Real Estate Investor Glossary
Acte authentique
Contract which must be drawn up by a notary in order to be published at the mortgage office and make the deed enforceable against all third parties. The real estate sale must be perfected through an authentic act.
Acte sous seing privé
A Deed perfected through a simple signature of the parties. It can be a preparatory act for the conclusion of a business. It is also called 'pre-contract' or preliminary contract.
Administrateur de biens
Is also called asset manager or building manager. He administers and manages the real estate on behalf of the owners.
Affichage du permis de construire
Compulsory formality upon receipt of the notification indicating the obtaining of the building permit. The display must be done in town hall and on the land to be built.
Agence immobilière
Regulated business offering negotiation and advisory services on real estate transactions i.e. sale, rental, property appraisals.
Agent immobilier
Professional who acts as agent of the owner, buyer or tenant, during the sale or rental of apartments, buildings, individual houses, business premises and lands.
Agrément
Administrative authorization procedure prior to the establishment or development of offices and business premises in Ile de France.
Aménageur
Operator intervening upstream of the real estate chain. Specialist in land and infrastructure techniques, this professional organizes the space in accordance to the zoning laws in order to make it suitable for receiving future construction operations.
Appel d’offres
Competitive selection process for the execution of specific works and aimed at finding the best price among several offers / companies.
Arbitrage
Term designating asset management strategies allowing investors to optimize their real estate portfolios.
Assurance dommages-ouvrage
Compulsory insurance protecting a building against ten-year construction risks. The insurance must be subscribed before the opening of the construction site, by any individual or legal entity who acts as owner, seller, or agent of the owner.
Assurance responsabilité civile professionnelle
Professional insurance applying to the activities of real estate agents, property managers, or real estate traders ("marchands de biens"), offering financial protection against potential responsibility, liability or damage caused to third parties.
Autorisation administrative
Mandatory permission (authorization, approval, permit or license) to be obtained before engaging in any real estate project (planning, building, development, renovation, restructuring, etc). Such as building permit or any other authorization required in case of listed heritage buildings, alteration or modification of buildings' appearance or other protected sectors.
Bail
Lease contract or other document defining the contractual relationship between owner and tenant. Some are subject to specific regulations, some others are subject to the free will of the parties under the provisions of the Civil Code.
Bailleur
Lessor or any Landlord who rents out real estate.
Bien immobilier
Building, land, real estate premises, share of real estate company, etc...
Cadastre
Administrative documents including the plot plan, the state of section and the cadastral matrix, making it possible to identify the properties of each municipality and which can be consulted at the corresponding Town Hall.
Carte professionnelle
Professional realtors engaged in real estate transactions or management activities must have a professional accreditation. It is issued by the prefect and renewed each year. It specifies the type of activity: "Transactions on buildings and businesses" or "Property management". A real estate agent without a professional accreditation cannot exercise his activity.
Certificat d’urbanisme
Town planning certificate i.e. an administrative information document specifying whether the land is constructible or not with all the planning provisions applicable to the land. This document should be requested in case of a land acquisition in order to know eventual constraints that the future real estate project must meet.
Cession
Transmission of real estate either for consideration (sale) or free of charge (donation).
Charge foncière
Total Cost of the land investment i.e. the acquisition price, fees, taxes and other items as well as, where applicable, the costs to be incurred to make it suitable for construction.
Coefficient d’Emprise
Ratio between the footprint of a constructed building and the surface area of the land plot.
Maximum values set by the Land Use Plan (P.O.S.).
Commission
Remuneration paid to a real estate agent as part of his activity (sales, management, etc.). The real estate agent must have a sales, rental or management mandate to receive a commission. The remuneration of real estate agents (commission and fees) is free and must imperatively appear in all acts.
Compromis de vente
This is a preliminary contract signed by the seller and the buyer of a property either under private signature or in front of a professional (notary). The sales agreement commits the parties and it is customary for the buyer to pay a deposit (generally 10% of the sale price) when this act is drawn up.
Conditions résolutoires
Clauses allowing the retroactive cancellation of a sale contract. Thus, certain legal or contractual provisions make it possible, for example, to cancel a sale in the future or in the future state of completion, after the contract has been concluded.
