Glossary of Property Term - D

Deed
A document, being written evidence of a legal transaction, which has been signed, sealed and delivered to testify to the agreement of the parties concerned.

Defeasible
When an estate or interest in property may be brought to an end by the operation of a condition subsequent or a conditional limitation.

Defect liability period (retention period)
An agreed period following practical completion of a building, engineering or other constructional operation during which the contractor is obliged to remedy any defects appearing in the building caused by the failure of materials or workmanship to meet the requirements of the building contract. Amounts specified in the contract will be withheld until such time as defects are remedied.

Demolition
The pulling down of a building or structure and, perhaps, the clearence of its site. Various enactments govern demolition, for example in the UK, the Building Regulatios under the Building Act 1984.

Density
In town planning, a term applied to the number of units permitted per acre (or hectare), usually in relation to residential accomodation.

Depreciated Replacement Cost Basis (DRC)
A method of valuing properties of unusual character or location for which evidence of comparable transaction does not exist. This basis of valuation “requires an estimate of the open market value of the land in its existing use and estimate of the buildings and other site works, from which deduction are then made to allow for the age, condition, functional obsolence and other factors which result in the existing property being worth less than a new replacement. It is a method of using current replacement costs to arrive at the value to the business in occupation of the property as existing at the valuation date.” (RICS Guidance Notes on the Valuation of Assets.)

Depreciated Value @ Depreciation

  1. Decrease in the value of real property caused by obsolescence, deterioration in its condition, or other factors.
  2.  One or more deductions made for accounting (or taxation) purposes to allow for the actual or assumed reduction in the capital value (cost) of an asset over an assumed or prescribed period.

Deprival value
The value to a business of an asset, being the loss which would be suffered by the business if it were deprived of that asset. This may be equivalent to its net replacement cost.

Derelict
Property which has been abandoned and neglected, or descriptive of such property.

Desk valuation
An imprecise term indicating a valuation a of a property by someone who has not been made a physical inspection of a property for that purpose. Traditionally, many will believe that no property can be valued unless it has been inspected at that time; contemporary needs for frequent valuations and the possibly prohibitive cost of a full inspection and valuation make it essential to compromise.

Devaluation

  1. In valuation practice, the analysis of a comparable to extract the unit of comparison or other comparative evidence, eg the yield.
  2. A reduction in the worth of a property.

Developer
An entrepreneur who has an interest in a property, initiates its development and ensures that this is carried out (for occupation, investment or dealing) and from the outset accepts the ultimate responsibility for providing or procuring the funds needed to finance the whole project.

Developer’s budget method
A cash flow appraisal of a proposed development project which breaks down the duration into periods, eg months, quarters or years, and allocates expenditures and receipts to those periods. Interest is also computed on a periodic basis. The method may be used to find profit (or loss), break-even, and periodic interest costs.

Developer’s profit (or loss)
The amount by which, on completion or partial completion of a development, the estimated value or the price realised on sale of a developer’s interest exceeds (or is less than) the total outlay, including such figure for the land as is considered appropriate in the circumstances (including accrued interest).

Developer’s risk and profit
In a residual valuation the amount which is allowed to cover both:

  1. An estimate of the sum needed to reflect the risk element between the valuation date and the completion of the development programme and
  2. An amount to meet the developer’s requirement for profit on the venture.

Development appraisal
An assessment of the financial and practical aspects of a development either at its inception or during its progress.

Development brief
A statement issued by the owner of a site giving detailed requirements for its proposed development, as guidance to would-be developer’s . It usually includes planning and development parameters, the procedures for the selection of the developer, the tenure being offered, and request to prospective developers for details of their experience, status and proposed method of funding.

Draw down
In development finance the withdrawing of part, or the whole, of a standing loan, usually for substantial sums over a long period.

Drop lock loan
A form of loan in which interest payable begins by being at a variable rate of interest used as a reference falls to or below an agreed level, then the interest payable is thereafter fixed or “locked” at a rate, calculated according to the terms of the agreement.

Dual rate method
A method of valuing terminable income flows, eg profit rents under a lease. Allowance is made for part of the net income to be nationally invested in a sinking fund at an accumulative rate to recoup initial outlay, with the remainder of the net income being capitalised at an appropriate remunerative rate of interest.

Dual rate table
A valuation table of years’ purchase calculated on the basis of individually selected remunerative and accumulative rates of interest.