A naturally occurring gas that is suspected of causing lung cancer.
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.
Rental rates are quoted as "Net" or "Gross". Net rental excludes realty tax and operating costs. Gross rental includes realty tax and operating costs.
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))
The number of dollars required to pay off each $1,000 of a mortgage loan.
rate of return
The percentage relationship between the earnings and the cost of an investment. See "internal rate of return;" "overall rate of return." Example: Nickson deposits $100 in a savings account. At the end of the year, Nickson receives an interest payment of $10. Nickson's "rate of return" is $10%.
rate of return of investment
See recapture rate.
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.
Acreage with no added "improvements," such as landscaping, drainage, streets, utilities, and structures. Example: The developer bought 50 acres of "raw land" upon which to develop a "subdivision."
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.
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 nonfreehold; for all practical purposes, the term real estate is synonymous with real property.
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 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 from degree programs to continuing education, from sales training to GRI (Graduate, REALTORS Institute), from prelicense to graduate studies, from consulting to research to 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 noninstitutional 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 transaction
A term covering the sale of real estate, the negotiation and sale of loans on real estate, and property management. The term is defined in Section 1 of the Real Estate Act.
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. This excludes 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 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
A contract that complies with all of the basic requirements may still be either void or voidable. This is because of the doctrine of reality of consent. A contract must be entered into as the free and voluntary act of each party. 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. If any of these circumstances is present, the contract is 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 defense.
realized capital gain
A member of a national organization generally composed of African-American real estate brokers, known as the National Association of Real Estate Brokers (NAREB).
A licensed salesperson who is a member of the National Association of Realtors®, focusing efforts on the marketing and brokerage of land.
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 Realtors® (NAR). The term realtor® designates a professional who subscribes to associations of realtors® to govern real estate practices of members of the board. The use of the name realtor® and the distinctive seal in advertising is strictly governed by the rules and regulations of the national association.
Realtor's® 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 his or her principal and any third parties.
realty tax and operating costs
- If a net rental rate is quoted, the amount shown for realty tax and operating costs is the estimated amount the tenant will pay during the first year of occupancy, in addition to the basic net rent. As realty tax and operating costs increase during the term of the lease, the tenant will pay its proportionate share of such increases.
- If a gross rental is quoted, the realty tax and operating costs will be expressed either as a base amount or a base year. The tenant will be responsible for paying its proportionate share of any increase in realty tax and operating costs over the base amount or the base year.
Law that prohibits escrow and title insurance companies from giving rebates or favorable treatment as consideration for the referral of business.
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)
In "appraisal," a term used to describe the rate of recovery of an investment in a "wasting asset." This rate is added to the "discount rate" to derive a "capitalization rate" in appraisal terminology. May be based on the straight-line, "sinking fund," or annuity method. Example: A building with a 50-year estimated "useful life" has a 2% straight-line "recapture rate." At a discount rate of 10%, the capitalization rate is 12%.
The process of rewriting existing loans, especially where there is a default. The term and interest rate may be adjusted to take pressure off the borrower.
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.
In appraisal, that time period just prior to the date of valuation over which demand and supply conditions have remained relatively stable.
Mutual agreement to "accept" (such as a state's acceptance) as "valid" the real estate "license" one has earned in another state. Example: In the absence of "reciprocity," Moore must take a new examination to obtain a real estate license in the state to which she moves. With "reciprocity," she needs only to present her previously earned license.
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
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.
A deed used by a trustee under a deed of trust to return title to the truster.
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 judgments.
- Cowardly or craven.
- 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.
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.
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.
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.
To obtain a new loan to pay off an existing loan; 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)
An action by a court to revise a contract to read as it was intended by the parties to read rather than as stated.
This center type provides general merchandise (a large percentage of which is apparel) and services in full depth and variety. Its main attractions are its anchors: traditional, mass merchant, or discount department stores or fashion specialty stores. A typical regional center is usually enclosed with an inward orientation of the stores connected by a common walkway and parking surrounds the outside perimeter.
