[R]

R-1 zone  A residential zone created by ordinance that allows only single family dwellings with a specified density ratio in a designated area or zone.

R-2 zone  A residential zone created by ordinance that allows duplexes and a commensurately higher density ratio than in R-1 zones.

R-3 zone  A residential zone created by ordinance that allows multifamily dwellings (apartments) and a commensurately higher density than R-1 or R-2 zoning codes.

R & D  Capital expended by a firm for research and development of future business possibilities.

RA  syn  residential appraiser  A residential appraiser, member of the Society of Real Estate Appraisers.

racial steering  An unethical and illegal practice by agents who "steer" house-hunters toward neighborhoods where people of their race are already living.

ranchette  A residential land from one to six acres in size.  Sometimes called horse property.

ranchownership  See condominium.

rate of return on equity, (ROE)  In investment analysis, a measure of return calculated as follows:    cash flow before tax  (divided by) equity investment = ROE.  The ROE measures the return on actual invested dollars, taking into consideration the drain on net operating income by the debt service.

rate of return on investment,  (ROI)  A calculation in investment analysis that expresses income as a percentage of capital.  There are several specific varieties in general use, such as the internal rate of return, called IRR, and the rate of return on equity capital, called ROE.  Refer to internal rate of return and rate of return on equity.

rate of return on total capital,  (ROR)   In investment analysis, a measure of return, calculated as follows:    net operating income (divided by) total capital invested = ROR.   It is sometimes called the free and clear return because it ignores whether the capital was financed.  That is, the ROR assumes that the investor has an equity equal to the market value of the property.  The rate of return on equity, on the other hand, takes into consideration the reality that financing exists on most projects.

raw land  Acreage that is not presently suitable for a profitable use.  It is unimproved land that may be used for grazing pending future development into some higher use.  Speculators often purchase raw land hoping for a large profit later.  Raw land almost always must be fed money, which causes a negative cash flow.  Depreciation is not allowable with respect to raw land.

ready, willing, and able buyer  A prospective buyer of real estate who is financially capable of and willing to purchase a parcel of real estate on the terms set forth in the listing agreement or on terms acceptable to the seller.  Once an agent has produced a ready, willing, and able buyer at the listing price, his commission is earned, even though the seller may elect not to sell.

real estate  syn  realty  Land and everything appurtenant to land, such as buildings and improvements.

real estate agent  A person licensed by the state to negotiate the selling of real property while being contractually bound to and under the supervision of a licensed real estate broker.

real estate broker  A person licensed by the state to act as an agent for real estate sellers and buyers in the negotiation, solicitation, and sale of real property.  Corporations may also be licensed to serve as real estate brokers.  Licensed sales agents are employed by real estate brokers.

real estate deal  A transaction involving real estate.  Such a transaction is often described as a "good" or a "bad" deal, a characterization that may not become evident until some time following close of escrow once all of its wrinkles have shaken out.

real estate investment trust,  (REIT)  A business organization that pools money from many participants to invest in large real estate transactions.  Profits are returned as dividends to the investors.  REITs appeal to investors who do not have a lot of money to invest, but desire to invest in large commercial real estate projects.  They are best considered as a long-term investment.  A typical life cycle is:  start-up phase, one to three years; operational phase, four to five years; and liquidation phase, three to six years.  Thus, a REIT may require investment of ten to fifteen years to maximize its return to investors.  Some REITs pool their capital to finance construction or to make permanent loans.  Shares in REITs are liquid in that many are actively traded on security exchanges or over-the-counter markets.  A single share may cost as little as $4 to $5, which attracts investors who otherwise probably could not invest in real estate.  Unlike a corporation, a REIT does not pay federal income taxes on its earnings.  A REIT that invests primarily in mortgages is called a real estate mortgage trust, or REMT.  During the l990s there has been little capital available from banks, savings and loans, pension funds and other institutional lenders.  This absence of capital has fueled a resurgence in REITs which have become major players in real estate finance once again.

