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Real Estate Dictionary/Glossary A,
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N.B. This glossary is provided with the understanding that the author is not
providing any legal, or other professional services. If legal or real estate
advice is required, the services of a competent professional person should be
sought.
R-value
A term used to describe the effectiveness of various kinds of insulation to
indicate their resistance to heat flow. If more than one layer of insulation is
used, the R-value of the individual layers are added together to indicate a
total R-value.
Radon
A naturally occurring gas that is suspected of causing lung cancer.
Rafter
A roof structural support system using "2 by" wood components that are nailed
together (as opposed to trusses that are connected using press-on metal plates).
(See truss)
Range
1. A measure of the difference between the highest and lowest variates. (See
variates)
2. A strip of land six miles wide, extending north and south and numbered east
and west according to its distance from the principal meridian in the
rectangular (government) survey system of legal description. For example, Range
3 East would be a strip of land between 12 and 18 miles east of its principal
meridian.
Rate cap
The limit on the amount the interest rate can be increased at each adjustment
period in an adjustable rate loan. The cap may also set the maximum interest
rate that can be charged during the life of the loan. (See adjustable rate
mortgages (ARMs))
Rate factor
The number of dollars required to pay off each $1,000 of a mortgage loan.
Ratification
Method of creating an agency relationship in which the principal accepts the
conduct of someone who acted without prior authorization as the principal's
agent.
Ready, willing and able buyer
One who is prepared to buy property on the seller's terms and is ready to take
positive steps to consummate the transaction.
Real estate
The physical land at, above and below the earth's surface with all
appurtenances, including any structures; any and every interest in land whether
corporeal or incorporeal, freehold or non-freehold; for all practical purposes,
the term real estate is synonymous with real property.
Real Estate Advisory Commission
A ten member panel appointed by the Real Estate Commissioner, who preside over
meetings. Six commission members must be licensed California real estate
brokers, and four must be non licensed members of the public. Unlike the
commissioner, commission members serve without compensation. They make
recommendations to the Real Estate Commissioner on relevant matters.
Real estate assistant
A real estate assistant (also known as a personal assistant or professional
assistant) is a combination of office manager, marketer, organizer and
facilitator with a fundamental understanding of the real estate industry.
Real estate brokerage
A Real Estate Brokerage is a business in which real estate license-related
activities are performed under the authority of a real estate broker.
Real estate commissioner
The Real Estate Commissioner is appointed by the governor and serves at the
governor's discretion. The commissioner determines administrative policy and
enforces that policy in the best interests of those dealing with real estate
licensees. The person selected as commissioner must have been a practising real
estate broker in California for five years or otherwise engaged in real estate
activity for five of the past ten years.
Real estate dealer
A real estate dealer holds property primarily for resale to customers in the
course of business, in contrast to a real estate investor who holds property for
personal investment. Dealers are denied certain income tax benefits available to
investors.
Real Estate Educators Association (REEA)
A professional organization established by and for real estate educators,
including individuals and institutions. REEA is international in scope and
represents every aspect of real estate education which include, degree programs,
continuing education, sales training, GRI (Graduate, REALTORS Institute),
prelicense, graduate studies, consulting, research and publishing. Members of
this association come from colleges, universities and proprietary schools,
regulatory agencies, real estate organizations, boards and associations, and
other delivery systems.
Real Estate Investment Trust (REIT)
A method of pooling investment money using the trust form of ownership. In the
1960s Congress provided favored tax treatment for certain business trusts by
exempting from corporate tax certain qualified REITs that invest at least 75
percent of their assets in real estate and that distribute 95 percent or more of
their annual real estate ordinary income to their investors. As an alternative
to the partnership or corporate methods of investing in real estate, the REIT
offers some of the flow-through tax advantages of a partnership or syndication
while retaining many of the attributes and advantages of a corporate operation.
(See non-institutional lenders)
Real estate investor
A real estate investor holds property for personal investment reasons, in
contrast to a real estate dealer who holds property primarily for resale to
customers. Investors are allowed certain income tax benefits denied to dealers.
Real estate license law
State law enacted to protect the public from fraud, dishonesty and incompetence
in the purchase and sale of real estate.
