Glossary
The vocabulary of the deal.
Every term gets a one-sentence definition, the longer version, and where it shows up in Prodeal. A to Z, no filler.
A
- A-Note / B-Note StructureA single loan split into a senior A-note and a subordinate B-note, allocating risk and return between lenders holding different pieces.
- A/B noteA single mortgage loan split into a senior A piece and a subordinate B piece, held by different investors but documented as one loan against the property.
- ACORD 25The standard certificate of liability insurance, evidencing a borrower's liability coverage to the lender.
- ACORD 28The standard evidence of commercial property insurance, showing property coverage and lender interests.
- Agency LendingMultifamily lending delivered to Fannie Mae, Freddie Mac, or Ginnie Mae execution through approved lender programs.
- AllongeA paper attached to a promissory note carrying additional endorsements when there is no room left on the note itself.
- ALTA 9 EndorsementA comprehensive title endorsement covering a range of matters including covenants, restrictions, and encroachments.
- ALTA SurveyA land title survey prepared to the ALTA/NSPS national standards, showing boundaries, improvements, easements, and encroachments in a form title insurers rely on.
- Amortization ScheduleThe table setting out how each payment splits between principal and interest over the loan term.
- Annual Budget ApprovalA loan requirement that the borrower submit, and sometimes obtain lender approval of, the property's operating and capital budget each year.
- AppraisalAn independent opinion of the property's value prepared to USPAP standards, required for regulated lenders under FIRREA above threshold amounts.
- Appraisal reconciliationThe section of an appraisal where the appraiser weighs the income, sales comparison, and cost approaches and explains the reasoning behind the final value conclusion.
- AppraiserThe independent professional valuing the property under USPAP standards for the lender's underwriting.
- As-built surveyA survey prepared after construction showing the improvements as actually built, used to confirm they sit within setbacks, easements, and property lines.
- As-Is ValueA property's current value in its present condition, before any planned improvements or lease-up.
- Assignment and AssumptionThe paired documents transferring a loan or contract to a new party who takes on its obligations.
- Assignment of ContractsA borrower's assignment to the lender of key project contracts, such as construction, management, or franchise agreements.
- Assignment of Leases and RentsA loan document assigning the property's leases and rental income to the lender as additional security.
- Audit TrailA time-stamped, tamper-resistant record of every action in a system: views, uploads, edits, and permission changes.
B
- B-Piece BuyerThe investor purchasing the highest-risk, first-loss bonds in a CMBS deal, who typically diligences the underlying loans closely.
- Bad boy carve-outsThe informal name for non-recourse carve-outs, covering sponsor conduct such as fraud, misapplication of funds, waste, and unpermitted transfers.
- Balance Sheet LenderA lender holding loans on its own books rather than selling or securitizing them, bearing the credit risk directly.
- Balloon PaymentThe large principal balance due at a loan's maturity when the loan does not fully amortize over its term.
- Bankruptcy SearchA check for bankruptcy filings by the borrower, guarantor, or related parties, a basic credit and legal diligence step.
- Beneficial OwnershipThe individuals who ultimately own or control an entity borrower, identified and certified for compliance.
- Borrower PortalA borrower-facing view of a loan in progress, where the borrower can see their outstanding items, upload documents against requests, and track status without emailing the lender.
- Borrower's CounselThe attorney representing the borrower, negotiating documents and delivering the entity and authority items the lender requires.
- Borrowing baseThe formula that caps how much a borrower may have outstanding under a facility at any moment, calculated from eligible collateral and reported on a recurring certificate.
- Break-Even OccupancyThe occupancy level at which a property's income exactly covers its operating expenses and debt service.
- Breakage FeeA charge compensating the lender for the cost of unwinding a rate lock or funding arrangement when a loan fails to close as scheduled.
- Bridge LoanShort-term financing that carries a property through a transition, repaid by a sale or permanent refinancing.
- Build-to-SuitA development where a property is constructed to a specific tenant's requirements under a pre-signed long-term lease.
- Builder's Risk InsuranceCoverage for a property under construction, protecting the work in progress against loss.
- Business Income InsuranceCoverage replacing lost income when a property cannot operate after a covered loss, protecting debt service.
C
- Cap RateNet operating income divided by property value, the market's shorthand for pricing income-producing real estate.
- Capital Expenditure ReserveA lender-held reserve funding future major repairs and replacements, sized from the property condition assessment.
