LEXICON

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Authenticated (or notarize) bill of sale

Act drafted by a Public Officer (notary, bailiff) defining the rights and obligations of contracting parties to formalize the sale of real estate. Opposite of a Private deed.

Deep of pledge

Contract by which a debtor gives their creditor an asset, a portfolio of securities etc. as security for a loan. The deed of pledge must be served by bailiff, however its cost is lower than that of a Mortgage.

 

Private deed

Act drafted and signed by the parties not requiring validation by a public officer. This term is opposed to a notarized or authenticated deed.

 

Sale by court order

Attribution par le juge ou par un officier public (notaire) d'un immeuble mis aux enchères.

 

Real estate manager

A real estate manager's function is to manage all or part of assets constituting an estate.

 

Liability and damage to works insurance

Damage to works insurance allows a purchaser to obtain compensation without having to establish the constructor's liability if a defect covered by the policy is found.

 

Lease

Document defining the contractual relationship between landlord and tenant. Some are subject to special regulations, others are freely entered into by the parties under the provisions of the Civil Code. They are also called lease agreements.

 

COMMERCIAL Lease

Contract under which a landlord (lessor) leases real estate used for commercial activity to a third party (the lessee).

 

Lessor

Owner (natural or legal entity) providing a lessee with the use of their property against the payment of rent.

 

LEB (Low Energy Building)

The LEB standard defines the level of performance required by the LEB (Low Energy Building) label. The aim is to reduce building energy consumption which represents a substantial portion of greenhouse gas emission.
Maximum energy consumption for new buildings is set at 50kWh/m2/year.
Measurement is done using five criteria: heating, cooling, ventilation, hot water, and auxiliary heating and lighting. The measurement is then weighted by a coefficient based on the climate zone and altitude.

 

Land Register

The land registry document is drafted by the communities which identify all land ownerships and sets their rental value used as a basis for local taxes. Each town hall has a land registry office which can provide this document. Consulting the community's land registry documents is free.

 

Cash flow

This is the annual flow constituted by the difference between the total income generated by real estate (rent, advertising space rental, financial income from security deposits) and all expenses including income tax, loan repayments, loan interest, or financial expenses.  
Cash flow = net income - expenses relating to the real property and owner (income tax, equity or loan, depreciation).

Unlike net income, the cash-flow is more an analytical element than a base of expertise.

 

Guarantor

A guarantor is the natural or legal entity that undertakes to ensure payment of a real estate credit if the borrower defaults.

 

Bank guarantee

A bank guarantee is an individual or private company acting as security for an individual or professional borrower to the bank (when a loan is taken out).
The bank guarantee carries heavy responsibility in the event of payment default of a real estate credit or any other type of loan by the borrower: the guarantor must repay the entire amount.
The bank guarantee is also called a joint or mutual guarantee.

 

SCR (Site coverage ratio)

The SCR or site coverage ratio is a ratio provided by local government authorities (Town hall, Departmental Public Works Directorate) to define the buildable area for each plot or rather the area impact. Both the SCR and FAR can vary on two adjoining plots and can even vary on the same plot.
To find out what SCR applies to your plot, you should first obtain the regulations governing the area in which your plot is located from the relevant local authorities (Town hall, Departmental Public Works Directorate, etc.). The area is provided by the LUP (Land Use Plan) or the LUP (Local Urban Plan)
The LUP or local urban plan defines the area in which your plot is located and provides constructability guidelines. The authorized SCR (Site Coverage Ratio) will certainly be provided in the regulations covering your plot.
The SCR is a means to limiting the overall construction on a plot, this SCR or Site Coverage Ratio is established to preserve open green spaces.  The Site Coverage Ratio is regularly coupled with a minimum open green space (at least 1m high) to be kept on the plot.teur au minimum) à conserver sur la parcelle.

 

Zoning certificate

This is the main official document providing information on the potential use of land as well as any architectural constraints (roof shape, windows, tiles) whether it has already been built on or not. It can be obtained from the town hall. A zoning certificate must be obtained prior to any real estate transaction

 

Certificate of Compliance

A certificate of compliance is a document that certifies that work performed complies with the work permit. A certificate of compliance is only required for certain specific transactions: works subject to rules applicable to historical monuments or protecting natural monuments and sites, work performed in a ZPPAU (architectural and urban heritage protection area), high-rise buildings, and establishment open to the public.