real estate law  Division 4 of the California Business and Professions Code, which governs the business of real estate licensing and brokerage practices.

real estate limited partnership,  (RELP)  A limited partnership that invests in real estate, usually commercial or multifamily.  Investors can lose only the amount of their investment, in most cases, and can obtain a tax shelter as well as income and capital gains.  The investors are limited partners, and usually maintain a passive role in the management of the project.  The tax benefits can be allocated in various ways.  For example, class A partners may own the land, and class B partners may own the building and lease the land.  In this way income on the land is separated from tax shelter on the building.  Appreciation and tax shelter are the most desirable features possible through investment in a RELP.  The disadvantages include a possible difficulty in selling interests in RELPs, especially if bad management leads to a lack of profits or even a negative cash flows.   Control of a RELP is vested in its general partner, often a corporation.  Insiders who control the general partner often have been guilty of misusing the OPM that is the capital of the RELP.

real estate mortgage trust,  (REMT)  Financial enterprises similar to real estate investment trusts, except they invest in mortgages rather than real property.

real estate owned,  (REO)  Institutional lenders, such as banks and savings and loan associations, sometimes receive title to properties that secure loans that are in default, following foreclosure sales.  These lenders typically offer these reclaimed properties, called REOs, for sale.

Real Estate Securities and Syndication Institute (RESSI)  An organization affiliated with the National Association of Realtors.  It is composed of professionals involved in syndications.

Real Estate Settlement Procedures Act,  (RESPA)  A federal law requiring parties to residential real estate transactions be provided with an accounting of all settlement charges and credits.  The purpose is to avoid misunderstandings by home buyers about closing costs.

real mortgage  syn  mortgage  and  deed of trust   See mortgage and deed of trust.

real property  The legal rights involved in the ownership, use, and possession of real estate.  Land and real property are not technically synonymous, though many persons use them interchangeably.  Real property technically includes legal rights to subsurface, surface, airspace, and improvements, as well as the land.  Real property is divided into estates:  fee-simple estates, leasehold estates, and life estates.

real property securities dealer  A licensee who may guarantee and service mortgage loans.  A guarantee of a mortgage loan makes it readily salable.  Servicing a loan means collecting its payments and doing the necessary accounting.  Large companies provide servicing of mortgages owned by investors for a servicing fee.

realtist  A member of the National Association of Real Estate Brokers.

realtor  A member of the National Association of Realtors.

realtor associate  A licensed salesperson who is a member of the National Association of Realtors.

Realtors National Marketing Institute, (RMNI)  An affiliate of the National Association of Realtors.

realty  syn  real estate  See real estate.

reasonable attorneys fees  A fiction, from the standpoint of the payer; never enough from the view of the payee!  Actually, it is an amount set by the court to compensate the prevailing party in a civil case for legal fees.  Usually no such recovery is allowed unless the parties have agreed in writing.  A client may owe his attorney more fees than the "reasonable" attorney's fees recovered from the loser.  Although not recoverable from the loser, such a fee must be paid to the attorney by the winner.  Most listing agreements and purchase agreements contain a clause that the prevailing party shall also be entitled to recover reasonable attorney fees.

recon  syn  reconveyance  and deed of reconveyance  See reconveyance.

reconveyance  syn  recon  and  deed of reconveyance   The transfer of the legal title to real estate from a trustee to the debtor (called trustor) once the mortgage debt is completely paid off.   It is comparable to "burning the mortgage."  Technically, a recon is a variety of deed, that is, it is a deed of reconveyance.  In the absence of a recon, the official records of the county would not reveal the extinguishment of the mortgage debt.

recourse loan   syn  hard money loan  A loan that allows a deficiency judgment following a judicial foreclosure sale.  The term “hard money” also is used to describe recourse loans, as well as loans for cash, as distinguished from seller’s carryback financing which are referred to as “soft money.”  Depending upon state laws, recourse paper includes refinance, construction, and improvement (development) loans.  Purchase-money loans are non-recourse loans.