- Capital StackThe layered structure of debt and equity financing a property, from senior debt at the bottom to common equity at the top.
- Carry guarantyA guaranty covering a property's operating shortfalls, debt service, and carrying costs during construction or lease-up, rather than the loan principal.
- Carve-Out GuarantyThe guaranty behind a non-recourse loan that springs personal liability for specified bad acts like fraud, waste, misapplication of funds, or unauthorized transfers.
- Cash Management AgreementThe agreement routing property revenues through a controlled account, with waterfalls that pay expenses, debt service, and reserves before the borrower sees cash.
- Cash SweepA mechanism directing excess property cash flow to the lender, for paydown or reserves, when a performance trigger is breached.
- Cash-on-Cash ReturnAnnual pre-tax cash flow divided by the equity invested, a simple measure of current yield to an investor.
- Casualty and condemnationThe loan provisions governing what happens to insurance proceeds after damage and to award money after a taking, including whether funds rebuild the property or repay the loan.
- Certificate of OccupancyThe municipal certificate confirming a building may lawfully be occupied for its stated use.
- Certificate of Substantial CompletionA document certifying that construction is complete enough for the property to be used for its intended purpose.
- Closing binderA single organized set of every executed document from a closed commercial loan, assembled at funding for post-closing review, audit, and servicing.
- Closing checklistThe master list of every document and condition a commercial loan must satisfy before funding, with an owner and a status on each line.
- Closing Checklist TemplateA reusable, reviewed checklist for a loan type that each new deal starts from and extends for its specifics.
- Closing DisbursementThe release and distribution of loan funds at closing, per the settlement statement and closing instructions.
- Closing Instruction LetterWritten instructions from the lender to the closing or title agent specifying exactly how the closing must be conducted and funds disbursed.
- Closing instructionsThe lender's written directions to the title company or settlement agent setting exactly what must be true before loan funds may be disbursed.
- Closing protection letterAn indemnity from a title underwriter covering the lender against loss from its settlement agent's fraud or failure to follow closing instructions.
- Closing StatementThe signed accounting of a loan closing: sources and uses of funds, prorations, escrows, and every fee and charge, agreed line by line before funding.
- CMBSCommercial mortgage-backed securities, bonds backed by pools of commercial real estate loans sold to capital-markets investors.
- Collateral AssignmentAn assignment of a right or asset to a lender as security, exercisable if the borrower defaults.
- Collateral fileThe set of original and certified loan documents a custodian holds to evidence a lender's secured position, distinct from the broader credit file.
- Comfort Letter (Franchisor)An agreement from a hotel franchisor to the lender, providing notice and cure rights and continuity of the flag on default.
- Commitment LetterThe document by which a lender formally commits to fund a loan, stating terms, conditions, expiration, and any deposit.
- Completion GuarantyA guaranty that construction will be finished, lien-free and on time, backing a construction loan beyond payment.
- ConcessionsRent discounts or incentives offered to attract or retain tenants, such as free months, reducing effective rent.
- Condition PrecedentA requirement that must be satisfied before a lender is obligated to fund, listed in the loan documents.
- Condominium RegimeA legal structure dividing a property into individually owned units and shared common elements, governed by a declaration.
- Construction DrawA periodic advance of construction loan proceeds against completed work, verified by inspection and conditioned on lien waivers and budget compliance.
- Construction draw scheduleThe agreed plan for advancing construction loan proceeds against work completed, tied to a line item budget and verified before each disbursement.
- Conventional LendingCommercial real estate lending by banks and credit unions on balance sheet, outside government insurance or agency programs.
- Correspondent LenderA lender originating loans in its own name for delivery to an investor, often table-funded and immediately assigned.
- Covenant ComplianceThe ongoing confirmation that a borrower is meeting the loan's promises, tested periodically from the borrower's financial reporting.
- CRA CreditConsideration a bank earns under the Community Reinvestment Act for qualifying lending and investment in its communities.
- Credit facilityA committed lending arrangement under which a borrower may draw, and in a revolving facility repay and redraw, up to a stated maximum during a defined availability period.
- Credit memoThe written analysis supporting a lending decision, covering the sponsor, the property, the underwriting, the structure, and the recommended conditions.
- CREFC IRPThe CRE Finance Council Investor Reporting Package, the standard set of files and data fields servicers use to report on securitized commercial mortgage loans.
- Cross-CollateralizationA structure where multiple properties secure multiple loans collectively, so each property backs the whole obligation.
