|
Deal structure
|
In general, the type and condition of the obligations of the parties involved in a financial transaction. In particular regard to the financing of an acquisition, deals can be: unleveraged, leveraged, traditional debt, participating debt, participating/convertible debt, or joint ventures.
|
|
Debt
|
Any amount one person owes to another.
|
|
Debt service
|
The outlay necessary to meet all interest and principal payments during a given period.
|
|
Debt service coverage ratio (DSCR)
|
The annual net operating income from a property, divided by annual cost of debt service. A DSCR below 1 means the property not generating sufficient cash flow to cover debt payments.
|
|
Debt-to-Income ratio
|
The ratio or percentage that is calculated by dividing the monthly payments on a long-term loan (mortgage) by monthly gross income. According to the FHA, the monthly mortgage payment should not take up more than 29% of the gross monthly income, and the mortgage payment combined with all non-housing debts should not exceed 41% of income.
|
|
Dedicate
|
To appropriate private property to public ownership for a public use.
|
|
Deed
|
The legal document that transfers property ownership.
|
|
Deed in lieu of foreclosure
|
A deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure. This process does not allow the borrower to remain in the house, but avoids the costs and lost time associated with foreclosure.
|
|
Deed of trust
|
An instrument used in place of a mortgage by which real property is transferred to a trustee to secure repayment of a debt.
|
|
Default
|
The failure or inability to pay monthly mortgage payments in a timely manner, or to otherwise meet the mortgage terms.
|
|
Deferred maintenance account
|
An account required to be maintained by the borrower, that provides funds for maintenance of a property.
|
|
Deficiency judgment
|
Imposition of personal liability on a borrower for the unpaid balance of mortgage debt, after a foreclosure has failed to yield the full amount of the debt.
|
|
Defined-benefit plan
|
An employee benefit plan that is specifically defined as a fixed amount or a percentage of salary. Pension plans, health and welfare plans, and Keogh plans are examples of defined-benefit plans.
|
|
Defined-contribution plan
|
An employee benefit plan whose contribution is defined in terms of amount contributed by the employee (deferred salary percentage), employer contribution (matching contributions), and earnings of the fund over the life of the fund, which are usually reinvested into the fund principal. Profit-sharing plans, 401(k), and thrift/savings plans are examples of defined-contribution plans.
|
|
Delinquency
|
Failure of a borrower to make timely mortgage payments under a loan agreement. Severe delinquency may lead to the lender calling the mortgage (foreclose).
|
|
Delinquent mortgage
|
A mortgage that involves a borrower who is behind on payments. The lender may send out a notice of delinquency, and begin foreclosure proceedings if the borrower cannot bring the payments up to date within a specified time limit.
|
|
Demising wall
|
The partition wall that separates one tenant's space from another, or from the building's common areas.
|
|
Department of Veterans Affairs (VA)
|
An independent agency of the federal government which guarantees long-term, low-payment, or no-down-payment mortgages to eligible veterans.
|
|
Deposit
|
Funds provided by the buyer with an offer to purchase property. Also referred to as "earnest money".
|
|
Depreciation
|
A decrease or loss in property value due to wear, age or other cause. In accounting, depreciation is a periodic allowance made for this real or implied loss.
|
|
Derivative securities
|
Securities that are created artificially, i.e., derived from other financial instruments. In the context of CMBS, the most common derivative security is the interest-only strip.
|
|
Design/build
|
Describes a planned construction situation in which a single entity is responsible for both the design and construction.
|
|
Disclosure
|
A statement to a potential buyer listing information relevant to a piece of property, describing potentially harmful conditions, such as the presence of radon gas, lead paint, or unstable structural members.
|
|
Discount point
|
Fees charged by a lender to reduce the interest rate. Generally calculated to be equal to 1% of the total loan amount, and normally paid at closing.
|
|
Discount rate
|
A yield rate used to convert future payments or receipts into present value.
|
|
Discretion
|
The level of authority granted to an adviser or manager over the investment and management of a client's capital.
|
|
Distraint
|
The act of seizing personal property of a tenant in default, based on the right and interest a landlord has in the property.
|
|
Diversification
|
The process of creating individual investments in a manner that insulates against risk. This is accomplished by spreading portions of the investment among a variety of asset types with different characteristics.
|
|
Dividend
|
Cash or stock distribution paid to holders of common stock.
|
|
Dividend yield
|
The annual dividend rate for a security expressed as a percent of its market price (annual dividend/price = dividend yield).
|
|
Dividend-ex date
|
Dividend expiration date. On this date, the stock owner is no longer eligible to receive dividends.
|
|
Document needs list
|
A list of documents required by a lender from a potential borrower submitting a loan application. Documents requested can range from paycheck stubs to bank statements.
|
|
Documentation Preparation Fee
|
A fee charged by lenders, brokers and/or settlement agents to prepare the necessary documents for closing.
|
|
Dollar stop
|
An agreed dollar amount of taxes and operating expense each tenant will pay on a prorated basis.
|
|
Down payment
|
The portion of a purchase price that is paid in cash and is not part of the mortgage loan.
|
|
DOWNREIT
|
An organizational structure that makes it possible for REITs to buy properties using partnership units. The effect is the same as an UPREIT, however, the DOWNREIT is subordinate to the REIT itself, hence the name.
|
|
Draw
|
A payment made to contractors, subcontractors, home builders or suppliers from the proceeds of a construction loan.
|
|
Dual Sinks/Dual Vanity
|
A bathroom layout including two sinks and cabinets, usually “his and hers”.
|
|
Due diligence
|
In general, any investigation of a financial deal that assures all facts and amounts to be true. In real estate specifically, the activities carried out by a prospective purchaser or mortgager of real property to confirm that the property is as represented by the seller and is not subject to environmental or other problems.
|
|
Due on sale
|
A mortgage provision that makes a mortgage due if the property is sold before the mortgage maturity date.
|
|
Duplex Apartment
|
An apartment that is spread out over two levels.
|