recordation  The filing of a document that pertains to real property with the recorder of the county in which the real estate is located.  The filing process involves scrutiny of the document tendered for recordation to ensure that it is recordable.  Then, it is time and date stamped, which will permanently fix its priority.  Transfer tax stamps are affixed on recordation.  The document then will be filed, through a microfiche or other system.  The original document then will be returned to the proper party.  There are two major types of index systems in use, the tract system and the grantor/grantee index system.  The tract system utilizes maps while the grantor/grantee index utilizes alphabetical listings of grantors and grantees.

red herring  A proposed contract term that is not critical but is offered for the purpose of distracting the other party.

red ribbon deal  A transaction involving the sale of an income producing structure that is in perfect condition.  See also pride of ownership.

red tape  All the rules and regulations, forms, procedures, and paperwork involved in processing a request through government channels.  Red is the traditional color of loss; black is the traditional color of profit.

redlining  The practice of denying or restricting loans for properties in certain neighborhoods.  This activity is illegal if it is practiced against a minority group or is discriminatory in an arbitrary manner.  The term relates to the practice of outlining neighborhoods on a map with a red crayon where loans will not be made.

reference rate  A bank term used as a substitute for the term prime rate.  Confusion and litigation has haunted certain loans calling for interest a point or two over the "prime rate."  Since "prime" borrowers pay different rates, it can be unclear as to what precisely is the "prime rate."  The reference rate, being independent of actual interest rates, avoids that confusion.

refinance loan  A loan, secured by mortgage, the proceeds of which are used primarily to pay off, or retire, an existing mortgage loan.  Refinancing occurs when interest rates drop, tempting homeowners to pay off existing high-interest rate loans with new, low-interest rate loans.
 
refinancing  Replacing an existing mortgage loan with another loan.  The new mortgage is used to repay the first mortgage, and to pay for any repairs, and so on.  The purpose of refinancing is to get a more favorable loan (in terms of lower interest rate, lower monthly payment, larger amount, or longer maturity) than the original mortgage loan.

regional mall  A shopping center, often enclosed, characterized by 3 to 7 department stores, and 50 to 100+ mall shops.  Site may be from 40 to 200+ acres.

regional shopping center  A retail center designed to serve a region, as opposed to a neighborhood.  Regional centers often have a number of major department store tenants, satellites and an enclosed mall.

regulation Z  A part of the federal Consumer Credit Protection Act that requires full disclosure of credit terms to consumers, including calculation of the annualized percentage rate, (APR).

rehab  syn  rehabilitation  See rehabilitation.

rehabbing  The business of rehabilitating property.
 
rehabilitation  syn  rehab  The substantial upgrading or improvement of property generally as part of an area wide program designed to arrest the progressive deterioration of the neighborhood.  Rehabilitation does not involve a basic change of structure, rather it involves restoring the property to its original condition by respecting the original architectural elements of the building and retaining them whenever possible.  Thus, it is also referred to as reconditioning.  Special mortgage insurance provisions are available under the Federal Housing Authority to encourage rehabilitation.  The term is applied both to residential and nonresidential property.

reinstatement  The curing of a default by a borrower.  A mortgage loan may be restored to current status by paying all past-due amounts.  Reinstatement is a right that cannot be defeated by an acceleration clause that purports to require payment in full on default.  But the right of reinstatement is cut off by the non-judicial foreclosure sale.

reinstatement period  A period of time during which a defaulting debtor may cure his default and thereby reinstate the original terms of the loan.  In non-judicial foreclosure, the reinstatement period is cut off shortly before the publicized foreclosure sale.  In judicial foreclosure proceedings, the reinstatement period ends with the entry of judgment by the court, but is followed by a redemption period.