Conditions suspensives
Contained in a preliminary contract (pre-agreement or promise of sale), these clauses are designed to suspend the execution of the contract upon the occurrence of an event. The contract will produce all these effects only when the foreseen event occurs. Such clauses may refer to the condition precedent to obtaining a loan, a building permit, etc. To be valid, a condition precedent must not depend on chance or on the sole will of a party.
Contrat de réservation
Preliminary contract by which a seller undertakes to reserve a building or part of a building for a buyer. The buyer must, in return, pay a security deposit into a special account.
COS
Land occupation coefficient determining the construction density authorized on the ground.
Dation
It is referred in Article 1243 of the Civil Code. The sale price of the land is totally or partially settled not by financial payment but by the delivery of premises built by the purchaser.
Déclaration d’achèvement des travaux
Form to be completed in triplicate by the holder of a building permit, as soon as construction or renovation works are performed. It is a key step in the real estate development process and it allows, among others, the town hall to be informed of the termination of the construction or renovation works as well their compliance with the planning permission obtained.
Déficit foncier
Deduction of renovation or refurbishment expenses from property income. It is possible to deduct up to 10.700 €/year for 5 years. This regime applies to rental only when the investor is taxed under the so-called “real” regime for his property income.
Délai d’écoulement
Number of months required to sell the stock of available housing. Expressed in months of sale, the average selling time is obtained by dividing the available stock by the number of monthly net sales. Non-professional borrowers have a cooling-off period of 10 days after receiving the loan offer to give their agreement.
Délai de rétractation
Individual purchasers (non-professionals) have a period of 10 calendar days from the date of signature of a promise of sale to reverse their decision and cancel the legal effects of their commitment to purchase. This right of withdrawal only applies to preliminary contracts and cannot apply to final contracts.
Densité de construction
Ratio between the floor area of a building and the surface of the land on which it is located.
Dépassement du COS
Any excess of the coefficient of land use (COS) can be subject to a town planning tax: the participation for exceeding the COS, also called participation for construction in overdensity.
Devis descriptif
Document describing the mode of execution of the construction work, as well as the materials and technical characteristics of the equipment used for the construction or renovation of a building or a house.
Devis estimatif
Detailed proposal establishing the estimated cost of the work necessary to carry out the construction.
Différé partiel
Period during which the borrower pays only the interest on the loan and does not repay any principal.
Différé total
Period during which the borrower does not repay any principal or interest. This interest will be added to the outstanding capital.
Documents d’urbanisme
Term designating all plans drawn up pursuant to the urban planning code.
DPE
Energy Performance Diagnosis: technical document confirming the energy consumption of a dwelling. Established by a qualified diagnostician, the DPE takes into account several parameters such as insulation, type of heating, ventilation, lighting and the production of greenhouse gases... Its results are translated into two scores: the first determines the primary energy consumption, the second the amount of greenhouse gases emitted.
Droit de préemption
Priority right of purchase allowing a private person or a public authority to acquire a property before any other purchaser, under the conditions and at the price fixed when it is put up for sale by its owner.
Droit de l’urbanisme
A branch of public law mainly related to administrative law, and for some of its provisions, to tax law and criminal law.
Droits de mutation
Duties and taxes collected by the notary, during a transfer free of charge or against payment (sale, donation, succession), on behalf of the State and local authorities.
Expert immobilier
Professional whose function is to estimate a property, i.e. to evaluate the market or rental value of real estate, residential or industrial buildings, goodwill, etc. Real estate expertise covers two kinds of activities. One is regulated, it is the judicial expertise and on appointment of the expert by the court. The other is free, it is amicable or conventional expertise.
Foncier
The term "land" is used to designate building land, the basis of any real estate development operation. It refers to everything related to built or unbuilt properties.
Foncière
Property Company owning real estate assets.
Garantie bancaire d’achèvement
It ensures to its beneficiary (the buyer of a real estate asset yet to be built or the owner of an asset to be renovated) either the completion of the construction or renovation works or the reimbursement of the payments the beneficiary has made. This guarantee requires the intervention of a financial institution.
Garantie biennale
It covers - for a period of two years from the date of receipt of the work - all disorders affecting equipment that are separable from the building.