Real Estate Mortgage Investment Conduit (REMIC)
A tax entity that issues multiple classes of investor interests (securities)
backed by a pool of mortgages. (See securitization)
Real estate owned (REO)
A term used by lenders to refer to properties acquired through foreclosure.
Real estate recovery fund
A fund established in some states from real estate license revenues to cover
claims of aggrieved parties who have suffered monetary damage through the
actions of a real estate licensee.
Real Estate Settlement Procedures Act (RESPA)
A federal law, enacted in 1974 and later revised, that ensures that the buyer
and seller in a real estate transaction have knowledge of all settlement costs
when the purchase of a one-to-four-family residential dwelling is financed by a
federally related mortgage loan. Federally related loans are broadly defined to
include loans made by savings and loan associations or other lenders whose
deposits are insured by federal agencies, insured by the FHA or VA, administered
by the Department of Housing and Urban Development or intended to be sold by the
lender to Fannie Mae or a similar federal agency.
Real Estate Transfer Disclosure Statement
As required by California Civil Code Sections 1102-1102.14, a transferee (buyer)
of residential real property is entitled to a statement from the transferor
(seller) which provides information regarding the physical condition of the
property.
Realtist
A member of a national organization, generally composed of African-American real
estate brokers, known as the National Association of Real Estate Brokers (NAREB).
REALTORSŪ Code of Ethics
A written system of standards of ethical conduct. Because of the nature of the
relationship between a broker and a client or other persons in a real estate
transaction, a high standard of ethics is needed to ensure that the broker acts
in the best interests of both the principal and any third parties.
Real property
The earth's surface, the air above and the ground below, as well as all
appurtenances to the land including buildings, structures, fixtures, fences and
improvements erected upon or affixed to the same, excluding growing crops. The
term real property includes the interests, benefits and rights inherent in the
ownership of real estate. (See bundle of rights)
Real property sales contract - See land contract
Real property security
A guaranteed loan or a loan where the broker will assume payments.
Real property securities dealer
A real property securities dealer is a broker who sells an existing trust deed
and guarantees a return on it.
Reality of consent
Although a contract may meet all of the basic requirements, it may still be void
or voidable, according to the realty of consent, which states that a contract
must be entered into as a free and voluntary act of each party, and each party
must be able to make a prudent and knowledgeable decision without undue
influence. A mistake, misrepresentation, fraud, undue influence or duress would
deprive a person of that ability, and if any of these circumstances were
present, the contract would be voidable by the injured party. If the other party
were to sue for breach, the injured party could use lack of voluntary assent as
a defence.
REALTORŪ
A registered trade name that may be used only by members of the state and local
real estate boards affiliated with the National Association of REALTORSŪ (NAR).
The term REALTORŪ designates a professional who subscribes to associations of
REALTORSŪ to govern real estate practices of members of the board. The use of
the name REALTORŪ and the distinctive seal in advertising is strictly governed
by the rules and regulations of the national association.
Realized capital gain
When a property is sold, a capital gain or loss is realized. (See capital gains,
excluded capital gains, deferred capital gains, recognized capital gains)
Rebate law
Law that prohibits escrow and title insurance companies from giving rebates or
favorable treatment as consideration for the referral of business.
Recapture clause
A clause in some percentage leases where the lessor has the right to terminate a
lease if a tenant does not obtain a desired gross. (See percentage lease)
Recapture rate
A periodic allowance for the recovery of investment capital from the property's
income stream.
Reconstructed cash flow analysis
An estimated cash flow analysis for a rental property, prepared by an agent
using accurate property information. Its purpose is to present what the cash
flow numbers for the investment property will look like when in the hands of a
potential buyer.
Recasting
The process of rewriting existing loans, especially when there is a default. The
term and interest rate may be adjusted to take pressure off the borrower.
Receiver
An independent party appointed by a court to impartially receive, preserve and
manage property that is involved in litigation, pending final disposition of the
matter before the court.
Recission
An option in the discharge of a contract. If both parties agree, they may
rescind a contract in a process called recission.
Recognition clause
A clause found in some blanket mortgages used to purchase a tract of land for
subdivision development providing for protection of the rights of the ultimate
buyers of individual lots in case of default by the developer. (See blanket
mortgages)
Recognized capital gains
The recognized capital gain from the sale of an asset subject to income taxes.
