Early Occupancy to EGR

 

Early Occupancy

In real estate, early occupancy is an arrangement in which a buyer or tenant is allowed to occupy the property before the closing or before the project is fully completed.

Earnest Money

The earnest money deposit is the portion of the down payment delivered to the seller or an escrow agent as evidence of good faith so as to legally bind the purchase.  When a purchase contract is offered and accepted by the seller, the buyer must typically provide an earnest money deposit.  This deposit will be credited to the buyer’s account, at the time of closing, as a portion of the down payment.  [A typical earnest money requirement with many residential property purchases is at least $1,000 at the time of signing and up to 5% of the entire purchase price within a few days after contract's attorney review period.]

Earthquake Insurance

Earthquake insurance is an insurance policy that covers damage caused by earthquake. This is necessary in earthquake prone areas, because standard insurance policies regularly exclude earthquake coverage.

Easement

The real estate term easement refers to the right to use the land of another person for a specific purpose, such as for a right-of-way or utilities.  For example, a utility company may obtain a right-of-way across a private property when deemed necessary by the local community.  Easements can be positive or negative; they are also either appurtenant or in gross.

Easement by Condemnation

The easement by condemnation is an easement created by law or the court, at the initiation of the local, state or federal government (or designated governmental agent). Condemnation is the legal exercise of the government’s power of eminent domain.

Easement by Estoppel

The easement by estoppels is an easement created by implication or declaration.  An easement by estoppel creates an easement based on the property owner’s words or actions, if they lead the dominant tenement to reasonably believe that an easement has been granted. For example, Angel owns lakefront property, but her neighbor Justin does not.  Angel tells Justin that he can go through her property to access the lake. She has just given Justin easement rights. Compare with the Implied Easement entry.

Easement by Necessity

The easement by necessity is an easement created by law or the court, usually to provide access to landlocked property owners.

Easement by Prescription

The easement by prescription is a method of establishing an involuntary easement allowed by most states.  By openly and continuously using someone’s land without consent for a number of years, a neighboring landowner may obtain an easement through his neighbor’s property.

Easement In Gross

The easement in gross is a type of easement right that is held by individuals and normally terminate with the death of one of the parties involved.  For example, a farmer gets an easement (in gross) right to store some equipment on her neighbor’s adjacent lot.  If either the farmer or her neighbor dies, the easement right ends.  The most common form is the commercial easement in gross.

Eave

An eave is the bottom portion of the roof’s exposed overhang.

Echo House

The echo house refers to a detached in-law unit or guest house, usually meant for occupancy by a parent or relative of the primary homeowner.

Eco-Roof

See the Green Roof entry.

Economic Base

In real estate, the economic base refers to the underlying commercial and industrial components of an area that provides employment and revenue to the area.

Economic Conversion

The term economic conversion refers to the process of converting a property’s usage-with subsequent renovations-to a different use.  For example, an industrial loft warehouse may be converted into stylish apartments.  If the profits justify the cost, this would be a good economic conversion.

Economic Depreciation

In real estate, economic depreciation refers to the decrease in a property’s value caused by external forces.  For example, a loss of the major employer in an area can affect the demand for new residential and retail developments in that area.

Economic Feasibility Study

An economic feasibility study is an analysis of a proposed investment that focuses on the economic and financial factors that will affect the subject property and influence the investment’s future success.

Economic Life

A property’s economic life is the projected length of time that a property, building or improvement can be expected to satisfy the demands of its intended use or application.

Economic Obsolescence

Also called external obsolescence, economic obsolescence refers to the type of obsolescence that occurs when a property or element of a property loses its value or attractiveness to the market.  All instances of economic obsolescence are incurable.

Economic Recovery Tax Act

Also called the Kemp-Roth Tax Cut, the Economic Recovery Tax Act (ERTA) of 1981 amended the internal revenue (tax) code and had a significant impact on the U.S. economy, especially real estate investing. It slashed income tax rates by nearly a quarter, with the top income tax bracket dropping to a 50% rate (from previous high of 70%). Although parts of this law were later repealed, many credit this law for spurring development and investment.

Economic Rent

An advanced economics concept, economic rent goes beyond just land and real estate. The concept of economic rent applies to all goods and commodities. Basically, economic rent is the difference between the cost to bring a product or service to market versus the revenue that property generates. At first glance, economic rent may seem to be another word for profit, but it’s more than just profit. However, economic rent is measured in input unit, rather than output.

Effective Age

In contrast to a building or improvement’s chronological age, the effective age considers the property’s age based on wear and tear.  For example, a poorly maintained building may only be 30 years, but the unchecked deterioration could give it an effective age of 60 years.  This neglected building would thus physically resemble a maintained building twice its age.

Effective Gross Income

With rental properties, the effective gross income (EGI) is the scheduled gross income and other miscellaneous revenues, less the projected vacancy rate. It is the property’s revenue before addressing any operating expenses or debt servicing.

EGI

See the Effective Gross Income entry.

EGR

See the Effective Gross Rent entry.