Garantie d’achèvement
Mandatory subscribed by the bulding constructor, as part of a sales contract in the future state of completion. It ensures to its beneficiary (the buyer of the asset under construction) the completion of the construction or the reimbursement of the payments he has made.
Garantie décennale
Legal obligation of liability requiring contractors to guarantee the works built for ten years against any construction defects.
Garantie de livraison
It protects the beneficiary (the buyer of a real estate asset yet to be built) against the risks of non-performance or improper execution of the construction works, at the price and according to the deadlines provided for in the contract. In the event of failure of the builder, the guaranteeing body must indeed give formal notice to the builder, and if necessary, designate another professional who will carry out the construction works.
Garantie de parfait achèvement
This mandatory guarantee due by the contractor is valid for one year from receipt of the work. It covers the repair of all apparent disorders, imperfections or lack of conformity reported by the contracting authority or the purchaser.
Garantie financière
It guarantees the commitment of the sums involved during real estate transactions or in the agreements concerning the management of buildings, when these contracts or transactions have been carried out by a real estate professional. Financial security is mandatory for all real estate agents or property managers. It is distinct according to whether the professional carries out the transaction or the management.
Hors d’air
Construction stage that corresponds to the installation of exterior joinery (doors and windows). At this stage, the building is then said to be "hors d’air".
Hors d’eau
Construction stage that corresponds to the installation of the roof. The building thus covered is then said to be "hors d’eau".
HQE
The High Environmental Quality (HQE)® approach aims to sustainably improve the quality of life of the building. It minimizes the environmental and health impacts resulting from the design, construction, use or operation of the building in all phases of its life cycle.
Immeuble ancien
Refers to all buildings that are more than five years old or have already been the subject of a first transfer since their completion. The distinction between old and new buildings determines different tax regime.
Immeuble de rapport
Property entirely dedicated to rental. The property is acquired or built by a single owner (individual, professional or real estate developer) who therefore owns the entire block instead of just owning one or more dwellings within a condominium. The owner thus positions himself as a lessor, and not as a co-owner.
Immeuble neuf
Refers to any building completed less than five years ago and subject to VAT.
Immobilier
Term designating the economic sector that includes all activities related to the construction, sale, purchase and management of residential buildings or for commercial and industrial use, individual houses and building land.
Indice BT 01
National (French) Real Estate index published each month in the Official Journal. This index is intended to allow the revision of the prices of public and private construction contracts. It is used in particular for the updating of the prices of new housing, in the context of contracts for the sale of buildings to be built, as well as contracts for the construction of individual houses.
Indice du coût de la construction
Coefficient established quarterly by INSEE. The construction cost index reflects price developments in the real estate sector. This index is used for the revision of rents for residential premises and commercial leases.
Intérêts intercalaires
Interest due on a gradual release of funds. The borrower must repay them every month with his bank (or other lending institution) until his mortgage is released in full. Interim interest is therefore only calculated on the amount of credit already released.
Livraison
Transfer of a completed property to its owner by a home builder or developer. Delivery should not be confused with acceptance of the works, a legal act by which the client (the buyer of the newly built asset) accepts the work with or without reservation. Delivery occurs after reception of the construction works.
Loueur Meublé en Professionnel (LMP)
Intended for landlords of furnished rental properties who have achieved annual rental income greater than € 23,000 or 50% of the resources of the tax household. It allows deficits to be charged to overall revenues. Operating deficits (charges above rents) and rental depreciation reduce the rental base. The rental can only be seasonal, as long as the activity is carried out on a professional and usual basis.
Lotissement
Operation aimed at dividing a land property and making it proper for building construction. In France, subdivision is considered to be any division of ownership that has the effect of increasing the number of building plots to more than two over a period of less than ten years.
Lotisseur
Professional whose activities consist in making land plots proper for construction.
Maître d’œuvre
This term refers to the professional or company (architect, design office, engineer, builder, ...) charged by the client with the design of a real estate project, the management, the supervision of the construction work, the choice of companies, and the verification of the conformity of the building with contractual commitments.
