REAL ESTATE JARGON!

Jargon no matter what the field, always seems a little confusing to those who cannot make head or tail of it! Not only is it considered rude to converse in plain jargon with a lay man, the fact that we cannot understand it makes it frustrating!

A ‘super built up freehold property’ sounds great... but do we really understand what it means?

There is never a right or a wrong when it comes to Jargon, there is only one thing – “uncertainty”! Here is a list of typical real estate terms, with meanings of course, for you to ponder and register… so that never again does real estate jargon leave you confused!!!

     1.  “Freehold”

What we understand – “Flexibility over the property…” 

What it really means - Permanent and absolute tenure of land or property with freedom to dispose of it at will. If you have ‘freehold’ you can enjoy the ownership of the property for perpetuity! Obviously, freehold property is considered more valuable than leasehold properties.

     2.  “Leasehold” 

Leasehold properties, as we know, are properties which we take on ‘lease’ – which means temporary ownership for a specific time period with terms and conditions et al. The lease includes full responsibility of maintaining the property too. Normally, lease agreements are for 99 years after which, the ownership of the ‘leased property’ is transferred back to the ‘freehold’ owner. Lease papers can be transferred subject to terms and conditions.

     3.  “Power of Attorney” 

We come across this term quite often. The dictionary defines this term as the authority to act for another person in legal or financial matters…or the legal document giving such authority to someone.

If a property cannot be sold or purchased due to certain restrictions, a power of attorney is executed to transfer the rights to the buyer.
It is a legal contract, which gives a person the right to manage, rent, lease, mortgage or sell property, and take binding decisions on behalf of the owner…But, the ownership of the property remains with the seller.

     4.  “Floor Space Index” 

In essence, the floor space index refers to the ratio between the Built up Area allowed and plot area available. This depends on the plot area and varies from one locality to another based on factors such as road width. It is expressed as a ratio or the total built-up area to total area of the plot of land. For example, if the FSI is 5, the total floor area of a multi storey building cannot exceed twice the size, i.e. 10 floors.

     5.  “Carpet Area” 

Like the name itself suggests, the term ‘carpet area’ refers to the actual usable area within the walls of the floor. In any house or apartment, the area within the confines of the walls, but not including the thickness of inner walls, is the carpet area.

     6.  “Super built up area” 

Nor is it super, nor is it built up… but the aggregate superficial area of a building taking each floor into account…including the lifts, the corridors, the passages, staircase, external walls and projections, internal walls and partitions, columns, piers, stairwells, lift wells, tank and plant rooms etc etc etc. This is the area which is being sold by everyone today and is the center point of mis-selling…and miscommunication! Developers add the shared space and distribute it among flat owners in proportion to the area of the flat. Ideally, the common floor area should not be more than 12-15% of the built-up area.

     7.  “Mutation”

 

Mutation of a property is the entry of the transfer of title in the revenue records of the local municipal body. Since it is only for the purpose of paying property taxes, it doesn't provide a legal title to the person mentioned in the mutation records. As the state collects property tax, the procedure and fees differ among states.