Property Management Industry Terminology

ADA (Americans with Disabilities Act)

U.S. civil rights law requiring accessible design, policies, and reasonable accommodations in public accommodations and many housing contexts.

Install ADA-compliant ramps, signage, and restroom fixtures in common areas.; Verify accessible parking ratios and routes during site inspections.; Include ADA compliance language in tenant build-out requirements.

Addendum

A written attachment to a lease or contract that modifies or adds terms; it becomes part of the original agreement when signed.

Use a pet addendum specifying fees and rules.; Add a parking addendum for assigned spaces.; Issue an addendum extending the lease term by six months.

Annual CAM Reconciliation

Year-end process comparing tenants’ estimated common area maintenance (CAM) payments to actual operating expenses, settling overages or shortfalls.

Issue CAM true-up statements in Q1.; Credit overpayments to next month’s rent.; Bill CAM deficits with supporting expense schedules.

Application Screening

The compliant evaluation of rental applicants’ credit, income, rental history, and background; must follow fair housing laws.

Apply uniform criteria (income 3x rent, no evictions).; Run credit, criminal, and eviction checks via screening provider.; Verify employment and prior landlord references.

Assignment of Lease

Transfer of a tenant’s rights and obligations to another party (assignee), typically requiring landlord’s prior written consent.

Retail tenant assigns lease to a buyer in an asset sale.; Approve assignment subject to financial review and fee.; Document assignment and release/continuing liability terms.

Base Rent

The fixed minimum rent due under the lease, excluding pass-throughs like CAM, taxes, insurance, and utilities.

Base rent of $25/SF plus NNN.; Post monthly base rent on the first of each month.; Calculate percentage rent only when sales exceed base threshold.

BOMA Standards

Measurement and operating standards from the Building Owners and Managers Association used for rentable/usable area, gross-ups, and benchmarking.

Re-measure suites per BOMA 2017 Office.; Apply a 15% load factor per BOMA.; Compare OpEx per SF to BOMA benchmarks.

Budget Variance

The difference between actual results and budgeted amounts; tracked with explanations and corrective actions.

Provide monthly variance commentary to owner.; Investigate a utility overage due to heat wave.; Report a favorable R&M variance from bulk pricing.

Build-Out (Tenant Fit-Out)

Construction to customize leased space to a tenant’s specifications per plans and lease terms.

Deliver a vanilla shell for tenant build-out.; Track TI build-out schedule and milestones.; Issue a punch list at substantial completion.

CAM (Common Area Maintenance)

Shared operating costs for common areas (e.g., landscaping, janitorial, security) recoverable from tenants per lease.

Allocate CAM by each tenant’s pro rata share.; Exclude capital items from CAM unless amortized per lease.; Perform annual CAM reconciliation.

CapEx (Capital Expenditures)

Investments that improve or extend the life of the property; capitalized and depreciated rather than expensed.

Replace the roof as CapEx, not R&M.; Budget CapEx for boilers and chillers.; Track CapEx approvals per PMA limits.

Capitalization Rate (Cap Rate)

A valuation metric equal to NOI divided by purchase price or value; indicates yield.

Price the asset at a 6% cap.; Cap rate compression increases value.; Back-solve value from NOI and cap rate.

Certificate of Insurance (COI)

Proof of insurance coverage from tenants and vendors, typically naming owner/manager as additional insured and waiving subrogation.

Collect COIs before vendor mobilization.; Track tenant COI expirations and limits.; Enforce COI compliance per lease and PMA.

Collections

Activities to secure timely payment of rent and charges, including notices, payment plans, and legal action if needed.

Send late notices after grace period ends.; Offer structured payment plans to reduce delinquency.; Initiate eviction for chronic nonpayment.

Concession

A rent or fee incentive offered to attract or retain tenants, such as free rent or discounts.

Offer one month free on a 12-month lease.; Amortize concessions across the lease term.; Track net effective rent including concessions.

Consumer Price Index (CPI) Escalation

Rent increases tied to a CPI measure, sometimes with floors or caps, per the lease escalation clause.