- Cross-DefaultA provision making a default under one loan an automatic default under another, linking otherwise separate obligations.
- Custodial accountAn account a servicer holds in trust for others, keeping borrower payments and escrowed funds separate from the servicer's own money.
D
- Data Room IndexThe organized table of contents for a data room, mapping every document to its place in the diligence structure.
- Date-Down EndorsementA title endorsement updating the effective date of coverage to confirm no new matters appeared since the last search.
- Deal PipelineThe set of prospective and in-progress deals a lender is tracking, from initial interest through closing.
- Debt ConstantThe annual debt service on a loan divided by the loan amount, expressing the total cost of debt as a single rate.
- Debt FundA private investment fund making commercial real estate loans, often bridge and transitional debt, financed with leverage.
- Debt service reserveFunds held by the lender to cover loan payments during a period when property income is expected to fall short of debt service.
- Debt YieldNet operating income divided by the loan amount, a value-independent measure of how hard the loan is working.
- Deed in lieu of foreclosureA negotiated transfer of the property to the lender in satisfaction of the debt, avoiding a foreclosure proceeding.
- Deed in Lieu of ForeclosureA negotiated transfer of a property from a defaulting borrower to the lender, avoiding a formal foreclosure.
- Deed of TrustA security instrument used in many states in place of a mortgage, conveying title to a trustee who holds it until the loan is repaid.
- DefeasanceReleasing property collateral from a loan by substituting a portfolio of government securities engineered to make the remaining loan payments.
- Development SpreadThe difference between a project's yield on cost and the market cap rate, measuring the value creation in a development.
- Diligence TrackerThe working list of every diligence item, its owner, and its status, that keeps a deal's investigation coordinated.
- Document VersioningKeeping a clear, authoritative record of which version of a document is current, avoiding the confusion of competing drafts.
- DSCR (Debt Service Coverage Ratio)Net operating income divided by debt service, the standard measure of whether a property's cash flow covers its loan payments.
- DSCR CovenantA loan covenant requiring the property to maintain a minimum debt service coverage ratio, tested periodically.
- Due-on-sale clauseA loan provision letting the lender accelerate the debt if the property or a controlling interest in the borrower is transferred without consent.
E
- Earthquake InsuranceSpecialized coverage for seismic risk, required by lenders in exposed markets, often informed by a seismic study.
- Economic VacancyThe gap between potential rent and actual collected rent, capturing physical vacancy plus concessions, delinquency, and non-revenue units.
- Effective Gross IncomeA property's potential gross income less vacancy and collection loss, the top line before operating expenses.
- Engagement LetterThe agreement retaining a third-party vendor, such as an appraiser, environmental consultant, or counsel, defining scope, fee, and timing.
- Environmental ConsultantThe firm performing environmental assessments, from Phase I records reviews to Phase II sampling.
- Environmental indemnityA separate agreement under which the borrower and guarantors indemnify the lender for environmental liabilities, usually surviving repayment and foreclosure.
- Environmental InsuranceCoverage for environmental liabilities, sometimes required where a property carries contamination risk.
- Equity MultipleA return metric expressing total cash returned to equity divided by total cash invested, over the life of an investment.
- Escrow AgentThe neutral party holding funds or documents and releasing them only when agreed conditions are met.
- Escrow AgreementThe contract governing funds or documents held by a neutral escrow agent, stating exactly what is held, for whom, and the conditions of release.
- Escrow analysisThe periodic recalculation of a borrower's escrow deposit, comparing what was collected against what was disbursed and resetting the monthly amount.
- Escrow ClosingA closing conducted through an escrow agent who holds documents and funds and disburses when all conditions are satisfied.
- Escrow HoldbackFunds retained at closing to cover an incomplete item, released when the condition is satisfied.
- Estoppel and SNDA TrackingThe process of collecting tenant estoppel certificates and SNDAs across a multi-tenant property before closing.
- Estoppel CertificateAn estoppel certificate is a signed statement from a tenant that confirms the current terms of their lease: the rent, the lease dates, the deposit held, and whether anyone is in default. A buyer or lender relies on it to prove a property's income is real before a sale or loan closes, and once signed the tenant is legally stopped, or estopped, from later claiming different terms.
- Evidence of InsuranceThe certificates and policy documents proving the borrower carries the property, liability, and specialty coverages the loan documents require, with the lender properly named.
- Exception ReportA servicing report listing loans that deviate from expected status, such as missing documents, covenant breaches, or late payments.
