U.S. Real Estate Glossary: Terms You Need to Know to Invest in the United States

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French-American Real Estate Glossary: Equivalents

In France	In the United States	What's Changing
Preliminary Sales Agreement, Unilateral Promise to Sell	Purchase Agreement	Private document, without a public official
Conditions precedent	Contingencies	Due diligence period negotiated in the contract
Security Deposit	Earnest money, held in an escrow account	Held by a title company, an attorney, or a bank
Notarized deed of sale, notarized document, at the notary's office	Deed, signed at closing	Filed with the county; the notary public merely certifies the signatures
Verification of Ownership History	Title Search and Title Insurance	A policy covers defects in title
Local Urban Development Plan (PLU), formerly known as the Land Use Plan	Zoning	Adopted by each city; some, such as Houston, do not have one
Housing Development	Subdivision, map	The plan is approved by the city or county
Easement under the Civil Code	Easement	Listed in the county registry
Condominium (co-owners, property manager, homeowners' association)	Condominium, HOA, management company	Association Rules (CC&R)
Residential Lease, Commercial Lease	Lease	Locally established rules; no national standard lease agreement
Real estate inspections, including energy performance inspections	Seller's Disclosure	Seller's Statement Regarding Known Defects
Municipal right of first refusal, exercised by the municipality	Right of first refusal	A right granted by contract, not by the municipality
Transfer Taxes	Transfer tax	Not present in Texas; no sales tax in the United States
Property Tax	Property Tax	County, city, school district, and, if applicable, MUD
Mortgage	Mortgage	Most Common 30-Year Fixed-Rate Mortgage
Pre-construction Sale (VEFA)	Pre-construction	Guarantees negotiated with the developer
Tax ID number of an individual or legal entity	ITIN (individual), EIN (corporation)	Issued by the IRS

0–9

1031 exchange

A 1031 exchange allows you to defer capital gains tax on the sale of a building or land held for business or investment purposes, provided the proceeds are reinvested in a similar property.

As of January 1, 2018, only real estate properties are eligible, according to the IRS fact sheet on real estate exchanges.

The tax is deferred, not eliminated: our article on the 1031 exchange as it applies to land explains the conditions in detail.

A

Accredited investor

An "accredited investor" is a status defined by the SEC, the U.S. securities regulator, for investors authorized to subscribe to certain private offerings in the United States.

For an individual, it is based on income or asset thresholds, or on certain professional qualifications.

Offers made to investors located outside the United States may be subject to a different framework, namely Regulation S.

Acre

The acre is the unit of area used for land in the United States: 1 acre is approximately 4,047 m², or a little more than 0.4 hectares.

A 94-acre plot of land, such as the one in the LandQuire project in Cibolo, Texas, therefore covers approximately 38 hectares.

Ag Exemption (Agricultural Assessment)

In Texas, the “ag exemption” is not an exemption but a special assessment: the land is taxed based on its agricultural production value, not its market value.

According to the Texas Comptroller, he must have been engaged in agriculture or forestry for at least 5 of the last 7 years.

Our guide toagricultural exemptions in Texas explains how to obtain and maintain them.

Agricultural lease (agricultural lease)

Land awaiting development is often leased to a rancher or farmer under an agricultural lease, which helps maintain the agricultural assessment in Texas.

This short-term agreement, which generally provides for termination in the event of a resale, is more akin to a temporary occupancy agreement than to a rural lease.

ALTA survey (ALTA land surveyor's survey)

An ALTA survey is a land surveyor’s survey conducted in accordance with the standards of the American Land Title Association and the National Society of Professional Surveyors.

It delineates the property boundaries, structures, access points, and registered easements, and serves as the basis for title insurance. See our article onthe ALTA land survey.

Appraisal (real estate appraisal)

An appraisal is an estimate of a property’s value made by a licensed professional, known as an appraiser. The bank requires it before granting a loan.

If the appraisal value is lower than the agreed-upon price, the buyer renegotiates or makes up the difference.

B

Building permit (permis de construire)

A building permit is the U.S. permit required by the project owner and issued by the city or county before construction begins.