 

Condominium fees

These are the costs and expenses required for the proper running of a condominium. Each building has its own characteristics.

 

Shipper

A shipper is any company (industrial, commercial, logistics service provider) that entrusts its goods to a carrier or forwarding agent to performtransportation operations requested in compliance with pre-determined terms (cost, reliability, schedule...).

 

Termination clause

This is a provision providing for the automatic termination of a contract should either party not fulfill its obligations.

 

Preliminary sales agreement

A preliminary sales agreement (or bilateral sales agreement) is a common legal term for an undertaking to sell. This is the first legal act that binds the seller and buyer. It corresponds to a firm sale and can be either a notarized deed or a private deed.

 

Condition precedent

Included in a preliminary agreement (undertaking to sell or preliminary sales agreement), the conditions precedent suspend contract performance on the occurrence of an event. The contract will only take effect once the event provided for occurs.

 

General contractor

The Architect/ General Contractor is responsible for the entire operation, from conception to completion. For peace of mind, the client entrusts all technical and administrative studies to the General Contractor who will have the work performed by reliable and competent companies on their behalf. By committing to a guaranteed schedule and fixed budget, the client is guaranteed that their project will be ready on time with a level of contractual quality.

 

Condominium

Real property belonging to several individuals separately. It is therefore divided into common and private areas.

 

FAR (Floor Area Ratio)

The FAR sets the number of m² of net floor area (NFA) which can be built on a given plot of land per 1m². The ratio is set in the Land Use Plan (LUP).

 

EPC (Energy Performance Contracting)

The European Directive of December 16th, 2002 on the energy performance of buildings defines Energy Performance Contracting (sometimes named EPC) as "a contractual arrangement between the beneficiary and the provider of an energy efficiency improvement measure, where investments in that measure are paid for in relation to a contractually agreed level of energy efficiency improvement".

Purpose of energy performance contracting:

The French government has set itself the objective of reducing energy consumption by 38% and greenhouse gas emissions by 50% by 2020 (C.f. Article 5 of the Grenelle 1 law).
Buildings represent approximately 40% of total energy consumption. Their relative weight in the country's energy consumption therefore requires mobilizing specific tools. Energy Performance Contracting is the most promising of these tools.

 

Leasing

Leasing is a moveable or real estate lease agreement which provides an option to sell at the end of the contract. Thus, leasing consists in leasing out a property for a certain period after which the lessee may either buy the property at a predetermined price stipulated in the lease agreement, continue to rent the property, or terminate the agreement and return the property.

 

Cross-docking

Inventory reduction process maintaining product retail availability through batch breakup on the distributor's platform (intermediary cross-docking handling) or the creation of store packaging by the manufacturer (pre-packed cross-docking) before re-consolidation by store.

 

 

 

Security deposit

Deposit paid to the landlord by the tenant to cover leasing-related risks.

 

Usage

Characteristics of a building determining its use: home, business, commercial.

 

Absestos inspection

An asbestos inspection is performed to identify products containing asbestos in real estate where the building permit was issued before July 1st, 1997.

 

EPC (Energy Performance Certificate)

Since January 1st, 2011, all real estate sale or lease advertisements published in newspapers, posted on websites or in agency windows must show the energy performance.

The Energy Performance Certificate (EPC) provides information on the energy performance of a home or building by assessing its energy consumption and greenhouse gas footprint. This is part of a European-wide energy policy to reduce building energy consumption and to limit greenhouse gas emission. EPC content and methodology is regulated (the decrees and orders can be downloaded from this website). The EPC describes the building or home (area, orientation, walls, windows, materials, etc.) and its heating, cooling, ventilation, and hot water production systems. It indicates, as required, either the amount of energy actually consumed (based on bills) or the estimated energy consumption for a standard use of the building or home.

EPC clarity is facilitated by two labels with 7 classes A to G (A for the most efficient and G least efficient):

· an energy label providing primary energy consumption;
· climate label providing the quantity of greenhouse gas emitted.

Energy performance display:




Obviously, actual building consumption does directly depend on the conditions of use and the actual heating temperature. Consumption estimates are therefore not a contractual guarantee but they do provide an objective quality comparison of sold or leased homes and buildings.