Maître d’ouvrage
Individual or legal person (SCI or investor for example) on whose behalf a construction or work is carried out. The Maître d’ouvrage gathers the funds and chooses the project manager (Maître d’oeuvre). For instance, an individual who builds his future house is the Maître d’ouvrage.
Maître d’ouvrage délégué
Refers to an individual or a legal person who intervenes on behalf of the project owner. The Maître d’ouvrage délégué then acts as a service provider. He is remunerated in the form of fees and does not bear the risk attached to the program.
Mandat
Agreement by which one person gives another the power to perform, in his or her name and on his behalf, one or more legal contracts, such as a sale, purchase, lease, etc. It is mandatory for real estate agents and property managers to hold a mandate to offer for sale or rent, or to manage it.
Marchands de biens
Professional whose activity consists in buying buildings for his own account and reselling them with the intention of making a profit. This activity is not regulated and does not offer the same guarantees as that of a real estate agent, but has a special tax regime.
Marché de travaux
Contract which includes, on the one hand the obligation by the contractor to perform a real estate construction or renovation in accordance with the descriptive estimate established by the project manager (“maitre d’œuvre”), and on the other hand the commitment by the contracting authority (“maître d’ouvrage”) to pay the price.
Mise hors d’eau
Term designating one of the stages of construction progress. A building is said to be "hors d'eau" when the roof and exterior walls are fully realized.
Mutation
Transfer of a property to a new owner.
Notice descriptive
Document specifying the technical characteristics of a construction. In France, such document must be drawn up in accordance with a model approved by ministerial order.
Péremption du permis
The building permit is expired, when the constructions are not undertaken within the period of two years, from its obtainment.
Permis de construire
Administrative authorization required for any new construction or additive to an existing construction.
Permis modificatif
Building permit allowing certain modifications to be introduced compared to the initial permit.
Plafond Légal de Densité (P.L.D.)
COS density limit beyond which the exercise of the right to build is the responsibility of the city and entails the payment of a tax.
Values
-FRANCE (except Paris): 1
-special case of PARIS: 3 (since 01/09/1988).
The municipalities are free to establish the P.L.D. on their territory.
Plan masse
Graphical representation of a construction project indicating the location, orientation and area of the buildings within the operation.
Plan de situation
Graphical representation of the geographical location of a real estate project, in relation to its immediate environment. The site plan makes it possible to visualize the positioning of the main equipment, services and means of communication located near the operation.
Plan d’Occupation des Sols
The POS sets the general rules and easements of land use of a municipality and makes it possible to organize and plan its development. One of the first uses of the POS for the seller or buyer of a property is to indicate whether his land is buildable or not, one of the objects of the POS being to define the use of each parcel of the communal territory.
Plan d’urbanisme
Urban Planning Document
Programme
Real estate transaction carried out on behalf of the same contracting authority (“maître d’ouvrage”) in one or more tranches.
Projet
All plans and documents providing for the execution of a work.
Promoteur
Professional who takes the initiative of a real estate program and leads it to its completion. To do this, the developer takes charge of all the administrative, legal, financial and technical operations necessary for the realization of the construction. He markets the operations he has built.
Promoteur-constructeur
Developers-builders build collective or individual housing, but also offices, commercial and industrial premises.
Promotion
Commercial, technical and financial structuring of a real estate transaction.
Prorogation du permis de construire
At the end of the period of validity of the building permit which, in France, is two years from the date of obtaining, the beneficiary may request an extension under certain conditions.
Queue de programme
Term designating the last remaining apartments or houses for sale in a real estate program.
Réception de l’ouvrage
Act by which the contracting authority (“maître d’ouvrage”) declares to accept the work with or without reservation. It notes: the completion of the works, their conformity with the contractual documents, their proper execution. It is from the reception of the works that run the deadlines of perfect completion and the biennial and ten-year guarantees.
Réception des travaux
Acceptance of the works consists of an adversarial verification of the works by the supervisor, the contracting authority and the contractor with a view to their acceptance. The contracting authority (“maître d’ouvrage”) may on this occasion note any disorders and defects of conformity, and draw up a report.
Recours contre le permis de construire
This term refers both to the appeal of the applicant himself in case of refusal by the municipality of his building permit request, withdrawal or stay of proceedings, and by third parties wishing to obtain the cancellation of the permit or compensation for damage caused by the new project.
