Glossary

Ratio that measures a business's ability to absorb losses, without reducing its ability to service existing debt. The lower the ratio, the greater the size of buffer available to creditors/lenders. Formula: (Accounts payable + Long-term debt + Other Loans _ Total net worth - intangible assets such as copyrights, patents and intellectual property).

Monthly deposits that a lender may require to be included with principal and interest payments for the payment of taxes and insurance.

Often a lender will require a borrower to put in escrow (generally on a monthly basis) an amount calculated to pay for the real estate taxes and insurance premiums, when due, with respect to the real estate collateral pledged to secure its loan.

A closing cost used to ensure that borrowers pay their property taxes. A tax service fee is typically paid by the business borrower at the time the mortgage is made (the Closing), and it is standard practice for the lender to then pass this sum on to a tax service agency. The role of a tax service agency is to look for delinquent property taxes and alert the lender to prevent tax liens from existing against the borrower's property. Since tax liens have priority over lender liens, banks want to ensure that they, not the taxing municipality, become the owner of these properties in the event of default.

One who is given possession of real estate for a fixed period or at will.

Tenant Improvements are alterations or changes made to a property to meet the needs or requirements of a tenant.

Lenders' loan terms may vary by loan uses, however as a guide the following terms may apply: Working Capital - 5 to 10 years / Machinery and Equipment - 7 to 15 years / Real Estate - 5 to 30 years.

Costs resulting from third party reports, whether it be appraisal reports, environmental reports or structural engineering reports.

The lender involved in a real estate loan that has the right to payment in full before payments to other lenders are made. Also known as _First Mortgage Lender_ and _Senior Lien Holder_.

Land used for production of forest stands for commercial use.

(1) A combination of all the elements that constitute a legal right to own, possess, use, control, enjoy and dispose of real estate or a right or interest therein. (2) The rights of ownership recognized and protected by the law. (3) The actual legal document conferring ownership of a piece of real estate.

A company involved in examining and insuring title

Insurance policy that protects the owner and mortgage holder with respect to real estate from loss sustained by defects in the title, often including problems with the Survey.

Total yearly income less operating expenses, adjustments, etc., but before mortgage payments, tenant improvements and leasing commissions.

A hotel definition that represent the gross annual receipts from room revenue.

The amount of incoming and outgoing traffic a retailer or self-storage building generates over a fixed period of time.

A lease that requires the tenant to pay for property taxes, insurance and maintenance in addition to the rent (also referred to as Net Net Net Lease")."

A mobile home consisting of three units which have been fastened together along their length.