Apply CPI-U with a 3% cap annually.; Calculate CPI adjustment using the base month.; Notify tenant of CPI escalation 30 days in advance.

Cure Period

The time allowed in a notice of default for a tenant or landlord to remedy a breach before remedies attach.

Provide a 10-day cure for maintenance violations.; Allow 3 days to cure nonpayment under state law.; Track cure deadlines in the critical dates log.

Default

Failure to perform a lease obligation, triggering potential remedies like late fees, interest, eviction, or termination.

Declare default after cure period expires.; Default for unauthorized subletting.; Charge default interest per lease.

Delinquency

Past-due rent or charges; tracked via aging schedules and collection efforts.

Monitor 30/60/90-day delinquency.; Reduce delinquency through payment plans.; Report delinquency rate in monthly KPIs.

Due Diligence

Comprehensive review of property condition, leases, financials, compliance, and risks before acquisition or management onboarding.

Abstract leases and verify rent roll.; Order PCA, ESA, and code compliance checks.; Collect estoppels and SNDAs before closing.

Escalation Clause

Lease provision specifying periodic rent increases (e.g., fixed steps, CPI, market resets).

2% annual step-up on base rent.; CPI escalation with a 1% floor and 4% cap.; FMV reset at renewal option.

Estoppel Certificate

Tenant’s signed confirmation of lease terms, rent status, and absence of defaults, relied upon by buyers and lenders.

Obtain estoppels from 90% of tenants before closing.; Tenant confirms no landlord defaults.; Cross-check estoppels against the rent roll.

Eviction (Unlawful Detainer)

Court process to regain possession for breaches like nonpayment or holdover; governed by state/local law.

Serve a notice to pay or quit.; File an unlawful detainer and seek judgment.; Coordinate sheriff lockout and change locks.

Fair Housing Act (FHA)

Federal law prohibiting discrimination in housing and requiring reasonable accommodations and modifications.

Approve assistance animals without pet fees.; Provide language access and equal marketing.; Train staff annually on fair housing.

Gross Potential Rent (GPR)

Theoretical maximum rent if all units/spaces are leased at contract or market rates, before vacancies and concessions.

GPR less vacancy equals GSR.; Track loss-to-lease relative to GPR.; Use GPR in annual budgeting.

Key Performance Indicators (KPIs)

Quantifiable metrics used to monitor operational and financial performance.

Occupancy, delinquency, and NOI growth.; Average days to complete work orders.; Turn time and renewal rate KPIs.

Late Fee

Contracted penalty charged when rent is not paid by the due date plus any grace period.

Assess a 5% late fee after the 5th.; Waive a first-time late fee as a courtesy.; Automate late fee posting in PMS.

Lease Abstract

A concise summary of key lease terms, dates, options, economics, and obligations for quick reference.

Abstract renewal options and notice windows.; Record rent steps and escalation mechanics.; Flag exclusives and co-tenancy clauses.

Lease Administration

The ongoing management of lease data, billings, options, notices, compliance, and reporting.

Maintain a critical dates calendar.; Bill escalations, CAM, and percentage rent.; Track insurance and HVAC maintenance obligations.

Lease-Up

The marketing and leasing period to reach stabilized occupancy for a new or repositioned property.

Weekly lease-up velocity reporting.; Offer limited concessions during lease-up.; Staff leasing agents based on traffic forecasts.

Maintenance Request (Work Order)

A ticketed request for repairs or service; tracked from submission to completion with priority and service levels.

Categorize emergency vs routine work orders.; Close work orders with photos and notes.; Measure SLA compliance for response times.

Make-Ready (Unit Turn)

The process of preparing a vacated unit for the next tenant, including cleaning, repairs, and inspections.

Track make-ready status on a turn board.; Standardize turn scopes and pricing.; Target a 5-day average turn time.

Net Operating Income (NOI)

Operating revenue minus operating expenses, before debt service, capital expenditures, and income taxes.

Increase NOI by reducing water usage.; Value the asset using NOI and market cap rate.; Present monthly NOI bridge vs budget.

NNN Lease (Triple Net)

Lease structure where the tenant pays base rent plus property taxes, insurance, and CAM.