As a noun, the term refers to the books in which certificates of indefeasible title are entered or kept and, as a verb; the term refers to registering documentation pursuant to the provision of the Land Title Act.
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)
Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.
To bring something back to its prior position, as in restoring a defaulted loan to current status.
The act of investing the funds generated by one investment into another investment.
Proposing any deviation from the terms of the offer constitutes a rejection of the original offer and becomes a new offer. (See counteroffer)
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.
A document, also known as a deed of reconveyance, which 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.
An increase of the land by the permanent withdrawal of the ocean or a river.
A "lease" stipulation that allows the landlord to move the tenant within the building. Example: The landlord of an office building requires "relocation clauses" in all leases for space that does not include an entire floor. When a new client wishes to lease an entire floor, the landlord may relocate tenants in such a way as to provide the desired space.
The right of future possession and use that goes to someone other than the grantor upon termination of a life estate.
A future interest in real estate created at the same time and by the same instrument as another estate, and limited to arise immediately 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.
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.
The right, but not the obligation, of a "tenant" to continue a "lease" at a specified "term" and "rent." Example: Abel leases property from Baker for 20 years at $500 monthly rent. A "renewal option" in the lease gives Abel the right to continue leasing for 5 years beyond the original term.
The average percentage of tenants in a building that are expected to renew at Market Rental Rates upon the expiration of their current lease. This percentage and the corresponding non-renewal percentage are used to estimate leasing-related costs and downtime.
A general term applied to the process of upgrading an existing improvement. Usually, there is an attempt to keep the same general appearance of the building with new materials or to return the building to its original appearance. Example: The city bought several dilapidated homes in the neighborhood. They plan to "renovate" the homes by bringing them up to the current housing code standards. The renovated homes will be sold to city residents.
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.
Ordinances' that limit the rent a landlord can charge for a property.
A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building's estimated expenses, market supply and demand and the owner's long-range goals for the property.
In "no down-payment sales" where the buyer of a property collects rents and deposits on the property without making payments on the loan.
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.
A portion of the term of a lease when no rent is required. It is offered by a landlord as a rental concession to attract tenants. Example: In order to attract tenants to the new office building, the landlord is offering a 3-month "rent-free period" to all tenants who sign a 2-year lease.
The time it takes for newly constructed properties to be fully occupied (from "preleasing", through the "construction" period, to "full occupancy.")
The rentable area includes the usable area plus a pro rata share of common areas on the entire office floor and in the building itself (e.g. main lobby) excluding vertical shafts, such as elevators, stairs, mechanical risers, etc.
rental growth rate
The expected trend in Market Rental Rates over the period of analysis, expressed as an annual percentage increase.
The result when vacancies (uncollected rent) are subtracted from gross scheduled income.
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.
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.
The amount of funds set aside to periodically replace or repair items such as appliances, roof, furnace, painting, etc.
An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the building' economic life. [Appraisal Institute]
The expense that has to be incurred to build an exact replica of the subject property. Contrast to replacement cost.
To annul, cancel.
The legal remedy of canceling, 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; there is no need to show any money damage.
research and development space
One and two story, 10 to I5 foot ceiling heights with up to 5O% office/dry lab space (remainder in wet lab, workshop, storage and other support), with dock-height and floor-height loading.
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, and 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.
A flat percentage of deposits, required by the Federal Reserve, to be set aside by member banks as a precaution. (See Federal Reserve)
This appraisal method is used for properties with redevelopment potential. To employ this method, another appraisal method is used to derive the property's value assuming it were employed in its highest and best use. Then, depending on whether the residual value of the land or the building is to be found, the cost of the building or the market value of the land is subtracted.
Resolution Trust Corporation
The organization created by FIRREA to liquidate the assets of failed savings and loan associations.
- The party who makes an answer to a bill or other proceeding.
- The party who contends against an appeal.
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)
restraint on alienation
A limiting condition on the right to transfer property. If the condition is against public policy or is unreasonable, courts will "void" the condition. Example: The "deed" that Lowell received when she bought property specifies that she may not resell the property to certain ethnic minorities. Since the clause is illegal, she went to court to remove this "restraint on alienation."
