Real Estate Glossary R [Part 1]

Terms Beginning With - R

Property Development & Investment Glossary, Terms & Definitions

R factor or value

Resistance to heat flow in a given material. R13 batt insulation is typically used for new home walls, and R30 batt insulation is typically used for ceilings.


Temperature resistance of a substance or its ability to keep heat from passing through it.

A special rating or way to figure out how well some types of insulation insulate. The Federal Trade Commission requires that sellers of new homes include certain insulation information in their sales contracts, such as the type, thickness, and R-value of the insulation.


Room only.

R2 statistic

A measure of how well a regression model fits the data is the coefficient of multiple determination.


In the corner of a board or plank, a rectangular longitudinal groove is cut.

Rack rate

The publicized or highest room rate charged in a hotel.

Rack rent

The rent that a property is worth on the open market to rent by the year, or what a tenant could be expected to pay if they rented it for a year and then rented it again for another year, with the tenant paying rates and taxes and the landlord doing repairs.

Radiant heating

Forced hot water heating is a common heating method that uses pipes installed in the floor, wall, or ceiling to provide hot water.


Wetlands are connected with inland locations that do not rely on stream, lake, or sea water.

A heat source radiates energy into the surrounding atmosphere.

Radial Axial development

Theoretical urban development is based on the assumption that companies concentrate along main arterial roadways, resulting in a radial or axial pattern of expansion outward from the central business area.


Property Finance Made Easy

We specialise in Development funding | Commercial finance | Construction loans | Portfolio refinancing & Property investment loans in Australia.


Click Here to strategise with Amber


In most sections of the nation, a naturally occurring radioactive gas may be found in the soil. The gas may cause or contribute to cancer at high amounts.

A naturally occurring, odourless gas that is made when radioactive minerals in the ground break down. It can be found in buildings in every state and territory. Radon is a carcinogen that has been linked to deaths from lung cancer. The amount of radiation in the air indoors is measured in picocuries per litre (pCi/L). The EPA says that a level of 4 should be taken. In most states, brokers have to say if radon problems are known and if mitigation systems are present.

During a real estate deal, a 48-hour test may be used. For mitigation, cracks need to be sealed and a PVC pipe needs to be put into the ground and out of the building through the highest level. A small fan pulls air and radon from the ground through the pipe and into the air outside, where the radon breaks down.


One of a series of sloped beams that go from the outside wall to the centre ridgeboard and hold up the roof.

Rainfall Intensity

The amount of rain that falls on the ground in inches or millimetres per hour or minute.


  1. An area of open land for cattle to graze.

  2. A group of hills.

Range line

A characteristic of the government’s rectangular survey that divides townships into east and west halves.

In the government survey system, a strip of land six miles wide running north-south is employed as a measurement.

Range of value

Most of the time, the market value of a property is given as a range between a low and a high number. As a first step in working with an owner to figure out an appropriate listing price, licensees often give an estimate of a range of values.

Rate lock agreement

A non-refundable deposit paid by a loan applicant to safeguard against an interest rate rise before the loan is concluded.

Rate of return

The relationship (expressed as a percentage) between a company’s annual net income and its invested capital (or appraised value or gross income). The rate of return is the percentage yield to the investor based on the income generated by the property.

The return on an investment is expressed as a percentage.

Rateable value

the estimated worth of a property used to calculate rates

Rated Securities

Securities with an issuer credit rating assigned by a rating agency.


Adoption or affirmation of an act already done on behalf of someone else without their permission. A principal’s activities, according to agency law, can approve an agent’s previously unauthorized actions. Anyone who has reached the legal age of majority may ratify a contract they entered into while still a juvenile.

Rating Agency

An organization that reviews investments and their underlying collateral and assigns a rating to the notes based on their standards. The ratings range from AAA (the highest) to CCC (the lowest).

Rational Method

A technique of calculating the discharge from a small drainage basin in response to a given rainfall total; the calculation is based on the coefficient of runoff, rainfall intensity, and basin area.

Raw land

Land that is devoid of any constructions or enhancements.

There is no infrastructure or other improvements on undeveloped property.

Unimproved land is land that has not been graded, built, divided, or changed in any way, such as by adding streets, lights, or sewers.

Land that has not been renovated.


The taking back of real property because of a legal right that was reserved when the property was first given away. The person who gives a fee simple with a condition has the right to get back in if that condition is broken. Reentry is basically a power of termination.

The right of reentry is different from the right of entry that a landlord has to go into a rented space and check it out.