Refus du permis de construire
Negative decision of the competent authority with which an application for a building permit has been lodged. It sanctions either an application that has not been drawn up regularly, or a project that does not comply with national or local urban planning rules.
Règlement de copropriété
It determines the destination and conditions of use of the private portions and common portions of a building or a subdivision, as well as the rights and obligations of the co-owners.
Revenu net foncier
It is equal to the gross property income (income corresponding to the rental or sale of real estate) less the tax-allowed expenses, namely: repair, maintenance, improvement expenses, management costs, interest on loans relating to the aforementioned operations and the purchase of the building, flat-rate deduction.
RT 2020
This is the most recent French thermal regulation (RT), implemented in 2020, providing for the implementation of new positive energy buildings (in French, “Bâtiments à énergie positive” or BEPOS) from January 1st, 2021. These buildings produce more energy than they consume for their own functioning. The means used to achieve BEPOS objectives are thermal insulation of buildings, local energy production and reduction of the environmental footprint. It should be noted that the previous regulation RT 2012 had already set a framework for the construction of Low Consumption Buildings (in French, “Bâtiments Basse Consommation » or BBC) which emit only a very small quantity of carbon dioxide and which respect the environment. RT 2012 defined a ceiling for primary energy consumption of buildings at 50 kWh Primary Energy /m² (taking into account heating, hot water, lighting, ventilation and cooling using thermal insulation). RT 2020 strengthens this framework and aims not only to reduce the energy consumption of new buildings, but also requires that the building's energy production be greater than its energy consumption. Future BEPOS buildings must therefore generate energy by integrating energy production equipment such as solar panels. The overall cost of construction in the RT 2020 standard is more expensive on average, but this can reduce energy costs in the long term.
Rythme de commercialisation
Average number of homes sold per month for a given real estate development project. It can also determine the sales rate, calculated as the ratio between the monthly available supply and the number of net bookings per month.
Société civile immobilière (SCI)
Term designating any company in civil form having a real estate activity.
Société Civile de Placements Immobiliers (SCPI)
The sole purpose of this French legal form of company is the acquisition and management of rental real estate assets. This collective investment company issues shares to investors.
Société civile immobilière de construction-vente
Legal entity most frequently used for the realization of development and construction operations.
Surface Hors Œuvre Brute (SHOB)
It includes the total floor area of each level of the construction calculated from the façade walls, including wall thickness, attic and basements, accessible or non-convertible balconies, loggias and roof terraces, intermediate levels and the ground floor. Terraces on one level with the ground floor or decorative projections are not taken into account. The calculation of the SHOB is the first step of the SHON.
Surface Hors Œuvre Nette (SHON)
The net floor area corresponds to the sum of the floor areas on each level, after deduction of the non-convertible work surface: attic and basements that cannot be converted, roof terraces, balconies, loggias, unenclosed areas located on the ground floor and garages. The SHON is the basis for calculating urban planning taxes and building density for the application of land use coefficients (COS).
Surface
A word commonly used as a synonym for "area" in the construction and building sector. In France, several types of surfaces must be distinguished: built-up area, “hors œuvre” area, living area, etc.
Surface bâtie
Perimeter of the constructed part of a building.
Surface habitable
Defined by the French Building Code, the living area corresponds to the floor area built, minus the thickness of walls, partitions, ducts, swings of doors and windows, surface of steps and stairwells. The living area does not include the areas of undeveloped attic, cellars, basements, garages, sheds, terraces, loggias, balconies, verandas,
dryers outside the dwelling, common premises and other dependencies of the dwellings. Nor does it include parts of habitable rooms whose height is less than 1.80 metres.
Surface hors œuvre
This type of surface designates the sum of the floor areas of each level of the construction.
Surface pondérée
Expression designating the usable surface of a dwelling, including annexes (balcony, terrace, loggia).
Surface utile
Floor area of a construction actually usable. This type of surface is equal to the net surface area (SHON), minus structural elements (walls, exteriors, posts), technical rooms outside attics and basements (heating, ventilation, machinery).