A probationary real estate license granted after a license was revoked, suspended or denied.
A limitation placed upon the use of property, contained in the "deed" or other written "instrument" in the "chain of title" or in local "ordinances" pertaining to land use. See "encumbrance." [Examples: The ownership of property is subject to several "restrictions." A deed "covenant" may restrict development alternatives, as may a local "zoning ordinance." "Easements" may restrict use of parts of the property. "Liens" may restrict sales. "Building codes" may restrict construction practices.]
The net income of current and prior periods less dividends paid, belonging to the shareholders of a corporation.
When an agent merely gives a right to expect professional service when requested, but none which is not requested. It binds the person retained not to take a fee from another against his/her retainer, but to do nothing except what he is asked to do, and for this he/she is to be distinctly paid.
A wall built to hold back or support a bank of earth.
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)
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.
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.
revenue per available room
Total room revenue for the period, divided by the average number of available rooms in a hospitality facility.
A generally accepted accounting principle which states that revenue is the value received from the sale of goods and services, interest, rent, and the gain or loss on the sale of assets. According to this principle, revenue is recognized on an accrual basis.
A situation in which financial benefits from ownership accrue at a lower rate than the mortgage interest level. See "leverage." Example: "Net-leased" property is purchased for $100,000 with a $75,000 mortgage at 12% interest and $25,000 of "equity." The net rent is $10,000 per year; interest expense is $9,000 per year. The $1,000 difference ("cash flow") provides a 4% return to the equity owner. In the absence of debt, the owner would receive a 10% return. "Reverse leverage" works against the property owner.
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.
The right of future possession and use by the grantor of a life estate. (See life estate)
reversion capitalization rate
The overall capitalization rate used to determine the Reversion Value.
A lump-sum benefit that an investor receives or expects to receive at the termination of an investment. [Appraisal Institute]
The mathematical factor that indicates the present worth of one dollar to be received in the future. Same as "present value of one." Example: The "reversionary factor" for 30 years at 12% is .03338. The present value of the receipt of land that will be worth $50,000 in 30 years if $1,690 (.03338 x $50,000)
The remnant of an estate that the grantor holds after granting a life estate to another person. (See life estate)
The interest a person has in property upon the termination of the preceding "estate." Example: Abel is the "remainder man" in property that was granted to Baker for life. Abel has a "reversionary interest" in the property.
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
The value of property at the expiration of a certain time period. Example: A "lease" will expire in 30 years. The landlord estimates that the "reversionary value" of the property will be $50,000; that is, the property can be sold in 30 years for $50,000.
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.
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.
One who owns land bounding upon a lake, river, or other body of water. See also "littoral."
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 riparian owners. Riparian owners own to the middle of a non-navigable river if such borders the property line and to the low water mark of a navigable stream or lake. (See littoral rights, water rights)
The likelihood of getting your money back. High risk means less likelihood; low risk means more likelihood.
Evaluation and selection of appropriate property and other Insurance.
Where 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.
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)
root of the title
The original grant (or root) of the title.
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.
rule of 72's
An approximation of the time it takes for money to double when earning "compound interest." Divide the percentage rate into 72 to derive the number of years to double the "principal." Example: A $1,000 "certificate of deposit" pays a 9% interest rate with annual compounding. In about 8 years, the balance will be $2,000 72 divided by 9% = 8).
rules and regulations
Real estate licensing authority orders that govern licensees' activities; they usually have the same force and effect as statutory law.
run with the land
A phrase describing rights or covenants that bind or benefit successive owners of a property. An example is a restrictive building covenant in a recorded deed that would affect all future owners of the property. Unlike an easement in gross, an easement appurtenant runs with the land and thus passes to a succeeding owner even if it is not specified in the deed.
Pertaining to the area outside the larger and moderate-sized cities and surrounding population concentrations. Generally characterized by farms, ranches, small towns and unpopulated regions. Compare with "suburb." Example: Garrison grew up on a farm in a "rural" area of Indiana. She later moved to Chicago and lived in a suburban town nearby. Garrison invested in "rural" land, hoping to be able to return at retirement.