The process of taking an existing subdivision and either replatting it (changing the lots from the old grid pattern to more modern irregular lots) or dividing it even more (that is, taking 20-acre lots and dividing them into 5-acre parcels). A re-subdivision is the same as a new subdivision when it comes to county subdivision approval and state and federal land sales registration.

Ready, willing, and able

A term used to describe a potential buyer of property who is both legally and financially capable of completing the sale. If a “ready, willing, and able” buyer is found on the listed terms, the broker is paid regardless of whether the seller completes the transaction. If the contract is subject to restrictions that were not anticipated in the listing agreement, the broker is not entitled to a fee until those conditions have been met or waived. Buyers aren’t “ready and willing” when they enter into options with sellers, but they are when the options are actually exercised. In order for a corporation to be “ready, willing, and able,” it must already exist.

In order to meet the requirements of the sale, the buyer must be able to pay both the initial cash payment and any required financing. When a seller accepts an offer from a buyer, the seller implicitly accepts the buyer’s ability to pay off the mortgage because the broker is not required to verify that the buyer has actual cash or assets to do so. Case law does hold that the broker is responsible for verifying if the buyer is able to make a purchase. In most cases, the broker is not entitled to a commission if the buyer cannot afford to buy the property.

A person who is capable of purchasing or selling real estate.

Real asset

Tangible items have monetary worth due to their utility.

Land, buildings, machines, gold, antiques, and other tangibles of monetary worth. Real assets, as opposed to financial assets such as promissory notes, bonds, and commercial paper, tend to maintain their value during periods of price inflation.

Real estate

The “bundle” of rights connected with the ownership and use of physical assets; and the industry, or commercial activity, relating to the purchase, operation, and disposition of physical assets.

Land and improvements, as well as any minerals and resources found on the property.

The physical land on, above, and beneath the earth’s surface, including all appurtenances, i.e., structures. Although for all practical purposes, the terms real estate and real property have become synonymous, technically speaking, the term real property is the most inclusive and includes the land, structures, and any and all interests in land, whether corporeal or incorporeal, freehold or non-freehold.

Real estate agent

A licensed salesperson who works for a licensed broker, even if the salesperson has already obtained an individual broker’s license.

Real estate broker

Any individual or business that has been granted a state license to sell or lease property on behalf of others.

Real estate commission

A commission that is appointed to monitor the implementation and administration of a state’s real estate license statute. It typically has the authority to award, revoke, or suspend licenses, as well as penalize real estate agents practicing in the state.

When a transaction is completed, a fee is paid to a real estate broker or agent.

Broker and salesperson licenses are granted by this state agency, which also has the authority to revoke or suspend them if there is good cause. Its principal responsibility is to protect the general public involved in real estate transactions.

Real estate cycle

Predevelopment, maturity, decline, and eventually rehabilitation or demolition are all stages of real estate development.

Real estate education, research, and recovery fund

Some states have a special state fund that is paid for by a portion of the real estate licensing fees or a separate fee. This fund is used to promote real estate education and help people who have been hurt by a judgment-proof licensee’s fraudulent actions.

Real Estate Fund

A legal entity that functions as a wrapper or vehicle for investors’ money and subsequently invests in real estate.

Real estate investment

Acquiring ownership or a leasehold interest in real estate for a business motive.

Real estate investment strategy

A comprehensive investment strategy in which a real estate investor takes a series of decisions to assist them reach their objectives.

Real estate investment trusts (REITs)

A property investment vehicle that is tax-transparent, (typically) listed, and regulated, comparable to a property investment company.

A type of ownership entity that gives limited responsibility, no taxation, and liquidity. Shares of beneficial interest, which are comparable to shares of common stock, are used to demonstrate ownership.

A real estate investment trust. 95 percent of earnings must be allocated to investors by law.

When at least 100 investors pool their money to invest in a single business trust, the REITs that own at least 75% of their assets and distribute at least 95% of their annual real estate ordinary income to their investors are exempt from corporate tax. Office buildings, residential complexes, and shopping malls are the most common types of real estate investments, as are mortgages. For more information, check out a mortgage investment trust (REMT).

Investing in real estate through properties or mortgages, REITs trade like stocks on the major exchanges, much as mutual funds. As a stakeholder in a real estate trust, the shareholder is subject to regular income tax on the trust’s ordinary income and capital gains distributions.

As a result, there is no double taxation, centralized management, transferability of interests, diversification of investments and access to expert real estate counsel, all of which contribute to the REIT’s advantages. A few disadvantages include that investments are passive and usually limited to large real estate transactions; losses cannot be passed through to the investor, as is the case with syndications; and, in most cases, trusts must register with the Securities and Exchange Commission, which is a time-consuming and expensive procedure.

