Oscar Castillo
"Residential" Real Estate

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    - Glossary

 

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Radon gas  - is continually released by uranium-bearing rocks and soil as the uranium undergoes natural radioactive decay.  The gas moves through the soil freely because it is chemically non-reactive and does not combine with other materials.  When the radon gas reaches the outdoor air, it is quickly diluted to low concentrations.  However, radon can accumulate under the slabs and foundations of buildings and can easily enter through cracks and openings, sometimes causing high indoor concentrations.  Radon decays/breaksdown into other radioactive elements (small bursts of energy which are solid particles)--often referred to as radon decay products or radon "progeny" (born from and usually air-borne).  When radon progeny are inhaled, they can lodge in the lungs and deliver radiation doses to sensitive lung tissue as the progeny continue to decay.  This can damage lung tissue and lead to lung cancer over the course of your lifetime.

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).

Range    a measure of the difference between the highest and lowest price  (the High and Low.points are called variates)

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.

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 nonfreehold; for all practical purposes, the term real estate is synonymous with real property. Also looked as  Land and everything permanently attached to the home or building.   Sometimes used interchangeably with the terms real property and realty.

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    (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   is a business in which real estate license-related activities are performed under the authority of a real estate broker.

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 practicing real estate broker in California for five years or otherwise engaged in real estate activity for five of the past ten years.

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

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 owned (REO)   a term used by lenders to refer to properties acquired by banks/lenders through foreclosure and reverted to the beneficiary institution because it was not able to be sold at an acceptable price at a trustee auction ( it is  held as inventory) then put out in the market to sell.

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.

REALTORS® 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.

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.

REALTOR®    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.

Realized capital gain   when a property is sold, a capital gain or loss is realized.

Rebate law   the 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 income to remain as a tenant. (found in retail leases)

Recapture rate   a periodic allowance for the recovery of investment capital from the property's income stream.

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 parites agree, they may rescind a contract in a process called recission.

Reclamation   The right to reclaim property in the event of non-payment, fraud or other irregularities. Reclamation generally refers to the right to demand a repayment.  It may also refer to the right of the seller to reclaim the property and assume ownership if the buyer does not pay or fails to meet the terms of the purchase agreement.

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.

Recognized capital gains   the recognized capital gain from the sale of an asset subject to income taxes

Reconciled Value   a home/property value check Asset Managers order. This includes a review of the last appraisal with a current broker price opinion (BPO) from the agent (must be less than 30 days old) in order to update a current market value for the property. Once received, this value is good for up to 90 days and supersedes the original appraisal for marketing purposes.

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.

Reconveys   in satisfying a deed of trust, the trustee reconveys full title to the borrower.

Reconveyance 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.

Recourse loan    A type of loan that allows a lender to seek financial damages if the borrower fails to pay the liability, and if the value of the underlying asset is not enough to cover it. A recourse loan allows the lender to go after the debtor's assets that were not used as loan collateral in case of default....Recourse loans give lenders a higher degree of power because they have fewer limits on what assets lenders can go after for loan repayment. For example, suppose that a homeowner takes out a recourse loan for $500,000 to purchase a home and then goes into foreclosure when the local housing market declines. If the value of the home is now only $400,000 and it was purchased with a recourse loan, the lending institution can target the borrower's other assets in order to make up for the outstanding $100,000.

Redeem    literally "to buy back." The act of buying back lands after a mortgage foreclosure, tax foreclosure, or other execution sale

Redemption   the right of a defaulted property owner to recover his or her property by curing the default.

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.

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.

Regulation Z   implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.

REIT    Real Estate Investment Trust. A product of federal tax legislation formed as a business trust, under a special state REIT statute or as a corporation for the purpose of investing in real estate or mortgages on real estate.

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 one can counter with a new offer.(counter offer)

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, lake  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, Joe Smith owns a property in fee simple and conveys the property "to Barry Carson and upon Carson's death, it wil go to Cora Drexler and her heirs." It is now said to be that Cora Drexler has a remainder estate, which is vested because the estate automatically passes to Cora Drexler and her heirs upon the death of Barry Carson.

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 center   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   is an act where the contracted owner 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.

