry.

Allodial System

The allodial system is a legal system of property ownership that allows for private ownership of property. This is the system adopted by true free market economies.

By contrast, the feudal system placed all real estate, with some exceptions, under royal ownership. Communism deemed all property to be owned by the state.

Allowance

In real estate, allowance refers to the incentives offered by builders and landlords, to buyers or tenants, which usually come in the form of extra fixtures, add-ons, build-outs or upgrades.

Allowance Over Building Shell

The allowance over building shell is an agreed amount limiting the build-outs and other upgrades that the builder or landlord will provide for a tenant, on a new project or building. With many new commercial properties, the developer or landlord basically provides an empty shell. They then build out the interior to satisfy the needs and requirements of the new tenant.

The developer will pay for some (or sometimes all) of the cost of the build-out, particularly because those improvements remain even after the tenant leaves. But the developer’s contribution limits, as well as allowed improvements, are always defined by this allowance.

All-Suite Hotel

The all-suite hotel is a  type of hotel in which the rooms are suites, having bedrooms separate from a salon, den or living rooms. Some suites may even have kitchenettes.

Alluvion

The term alluvion refers to new deposits of land caused by accretion.

Alquist-Priolo Special Study Zone

The Alquist-Priolo Special Study Zone is the area encompassing 660 feet on both sides of fault lines in California. State law requires sellers and agents to disclose if a property is located in such a zone.

Alt-A Loan

The Alt-A loan is mortgage financing for residential properties that fall short of conforming loan requirements but are better than sub-prime loans. These are basically A-minus loans that just miss the better prices but more stringent requirements of conforming or A-paper loans. For example, A-credit investors buying non-owner-occupied property are still required to make at least a 20% down payment under the guidelines of conforming loan programs. However, Alt-A loans will allow that same investor to acquire investment (non-owner-occupied) properties with 10%, 5% or in some cases nothing down. The interest rates will be higher, but not as bad as with sub-prime loans.

Two common types of Alt-A loan are the No Documentation or No Income Verification (NIV) loan programs, which have allowed borrowers to obtain financing with minimal documentation of their ability to pay.

Alteration

In the real estate development and construction arena, alteration involves the renovation of a property’s interior through the movement, addition or elimination of building features, such as placement and type of ceiling, doors, floors, walls, windows and amenities.

There is usually no substantial increase or decrease in floor space with most alterations.