- Exit Cap RateThe assumed capitalization rate at a future sale, used to project a property's exit value in underwriting.
- Extension OptionA borrower's contractual right to extend the loan maturity, usually on conditions and for a fee.
F
- Fannie Mae DUSThe Delegated Underwriting and Servicing program through which approved lenders originate and service multifamily loans that Fannie Mae purchases.
- Fannie Mae Small BalanceFannie Mae's small-loan multifamily execution through its DUS lenders, serving smaller apartment properties with agency terms.
- Financial Reporting RequirementsThe loan's schedule of borrower financial deliverables: operating statements, rent rolls, budgets, and certifications, on defined dates.
- Firm CommitmentHUD's binding commitment to insure a multifamily loan on stated terms, the green light between underwriting and closing on FHA deals.
- Flood DeterminationA certification of the property's FEMA flood zone that triggers mandatory flood insurance when any structure sits in a special flood hazard area.
- Flood zone determinationA report identifying whether a property sits in a designated special flood hazard area, which decides whether flood insurance is federally required.
- ForbearanceA lender's temporary agreement to withhold enforcing its rights, giving a struggling borrower room without permanently changing the loan.
- Forbearance agreementA written agreement in which a lender agrees not to exercise remedies for a defined period while the borrower works to cure a default or complete a resolution.
- Forward CommitmentA lender's commitment to fund a loan at a future date on agreed terms, common on construction-to-permanent and agency multifamily deals.
- Franchise Agreement (Hotel)The brand agreement governing a hotel's flag, central to hospitality lending diligence.
- Freddie Mac OptigoFreddie Mac's network of approved multifamily lenders originating loans the agency purchases, spanning conventional, targeted affordable, and small balance products.
- Freddie Mac SBLFreddie Mac's Small Balance Loan program for smaller multifamily properties, offering agency execution on loans below the conventional threshold.
- Funding ConditionsThe specific items confirmed in the final hours before a lender releases funds, the last gate of a closing.
G
- Gap IndemnityA borrower's indemnity covering the title company for the gap between closing and recording, when new liens could theoretically appear.
- Ginnie MaeThe government corporation guaranteeing mortgage-backed securities composed of federally insured loans, including FHA multifamily.
- Going-In Cap RateThe capitalization rate at acquisition, based on in-place or first-year net operating income relative to the purchase price.
- Good faith depositMoney a borrower posts when accepting a term sheet or commitment, used to fund third-party reports and legal costs and generally at risk if the borrower walks away.
- Good Standing CertificateA state-issued certificate confirming an entity exists and is current on its filings, usually dated within thirty days of closing.
- Gross Potential RentThe total rent a property would collect at full occupancy and market rents, before vacancy and loss adjustments.
- Gross vs. Net LeaseThe distinction between leases where the landlord pays operating expenses (gross) and where the tenant does (net), shaping NOI analysis.
- Ground LeaseA long-term lease of land on which the tenant owns the improvements, creating a leasehold estate a lender can mortgage.
- Guarantor Financial StatementThe personal or entity financial statement documenting a guarantor's net worth and liquidity, underwritten alongside the property.
- GuarantyA third party's promise to answer for the borrower's obligations, in full, in part, or only on specified bad acts.
- Guaranty of collectionA guaranty enforceable only after the lender has pursued the borrower and the collateral and can show a remaining deficiency.
- Guaranty of paymentA guaranty allowing the lender to demand payment from the guarantor as soon as the borrower defaults, without first pursuing the borrower or the collateral.
H
- HUD 221(d)(4)The FHA program for new construction or substantial rehabilitation of multifamily housing, combining construction and permanent financing in one insured loan.
- HUD 223(f)The FHA program for acquiring or refinancing existing multifamily housing, insured by HUD and processed through approved MAP lenders.
- HUD 223(f)The FHA-insured program for acquiring or refinancing existing multifamily properties, offering long fixed-rate non-recourse terms with fully amortizing payments.
- HUD 232The FHA program insuring loans for residential care facilities, including skilled nursing and assisted living.
- HUD MAPHUD's Multifamily Accelerated Processing program, the standardized underwriting and closing track for FHA-insured multifamily loans through approved lenders.
I
- Impound AccountA lender-held account, also called an escrow account, that collects and pays a property's taxes and insurance.
- Insurance ConsultantThe specialist reviewing the borrower's insurance for compliance with loan requirements.