REIT  syn  real estate investment trust  See real estate investment trust.

release clause  A contractual provision (clause) usually contained in or incorporated by a deed of trust or mortgage that permits portions of the collateral to be released free and clear of the lien.  A release clause is typically used when a purchaser of unimproved land intends to develop and resell it in increments.  The release clause permits the "escape" of an increment, or parcel, of undeveloped property from the lien of a blanket deed of trust in exchange for the payment of an agreed-on portion of the unpaid principal.
 Example:  The seller takes back a purchase-money note secured by a blanket deed of trust securing ninety percent of the purchase price.  The buyer subdivides the parcel into twenty-five lots held for sale.  The buyer/subdivider now obtains release of one lot in exchange for payment of four percent of the original purchase price of the land plus proportionate accrued interest.  The release money is generated from the sale of the lot.  (Notice that the entire purchase price of the land will be repaid by the sale of the twenty-third lot.)
 A release is obtained from the trustee who then records a deed of partial reconveyance.  A release clause will not be enforced by the courts if it is ambiguous or uncertain or unfair to the creditor in its application.  Release agreements should not be capable of releasing the most valuable portions of the collateral for a pro-rata portion of the unpaid principal.  Release clauses are frequently drafted on a lot-release basis, or acreage basis, with reference to access, utility connections, and continuity of unreleased portions.
 A release clause will often be used with a subordination agreement in order to enable the developer/purchaser to finance the lots "off the land."  Alternatively, "land-busting" subdividers who do not manufacture lots, but who create "paper-lots," and who thereby do not require interim financing, may use a release clause with a collateral assignment agreement where the consideration for a release is the assignment to the seller of a note secured by a first deed of trust from the buyer of the lot.
 An increased price is the typical incentive for the seller to permit a portion of the collateral to "escape" through a release, subordination, or collateral assignment deal.

RELP  syn  real estate limited partnership  See real estate limited partnership.

remainderman  The owner of a future interest in real property.  Most typically, a life estate will be created (by Will or grant deed, for example) with remainder earmarked for a specific person, called a remainderman.  The remainderman’s future interest blossoms into full fee ownership upon death of the life tenant.

REMT  syn  real estate mortgage trust  See real estate mortgage trust.

renegotiate  Negotiate for a substitute contract, or new terms within an existing contract.

renewable loan  A short-term loan, sometimes of three months, which is intended to be renewed for another three months following its due date.  The lender is not obligated to renew, but the parties to the loan anticipate that renewal will be made unless circumstances have changed.

renovation  Renovation, although similar to rehabilitation, usually requires  a greater proportion of new materials.  See also rehabilitation.

rent  The payment by an occupant, called a tenant, to an owner, called a landlord, as compensation for the use, possession, and enjoyment of premises.  Commercial and residential tenants alike pay rent.  Rent is the primary income from income-producing property.  All income from investment property is not rent, however.  For example, in addition to rent, an income property may produce income from vending machines, parking, laundry, machines, and so forth.

rent-a-broker  A practice where a licensed real estate broker "rents" his license to a corporation or sales organization that lacks and needs a license to operate.  The practice is improper because the broker who rents the license out usually does not provide the necessary supervision of salespersons and may be in violation of state licensing laws.

rental agreement  A term, often used to describe a tenancy for years, or month-to-month tenancy, instead of the formally correct term “lease”.

rental apartment  One unit in a multi-unit residential structure that is available to be rented.  City apartments that are owned by their occupants are technically condominiums.

rental value  The estimated amount of rent that could be obtained for the use and occupancy of a property.

rent concession  A monetary benefit offered by a landlord to prospective tenants as an inducement to lease his property.  Rent concessions in a soft market often take the form of one month's free rent.

rent control  Governmental regulation of how much rent a landlord may charge for the possession and use of rental premises.  Rent control has not occurred with respect to commercial properties.

rent skimming  Collecting rents, usually from tenants in a commercial building, while defaulting on the mortgage.  Because landlords may be able to remain in possession, collecting rent pending foreclosure, an opportunity exists to simply collect rent and withhold payment of bills, to the detriment of the lender.  This practice is illegal, can be restrained by a judge, and is a misdemeanor if done wilfully.