(See capital gains, deferred capital gain, excluded capital gain, realized
capital gain)
Reconciliation
1. The final step in an appraisal process, in which the appraiser reconciles the
estimates of value received from the direct sales comparison, cost, and income
approaches to arrive at a final estimate of market value for the subject
property.
2. The balancing of entries in a double-entry accounting system. (See appraisal)
Reconveys
In satisfying a deed of trust, the trustee reconveys full title to the borrower.
Re-conveyance deed
A deed used by a trustee under a deed of trust to return title to the truster.
Recording
The act of entering into the book of public records the written instruments
affecting the title to real property, such as deeds, mortgages, contracts for
sale, options and assignments. There is also a body of public records apart from
the real estate recording system that has a bearing on the quality of title. A
title searcher would also check, for example, public records regarding probate,
marriage, taxes and judgements.
Recreant
1. cowardly or craven.
2. unfaithful, disloyal, or traitorous.
Rectangular (government) survey system
A system established in 1785 by the federal government, providing for surveying
and describing land by reference to principal meridians and base lines.
Redemption
The right of a defaulted property owner to recover his or her property by curing
the default. (See equitable redemption, statutory redemption)
Redemption period
A period of time established by state law during which a property owner has a
right to redeem real estate after a foreclosure or tax sale by paying the sales
price, interest and costs. Note that many states do not have such statutory
redemption periods.
Red flag
A visual sign or indication of a defect. Something that warns a reasonably
observant person of a potential problem, thus requiring further investigation. A
broker who spots uneven floors or water-stained ceilings is on notice to inquire
about soil settlement and roof leakage problems.
Redlining
A practice by some lending institutions that restricts the number of loans or
the loan-to-value ratio in certain areas of a community. A redlining policy may
be so severe that in effect the lending institution prohibits lending any money
in certain areas of the city. The usual justification for redlining is that the
lender wants to limit the risks in an area that is deteriorating. The lender
discriminates against a whole class of risks rather than distinguishing among
individual risks.
Reduction certificate (payoff statement)
The document signed by a lender indicating the amount required to pay a loan
balance in full and satisfy the debt; used in the settlement process to protect
both the seller's and the buyer's interests.
Refinance
To obtain a new loan to pay off an existing loan, or to pay off one loan with
the proceeds from another. Properties are frequently refinanced when interest
rates drop and/or the property has appreciated in value. Sometimes, a buyer will
purchase a property by way of a contract for deed with the expectation of either
selling the property before the balance under the contract for deed becomes due
or refinancing at better terms and interest rates than exist at the time the
agreement of sale is entered into. (See realized capital gains)
Reformation
An action by a court to revise a contract to read as it was intended by the
parties to read rather than as stated.
Reflective coatings
A black tinted window coating. Reflective coatings greatly reduce the
transmission of daylight through clear glass. Commonly used in hot climates in
which solar control is critical.
Regression
An appraisal principle that states that between dissimilar properties the value
of the better-quality property is affected adversely by the presence of the
lesser-quality property. (See appraisal)
Regulation Z
Implements the Truth-in-Lending Act requiring credit institutions to inform
borrowers of the true cost of obtaining credit.
Reinstatement
To bring something back to its prior position, as in restoring a defaulted loan
to current status.
Rejection
Proposing any deviation from the terms of the offer constitutes a rejection of
the original offer and becomes a new offer. (See counteroffer)
Release
Any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the environment of a
hazardous or toxic chemical or extremely hazardous substance.
Release clause
A provision found in many blanket mortgages enabling the mortgagor, upon payment
of a specific sum of money, to obtain a partial release of particular portions
or parcels of the collateral.
Release deed
A document, also known as a deed of reconveyance, that transfers all rights
given a trustee under a deed of trust loan back to the grantor after the loan
has been fully repaid.
Release of liability
The release of an old borrower from further responsibility for repayment of an
assumed loan.
Reliction
An increase of the land by the permanent withdrawal of the ocean or a river.
Relinquished property
The property given up in the exchange.
Remainder
The right of future possession and use that goes to someone other than the
grantor upon termination of a life estate.