For a new housing development, this is generally determined on a lot-by-lot basis once the site plan has been approved.

Broker and real estate agent

In the United States, a real estate agent is a professional who practices under a state-issued license and reports to a broker.

The title "Realtor" is reserved for members of the National Association of Realtors: it indicates membership, not a degree.

Just like a real estate agent’s professional license in France, the license can be verified with the commission that issued it—in Texas, the Texas Real Estate Commission.

C

Cap rate (capitalization rate)

The cap rate expresses a property's annual net income as a percentage of its price: a property purchased for $1,000,000 that generates $60,000 in net income has a cap rate of 6%.

It is used to compare investment properties in a rental real estate investment, based on rent amounts and existing leases.

A vacant lot that does not generate rental income is not valued in this way.

Certificate of Occupancy

The certificate of occupancy is issued to the building owner by the local authority upon completion of the construction work.

It certifies that the building complies with building codes and is suitable for occupancy, either as a residence or as a business premises.

Its role is similar to that of the declaration of completion and compliance with building codes in France.

Closing (final signing)

Closing is the final step in the transaction: the buyer pays and signs the financing documents, and the seller signs the deed, which is then recorded with the county.

In Texas, it usually takes place at a title company; elsewhere, it sometimes takes place at a lawyer's office.

There is neither a notarized document nor a notary in the French sense: the American notary public merely certifies signatures.

Closing costs (purchase costs)

Closing costs include the fees paid at closing: title insurance, title company fees, deed registration, and loan processing fees.

They serve as the equivalent of "notary fees," since there are no transfer taxes in Texas.

Club Deal

A club deal brings together a small group of investors who jointly finance a single project (a building, a hotel, or a piece of land) through a company created specifically for that purpose.

An operator manages the project and reports to the partners. See our guide to real estate club deals.

Commercial lease

A commercial lease is a U.S. commercial lease agreement signed for an office, a retail space, or a warehouse.

It does not offer a level of protection comparable to that of commercial leases in France (right to renewal, right to a lease): everything depends on its terms.

Comps (comparable sales)

Comparables, or market comparables, are recent transactions involving comparable properties (comparison criteria: square footage, zoning, access, utilities) that are used to estimate a property’s value.

When it comes to land, we mainly compare the price per acre or per lot. Our method for estimating the value of a parcel of land using market comparables explains the calculation in detail.

Condominium (co-ownership)

A condominium, or condo, is a form of co-ownership housing: each co-owner owns their own apartment and a share of the common areas.

The co-owners meet in an assembly and vote on the budget, under rules similar to those of a French co-ownership association.

In Florida, safety regulations for apartment buildings have been tightened, and the costs are borne by the co-owners: see our guide toreal estate in Florida.

Contingency (condition precedent)

A contingency is a condition specified in the purchase agreement: obtaining a loan, a property appraisal, a home inspection, or the outcome of due diligence.

If this condition is not met within the specified time frame, the buyer can generally withdraw from the transaction and recover their deposit. This is equivalent to the conditions precedent in a preliminary sales agreement.

County

The county is the administrative level between the city and the state. Outside of cities, it is often the county that approves subdivision plans, and it is the county that maintains the land registry.

LandQuire analyzes 3,143 U.S. counties using an algorithm based on more than 120 criteria to select its properties.

CPA (Certified Public Accountant)

A CPA (Certified Public Accountant) is a licensed and certified public accountant in the United States. They prepare tax returns for companies and investors.

At LandQuire, the tax matters for each project company are handled by an independent CPA.

D

Deed (title deed)

A deed is the document that transfers property from one owner to another: once recorded with the county, it serves as the official deed of sale.

A warranty deed protects the purchaser against any defect in title, regardless of its origin.

The special warranty deed limits this protection to the period during which the seller owned the property.

Deed restrictions (use restrictions)

Deed restrictions are private rules set forth in the deeds of a subdivision: type of construction, minimum lot size, prohibited commercial activities.

They are binding on successive owners.

In Houston, the most populous city in Texas, which has no zoning laws, these regulations govern land use, as the City of Houston points out.