- Intercreditor AgreementThe contract between two lenders to the same borrower or project that fixes priority, payment rights, and who can act when things go wrong.
- Interest Rate CapA hedge limiting the interest rate on a floating-rate loan, required by lenders on transitional debt.
- Interest ReserveLoan proceeds set aside to pay interest during a period when a property does not yet generate enough cash flow, common in construction and bridge loans.
- Interest-Only PeriodA span during which the borrower pays only interest, deferring principal amortization to later in the term.
- Internal Rate of Return (IRR)The annualized discount rate at which an investment's cash flows net to zero, the standard time-weighted return measure.
J
K
L
- Lease AbstractA structured summary of a lease's business terms: parties, premises, term, rent, escalations, options, and the clauses a lender cares about.
- Leasehold MortgageA mortgage secured by a tenant's leasehold interest rather than a fee ownership of real property.
- Legal OpinionA letter from borrower's counsel opining that the borrower is duly formed, the loan documents are authorized, and the obligations are enforceable.
- Lender due diligenceThe review a lender runs before funding a commercial loan: third-party reports, title, borrower financials, and property documents, checked against the commitment.
- Lender's CounselThe attorney representing the lender, drafting and negotiating loan documents and confirming conditions to funding.
- Lender's Title PolicyA loan policy of title insurance that insures the lender's mortgage lien is valid, enforceable, and in the agreed priority position, up to the loan amount.
- Life Company LenderAn insurance company lending against commercial real estate to match long-dated liabilities, known for low-leverage, long-term, fixed-rate loans.
- Lis PendensA recorded notice that litigation affecting a property's title is pending, warning potential buyers and lenders of the dispute.
- Litigation SearchA search for pending or past litigation involving the borrower, guarantor, or property, informing risk assessment.
- Loan AdministratorThe role owning loan documentation and boarding, ensuring the closed loan is complete, accurate, and correctly set up for servicing.
- Loan AgreementThe master contract for the loan: conditions to funding, representations, covenants, reserves, cash management, transfer rules, and events of default.
- Loan AssumptionA property sale in which the buyer takes over the existing loan on its terms, with lender approval, instead of paying it off.
- Loan BoardingSetting up a closed loan in the servicing system: terms, payment schedules, escrows, reserves, covenants, and document images, verified against the executed documents.
- Loan CloserThe person who drives a loan from commitment to funding, running the checklist and coordinating every party.
- Loan CommitmentA lender's binding agreement to make a loan on stated terms once the listed conditions are satisfied.
- Loan committeeThe body inside a lender that approves credits above a stated authority level, working from a credit memo prepared by the deal team.
- Loan ModificationA negotiated change to an existing loan's terms, such as rate, maturity, amortization, or covenants, documented and often requiring consents.
- Loan OriginatorThe person or team sourcing and structuring a loan, from first borrower contact through commitment.
- Loan Participation AgreementThe contract governing a participation, defining each party's share, rights, payment mechanics, and the lead's servicing duties.
- Loan ServicingThe ongoing administration of a loan after closing: collecting payments, managing escrows, testing covenants, and maintaining the record for the life of the loan.
- Loan SyndicationA loan arranged by one or more lead banks and funded by a group of lenders, each directly a party to the credit agreement.
- Loan TapeA structured data file summarizing the key terms and performance of a loan or a portfolio of loans, used in sales, servicing, and reporting.
- Loan-to-Cost (LTC)The loan amount as a percentage of total project cost, the primary sizing metric for construction and value-add loans.
- Loan-to-Value (LTV)The loan amount divided by the property's appraised value, the basic measure of how much equity cushions the lender.
- LockboxAn account arrangement directing tenant or borrower receipts to a lender-controlled account rather than to the borrower directly.
- Lockout periodA stretch early in a loan term during which the borrower may not prepay at all, regardless of any willingness to pay a penalty.
- Loss to LeaseThe difference between a unit's market rent and its actual in-place rent, reflecting below-market leases.
M
- Master LeaseA single overarching lease under which the tenant subleases space to occupants, common in structured and credit-tenant deals.
- Master ServicerIn securitized structures, the servicer administering performing loans and passing troubled ones to special servicing.
- Mechanic's LienA claim against property by a contractor or supplier for unpaid work, which can jump ahead of a mortgage depending on state law and timing.
- Mechanics lien waiverA signed release from a contractor, subcontractor, or supplier giving up lien rights for work covered by a payment, either conditionally or unconditionally.
