OBLIGATED RENT – Also known as ACTUAL RENT and CONTRACT RENT. The amount of consideration paid as RENT under the terms of a LEASE – in contrast to economic rent.
OBLIGEE – The person into whose favor an obligation is entered.
OBLIGOR – 1) one who has engaged to perform some obligation; 2) one who makes a BOND; 3) The person who binds himself or herself to another.
OBSOLESCENCE – A LOSS in VALUE due to reduced desirability and usefulness of a STRUCTURE because its design and construction has become obsolete.
OCCUPANCY AGREEMENT, LIMITED – Usually prior to closing, an agreement that allows a prospective buyer to obtain possession under a temporary arrangement,.
OCCUPANCY RATE OR LEVEL – Percentage of currently RENTED UNITS in a NEIGHBORHOOD, building, complex or city.
OCCUPANT – Person or persons who reside in a particular place.
OCCUPATIONAL HAZARDS – Occupations which expose the INSURED to greater than normal physical danger by the very nature of the work in which the INSURED is engaged and the varying periods of absence from the occupation that can be expected due to the DISABILITY.
OCCURRENCE – An ACCIDENT, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or PROPERTY DAMAGE during the period of an INSURANCE POLICY.
OCCURRENCE POLICY – A LIABILITY INSURANCE POLICY that covers CLAIMS arising out of OCCURRENCES that take place during the POLICY period, regardless of when the CLAIM is filed.
OCEAN MARINE INSURANCE – INSURANCE for sea-going vessels, including LIABILITIES connected with them and their cargoes. See also INLAND MARINE INSURANCE and MARINE INSURANCE
OFFER – An expression of willingness to purchase a property at a specified price.
OFFER AND ACCEPTANCE – Also known as MEETING OF THE MINDS – The mutual agreement to the terms of the CONTRACT by the parties to the CONTRACT.
OFFEREE – One who receives an OFFER.
OFFEROR – One who extends an OFFER to another.
OFFICE BUILDING – A STRUCTURE primarily used for the conduct of business such as clerical services, administration and consultation with associates and clients. Such buildings can be large or small and may house one or more business concerns.
OFFICE OF INTERSTATE LAND SALES REGISTRATION (OILSR) – A division of the U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT that regulates offerings of LAND for sale across state lines.
OFFICE OF THRIFT SUPERVISIONS (OTS) – A federal agency created by FIRREA to regulate and supervise federally chartered SAVINGS AND LOAN ASSOCIATIONS. The OTS takes over the thrift regulatory duties exercised by the FEDERAL HOME LOAN BANK BOARD prior to passage of the Act. The new agency is part of the Treasury Department.
OFFICE PARK – A planned development specially designed for OFFICE BUILDINGS and supportive facilities, such as restaurants. Some office parks, such as a research park or a medical services park, are designed to attract specific TENANTS.
OFFICER OF THE COURT – A particular person who is legally representing the court.
OFF-SITE COSTS – Expenditures related to construction that are spent away from the place of construction.
OFF-SITE IMPROVEMENTS – The portions of a subdivision or development that are not directly on the LOTS to be sold.
OIL AND GAS LEASE – A LEASE under which the LESSEE has the right to explore, drill for and extract petroleum products from the LESSOR’S REAL PROPERTY with RENT being paid for the exploration and drilling rights and ROYALTIES being paid for the extraction.
OLD-AGE, SURVIVORS AND DISABILITY INSURANCE PROGRAM (OASDI) – The
Social Security social INSURANCE program into which participants make payroll contributions based on earnings. BENEFITS are paid to INSURED workers and eligible family members when they retire or become DISABLED and to the survivors of deceased workers.
ONE HUNDRED PERCENT LOCATION – Also known as HUNDRED PERCENT
LOCATION – The most desirable possible location for a particular company’s business enterprise.
OPEN-END MORTGAGE – A MORTGAGE under which the MORTGAGOR may secure additional funds from the MORTGAGEE, usually STIPULATING a ceiling amount that can be borrowed.