Developer and homebuilder

The developer purchases a zoned parcel of land and carries out the infrastructure work (roads, utilities, drainage) as the project owner.

The homebuilder then oversees the construction of the homes.

LandQuire resells its land to these professionals once it has been approved.

Due Diligence (Pre-Acquisition Audit)

Due diligence is the audit period between the signing of the agreement and closing: title, surveyor’s report, zoning, flood zones, utilities, and environmental factors.

The agreement often provides that the buyer may withdraw if they discover a problem during this period. Our real estate due diligence checklist lists the items to verify.

E

Earnest money (security deposit)

Earnest money is the amount paid by the buyer upon signing the purchase agreement, which is held in an escrow account until closing.

It is deducted from the amount due on the day of the final signing, just like the security deposit for a preliminary sales agreement.

If the buyer withdraws without a valid reason, the seller may retain it.

Easement (servitude)

An easement is a right of use granted to a third party on a piece of land: right of way, power line, pipeline.

Registered in the county registry, it generally remains attached to the property after the transfer, similar to an easement as defined by the provisions of the French Civil Code.

See our articles on easements in Texas and pipeline easements.

EIN (a company's tax ID number)

The EIN (Employer Identification Number) is the federal tax identification number that the IRS assigns to corporations and other entities.

This is the identification number for a legal entity, whereas the ITIN is the identification number for an individual.

An LLC that invests in a U.S. project needs one, andthe IRS issues it free of charge.

Entitlement (development permits)

"Entitlement" refers to the public permits that determine what can be built on a parcel of land and to what extent: zoning, subdivision plans, and access to utility networks.

It is during this stage that the value of raw land is created: LandQuire purchases it in its raw state and resells it once it has been approved. See our guide to land entitlement.

Escrow (escrow account)

An escrow account is an account held by a neutral third party (title company, attorney, or bank) that holds the funds for a real estate transaction until closing.

It protects both the buyer and the seller during the due diligence process. Our guide toescrow in the United States explains how it works.

ETJ (the area of influence of a Texas city)

ETJ (extraterritorial jurisdiction) is the area surrounding a Texas city, outside its boundaries, where the city enforces its zoning regulations without collecting municipal taxes.

Its width depends on the city's population (Texas Local Government Code, Chapter 42). Our article onthe ETJ in Texas explains in detail how this affects permits.

Eviction (expulsion)

Eviction is the legal process that allows a landlord to reclaim the property after a tenant fails to pay rent or violates the lease.

It is handled by a local court and follows local law; there is no national winter truce as there is in France.

F

FEMA flood zone

Flood zones are areas identified as flood-prone by FEMA, the Federal Emergency Management Agency, on its FIRM (Flood Insurance Rate Map) maps.

Zones A and V make up the Special Flood Hazard Area, which has a 1% chance of flooding each year, according to FEMA's glossary.

See our article on FEMA flood zones in Texas.

FIRPTA (Withholding Tax on Sales by Nonresidents)

The FIRPTA (Foreign Investment in Real Property Tax Act of 1980) allows the United States to tax foreign nationals who sell property located within its borders.

According to the IRS's FIRPTA page, the buyer generally withholds 15% of the transaction amount and remits it to the IRS.

This withholding is an advance payment of the tax due: see our article on FIRPTA for nonresidents.

Frontage and street-facing side (street-facing facade)

Frontage is the length of a property’s facade along a road. A “front foot” is the corresponding unit of measurement: a linear foot of frontage, or 30.48 cm.

A lot intended for commercial use is sometimes valued by the front foot rather than by the acre, because the frontage determines access and visibility.

See our article on access and street frontage.

H

HOA (Homeowners' Association)

The HOA (Homeowners Association) is the association of homeowners in a housing development or apartment building, funded by dues approved each year at a general meeting.

It maintains the common areas and enforces its rules (the CC&Rs, which are similar to condominium bylaws); its board, elected by the co-owners at a meeting, serves as the homeowners’ association board.

Day-to-day management is often entrusted to a management company, which is equivalent to a property manager.

