A GLOSSARY OF REAL ESTATE TERMS

R


Rate Index
Identifies the index corresponding to the yield of a published interest rate, such as the Prime Rate, LIBOR, Treasury Bill / Treasury Note rate, 11th District COFI, etc. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. A final note rate typically includes an Index Yield plus a Spread.
Real Estate
Land and anything permanently affixed to the land and those things attached to the building.
A middle man or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.
Real Estate Investment Trust(REIT)
A business entity formed to invest in real estate, mortgages and/or securities backed by real estate. REITs are required to pass through 95% of taxable income to their investors and are not taxed at the corporate level. The three major types of REITs are equity, mortgage and hybrid, with equity being the dominant type; referred to as REIT.
A vehicle, created by the Tax Reform Act of 1986, which permits the sale of interests in mortgage loans in the secondary market. It is a pass-through entity that can hold loans secured by real property and issue multiple classes or investors without the regulatory, accounting and economic obstacles inherent with other forms of mortgage-backed securities; referred to as REMIC.
The term used to describe real property collateral to which title has been taken back by the mortgagee (trust by way of beneficial ownership) through foreclosure or deed in lieu of foreclosure.
Real Estate Taxes
An expense line item that includes all fees relating to real property (real estate) taxes associated with the property. Identifies the method by which the tenant is responsible for payment or reimbursement of Real Estate Taxes. A pecuniary charge laid upon real property for public purposes.
Realtor
Registered name for a member of the NATIONAL ASSOCIATION OF REALTORS.
Realtor Associate
Salesperson associated with a broker who is a member of the NATIONAL ASSOCIATION OF REALTORS.
Realty
A synonym for real estate.
Recession of Contract
Annulling a contract and placing the parties to it in a position as if there had not been a contract.
Recording
The act of writing or entering an instrument in a book or public record, usually in the office of the county clerk and recorder. Such recording constitutes notice to all persons of the rights or claims contained in the instrument. This type of notice is called "constructive notice" or "legal notice."
Recourse
A type of mortgage loan in which the lender’s remedies in the event of borrower default are unlimited, extending beyond the property to the borrower’s personal assets.
Recourse Options
Options that determine the type of mortgage loan in which the lender’s remedies in the event of borrower default are either limited or unlimited, and may extend beyond the property to the borrower’s personal assets.
Recreational Area
An area suited for games, dancing, or other kinds of recreation.
Recreational Property
A property designed for a very specialized use. Property types include sports arenas, country clubs, marinas, etc.
Redlining
The practice of refusing to provide loans or insurance in a certain neighborhood.
A Loan Purpose; to provide new financing or new financing for, as by discharging a mortgage with the proceeds from a new mortgage obtained at a lower interest rate.
Regional Shopping Center
Enclosed shopping center of 400,000 - 800,000 square feet. Tenants: At least two anchor stores.
This regulation, known as Regulation Z, is issued by the Board of Governors of the Federal Reserve System to implement the Truth in Lending Act.
Reimbursement (Reimbursement Structure)
A payment or accounting structure in which the cost for utilities and/or services incurred by the tenant is paid to the provider by the lessor and subsequently reimbursed, usually on a prorata basis, by the tenant. Typically, the associated item is allocated between the lessor and lessee based on the lessee’s proportionate share of net rental area (e.g. utilities, real property taxes, insurance).
Reimbursement Basis
Identifies the structure by which the tenant reimburses the landlord for expenses relating to the leased area; options include NNN, Gross, or Modified Gross.
Reissue rate
A charge for a title insurance policy if a previous policy on the same property was issued within a specified period of time. Reissue is less than the original charge.
Release
An instrument releasing property from the lien of the mortgage, judgment, etc.
Renewal Probability
The probability that the tenant will renew or extend the lease term for one or more prescribed periods, expressed as a percentage from 0% to 100%. For example, a 65% renewal probability represents that the there is a 65% chance that the tenant will renew the lease; resulting in a 35% rollover probability.