Syndic de copropriété
The syndic is the legal representative of the syndicate of co-owners. As such, the syndic:
- performs the administration of the co-ownership,
- ensures the maintenance in good condition of use of all common areas and equipment (corridors of the building, collective heating installation, pipes, gardens and parks that are part of the condominium ...). He collects the charges, he concludes the contracts for the maintenance and conservation of the building.
- performs the financial management of the co-ownership, prepares the provisional budget, the accounts of the syndicate and their annexes and submits them to the vote of the co-owners.
- organizes and coordinates the co-owners’ general meetings and executes their decisions.
Taxes immobilières
In France, there are three main real estate tax categories:
-The property tax, payable annually and the amount of which depends on the rental value of the property and the rate that can be revised each year by the municipalities.
-The housing tax, payable annually, now only applies to secondary homes (the housing tax on the main residence being abolished for all taxpayers from 1 January 2023). Its method of calculation is similar to that of the property tax.
-The regional tax (or local equipment tax) is payable by the person who carries out construction or expansion work.
Taux annuel effectif global (TAEG)
This interest rate measures the total cost of the credit comprising interest and other credit costs (application fees, insurance and guarantee costs). It cannot exceed the usury rate in effect on the date of issue of the loan offer. The TEG, unlike the TAEG, is expressed as a proportional annual rate and applies mainly to business loans.
TMA
As part of an acquisition contract, the buyer of a new home may want development and customization work, affecting the plan, called Buyer Modification Work (TMA). To be valid, these modifications must comply with urban planning rules and not extend the schedule initially planned. TMAs may be subject to a surcharge.
Tour de table
Pool of partners providing capital who take the risk of a real estate transaction in order to share the profits.
Transaction
Transmission of real estate either for consideration (sale) or free of charge (donation).
Transfert du permis de construire
Transfer the right to build to a person other than the initial beneficiary, in the event of a transfer of the land for example.
Urbanisme
Term designating a technical set of planning, building, development and heritage protection norms and rules stipulated at the national or local level and supervised by the municipalities on their respective territories.
Urbaniste
Professional in charge of studying urban planning and carrying out urban planning projects for an area or district.
Valeur intrinsèque
Level of valuation of a property based solely on its intrinsic characteristics (quality of construction, general condition ...) to the exclusion of all other factors, of cyclical and economic types in particular.
Valeur vénale
Market value of real estate. The market value is obtained by reference to previous values or by comparison with the selling prices of the real estate market, at a given time and under the free conditions of the law of supply and demand.
Valeur locative
The amount of rent that one can expect to obtain as the owner of a property. The rental value depends on the location, surface area, condition of the property, etc. and is an important element in the analysis made by an investor wishing to acquire the property in question.
Vente en l’état futur d’achèvement (VEFA)
Sale of a dwelling before its construction. Purchased on "plans", the property is paid in several instalments, as and when the stages of construction (foundations, structural work ...) are fully completed.
Vice apparent
Defective workmanship, lack of completion or other unfitting execution noted upon receipt of the works Apparent defects must then be listed as reservations on the part of the contracting authority or the purchaser (“maître d’ouvrage”). Apparent defects are mainly covered by the guarantee of perfect completion limited to one year.
Vice caché
Lack of conformity affecting a work that does not appear when the work is received. Hidden defects are covered by biennial and ten-year guarantees.
Vice de construction
Defective workmanship involving the liability of prime contractors or contractors. Construction defect is a disorder that results in a deterioration of the construction.
Voiries et Réseaux Divers (V.R.D.)
These are the equipment necessary for the use of dwellings (access roads, sewers, water supplies, electricity and telephone lines, etc.).
Zone d’Aménagement Concerté (ZAC)
Within the perimeter of a ZAC, a public authority or a public institution may intervene to carry out or have carried out the development and equipment of built or unbuilt land, in order to transfer them later to public or private users.
Zone d’Aménagement Différée (ZAD)
Area in which a pre-emption duty is established.
Zone NA
Area of future urbanization.
Zone naturelle
Area bounded by the land use plan.
Zone NB
Ordinary natural area subject to limited urbanization.
Zone NC
Area of economic or natural wealth.
Zone ND
Area of sites, risks or nuisances.
Zone U
Urban areas defined by the land use plan.
