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Cap rate

see Capitalization Rate

Capital expenditure

The cost of making improvements on a property.

Capital gain

Taxable income derived from the sale of a capital asset. It equals the sale price less the costs of sale, adjusted basis, suspended losses, excess cost recovery, and recapture of straight-line cost recovery.

Capital improvement

Any improvement that extends the life or increases the value of a piece of property.

Capital market

The supply and demand for resources to invest in real estate and other investments.

Capitalization Rate

A percentage that relates the value of an income-producing property to its future income, expressed as net operating income divided by purchase price. Also known as cap rate.

Cash flow

The net cash received in any period, taking into account net operating income, debt service, capital expenses, loan proceeds, sale revenues, and any other sources and uses of cash.

Cash flow after taxes (CFAT)

Calculated from the cash flow before taxes, less the tax liability (savings), plus investment tax credit.

Cash flow before taxes (CFBT)

For properties, it is the result of several steps; calculating the effective rental income, plus other income not affected by vacancy, less total operating expenses, less annual debt service, funded reserves, leasing commissions, and capital additions.

Cash-on-Cash Return

An investment return ratio derived by dividing cash return by cash invested.

Certificate of Deposit (CD)

A document showing that the bearer has a specified amount of money deposited with a bank or other financial institution.

Certificate of deposit index

An index based on the interest rates on six-month CDs. It used to determine the interest rate for some adjustable-rate mortgages.

Certificate of eligibility

A document issued by the Veterans Administration that verifies the eligibility of a veteran for a loan program.

Certificate of occupancy

A document which states that a home or other building has met all building codes and is suitable for habitation.

Certificate of sale

A document issued at a judicial sale, which entitles the buyer to receive a deed after court confirmation of the purchase of the property.

Chain of title

The official record that details the ownership history of a piece of property.

Chattel

Personal property such as furniture, clothing or a car.

Classified property tax

A tax that varies in rate depending on the use of the property.

Clear title

A property that does not have liens, defects or other legal encumbrances.

Closing

The final procedure in which documents are signed and recorded, and the property is transferred.

Closing costs

Expenses incidental to the sale of real estate including, but not limited to, loan, title and appraisal fees.

Closing statement

A document that details the final financial settlement between a buyer and seller and the costs paid by each party.

Cloud on title

An invalid encumbrance on real property.

Co-signer

A second party who signs a promissory note and takes responsibility for the debt.

Commercial real estate

Any multifamily, office, industrial, or retail property that can be bought or sold in a real estate market.

Commercial strip property

A strip of commercially zoned land divided into parcels to be developed for retail use. These properties usually have a fairly narrow trade area and offer a variety of products and services.

Common area

Areas within a building and its site, such as lobbies, hallways, grounds, and parking lots, that is available for non-exclusive use by all tenants.

Compound interest

Interest computed on the original principal and accumulated interest.

Compound interest

The interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.

Compounding

A type of calculation in which interest earned is reinvested and earns additional interest.

Conditional commitment

A promise by a lender to make a loan if the borrower meets certain conditions.

Condominium

Individual units in a building or development in which owners hold title to the interior space while common areas such as parking lots, community rooms and recreational areas are owned by all the residents.

Condominium conversion

The change in title from a single owner of an entire project or building to multiple owners of individual units.

Construction loan

Short-term loans a lender makes for the construction of homes and buildings. The lender disburses the funds in stages.

Contract rent

The total monetary rental obligation specified in a lease. See base rent.

Contractual lien

A voluntary obligation such as a mortgage or trust deed.

Controlled growth

Any restrictions imposed on the amount or type of new development in an area.

Convertible adjustable-rate mortgage

A mortgage which starts as an adjustable-rate loan, but allows the borrower to convert the loan to a fixed-rate mortgage during a specified period of time.

Conveyance

The transfer of title of property.

Conveyance tax

A tax imposed on the transfer of real property.

Cost recovery

An annual deduction based on the class life of an asset.

Counteroffer

A response to an offer.

Critical area

Any area that is subject to natural hazards or a land feature that supports unique, fragile or valuable natural resources including fish, wildlife or other organisms or their habitats or such resources that carry, hold or purify water in their natural state.

Some definitions come from the Certified Commercial Investment Member Institute (CCIM).