Rent Roll Start Date
Identifies the date from which Tenant Improvement and Leasing Commissions are calculated. By default, this date is the date on which the loan file was created.
Rent Step-Up
A lease agreement in which the rent increases every period for a fixed amount of time or for the life of the lease.
Repairs & Maintenance
A line item expense that represents all expenses for the general repairs and maintenance of the building including common areas and general upkeep. Includes both in-house payroll and contracted services. The cost of any other repairs and maintenance items not specifically included in other expense categories.
Replacement Reserves
Minimum required replacement reserves (or capital expenditures) for the proposed loan. A replacement reserve is usually an amount set aside from net operating income to pay for the eventual wearing out of short–lived assets; monthly deposits that a lender may require a borrower to a reserve in an account, along with principal and interest payments for future capital improvements of major building systems (e.g. HVAC, parking lot, carpets, roof, etc.). Replacement reserves are typically calculated on a per unit basis (e.g. multifamily - per unit; office, retail, industrial - per square foot; etc.).
Research & Development
An Industrial property subtype in which the property is occupied by one or more tenants and the property is utilized for research & development purposes.
Reserve Funds
A portion of the bond proceeds that are retained to cover losses on the mortgage pool. A form of credit enhancement. Also called reserve accounts.
Residual
Residual refers to any cash flow remaining after the liquidation (full pay off) of all classes of securities in. a CMBS. Multiple-Asset, Multiple Class CMBS frequently have a residual.
Residual Interest
Every REMIC must have one and only one class of residual interests, although there may be multiple owners of residual interests. All distributions of residual interests must be prorated; however, a residual interest does not have to entitle the holder to any fixed or minimum, distributions in order to qualify as such. Residual interests may accrue income or cash flow in several ways including 1) the rate(s) differential between the underlying mortgages and the REMIC regular interests, 2) income or cash flow resulting from over-collateralization, 3) buy down reserves, sinking funds or prepaid insurance, and 4) income from qualified reserve funds or cash flow investments in excess of what is required to service regular interests.
Resort Area
A place or geographical area (e.g. city, county, region) where tourism substantially contributes to the local economy; a place frequented by people for relaxation or recreation (e.g. beach resort, ski resort).
RESPA (Real Estate Settlement Procedures Act)
A federal regulation that requires lenders and mortgage brokers to disclose to borrowers, in advance, the fees required to obtain a mortgage loan.
Restrictive Covenants
Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and be binding only between the original seller and buyer.
Retail
A general property type or building type classification characterized by its usage for retail Purposes; Grocery Anchored Retail, Other Anchored Retail, Free Standing Retail, Strip Center - Anchored, Strip Center - Unanchored, Mall - Super Regional, Mall - Regional, Regional Center, Unanchored Retail, Single Tenant Investment Grade, Single Tenant Non-Investment Grade, Outlet Center, Other.
Retail Property
Property types range from super regional shopping centers with a gross leasable area greater than one million square feet to small stores with single tenants. See Shopping Center.
Characterizes the tenant type based on usage of the leased area; Retail usage generally includes most uses involving the sale of goods to consumers.
Return of capital (ROC) refers to payments back to "capital owners" (shareholders, partners, unit holders) that exceed the growth (net income/taxable income) of a business
Revenue Stamps
Formerly, federal tax on a sale of real property. Canceled and replaced by state tax stamps.
A special program for the elderly that provides income until death. Payment requirements are arranged through the increase in the principal amount of the loan.
Riparian
Pertaining to the banks of a river, stream, waterway, etc.
Road Surfaces
Identifies the primary road surfaces on the collateral property.
Rollover Probability
The probability that the tenant will not renew or extend the lease term at the time of lease expiration, expressed as a percentage from 0% to 100%. For example, a 35% rollover probability represents that the there is a 35% chance that the tenant will not renew the lease; resulting in a 65% renewal probability.