Home inspection

A home inspection is a visit by a professional inspector, paid for by the buyer as part of the due diligence process: structure, roof, plumbing, electrical system, and anticipated repairs.

Her report is used to renegotiate or withdraw from the contract, if the contract so provides. For an undeveloped lot, it paves the way for soil tests and a surveyor’s survey.

Homestead (primary residence)

A "homestead" refers to a primary residence, the owner's home: in both Texas and Florida, it entitles the owner to a reduction in the property's assessed value for property tax purposes.

You must register your primary residence with the county assessment department.

The reduction does not apply to a residence rented to a tenant, a second home, or vacant land held as an investment.

I

ITIN (Individual Taxpayer Identification Number)

The ITIN (Individual Taxpayer Identification Number) is a 9-digit tax identification number that the IRS assigns to individuals who have U.S. tax obligations.

It applies to those who cannot obtain a Social Security number, such as a French citizen who invests in a U.S. project in his or her own name.

According tothe IRS, the application is filed using Form W-7.

K

K-1 (Schedule K-1)

Form K-1 is the annual document that a partnership provides to each partner; it shows the partner’s share of income, deductions, and tax credits.

According tothe IRS, the partner reports these amounts on his or her own tax return. LandQuire investors receive a K-1 each year.

L

Land banking (land reserves)

Land banking involves purchasing land and holding onto it without developing it, while waiting for the city to expand to include it.

It differs from entitlement, in which one obtains the necessary permits to resell land that is ready for development.

Landlocked parcel (enclosed plot of land)

A landlocked lot has no direct access to a public road. Without a right of way, it is difficult to finance, build on, and resell.

See our article on landlocked lots.

Lease (rental agreement)

A lease is an American rental agreement: it specifies the rent, the term, the security deposit, and the allocation of expenses between the landlord and the tenant.

Residential leases are governed by local law: deposit requirements, notice periods, and eviction procedures are not set by a national code, as they are in France.

Listing Agreement (Sales Agreement)

A listing agreement is the contract signed between a homeowner and their real estate agent to list a property on the market: term, asking price, and commission.

An exclusive listing is the most common option, and the listing is then shared among agents through the MLS (Multiple Listing Service).

LLC (Limited Liability Company)

An LLC is a legal entity established under the laws of each state, registered with the Secretary of State (the equivalent of the RCS), which limits the liability of its members to their capital contributions.

By default, the IRS does not tax it as such: its income is reported by its sole owner, or by its owners as in a partnership, according tothe IRS.

LandQuire investors who use an LLC often incorporate it in Wyoming: see “Forming an LLC in the U. S.”

Lot

A lot is a parcel of land created by subdividing a larger parcel, as described in a map registered with the county.

The number of approved lots often serves as the basis for determining the value of land sold to a developer.

M

Manufactured home (prefabricated home)

A manufactured home is a dwelling that is built in a factory, then transported and installed on a lot or in a designated park.

It is primarily used for affordable housing, a private market distinct from France's low-income housing (HLM) program.

LandQuire has acquired land in Florida for these homes, in Bunnell and Okeechobee.

Mineral rights

In the United States, the subsoil (oil, gas, minerals) can be separated from ownership of the land and sold separately.

A buyer of land should therefore check the title to see what is included in the sale. See our article on mineral rights in Texas.

Mortgage (home loan)

A mortgage is an American loan used to purchase a home, secured by the property being financed; the most common type is a 30-year fixed-rate mortgage.

A nonresident can take out a loan, but banks generally require a higher down payment. See our guide to real estate financing in the U.S. for foreign investors.

MUD (Municipal Utility District)

A MUD is a public district established to fund water, sewer, and drainage services for a neighborhood located outside a city's utility networks.

It borrows through bonds, which are repaid through a tax added to the property tax paid by homeowners in the district.

In Texas, the TCEQ, the state’s environmental agency, reviews the issuance of some of these bonds; see also MUD and PUD.

Multifamily (investment property)

"Multifamily" refers to a building with multiple rental units, equivalent to an investment property.

If there are more than four units, it is generally financed as an income-producing property, based on its rental income.