Remainder estate
A future interest in real estate created at the time and by the same instrument
of the original estate, but limited its immediate authority upon the termination
of the prior estate. For example, Hoe Phigg owns a property in fee simple and
conveys the property "to Barry Clink and upon Clink's death, to Cora Quibb and
her heirs." Cora Quibb has a remainder estate, which is vested because the
estate automatically passes to Cora Quibb and her heirs upon the death of Barry
Clink.
Remainder interest
The remnant of an estate that has been conveyed to take effect and be enjoyed
after the termination of a prior estate, such as when an owner conveys a life
estate to one party and the remainder to another.
Rent
A fixed, periodic payment made by a tenant of a property to the owner for
possession and use, usually by prior agreement of the parties.
Rental centre
A special leasing office located in an apartment complex. Usually includes a
furnished model and a closing area.
Rental income
The result when vacancies (uncollected rent) is subtracted from gross scheduled
income.
Rental statement
A summary of rental amounts paid and security deposits collected on a property
used for rental purposes.
Rent control
Ordinances that limit the rent a landlord can charge for a property.
Rent factor
A multiplier used to establish the rental rate for industrial properties based
on the owner's desired rate of return.
Rent schedule
A statement of proposed rental rates, determined by the owner or the property
manager or both, and based on a building's estimated expenses, market supply and
demand and the owner's long-range goals for the property.
Rent skimming
In "no down-payment sales" where the buyer of a property collects rents and
deposits on the property without making payments on the loan.
Rent up
A requirement of a lender that a developer lease a stated amount of space in a
building as a prerequisite to a permanent lender "taking out" the interim
lender.
Renunciation
An act or instance of relinquishing, abandoning, repudiating or sacrificing
something, as a right, title, person, etc.
Repair or corrective maintenance
Involves the actual repairs that keep the building's equipment, utilities and
amenities functioning. Repairing a boiler, finding a leaky faucet and mending a
broken air-conditioning unit are acts of corrective maintenance.
Replacement cost
The construction cost at current prices of a property that is not necessarily an
exact duplicate of the subject property but serves the same purpose or function
as the original.
Replacement property
The property acquired in the exchange.
Rescind
To annul, cancel.
Rescission
The legal remedy of cancelling, terminating or annulling a contract and
restoring the parties to their original positions; a return to the status quo.
Contracts may be rescinded due to mistake, fraud or misrepresentation and, there
is no need to show any money damage.
Reserve fund
Monies a lender will often require a borrower to set aside as a cushion of
capital for future payment of items such as taxes, insurance, furniture
replacement and deferred maintenance. Sometimes a reserve fund is referred to as
an impound account or customer's trust fund. Replacement reserves should be
maintained especially when the owner is installing items having a short life
expectancy-for example, appliances, furniture or carpeting in a furnished
apartment.
Reserve funds
An expense category in the operating budget. Monies that are set aside for
replacement expenditures not covered by insurance such as roof or furnace
repairs. (See operating budget)
Reserve requirements
A flat percentage of deposits, required by the Federal Reserve, to be set aside
by member banks as a precaution. (See Federal Reserve)
Residential Purchase Agreement
A model purchase agreement form, initially developed in 1985 by the California
Association of RealtorsŪ in cooperation with the State Bar Association, that
ensures a real estate purchase agreement will be complete and in compliance with
state law.
Resolution Trust Corporation
The organization created by FIRREA to liquidate the assets of failed savings and
loan associations.
Respondent
1. The party who makes an answer to a bill or other proceeding.
2. The party who contends against an appeal.
Restraining order
An order that may issue from filing for an injunction. Though the term is
sometimes used as a synonym of injunction, it is distinguished from an
injunction in that it is intended only as a restraint upon a defendant until the
granting of a temporary or perpetual injunction. (See injunction)
Restricted license
A probationary real estate license granted after a license was revoked,
suspended or denied.
Restrictive covenants
A clause in a deed that limits the way the real estate ownership can be used.
(See covenants, conditions & restrictions, deed restrictions)
Resource Conservation and Recovery Act
Federal law administered by the EPA which regulates the generation, processing
and transportation of hazardous waste.
Retail property
Income-producing property from which various types of retail products are sold.