OPEN HOUSE – A method of showing a home for sale whereby the home is left open for inspection by interested parties.
OPEN HOUSING – A condition under which housing UNITS may be purchased as LEASED without regard for color, racial, religious, or ethnic characteristics of the buyer or TENANTS.
OPEN LISTING – Also known as NON-EXCLUSIVE and SIMPLE LISTING – The employment CONTRACT which is given to as many BROKERS as the seller desires, but with an obligation to pay the COMMISSION only to the BROKER who produces the buyer for the PROPERTY.
OPEN MORTGAGE – A MORTGAGE that has MATURED or is overdue and is therefore open to FORECLOSURE at any time.
OPEN SPACE – Within a developed area, LAND that is left undeveloped and serves as an AMENITY to surrounding occupants.
OPERATING EXPENSE RATIO – The mathematical relationship derived by dividing OPERATING EXPENSES by potential GROSS INCOME.
OPERATING EXPENSES – Also known as PROPERTY CHARGES and PROPERTY EXPENSES -Amounts paid to MAINTAIN PROPERTY such as UTILITIES, PROPERTY TAXES and HAZARD INSURANCE.
OPERATING LEASE – A LEASE between the LESSEE and the sub-lessee who actually occupies and uses the PROPERTY.
OPERATING LEVERAGE – Automatic increases in the NET OPERATING INCOME or cash flow of income-producing REAL ESTATE when INCOME and EXPENSES increase at the same rate which is further enhanced when EXPENSES are fixed.
OPERATING RATIO – The sum of EXPENSES and LOSSES expressed as a percent of EARNED PREMIUM.
OPERATING STATEMENTS – Financial reports on the cash flow of a PROPERTY.
OPINION OF TITLE – Generally from an ATTORNEY, a certificate as to the validity of TITLE to PROPERTY being sold.
OPPORTUNITY COST – The APPRAISAL principle which maintains that the cost of an investment must include the sacrifice of not being able to select other INVESTMENTS or exercise other options once the INVESTMENT has been made.
OPTION – The only UNILATERAL REAL ESTATE CONTRACT, the right to LEASE, RENT, buy, sell or exchange REAL PROPERTY at a future date at a specified price. OPTIONS must be transferred from the OPTIONER to the OPTIONEE for some valuable consideration..
OPTIONALLY RENEWABLE CONTRACT – A CONTRACT of HEALTH INSURANCE in which the INSURER reserves the right to terminate the COVERAGE at any anniversary or, in some cases, at any PREMIUM due date, but does not have the right to terminate COVERAGE between such dates.
OPTIONEE – One who receives or purchases an OPTION.
OPTIONOR – One who gives or sells an OPTION.
OPTION TO PURCHASE – A CONTRACT that gives one the right to buy a PROPERTY for a specified amount, within a certain time and subject to specified CONDITIONS.
ORAL CONTRACT – An unwritten agreement. Though verbal LEASES for a year or less are often acceptable, with few exceptions unwritten agreements for the sale or use of REAL ESTATE are unenforceable in most states under the Statute of Frauds.
ORDINANCES – Municipal rules governing the use of LAND.
ORDINARY AND NECESSARY BUSINESS EXPENSES – A tax term that allows a current DEDUCTION for business EXPENSES. Contrasted with CAPITAL EXPENDITURES and unreasonable EXPENSES.
ORDINARY LIFE INSURANCE – LIFE INSURANCE usually issued in amounts of $1,000 or more for a fixed amount at a definite PREMIUM payable on an annual, SEMI-ANNUAL, quarterly or monthly basis.
ORIENTATION – A reference to how the buildings or other IMPROVEMENTS are located on the SITE.
ORIGINAL EQUITY – The amount of cash initially invested by the underlying REAL ESTATE owner. Distinguished from SWEAT EQUITY, CAPITAL CALLS.
ORIGINATION FEES – Charges to a borrower to cover the costs of issuing the LOAN, such as APPRAISAL, credit checks and TITLE expense.