Untaxed corporate companies formed to aggregate the resources of private investors for real estate investing. Some REITs invest in mortgages, while others acquire stock.

A corporation or trust that purchases and manages income property (equity REIT) and/or mortgage loans using the combined capital of several investors (mortgage REIT).

Real Estate Mortgage Investment Conduit (REMIC)

A pass-through business that may hold real-estate-secured loans and benefit from tax advantages. These organizations aid in the secondary market selling of mortgage loan interests.

A special way to pay taxes for companies that sell different types of investor shares backed by a pool of mortgages. Most of the time, a REMIC is a conduit entity for tax purposes, which means that its investors get the income and report it on their own tax returns. There are a lot of complicated rules about how to become a REMIC and how to transfer money to or get rid of the entity. If the requirements are met, pass-through REMIC status is given to a partnership, trust, or other similar entity. The only way for something to be a REMIC is if it passes two tests: (1) Most of the assets must be qualified mortgages and allowed investments at the end of the fourth month after the “startup day” and at the end of each quarter after that. (2) There must be at least one class of regular interests and one class of residual interests for each REMIC interest.

Real estate mortgage trust (REMT)

A REIT that buys and sells real estate mortgages (typically short-term, junior instruments) rather than real estate. Mortgage interest, origination fees, and profits earned from buying and selling mortgages are major sources of income for REMTs.

The combination or hybrid trust is a related trust that combines real estate equity investing with mortgage lending, earning profits from rental income and capital gains, as well as mortgage interest and placement fees.


:rotating_light: You are missing out if you haven’t yet subscribed to our YouTube channel.

Real Estate Operating Company (REOC)

A publicly traded real estate development, investment, or management firm with assets but no REIT classification.

Real estate owned (REO)

Lenders use this term to describe real estate that they have acquired involuntarily through foreclosure. Brokers are frequently used by lenders to market their REO properties.

Real estate security

A type of personal property that is secured by real estate and serves as proof of ownership or indebtedness.

Real estate service

The advantages of using real estate. Real estate offers customers with a place to live and a place to work.

Real Estate Settlement and Procedures Act (RESPA)

A federal legislation that requires lenders to give information on all expenses connected with completing a residential loan within three business days of the loan application, to utilize the HUD-1 closing statement, to restrict needed escrow deposits, and to eliminate kickbacks on loan-related services.

It was established in 1974 and later changed by the federal government to ensure that the buyer and seller of a one-to-four-family residential property be informed of all settlement fees when the purchase is financed by a federally connected mortgage loan. To be considered a federally linked loan, a company must make loans that are insured by federal agencies, such as the Federal Housing Administration (FHA) or the Veteran’s Administration (VA), or that are supervised by the Department of Housing and Urban Development (HUD). Most institutional loans are effectively covered under RESPA.

Consider the fact that RESPA laws only apply to first-time homebuyers, not second-time buyers. Loans that are covered by RESPA must meet the following criteria:.

Informational pamphlet: Shopping for Your Home Loan, a HUD-published brochure, must be given to every loan applicant to explain the various RES PA requirements and provide information on settlement (closing) expenses. The Uniform Settlement Statement is discussed in detail, line by line.

How much will it cost to settle the case? An estimate of the settlement expenses that the borrower is anticipated to incur must be provided by the lender upon application or within three business days of a completed application. Depending on comparable prior transactions in the area, this could be an exact dollar amount or a range of expenses. Anyone can hire and pay for an attorney or title business of their choice, and the borrower has no obligation to do so. Lenders, however, are required to disclose any business relationships they have with any attorney or title company that will be used to close the loan. A three-day waiting time may be imposed on charges that change before settlement. Taxes, insurance premiums, and other obligations may be escrowed by the lender for up to two months in advance (impounds).

Unified Statement of Agreement: On a conventional HUD form, loan closing information is required to disclose the financial details of the transaction. The statement must include a breakdown of all fees and costs incurred, including those imposed by the lender and those paid from the closing funds. There is a three-day waiting time before a transaction can close if certain charges alter from the original good faith estimate (GFE). Expenses incurred by the buyer and seller outside of the closing do not need to be disclosed to each other. Pre-paid items must be properly identified as such and deducted from your totals before you close out your bookkeeping for the year. There is a two-year time limit on lenders keeping these statements until they sell or otherwise dispose of the loan (and its servicing). The Uniform Settlement Statement may be modified to accommodate local practices, such as removing lines that don’t apply. The settlement agent shall allow the borrower to examine the settlement statement, to the extent that the numbers are available, one business day prior to closing if requested by the borrower. For the purposes of the Truth in Lending Act, lenders are prohibited from charging a fee for the creation of the Uniform Settlement Statement or any other required statement.