Retainer
Retainer is a professional relationship between an advisor and a client in which
a client engages the services of a professional through payment of a fee. The
professional's obligation is to provide advice or services as needed by the
client.
Retaining wall
A wall built to hold back or support a bank of earth.
Retaliatory eviction
An eviction due to a tenant's complaints to the landlord, a public agency or
tenant association. It is illegal for a landlord to decrease services, increase
rent or evict the tenant within 180 days of such a complaint. (See eviction)
Retirement communities
Many of them in temperate climates, are often structured as PUDs. They may
provide shopping, recreational opportunities and health care facilities in
addition to residential units.
Retroactive liability
A liability is not limited to the current owner of a property, but includes
people who have previously owned the property. (See liability)
Return on investment
The net annual income divided by the original cash investment equals a
percentage return on investment.
Reverse-annuity mortgage (RAM)
A loan under which the homeowner receives monthly payments based on his or her
accumulated equity rather than a lump sum. The loan must be repaid at a
prearranged date or upon the death of the owner or the sale of the property.
Reversion
The right of future possession and use by the grantor of a life estate. (See
life estate)
Reversionary interest
The remnant of an estate that the grantor holds after granting a life estate to
another person. (See life estate)
Reversionary right
The return of the rights of possession and quiet enjoyment to the lessor at the
expiration of a lease.
Revocation
An offeree may fail to accept the offer before it expires. The offeror may
revoke the offer at any time before receiving the acceptance. This revocation
must be communicated to the offeree by the offeror, either directly or through
the parties' agents.
Right of correlative user
The right of a landowner to the reasonable use of underground percolating water.
(See water rights)
Right of first refusal
The right to the first opportunity to lease or purchase real property. For
example, apartment tenants might retain the right of first refusal when their
units are being converted to condominiums.
Right of prior appropriation
A water rights concept in California and other states that the first user of
riparian water obtains priority over subsequent users. (See water rights)
Right of survivorship
The distinctive characteristics of a joint tenancy (also tenancy by entirety) by
which the surviving joint tenant(s) succeeds to all right, title and interest of
the deceased joint tenant without the need for probate proceedings.
Right-of-way
The right given by one landowner to another to pass over the land, construct a
roadway or use as a pathway, without actually transferring ownership.
Riparian rights
The rights of a landowner whose land borders on a stream or watercourse to use
and enjoy the water which is adjacent to or flows over the owners land provided
such use does not injure other adjacent land owners. Property boundary would be
the centre line of a non-navigable river or the low waterline of a navigable
stream or river. (See littoral rights, water rights)
Risk
The probability of getting your money back. High risk means low probability; low
risk means high probability.
Risk assessment
Qualitative and quantitative evaluation of the risk posed to human health and/or
the environment by the actual or potential presence and/or use of specific
pollutants.
Risk-based financing
When the lender sets loan terms based on potential risk. Borrowers that show
little risk of default would be entitled to a better rate and terms than a
borrower where a higher probability of default is indicated.
Risk management
Evaluation and selection of appropriate property and other Insurance.
Rolled roofing
An asphalt roofing material that is manufactured in rolls with granules on one
side. Asphalt roofing is a relatively inexpensive and short-lived product, and
should not be used as a roofing material over living spaces.
Rollover loan
A loan that includes a call date earlier than its normal amortization period;
also called a renegotiable rate loan or a bullet loan.
Roman Civil Law
Roman private property ownership codes enforced by Spain on early California
land owners. (See civil law)
Roof decking
The under-support material which is typically wood for attaching shingles and
other materials to the roof. (See shingles)
Root of the title
The original grant (or root) of the title.
Routine maintenance
Includes such day-to-day duties as cleaning common areas, performing minor
carpentry and plumbing adjustments and providing regularly scheduled upkeep of
heating, air-conditioning and landscaping.
Rules and regulations
Real estate licensing authority orders that govern licensees' activities; they
usually have the same force and effect as statutory law.
Real Estate Dictionary/Glossary A,
B,
C,
D,
E,
F,
G,
H,
I,
J,
K,
L,
M,
N,
O,
P,
Q,
R,
S,
T,
U,
V,
W,
X,
Y,
Z
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