renters insurance  Insurance for residential tenants.  It covers losses from theft, storm, or fire.  Renters insurance generally comes in two varieties, covering actual cash value depreciated at the time of loss or replacement cost (the actual cost to replace).

rent guarantee  A seller's guarantee to provide an agreed on income stream to a purchaser for a given period of time.  Rent guarantees typically are used when space is vacant and/or tenants are scarce, and the purchaser doubts the quality of the income on which the purchase price is predicated.  A rent guarantee may take the form of a leaseback of vacant space.

rent-up period  The period of time following completion that it takes a structure to be fully rented.

REO  syn  real estate owned  Lenders carry such real estate following foreclosure, until a worthwhile disposition of the property can be made.

repair and deduct  A statutory remedy in some states for tenants of residential dwellings.  Upon failure of a landlord to maintain the premises in a livable condition, the tenant may give notice of the problem to the landlord, wait a reasonable amount of time, and then, if the landlord has continued to allow the problem to exist, spend up to one month's rent to remedy the problem.  The amount so expended can be deducted from the payment of the next month's rent.  Hence the phrase repair and deduct.  Because repair and deduct is a statutory remedy, it differs from state to state and does not exist in some states.

repo  Repossessed real estate.  A repossession may occur voluntarily as when a debtor gives a deed in lieu of foreclosure, or it may occur by foreclosure.

reproduction cost  The cost at the date of appraisal of constructing a replica of an existing building.
request for admission of facts  A request submitted to counsel by the opposing attorney before trial for the acknowledgment of facts that are not in dispute and yet are relevant and material.  This is a type of discovery procedure.

request for notice of default  A formal request to be notified if any lienholder records a notice of default of mortgage or deed of trust payments.  The purpose of a request for notice is to be informed of the possibility of a foreclosure sale before it occurs.  Junior lienholders need such notice to have time to protect the security of their liens.  A request for notice is recorded in the official records of the county, and often is included in printed forms of mortgages and deeds of trust.

residence  A dwelling.

resident manager  An individual who is employed by an apartment owner or management agent to perform necessary on-site management functions.  The resident manager lives on the premises.  State laws often require a resident manager for apartment projects of a certain size.

RA  syn  residential appraiser  See residential appraiser.

residential land lease  A sale of a residence in which the seller retains the title to the land and simultaneously leases it to the buyer.  The purpose is to reduce the down payment otherwise required to make the deal workable.  Furthermore, lease payments on the land are usually less than the amount of the mortgage principal and interest allocable to the land.

residential member, (RM)  See RM.

residential property  Property that is designated for development into dwellings, either single family, or varieties of multifamily.

residential zone  A type of zoning that generally authorizes the development of residential uses, such as single-family or multi-family housing.  Residential zones are usually classified into single-family structures, duplex and multi-family buildings.

Resolution Trust Corporation, (RTC)  A corporation created by Congress to salvage Savings and Loan and thrift institutions from insolvencies that resulted from excessive lending practices during the 1980s.  The RTC takes over troubled institutions, and auctions of its real estate holdings to raise money with which to reimburse depositors.

RESPA  syn  Real Estate Settlement Procedures Act  See Real Estate Settlement Procedures Act.

RESSI  syn  Real Estate Securities and Syndication Institute  See Real Estate Securities and Syndication Institute.

restoration  The repair or re-creation of a building to its original architectural appearance.
restructure of debt  An agreed on change in the terms of repayment of existing mortgage debt.  Unlike a refinancing, which substitutes a new loan for the old one, a restructuring of debt refers to a change in terms, for example, in the interest rate or in the length of time for repayment.  A troubled project is a likely candidate for a restructuring indebtedness.

resyndication  A syndication formed to purchase the assets of a prior syndication.