Anti-kickback legislation: When an insurance company pays a lender a reward for sending one of the lender’s recent customers to the agency, or when a lender pays a real estate licensee to connect purchasers to the lender, RESPA clearly bans the payment of kickbacks or unearned compensation. Real estate salespeople and brokers are exempt from this rule if payments are given in accordance with co-brokerage and referral arrangements.

The Consumer Financial Protection Bureau (CFPB) administers and enforces RESPA (CFPB). These types of loans are exempt from the provisions of the Real Estate Settlement Procedures Act (RESPA), which governs loans secured by mortgaged property that is more than 25 acres in size.

Real property

Any rights related with property ownership and all permanent attachments to land.

The possession of land and structures in the form of actual real estate.

The surface of the earth, the air above it, and the ground below it, as well as everything attached to the land, like buildings, structures, fixtures, fences, and improvements, except for crops. Real property refers to the interests, benefits, and rights that come with owning a piece of land (the bundle of rights).

Personal property is anything that is not real property. Real property and personal property are treated differently by the law, so it’s important to tell them apart.

Instruments that affect real property must be written and should be recorded. Instruments that affect personal property, on the other hand, can be spoken or written, usually don’t need to be recorded, and can be transferred by just delivering them.

There are many important differences between real and personal property when it comes to tax laws.

Land titles are bought and sold according to the laws of the state where the land is located. This includes important things like rules of inheritance and probate. On the other hand, personal property can be moved and is governed by the laws of the place where it is located.

Common-law rules treat leaseholds as personal property, which is also called “chattels real.” However, for some purposes (like taxation and condos), certain long-term leaseholds are treated as real property by law.

Judgment liens can only be put on real property that has been ordered by a court. Most of the time, debts have to be paid off by selling personal property before real estate can be taken.

Real property administrator (RPA)

The Building Owners and Managers Association International bestows this professional accreditation to property managers. For individuals who have completed all of the necessary educational and experience criteria, designation is a mark of professional success.

Real property securities registration

The process of disclosing and notifying appropriate government agencies about an issuer’s proposed real estate security offering. Unless exempt, all real estate securities must be registered with the federal Securities and Exchange Commission (SEC) and, in most cases, with the securities commissions in the states where the securities will be offered for sale.

The intrastate exemption and the private offering exemption are the two most frequently invoked exemptions. Under the intrastate exemption, an offering directed solely to residents of a single state where the issuer is also a resident and doing business is exempt from registration with the SEC, though it must register with the state unless it is also exempt from state registration requirements as a private offering. The private offering rules exempt an offering that is limited in scope and directed to a specific type of investor who does not require the protection provided by the SEC disclosure requirements (i.e., investors sophisticated and wealthy enough to withstand a loss of invested funds and knowledgeable enough to fully evaluate the risks of the investment). The limits of this private offering exemption are further defined in Securities and Exchange Commission Rule 146.

The SEC considers the offering of condominiums to be real property securities in certain circumstances, such as when the units are offered with an emphasis on the economic benefits derived from the rental of the units or where there is a rental pool or mandatory rental agreement. The developer of an unregistered (with the SEC) condominium must carefully train all salespeople to avoid making any representations about rental income that a purchaser may receive. Here are some examples of instructions:

Developer advises that no representations or references will be made to either purchasers or prospective purchasers concerning the rental of the apartment, income from the apartment, or any other economic benefit to be derived from the rental of the apartment, including but not limited to any reference or representation to the effect that the developer or the project’s managing agent will provide, directly or indirectly, any services relating to the rental or sale of the apartment. The purchaser is solely responsible for the rental of the apartments and the provision of management services in connection with them.

If the condominium is offered for sale in other states, the securities laws (blue-sky laws) of those states must be reviewed to see if registration is required. For example, the California commissioner of corporations has ruled that offering Hawaii condominium units in conjunction with a voluntary rental pool constitutes the offering of a real property security under California law.

Realized gain

When you sell a capital asset, you make a profit. This profit is usually the difference between the net sales price (amount realized) and the property’s adjusted tax basis. The part of the realized gain that is taxed is the part that is called the “recognized gain.”

A gain that has happened monetarily but is not necessarily taxed in a transaction.