The Certificate also provides recommendations that allow the buyer, owner, lessor or lessee, to find out about the most effective energy saving measures. This is advice on proper building and facility use and management as well as recommendations for work to undertake. The recommended works are not mandatory: the EPC aims to encourage improved building energy performance and not to force the execution of works.

An EPC is generally valid for 10 years excepting special circumstances.

The Energy Performance Certificate must be established by a duly qualified independent professional who has taken out insurance.
Certification bodies, accredited by the COFRAC (French Accreditation Body), check candidate qualifications. This Certification has been mandatory since November 1st, 2007. Around 6,000 professionals have already been accredited to provide EPC. Assessors may make themselves known to real estate intermediaries and notaries who can then have recourse to their services for this Certification.

Note: The EPC must not be confused with any other certification which could be offered by non-accredited professionals that does not meet the same level of requirements.

This certification is one of a series of measures designed both to limit the impact of rising energy costs for the French and also to preserve the environment. This energy label is a major step forward in user information: it allows each French family that buys or leases real estate to better assess the greenhouse gas footprint of its energy choices and their potential energy bill.

 

Transfer tax

Sum an individual must pay to the tax authorities on receiving real estate by gift, inheritance, or valuable consideration.

 

Pre-emptive right

Right to acquire property in priority over any other purchaser

 

 

 

Warehouse

Location, building, hangar dock, etc. where goods are deposited for a limited period.

 

Condition of premises report

Document jointly prepared by the landlord and tenant on taking possession of and leaving the premises. A comparison of the two documents will determine any damage the tenant will be liable for.

 

Euribor

In English: Euro Inter Bank Offered Rate.
In French: Taux Interbancaire Offert en Euros.
This is the interbank offer rate for payment of deposits in the Eurozone.

 

Expropriation

Expropriation is a proceeding instituted by the Authorities by which a real estate owner is forced to abandon their property to the Government on payment of compensation. Expropriation is only authorized for operations recognized as being of public utility.

 

 

 

Investment fund

Investment funds are collective financial asset holding bodies.

 

Notary fees

These are mandatory fees for a real estate transaction. These costs are divided into three items: taxes paid to the Treasury, notary fees and other sundries, and so-called disbursements.

 

Two-year guarantee

The two-year guarantee (or guarantee of proper operation) covers fixtures as opposed to construction elements covered by the ten-year builder's guarantee. It is for a two-year period starting from the date work is accepted.

 

Maintenance bond

For a period of one year (from date work is accepted), it covers any apparent defects or faults which reservations were made in the acceptance report and/or any damage that might appear after acceptance.

 

Ten-year builder's guarantee

This mandatory guarantee covers all construction defects compromising the structure's integrity or making it unsuitable for its intended purpose for a period of 10 years. This guarantee also covers any damage affecting the integrity of facilities that are indissociable from the building. The ten-year guarantee begins running on the house's acceptance by the project owner.

 

Real Property MANAGER

Professional who performs, on behalf of a building owner, usual management acts such as: signing leases, rent collection, servicing, repairs, works supervision, payment of certain taxes (property tax, rights to lease), i.e. anything that a conscientious owner would undertake.
They must regularly report to their client. They must keep the building’s servicing log book up to date.

 

 

 

Agency fees

An agent will receive remuneration for their work. Fees are not set, however the rate must be displayed in the real estate agency and in client reception areas. They are set by the Listing Agreement and paying party and any advertising is included in the sale price if it is to be paid by the buyer or seller. The amount and the paying party are usually mentioned in the sale agreement.

 

HEP (High Energy Performance)

The "High Energy Performance" label provided for under Article R.111-20 of the Construction and Housing Code certifies new building compliance in a reference document that integrates thermal regulation requirements, compliance with an overall energy performance level above the regulatory requirement, and minimum control procedures.
There are two levels corresponding to a low conventional energy consumption:

- 8% of the conventional consumption defined in Article 8 of the Decree of November 29, 2000: the  "High Energy Performance" label is then named the "High Energy Performance, HEP 2000" label,
- 15% of the reference conventional consumption defined in Article 8 of the aforementioned Order of November 29, 2000; the "High Energy Performance" is then named the "Very High Energy Performance, VHEP 2000 " label.
In the RT2005, the HEP label is associated with a 10% reduction of the reference consumption and the VHEP label with a 20% reduction.