retaliatory eviction  The eviction of a tenant by a landlord primarily for revenge.  The revenge may be related to complaints by the tenant regarding unsafe or unsanitary conditions on the property.  The action is statutory and usually authorizes the award of punitive damages.

return on investment,  (ROI)  See rate of return on investment.

revamp rate  A specially low premium rate for title insurance policies issued when a mortgage is refinanced with the same lender within a short period of time.  The justification for the lower premium is that the transaction is more of a revision, or revamp, than a new transaction.

revenue bond  Any bond that is repaid with income from an improvement that was created with proceeds from the bond.  Landowners may pay assessments for improvements to land, such as sewer trunk lines, which are collected and then paid to the bondholders who initially financed the construction of the improvement.  Payments to holders of revenue bonds are exempt from federal tax and from state taxes of resident bondholders.

reverse annuity mortgage  A mortgage designed to produce an annuity, or stream of monthly payments, to a homeowner with a large equity in his home.  The lender makes monthly payments, each of which is added to the unpaid balance of an ever-increasing loan, to the homeowner who uses the money for normal living expenses.  Such payments allow an elder homeowner to effectively live off his equity.  The loan is not due until the homeowner dies or sells.  A "shared appreciation loan for seniors" is a variation of a reverse annuity mortgage in which the lender, in addition to interest, ultimately receives a share of any appreciation in the property.

reverse paper  A carryback mortgage the terms of which create negative amortization, as when interest accrues at a faster rate than it is paid.
 
right of first refusal  syn  preemption agreement  The right to purchase an interest in real property if its owner decides to sell.  Unlike an option, the holder of a right of first refusal does not have the unqualified choice to buy or not to buy.  A right of first refusal gives the holder the right to match any offer received by the seller from some other prospective buyer.  The price and terms offered by the holder of the right of first refusal must equal or better the price and terms contained in a bona fide third party offer.  A right of first refusal, often found in leases or limited partnership agreements, serves to preempt a possible sale to a third party, and hence may be called a preemption agreement.

right of reinstatement  The right of a defaulting debtor to redeem the loan by bringing current all past monthly payments and late charges, even though the note and mortgage declare that the entire unpaid balance is immediately due in full upon any default.

right-of-way  The right of the public or a private party to travel across a landowner’s property.  Roads are public rights-of-way.  Easements are private rights-of-way.

ringer  A friend or relative of a prospective buyer who lends the use of his real estate license for the purpose of sharing in the listing agent's commission.  This practice is in violation of the Real Estate Law.

RM  syn   Residential Member.  The designation RM is awarded by the American Institute of Real Estate Appraisers.

RNMI  syn  Realtors National Marketing Institute  See Realtors National Marketing Institute.

ROE  syn  rate of return on equity  See rate of return on equity.

ROI  syn  rate of return on investment  See rate of return on investment.

rolling options A series of options held by a single optionee that are exercised as contiguous parcels are required for successive phases of development.  Rolling options are one method by which large developers can avoid inventorying large parcels when future demand for product is uncertain.

rollover mortgage  A mortgage with an early due date, say 5 years, at which time the borrower has the right to “roll over” (renew) the loan at the then-current interest rate.

rollover of principal residence  The purchase of a replacement principal residence within the time following sale of a home, and under the conditions prescribed by the IRS that permit the seller to defer payment of capital gains taxes.  Sometimes the phrase may be used in a commercial context, as when “I rolled over the apartment project into an office building.”

ROR  syn  rate of return on total capital  See rate of return on total capital.

row houses  A grouping of similarly shaped homes with the same frontage.  They may have common sidewalls or little space between separate sidewalls.

royalty  Money paid to a landowner in exchange for the extraction of minerals from his land pursuant to an oil and gas or other mineral lease.

RTC  syn  Resolution Trust Corporation  See Resolution Trust Corporation.

runs with the land  Benefits to parcels such as the benefit of CC&Rs, that “runs” with the land following its sale.  New owners can enforce CC&Rs that run with the land.
rural  Of or pertaining to the countryside.