REO Sale  stands for Real Estate Owned and is most often understood to be a bank owned home, or a home owned by the government, such as a HUD home (FHA) or a GSE (Government Sponsored Enterprise) like Freddie Mac or Fannie Mae.  REO-(type of sale) as the lien holder has acquired the property through foreclosure or the result of a Trustee Sale. These types of sales often involve a third party “asset manager” that services and works toward liquidating the asset/property on behalf of the public or private owner. Typically these types of sales are often significantly discounted to allow them to be sold quickly (30 days or less) and in their present as-is condition

REO (Vampire REO's) - are bank-owned homes that are still occupied by the previous homeowner who have been foreclosed on. On the surface these properties often will look like normal "non-distressed" homes, but beneath the surface they represent a "shadow inventory" - which is inventory that has not been exposed to the market place yet (ie: not listed).  This type of shadow inventory (Vampire REO's) does remain and is sitting "out there".  Yes, it can be viewed upon as being intentionally hidden from the market.  What will motivate banks/lenders to sell them is a rise home prices (ie: enough/higher value) in order to try to recoup/minimize their losses from these bad loans.

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.

Representation Agreement   a mutual contractual agreement between the agency and the client committing services and fiduciary duties to the client.

Request For Approval of Short Sale (RASS)   a letter supplied by the servicer and issued to the homeowner that illustrates guidelines applying to the HAFA program.

Rescind   To annul, cancel.

Rescission    the legal remedy or act 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 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, 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.

Reserve requirements   a flat percentage of deposits, required by the Federal Reserve, to be set aside by member banks as a precaution.

Residential Purchase Agreement   a model purchase agreement form, initially developed in 1985 by the California Association of Realtors® 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    an organization created to liquidate the assets of the failed savings and loan associations.

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.

Retail property   income-producing property from which various types of retail products are sold.

Retainer   when there 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.

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.

Return on investment ROI)  a  performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. Calculated using 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.

Reverse Mortgage  - is designed to help seniors access the equity in their home and so that they have more available cash. The reverse mortgage is a product that is only available to homeowners who are over 62 years old; it is essentially a loan taken against the equity a borrower has in his or her home. The loan amount can be paid to the homeowners as a lump sum, or borrowers can access the cash as a line of credit.
Note: The amount of the total loan is recorded as a lien for that amount against the property, even if the total amount of that loan has not been disbursed. For example, a reverse mortgage for $100,000 may be disbursed as a $50,000 lump sum, with the remaining $50,000 available as a line of credit. The $100,000 would be the recorded lien.

Reverse Osmosis (RO) - is a technology that is used to remove a large majority of contaminants and/or impurities from water. This is done by the water pressure pushing household tap water through a semi-permeable membrane (acts like a filter). Its filtration purpose is to remove impurities such as Fluorides, Lead, Chlorine, Chloramine, Nitrates, Sulfates, plus others from "tap water".

Reversion   the right of future possession and use by the grantor of a life estate.

Reversionary interest   the remnant of an estate that the grantor holds after granting a life estate to another person.

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.

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.

Right of redemption    Only a handful of states allow a borrower to redeem a property once it has been foreclosed upon. This is the right that allows a borrower a specified time to come up with all missed mortgage payments, interest, late fees and court costs to redeem ownership. This period will range from 10 – 365 days depending on the state. Yet, don’t let this “right” fool you as a borrower, there are plenty of loopholes that allow lenders to cancel or extinguish the right to redeem a home. Each foreclosure (and the circumstances surrounding it) is different, thus regardless of state law, once a foreclosure has occurred; the chances of redeeming a property are slim to none.

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 center line of a non-navigable river or the low waterline of a navigable stream or river.

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.

Robo signing   In the foreclosure industry, robo-signing is the practice of a bank employee signing thousands of foreclosure documents and affidavits without verifying the information contained in the document or affidavit. Some reports have revealed that one bank official performed the “Herculean” task of signing off on almost 10,000 documents in one month. This practice by lending institutions called into question the validity of thousands of mortgage foreclosures across the country. Major culprits were Bank of America, Chase, Wells Fargo and Ally/GMAC.  State attorneys  plan on launched a probe into mortgage-servicing practices and may hold them accountable where and if there were violations of state foreclosure laws.

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.

Roof decking   the under-support material which is typically wood for attaching shingles and other roofing materials to the roof.

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.

Rumford Act   California's fair housing law. (refer to Fair Employment & Housing Act)

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.

 

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