Bill monthly NNN charges with true-up at year-end.; Review exclusions and capital treatment in NNN.; Separate base rent from pass-throughs in the ledger.

Occupancy Rate

The percentage of rentable units or space that is occupied and (often) paying.

Maintain 95% physical occupancy.; Track economic vs physical occupancy.; Monitor occupancy trends by unit type.

Operating Expenses (OpEx)

Day-to-day property costs (e.g., utilities, repairs, admin, management fees) excluding debt service and CapEx.

Benchmark OpEx per SF against peers.; Reclassify misposted CapEx from OpEx.; Optimize OpEx through preventive maintenance.

Pro Rata Share

A tenant’s proportional share of expenses, typically based on leased area or a lease-defined formula.

Apply 12.5% pro rata to CAM charges.; Adjust pro rata for BOMA gross-ups to 95%.; Recalculate share after suite expansion.

Property Management Agreement (PMA)

Contract between owner and manager setting scope, authority, fees, reporting, and termination rights.

3% management fee plus leasing fees per PMA.; Approval thresholds for vendor contracts.; Insurance and indemnity provisions in PMA.

Property Management Software (PMS)

Integrated system for accounting, leasing, maintenance, communications, and reporting.

Process ACH payments through PMS portal.; Generate rent roll and delinquency reports.; Dispatch mobile work orders from PMS.

Quiet Enjoyment

Tenant’s right to use and enjoy the premises without undue interference, subject to lease terms and law.

Enforce noise rules to uphold quiet enjoyment.; Limit construction hours to business times.; Avoid wrongful entry without proper notice.

Ratio Utility Billing System (RUBS)

A formula-based method to allocate utility costs among tenants when units are not individually metered.

Implement RUBS for water/sewer across unit mix.; Disclose RUBS methodology in leases.; Adjust RUBS factors annually based on occupancy.

Rent Roll

A current schedule of units/spaces with tenant names, rent, charges, lease dates, deposits, and other key data.

Reconcile rent roll to the GL each month.; Use rent roll to verify GPR and occupancy.; Provide a certified rent roll at closing.

Repairs and Maintenance (R&M)

Routine upkeep and minor repairs expensed in the period, as opposed to capital improvements.

Charge faucet replacement to R&M.; Capitalize replacements above policy threshold.; Track R&M by category for budgeting.

Reserve Fund (Replacement Reserves)

Cash set aside for future major replacements (e.g., roofs, HVAC) per lender or owner policy.

Fund reserves at $300/unit/year.; Draw from reserves for chiller replacement.; Report reserve balances in the monthly package.

Security Deposit

Funds held to secure tenant performance and cover damages or unpaid amounts, handled per state/local law and lease.

Hold deposits in a trust account with interest where required.; Provide itemized deposit disposition within statutory timelines.; Apply deposit to rent or damages at move-out.

SNDA (Subordination, Non-Disturbance, and Attornment)

Agreement aligning landlord, tenant, and lender rights so the tenant’s lease continues (non-disturbance) if the lender forecloses.

Obtain SNDAs from major tenants for financing.; Attach signed SNDA to the lease file.; Reference SNDA obligations in tenant estoppels.

Tenant Improvement (TI) Allowance

Landlord’s contribution to tenant build-out costs, paid directly or as reimbursement per documented work.

TI allowance of $40/SF for new office build-out.; Reimburse TI upon lien waivers and as-builts.; Amortize excess TI in rent if applicable.

Variance Report

Narrative and analysis explaining the causes of budget-to-actual differences and proposed corrective actions.

Explain a spike in snow removal costs.; Highlight recurring unfavorable utilities variance.; Document savings from a vendor re-bid.

Vendor Management

The process of selecting, contracting, onboarding, monitoring, and paying third-party service providers.

Run an RFP for landscaping services.; Maintain W-9s and COIs for all vendors.; Scorecard vendors on quality and responsiveness.

Zoning

Local land-use laws regulating permitted uses, density, height, parking, and signage.

Confirm proposed use is permitted by-right.; Apply for a variance for additional parking.; Monitor rezoning that could impact rents or uses.