- Member Business LoanA commercial loan made by a credit union to a member, subject to NCUA rules including an aggregate cap relative to assets.
- Memorandum of LeaseA short recorded document giving public notice of a lease without disclosing its full terms.
- Mezzanine DebtFinancing secured by a pledge of the equity in the property owner, not the property itself, sitting between the mortgage and the sponsor's equity.
- Mezzanine loanA loan secured by the borrower's equity interests in the property owner rather than by the real estate itself, sitting behind the mortgage and ahead of common equity.
- Mini-PermMedium-term financing bridging construction and permanent debt, typically three to five years, on a recently stabilized property.
- Mortgage BankerA firm that originates commercial mortgages, placing them with lenders or investors rather than holding them on balance sheet.
N
- NCUA ExamThe National Credit Union Administration's examination of a credit union, including scrutiny of its commercial and member business lending.
- Net leaseA lease under which the tenant pays some or all of the property's operating expenses in addition to base rent, shifting cost risk from landlord to tenant.
- Net Operating Income (NOI)A property's revenue minus operating expenses, before debt service, capital items, and income taxes.
- Non-recourse carve-outAn exception to a non-recourse loan that makes the sponsor personally liable for losses caused by specified bad acts, and in some cases for the entire debt.
- Non-Recourse LoanA loan where the lender's remedy is the property itself, with the borrower and sponsors not personally liable except for negotiated carve-outs.
- Note-on-Note FinancingA loan secured by another loan, where a lender finances a debt fund or originator's position in a mortgage rather than the real estate directly.
O
- Occupancy Cost RatioA tenant's total occupancy cost as a percentage of its sales, a health check for retail tenants.
- OFAC CheckScreening of parties against the Treasury's sanctions lists, a required compliance step before doing business.
- Operating Expense RatioOperating expenses as a percentage of effective gross income, a quick gauge of a property's cost efficiency.
- Operating expense reconciliationThe annual true-up comparing estimated operating expense payments collected from tenants against actual costs, producing a billing or a credit.
- Opinion letterA letter from borrower's counsel stating that the borrower is validly formed, that it has authority to enter the loan, and that the documents are enforceable against it.
- Organizational DocumentsThe entity papers that prove who the borrower is and who can bind it: formation certificates, operating or partnership agreements, resolutions, and incumbency certificates.
P
- Paralegal (Closing)The legal-team member coordinating documents, signatures, and recordings in a loan closing under attorney supervision.
- Participation agreementThe contract under which a lead lender sells undivided interests in a loan to one or more participants while remaining the lender of record.
- Participation LoanA single loan in which the lead lender sells shares to participant lenders, who fund their portions and take payments through the lead.
- Payment and performance bondSurety bonds guaranteeing that a contractor will complete the work and will pay its subcontractors and suppliers.
- Payoff LetterA servicer's statement of the exact amount required to pay a loan in full as of a given date, including principal, interest, and any fees or premiums.
- Permanent FinancingLong-term, typically fixed-rate financing on a stabilized property, replacing construction or bridge debt.
- Phase I Environmental Site AssessmentA records-and-site-visit environmental review to the ASTM E1527 standard that identifies recognized environmental conditions without any physical sampling.
- PIP (Property Improvement Plan)A franchisor-required schedule of renovations to bring or keep a hotel at brand standard, funded through reserves.
- Post-ClosingThe trailing workstream after funding: recorded documents back from the county, final title policy, outstanding deliverables, and file completion.
- Post-closing punch listThe items still outstanding after a loan funds, typically recorded documents, final title policies, and originals that could not be delivered at the table.
- Power of SaleA clause allowing a lender to foreclose and sell property without a court proceeding, common under deeds of trust.
- Preferred EquityAn equity position with priority over common equity for returns, often used alongside or instead of mezzanine debt.
- Prepayment PenaltyA charge for repaying a loan before maturity, protecting the lender's expected yield.
- Pro FormaA projection of a property's future income, expenses, and cash flow, used to underwrite value-add and development deals.
- Promissory NoteThe borrower's signed promise to repay the loan: amount, rate, payment terms, maturity, and default consequences, in a single negotiable document.
- Property Condition AssessmentAn engineering review to the ASTM E2018 standard covering the building's systems and structure, with cost tables for immediate repairs and long-term reserves.
- Property Management AgreementThe contract governing third-party management of a property, often subordinated and assignable to the lender.