 

HEQ (High Energy Quality)

The HEQ is a means for building owners to have the environmental quality of their actions and their realization recognized by an independent third party.

It is therefore a voluntary initiative for building owners who wish to enhance their actions and provide their stakeholders with assurances on the HEQ performance achieved: healthy and comfortable structures with an environmental footprint, assessed for the entire life cycle (therefore including deconstruction) that is as controlled as possible.

HEQ certification certifies conformity with a certification standard and the implementation of an Environmental Management System (EMS).
The project owner uses this to define performance levels and undertakes to provide project stakeholders with the means to achieve them.

HEQ certification exists for both new and existing buildings in commercial, industrial, storage, individual housing, and multi-family housing areas.

 

Mortgage

A mortgage guarantees payment of a debt contracted on real estate. This is the most frequented requested guarantee. It can be taken out regardless of the real estate type.

ICPE (Installations classified for the protection of the environment)
An installation classified for protection of the environment is a fixed installation whose operation presents a risk to the environment.
E.g. factories, farms, warehouses, quarries, etc.
To determine whether an installation is subject to this regulation, it is necessary to refer to the nomenclature which, in its latest version, is in the form of a list of substances and activities that are assigned thresholds - product quantity, workshop surface area, machinery power, number of animals, etc. Depending on whether these thresholds are exceeded and by how much, there are three regimes: declaration, registration or authorization. Prior to commissioning, the classified installation must perform a more or less complex procedure depending on the regime.

 

 

 

Rental real estate investment

Refers to a real estate purchase destined to be leased out for rental income.

 

 

 

Enjoyment

Free disposal of real estate or rent collection.

 

 

 

Leasing

Leasing is a lease agreement for a movable or real property with an undertaking to sell at a predetermined price at the end of the agreement.

 

Logistics

Physical flow control technology and related information that the company receives from its suppliers, transferred between its establishments and dispatched to the customer. Logistics is therefore a management science discipline based on paradigms and related concepts and supported by a range of techniques and tools.

 

Distribution logistics

Any activity aiming to ensure the most cost effective provision of the correct references and quantities of finished products within the time-scale requested by the customer and/or the end user. Implementing this process requires a distribution policy to be defined (finished goods stock management method, delivery, downstream transportation management, operation outsourcing to logistics service providers...).

 

Carrez Law

This law aims to improve the protection of condominium unit buyers by establishing a surface area guarantee. It requires the seller to inform the buyer of the unit surface area sold by a statement to appear in the first act signed.

 

Rent

Monthly or quarterly amount paid to the lessor by the lessee in return for the right to occupy the property.

 

 

 

Discharge / Release

Written notarized authentic deed that halts the effects of a seizure, opposition, or Mortgage.

 

Project manager

The project manager is an individual or more often legal entity that develops a real estate project based on the needs, goals, deadlines, and costs determined by the project owner. They are responsible for the methods, techniques, and people it mobilizes to realize the product.

 

Project owner

The project owner is an individual or more often a legal entity that expresses the need, sets goals, provides the budget and deadlines desired for the project.

 

Principal

Person who gives another person (agent) the authority to perform one or more legal acts on their behalf.

 

Mandate

Act by which one person (principal) gives another (agent) the power to perform on their behalf and for their account one or more legal acts, such as a sale, purchase, lease... Real estate agents and managers are required to hold a mandate to put real estate up for sale or lease, or to manage it.

 

Agent

Person having authority to act on behalf and for the account of another person under a contract called a mandate. The agent only incurs liability for personal misconduct.

 

 

 

Bare ownership

Bare ownership or abusus is a substantive right resulting from the dismemberment of the right of ownership. It gives its holder to have something but does not allow them to enjoy, use or have any beneficial use rights of it because the right of enjoyment or use of the property is more for the usufructuary. Therefore, bare ownership and usufructuary rights constitute limited proprietary rights to a real property.

 

Invalidity

Annulment of a legal act for non-compliance with a formal or substantive condition required for its successful implementation.

 

 

 

Common area

Parts of buildings for the use of all a building's occupants (staircase, hallway, rest room, courtyard...).

 

Logistic platform

Place where goods transit. As opposed to the warehouse which is destined for storing goods, a logistics platform is more suitable for Cross-docking. By extension, the term logistics platform also means a logistics activities park consisting of warehouses and logistics platforms.