A Realtor® who is a member of the National Association of Realtors®.

Active members of local boards of REALTORS connected with the National Association of REALTORS use this registered trademark phrase exclusively.


Land and everything that is fixed to it is the opposite of personal property.

It’s all about real estate.

Reappraisal lease

A lease that says the property will be re-evaluated every so often and that sets the rent as a percentage of the new value.

Reasonable time

Allowable or required amount of time for an action to be done, taking into account the nature of the action and its surroundings If a contract specifies a specific deadline for execution, the courts will suggest a “reasonable time,” which can vary greatly from case to case.

A court would not grant a reasonable amount of time after the defined time stated in the contract if the parties stated that “time is of the essence” in the contract.

When a due-on-sale clause is triggered, a lender must make a judgment about whether to activate the clause within a reasonable amount of time. Acceptance of an offer


A decrease in an agreed-upon fee. In some states, it is legal for a broker to give a portion of his or her commission back to the person who hired the broker. The reason for this is that the payment is not for doing anything that needs a real estate license. It’s just a refund or a cut in the commission. But if the seller’s broker is going to give back some of the commission to the buyer, everyone needs to know about it.


To charge taxes at the same rate as before (i.e., ordinary tax). All depreciation or cost recovery taken on depreciable real property that is more than the amount allowed by the straight-line method is subject to the recapture provisions of the Internal Revenue Code. This means that this excess is taxed at ordinary income rates in the year of sale. These rules are meant to stop the taxpayer from taking advantage of both accelerated depreciation and capital gain treatment.

Even though excess depreciation may be taxed at regular rates when the property is sold, a smart investor knows that the money saved on taxes in the first few years of investing can be used to make a lot of money before the same money is used to pay taxes on the excess depreciation. Also, if a tax-deferred exchange happens, the tax on the extra depreciation taken is put off until the next year.

Excess depreciation over straight line depreciation is the amount of gain assessed by the IRS on the sale of depreciable property.

Recapture clause

A provision that is common in percentage leases, particularly in those for shopping malls, providing the landlord the ability to terminate the lease and reclaim the premises if the tenant fails to meet a predetermined level of sales. In order to keep the lease in place, the tenant may try to negotiate a provision that increases the minimum rent to the amount the owner would have received had the predicted sales volume been attained.

It is also possible to use a recapture clause to give the ground lessee the right to purchase the fee after a set period of time has passed, or the landlord may have the option to regain the premises if the tenant gives notice of its intent to assign or sublet to another or surrender a portion of the lease space or term.

Office leases often include provisions that allow the lessor to reclaim any space the tenant is unable to use or sublet.

A contract clause that allows the party who transfers a right or interest to reclaim it under specified conditions.

Recapture rate

A term used in appraisal to describe the rate at which invested capital will be returned over the amount of time that smart investors would expect to get their money back from an asset that is losing value.


Restructuring already existing debt, especially in cases when the borrower has fallen behind on payments. Depending on the borrower’s needs, the loan term can be extended, and the interest rate can be altered on a regular basis. It’s important to watch out for the possibility that other liens will take precedence over the recast debt. In some circumstances, the lender may prefer to wait until the building is sold before modifying or recasting a defaulted construction loan, as doing so could affect lien priorities.


A written confirmation that you got something. Along with being an offer to buy and an acceptance form, many purchase contracts also serve as a receipt. So, brokers shouldn’t sign the “receipt” part of a contract until they’ve actually gotten the deposit from the buyer.


The principal-related and interest-related cash flows created by an asset that are payable to (or receivable by) the asset’s owner are referred to as “principal-related and interest-related cash flows.”


A third party that a court chooses to receive, keep, and manage property that is involved in a lawsuit until the court makes a final decision on the case. This could be a bankruptcy case or a case where a subdivider is told they can’t sell a subdivision that hasn’t been registered. In some states, a receiver is put in charge during the time the law gives the owner to get back into the property after the foreclosure sale. Receivers wouldn’t need a real estate license to sell the property they are in charge of, but the court would have to agree to the sale.


The replenishing of groundwater with surface water.

Recharge Zone

A region with a high concentration of groundwater recharge.

Reciprocal easements

The practice of mutual exchanges of privileges. Some states have reciprocal arrangements for recognising and granting licenses to licensed brokers and salespeople from other states.


The act of trading privileges with each other. Some states have agreements that allow licensed brokers and salespeople from other states to use their licenses in their own states.


Continued at…
:point_right: Real Estate Glossary R [Part 2]