- Punch List (Construction)The list of minor items remaining to be completed or corrected near the end of a construction project.
Q
R
- Rate LockAn agreement fixing the loan's interest rate for a set period, protecting the borrower from rate movement between commitment and closing.
- Rating AgencyA firm assigning credit ratings to securitized debt, whose criteria shape how loans are structured and pooled.
- RecastRe-amortizing a loan over a new schedule, often after a principal paydown, without originating a new loan.
- ReceivershipA court-appointed receiver taking control of a property to preserve its value during a loan default or dispute.
- Recourse LoanA loan where the borrower and guarantors are personally liable for repayment beyond the collateral itself.
- RefinancingReplacing an existing loan with a new one, to lower rate, extend term, pull equity, or fund a business plan.
- Regulatory AgreementThe agreement binding a HUD-insured borrower to program requirements on operations, distributions, reserves, and reporting for the life of the loan.
- Release of LienThe recorded document that discharges a mortgage or lien once the underlying obligation is satisfied.
- Rent RollA rent roll is a document that lists every tenant in a property alongside their unit, rent, lease start and end dates, and deposits. It is the primary evidence of a property's income, and one of the first documents a lender or buyer requests when underwriting a commercial real estate loan or sale.
- Replacement reserveA monthly escrow funded by the borrower to pay for capital repairs and replacements, sized from the property condition assessment.
- Repo FacilityA repurchase agreement financing arrangement funding an originator's or investor's holdings of loans or securities.
- Reserves and EscrowsLender-held accounts funded at closing and monthly for taxes, insurance, replacements, tenant improvements, and negotiated repair items.
- RetainageA percentage of each construction payment withheld until the work is complete and the period for filing mechanics liens has passed.
- Role-Based AccessPermissioning that grants document access based on a party's role, so each party sees only what it should.
S
- Sale-LeasebackA transaction where an owner-occupant sells its property and simultaneously leases it back, converting owned real estate into a long-term lease.
- SBA 504 LoanAn SBA program financing owner-occupied commercial real estate and equipment through a bank first mortgage plus a subordinate CDC debenture.
- SBA 7(a) LoanThe SBA's flagship guaranteed loan program, financing a range of small business needs including owner-occupied real estate, with an SBA guarantee to the lender.
- Schedule B ExceptionsThe items listed in a title commitment that the title policy will not insure against, such as easements, restrictions, and matters a survey would show.
- SecuritizationPooling loans and issuing securities backed by their cash flows, distributing risk to capital-markets investors.
- Seismic PMLProbable maximum loss, an estimate of the damage a building would suffer in a major earthquake, expressed as a percentage of replacement cost.
- Seismic Report (PML)A study estimating a building's probable maximum loss from an earthquake, informing insurance and lending decisions in seismic zones.
- ServicerThe party administering a loan after closing, collecting payments, managing escrows, and maintaining the record.
- Servicing SpreadThe portion of a loan's interest retained by the servicer as compensation for administering the loan.
- Servicing TransferThe handoff of servicing rights and records from one servicer to another, governed by notice requirements and a data and document exchange.
- Settlement statementThe itemized accounting of every debit and credit at a closing, showing the sources of funds and exactly where each dollar was disbursed.
- Settlement StatementThe itemized accounting of all funds in a closing, showing every charge, credit, and disbursement for each party.
- SNDA (Subordination, Non-Disturbance, and Attornment)A three-way agreement between lender, landlord, and tenant that sets what happens to a lease if the lender forecloses. A standard closing requirement on tenanted commercial property.
- SNDA RecordingThe recording of a subordination, non-disturbance, and attornment agreement to bind successors and give it priority effect.
- Special ServicingThe handling of defaulted or at-risk loans by a specialist servicer with authority to modify, foreclose, or otherwise resolve them, common in CMBS.
- SponsorThe principal or firm behind a real estate deal, whose experience, capital, and track record the lender underwrites alongside the property.
- Sponsor liquidityThe cash and readily marketable assets a sponsor holds, tested at underwriting and often required to be maintained as a covenant through the loan term.
- Springing lockboxA cash management arrangement that stays dormant until a defined trigger occurs, at which point the lender takes control of property receipts.
- Springing RecourseA provision converting a non-recourse loan into a recourse obligation upon specified triggering events.
- Stabilized NOINet operating income a property is expected to produce once occupancy and rents reach a normal sustained level, used to size permanent debt and test exit assumptions.
