Real Estate Glossary

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B

balance

The principle of balance requires the appropriate blend of the four factors of production. For maximum value to be achieved land, labor, capital, and management must be in the proper proportion to each other.

Balloon payment

Loans set each monthly payment to cover interest requires and some principal payback. The final payment at the end of the term would handle any remaining principal and be larger than any prior payment. Also called a partially amortized loan.

base line

The main imaginary line running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system.

benchmarks

A permanent reference mark or point established for use by surveyors in measuring differences in elevation,

Keyword(s):

beneficiary

(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.

bilateral contract

A contract where all parties are legally bound to act as the contract states.

blanket loan

covers financing for multiple land lots.

Example: a builder or developer may be creating a subdivision so will use this financing and will also request a partial release clause. So as each lot is sold the entire debt is not required to be paid.

Keyword(s):

blockbusting

An illegal practice where one person gets another to enter a real estate transaction where the first person could benefit financially by showing that a change may occur in the neighborhood including race, sex, religion, color, handicap, familiar status or ancestry of the occupants, a change possibly resulting in the lowering of the property values a decline in the quality of schools, or an increase in the crime rate.

breach of contract

Violation of terms in a contract without a legal excuse. For example: not paying on time. The person who did not breach has three options:

rescission of the contract
action for money damages
an action for specific performance

Keyword(s):

break-even ratio

identifies the percentage of EGI necessary to pay for all operating expenses and debt service. It is the point where cash flow begins. It is also the occupancy necessary to pay all expenses and debt service.

Since the BER describes the occupancy necessary to break-even, it can also be used as an indicator of the risk posed by such an investment. A lower break-even ratio means that a lower occupancy will satisfy the operating expenses and debt service and that would mean lower risk. The break-even ratio is calculated by dividing the total of the operating expenses and annual debt service by the effective gross income

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