 

LUP (Local Urban Plan)

Document describing the general purpose of land more simply than the Land Use Plan (LUP). The Local Urban Plan replaced the Land Use Plan when the SUR law (Solidarity and Urban Renewal) was voted in by the Parliament on December 13th, 2000.  It defines the rules indicating what forms buildings should take, which areas should remain natural areas, which areas are reserved for future construction, etc. In particular, it must clearly state the overall urban planning project or PADD summarizing the community's general intentions regarding a city's development.

 

LUP (Land Use Plan)

The LUP is a document available at the Town Hall, which sets zoning regulations applicable to a municipality's territory enabling it to organize and plan its development. A purchaser can consult this document to verify whether a plot is buildable or not and it indicates the future use of each of the municipal territory's plots. This document is drafted at the initiative of the municipalities but is not required by law.

 

 

 

Portion

An individual's share in the allocation of an asset, right, enjoyment, or sum (payable or receivable).

 

 

 

Rack

Storage shelving made up of ladders, beams, and identification and security accessories.

 

Condominium by-laws

This must be established for every condominium. Their purpose is to set private and public area usage, determine the conditions for their enjoyment, and to provide common area management rules.

 

Profitability

This is the ratio between the sums involved in purchasing and maintaining real estate and the rent collected for it. The potential increase in value should also be included in this calculation.

 

Tenant's repairs

Repairs due to wear and tear on the real estate that must be undertaken by the tenant.

 

Termination

Termination of a Lease Agreement because the tenant has not fulfilled their obligations: failure to pay rents, charges, security deposit, insurance for the rented premises.

 

Rental income

Income from real estate rental.

 

 

 

SCI (Non Trading Real Estate Company)

Civil society incorporated for the acquisition, construction, management, or sale of real estate.
Generally established to create and manage an estate and facilitate transmission.

 

REIT (Real estate investment trust)

These are collective investment companies designed to buy and manage rental properties by issuing REIT shares to the public.

 

Escrow

Escrow is a sum which is deposited with a notary or a real estate agency. In some cases (including the lending institution's refusal to grant a real estate loan), this amount can fully refunded.

 

Easement / Servitude

Real estate rights have limits called easements or servitudes. They are attached to a building and not the owner. Each owner must observe them. They may benefit from or bear the consequences of this.

 

GFA (Gross Floor Area)

The GFA (Gross Floor Area) corresponds to the entire area of ALL the floors measured up to the outside walls.
To calculate the GFA, the building's area must be measured up to the outside of the walls. This measurement can be made using blueprints if there are to scale. The GFA is calculated for each level (storey) of the building, and is expressed in m².

 

NFA (Net Floor Area)

The NFA (Net Floor Area) corresponds to the subtraction of certain parts of your project from the GFA (Gross Floor Area). Is it expressed in m².

 

Sub-letting

Lease issued by a tenant (or lessee) with the consent of the landlord (or the lessor) to allow use of the premises they lease to a third party.

 

Gross usable area

The gross usable area is equal to the Net Floor Area less
structural elements: beams, outside walls, partition walls...
vertical circulation systems: parts not deducted for the Net Floor Area.
The Gross Usable Area is the most commonly chosen basic parameter for market value, utility value, or market rental value evaluations.

 

Net usable area

This is actual the floor space reserved for work (e.g. office space, storage, production). It is obtained by subtracting horizontal circulation systems, social space and rest rooms from the Gross usable area.

 

 

 

Real estate tax

The owner must pay this on January 1st of the tax year. In the event that a building is sold, the seller and buyer can agree that this tax is paid proportionally by them in the bill of sale.

 

 

 

Usufruct

Usufruct may be defined as the right to enjoy something belonging to others on condition of keeping this object. The usufruct beneficiary is called the usufructary. Usufruct can be granted for a specified period or for life. The owner of an asset subject to usufruct is called the bare owner.

 

 

 

VEFA (Pre-sale prior to completion of construction)

Any sale of land and a building to be constructed must be governed either by a Presale contract, prior to completion of construction or a forward sale contract. By the VEFA, the buyer immediately becomes the owner of the land and any buildings already completed and the owner of buildings to be constructed as the work progresses.
VEFA (Pre-sale prior to completion of construction)