- Stabilized ValueA property's projected value once it reaches normal, sustained occupancy and income, distinct from as-is value.
- Standby CommitmentA backup financing commitment a borrower can draw on if primary financing is unavailable, providing assurance without an expectation of funding.
- Step-Down PrepaymentA prepayment penalty that declines over time, such as 5% in year one falling by a point each year.
- Stretch Senior LoanA senior loan sized above typical leverage, reaching into what mezzanine debt would normally cover, at a blended rate.
- Sub-ServicerA servicer performing servicing functions on behalf of the primary servicer or lender under a subservicing agreement.
- Subordination AgreementAn agreement that re-ranks priority between interests in the same property, putting one lien, lease, or payment right behind another.
- Survey ExceptionA title policy exception for matters a survey would disclose, removable or narrowed by delivering an acceptable survey.
- SurveyorThe licensed professional preparing the land survey that title insurers and lenders rely on.
T
- Table FundingA closing where a loan is originated in one lender's name but funded at the closing table by another, who takes the loan by simultaneous assignment.
- Tax and Insurance EscrowThe reserve a lender collects to fund a property's real estate taxes and insurance premiums as they come due.
- Tax Parcel VerificationConfirmation that the property's tax parcels match the collateral and that taxes are current.
- Tenancy in Common (TIC)A form of co-ownership where multiple parties hold undivided fractional interests in a property, each freely transferable.
- Tenant Estoppel CertificateA tenant's signed confirmation of its lease terms and that neither party is in default, relied on by lenders at closing.
- Term SheetA non-binding summary of proposed loan terms, issued early to align the lender and borrower on structure before the expense of full documentation.
- TI/LC ReserveA reserve for tenant improvements and leasing commissions, funding the cost of re-tenanting space as leases roll.
- Title CommitmentA title insurer's binding offer to issue a title policy on stated terms, listing what it will insure, what it requires before closing, and what it will not cover.
- Title CompanyThe company issuing title insurance and often handling escrow and closing, central to confirming the lender's lien priority.
- Title endorsementAn addition to a title policy that extends coverage to a specific risk the base policy excludes or leaves ambiguous.
- Title EndorsementsAdd-ons to a title policy providing coverage for specific risks beyond the standard policy.
- Trailing Twelve Months (T-12)A financial statement showing a property's actual income and expenses over the most recent twelve months.
- TrusteeIn a securitization, the party holding the loans for the benefit of bondholders and administering the trust per the governing documents.
U
- UCC Financing StatementThe UCC-1 filing that perfects a lender's security interest in personal property and fixtures, filed with the state and sometimes the county records.
- Umbrella PolicyExcess liability coverage sitting above primary policies, providing an additional layer of protection.
- UnderwriterThe analyst who assesses a loan's risk, sizing it against cash flow, value, and sponsor, and setting the conditions of approval.
- Unitranche LoanA single blended loan combining what would otherwise be senior and subordinate debt into one facility at one blended rate.
- Utility Will-Serve LetterA utility provider's confirmation that it will supply service to a property, often required for construction and development.
W
- W-9 CertificationThe IRS form by which a party certifies its taxpayer identification number, collected for tax reporting.
- Warehouse LenderA lender providing short-term financing to originators to fund loans before they are sold or securitized.
- Warehouse line of creditA short-term revolving facility that funds loans a lender originates and intends to sell, secured by those loans until they are purchased by the takeout investor.
- Watch ListA servicer's roster of performing loans showing early warning signs, monitored more closely before any actual default.
- WatchlistThe list of loans flagged for heightened monitoring because of performance, collateral, or sponsor concerns, short of transfer to special servicing.
- WatermarkingOverlaying documents with identifying marks, such as user and timestamp, to deter and trace unauthorized sharing.
- Wet vs. Dry ClosingThe distinction between closings where funds disburse at signing (wet) and where funds wait for post-signing conditions like recording (dry).
- Wire InstructionsThe banking details directing where closing funds are sent, verified carefully to prevent fraud.
- WorkoutThe negotiated process of resolving a troubled loan short of foreclosure, through restructuring, paydowns, additional collateral, or a managed exit.
Y
Z
- Zoning endorsementA title endorsement insuring that the property's current use and structures comply with applicable zoning, and in the broader form that parking and setbacks conform.
- Zoning ReportA report confirming how the property is zoned, whether the current use and improvements comply, and what happens if they are damaged or rebuilt.
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