O

Off-market

An off-market property is sold outside of public listings, in a private transaction between the owner and the buyer.

LandQuire purchases its land off-market, directly from owners, based on an analysis of 3,143 counties. See our article on off-market land in the United States.

P

Site Plan (Subdivision Plan)

A plot plan is a map showing the subdivision of a parcel of land: its division into lots, streets, easements, and utility lines.

In Texas, the term refers to the preliminary plan, the final plan, and the amended plan (Texas Local Government Code, § 212.001).

Once the final survey has been approved and recorded with the county, the parcels have legal standing: see the survey approval process.

PPM (Private Placement Memorandum)

The PPM is the information document for a private fundraising round. It includes key details such as a description of the project, the legal structure, costs, risks, and exit terms.

At LandQuire, each project has its own PPM, which details the expenses included in its budget; the investor signs it along with the subscription agreement.

The steps are described on the page titled “How to Invest in a Real Estate Project.”

Preconstruction (off-plan purchase)

Buying off-plan means reserving a home before or during its construction; it is similar to a VEFA (sale of a property before completion) in France.

The buyer’s protections against the developer, who is the project owner (deposit, deadlines, guarantee of project completion), depend primarily on the contract and local law.

Preferred return

The preferred return is the return paid first to a project’s investors, before any profit sharing with the manager.

It is expressed as a target annual percentage and is not guaranteed: it depends on the proceeds from the resale.

Property Manager (Rental Manager)

A property manager is a professional who manages a rental unit or building on behalf of the landlord: finding tenants, collecting rent, and performing maintenance work.

He drafts rental agreements and commercial leases and handles delinquent payments: a role similar to that of a property manager or building manager in France.

An empty lot is not rented out: it has no tenants and requires no maintenance.

Property tax (taxe foncière)

Property tax is the local real estate tax, calculated annually based on the assessed value of buildings and land by a local assessment office.

This rate combines the shares from the county, the city, the school district, and, if applicable, a MUD.

For agricultural land, the special assessment (agricultural exemption in Texas) may reduce it.

PUD (Planned Unit Development)

A PUD is a housing development designed as a single, cohesive unit, with its own urban planning regulations regarding density, green spaces, and common facilities.

It may deviate from standard zoning regulations in exchange for a master plan approved by the city, and its common areas are often managed by an HOA. See MUD and PUD.

Purchase Agreement (contrat d’achat)

The purchase agreement is the contract signed by the buyer and the seller prior to closing: purchase price, deposit, due diligence period, conditions precedent, and the date of the final signing.

It is a private document, signed without the presence of a public official: it serves as a preliminary sales agreement or a unilateral promise to sell.

R

REIT (Real Estate Investment Trust)

A REIT is a U.S. real estate investment trust that owns or finances income-producing properties and distributes nearly all of its profits to its shareholders.

Most are publicly traded: you only need one share to invest. See our guide to REITs.

Regulation S

Regulation S, adopted by the SEC in 1990, allows securities to be offered to investors outside the United States without registering the offering with the SEC, as noted in the SEC’s 1998 press release.

The offering must take place outside the United States, without any solicitation directed at the U.S. market.

LandQuire's recent offerings to U.S. nonresidents are made under Regulation S.

Rezoning (change in zoning)

Rezoning is a request to change the zoning designation of a parcel of land, for example, from agricultural to residential.

In Texas, the process involves a public hearing: property owners located within 200 feet (approximately 60 m) must be notified in writing at least 10 days in advance (Texas Local Government Code, § 211.007).

Right of first refusal (right of preference)

The right of first refusal is a contractual right: the holder of this right may purchase the property on the terms offered by another buyer before the sale is finalized.

This should not be confused with the French urban right of first refusal, which a municipality exercises over properties located in certain areas.

S

Security deposit (tenant's security deposit)

The security deposit is the amount paid by the tenant to the landlord upon signing the lease to cover any unpaid rent and damage to the property.

In France, the amount of this security deposit is capped by law for residential leases; in the United States, the cap and the timeframe for its return are governed by local law.