ORIGINATION PROCESS – The process by which a LOAN is funded, including the financial structure, DUE DILIGENCE process and lender committee approvals.
OR-MORE CLAUSE – Also known as REPAYMENT CLAUSE – The clause which permits partial or complete repayment of the PRINCIPAL BALANCE ahead of the scheduled time without any PENALTY.
OSTENSIBLE AGENT – The person who is not an AGENT of the PRINCIPAL but whose actions give the impression that the person is an AGENT.
OTHER PEOPLE’S MONEY – Borrowed funds invested in a moneymaking venture. This term implies that DEBT can be used to maximize investment profits or minimize RISK of personal LOSS.
OUTSTANDING BALANCE – The amount currently owned on a DEBT.
OVERAGE – In LEASES for retail stores, amounts to be paid over the BASE RENT based on gross sales.
OVER AGE 55 HOME SALE EXEMPTION – In taxation, an individual over age fifty-five can sell a PRINCIPAL RESIDENCE at a gain and exclude up to $125,000 of the gain from taxation, regardless of the purchase of another home,
OVERALL RATE – Also known as CAPITALIZATION RATE and CAP RATE. The rate used to CAPITALIZE INCOME into VALUE in the INCOME APPROACH TO VALUE.
OVERALL CAPITALIZATION RATE – Also known as OVERALL RATE OF RETURN – The percentage relationship of NET OPERATING INCOME divided by the purchase price of PROPERTY.
OVERALL RATE OF RETURN (OAR) – Also known as OVERALL CAPITALIZATION RATE – The percentage relationship of NET OPERATING INCOME divided by the purchase price of PROPERTY.
OVERBUILDING – A situation in a given area where there has been more REAL ESTATE construction than the market can absorb within a reasonable time.
OVERHEAD EXPENSE INSURANCE – A special form of HEALTH INSURANCE designed to help offset overhead expenses such as office rent, employees’ wages, utilities and auditors’ fees, incurred during TOTAL DISABILITY. The monthly payments during DISABILITY is not a fixed amount of INDEMNITY as on regular disability polices, but the amount of overhead expense actually incurred, or a percentage thereof, up to the limit specified in the policy.
OVERHEAD INSURANCE – A type of SHORT-TERM DISABILITY INCOME INSURANCE that reimburses the INSURED person for specified, fixed monthly expenses that are normal and customary in the operation and conduct of his/her business or office.
OVER-IMPROVEMENT – A LAND use considered too intense for the LAND.
OVERRIDE – 1) An ESTATE carved out of a working interest in an oil and gas lease; 2) a fee paid to someone higher in the organization, or above a certain amount;
OVERRIDING COMMISSION – Also known as OVERWRITE – A COMMISSION paid to general AGENTS or agency managers in addition to the COMMISSION paid to the soliciting AGENT or BROKER.
OVER-THE-COUNTER MARKET – A means of buying and selling SECURITIES that are not listed on a STOCK EXCHANGE. NEGOTIATIONS are carried out by telephone or computer network.
OVERWRITE – Also known as OVERRIDING COMMISSION – A COMMISSION paid to general AGENTS or agency managers in addition to the COMMISSION paid to the soliciting AGENT or BROKER.
OWNER OCCUPANT – A TENANT of a RESIDENCE who also owns the PROPERTY.
OWNER OF RECORD – The person(s) who, according to the public records, is/are the owner of a particular PROPERTY.
OWNER’S POLICY – A TITLE INSURANCE POLICY issued for the benefit of the
PROPERTY owner; usually paid for by the seller.
OWNERSHIP FORM – Methods of owning REAL ESTATE which affect ESTATE TAX, INCOME TAX, continuity, SURVIVORSHIP, LIABILITY, TRANSFERABILITY, disposition at death and at BANKRUPTCY.
OWNERSHIP RIGHTS TO REALTY – Possession, control, enjoyment and disposition.