Seller financing

Seller financing is a loan provided by the seller to the buyer: part of the amount is paid at closing, and the remainder is paid in installments, secured by the land.

Some LandQuire projects use seller financing to purchase the land. See our guide to seller financing in the U.S.

Seller’s Disclosure

In Texas, the seller of a home provides the buyer with a written statement detailing known information about the property: the roof, past flooding, work that has been done, and fixtures.

It serves the same purpose as mandatory inspections in France—such as the energy performance inspection—but does not follow the national format.

Septic system (on-site wastewater treatment)

A property that is not connected to the sewer system must treat its wastewater on-site using an approved septic system.

The type of soil and the size of the lots determine whether this permit is granted—and thus the number of possible lots. See our comparison of septic systems and sewer systems.

Short-term rental

Short-term rentals—ranging from a few nights to a few weeks—are regulated by each city: some prohibit them in residential neighborhoods or require a permit and an accommodation tax.

It is the equivalent of a furnished vacation rental in France.

Tax status as a professional or non-professional furnished rental property owner does not replace these local permits.

Single-family home (detached house)

A single-family home is a detached house built on its own lot: it is the most common type of housing in the United States.

This is the type of housing that homebuilders construct on lots in new subdivisions on the outskirts of cities that are seeing population growth.

Special Purpose Vehicle (SPV)

A project company, or SPV (special purpose vehicle), is a company created for a single piece of land: it purchases the land, holds the necessary permits, and resells it.

At LandQuire, each project has its own plan, designed to last 5 years with a possible 1-year extension, and investors’ capital is deposited into its account.

Subdivision (housing development)

Subdivision is the division of a parcel of land into several buildable lots, approved by the city or county through a subdivision plan. It is the equivalent of a housing development.

See our article on how to subdivide a parcel of land.

T

Title (title deed)

The title refers to the ownership rights to a property and its history: successive owners, mortgages, easements, and liens.

Before each transaction, a title company reviews this information in the county records—a task performed by a notary in France.

Title Commitment (Commitment by the Title Insurer)

The title commitment is the insurer's preliminary commitment: this document lists the items that must be settled before closing and the exclusions (easements, subsoil) that the policy will not cover.

The buyer reviews it during due diligence to resolve these issues before signing. See our article on title commitments in Texas.

Title insurance

Title insurance protects the owner (owner’s policy) or the lender (lender’s policy) against title defects that existed prior to the purchase, such as unpaid taxes by a previous owner.

This is explained by the CFPB, the federal consumer protection agency. See our guide to title insurance in the U.S.

Transfer tax (tax on the transfer of property)

The transfer tax is a tax levied on the sale of real estate at the local or regional level; it is the equivalent of the transfer tax in France.

In Florida, it takes the form of the documentary stamp tax; Texas does not levy one.

The United States does not have a sales tax; therefore, real estate purchases are not subject to it.

Triple-net lease

In a triple-net (NNN) lease, the tenant pays, in addition to rent, property taxes, insurance, and building maintenance.

Common for retail and office spaces, this arrangement provides the owner with income that is almost net of expenses.

U

Utilities (utilities networks)

Utilities are the infrastructure systems necessary for construction: water, sewer, electricity, and gas.

Their proximity, or the cost of extending them, is one of the first factors considered before purchasing land to be developed.

W

Water rights

Under Texas law, surface water belongs to the state and may be used only with a permit, while groundwater belongs to the landowner and is regulated by groundwater management districts.

A property without access to the public water system therefore relies on a well and is subject to local district regulations. See our article on water rights in Texas.

Wildlife management

In Texas, land that qualifies for agricultural valuation can retain that status by being converted to wildlife management use, as outlined in a plan.

This plan (habitat, water sources, wildlife monitoring) is submitted to the county’s assessment department. See our article on the wildlife management plan.

Z

Zoning

Zoning is the urban planning regulation that specifies, zone by zone, land use, building density, and building height.

It is the equivalent of the local urban planning plan (PLU) in France. It is adopted by cities; Houston, the most populous city in Texas, does not have one.

See our guide to land entitlement.