The Ultimate Real Estate Glossary: Letters Q-R
When you’re looking over your real estate contract, it helps to know the technical jargon and understand what you’re really about to sign.
That’s what the Ultimate Real Estate Glossary was made to do. We wrote this guide to help you through the confusing tangle of real estate terminology so that you don’t have to constantly jump from website to website finding definitions.
For this edition, we’re going through the real estate terms that start with the letters Q and R.
Real estate terms: The letters Q-R
Quit Claim Deed (QCD): A legal instrument that transfers a party’s interest in a property to another party. The grantor ‘quits’ all claims to the property, which gives it to the grantee. However, the grantee receives no warranties and gets all the liens, assessments, covenants, and encumbrances associated with the title. Quit-claim deeds are typically used to transfer properties between family members.
R & I: This stands for repair and improvement costs. In some cases, buyers purchase homes knowing that there are repairs and improvements needed throughout the residence. At other times, they’ll request (or mandate) that the sellers resolve any issues before finalizing the purchases of the properties.
Real estate contract: A written contract between two parties that guides a real estate transaction. Most real estate contracts deal with the purchase or transfer of a piece of property. A contract is legally binding and enforceable in a court of law.
The exact form of a contract varies by state and by type of transaction. Typical components of a contract include the identities of the parties, property details, the price and financing details, closing and possession dates, other included items in the sale, contingencies, closing costs, and optionally riders.
REALTOR®: A registered trademark of the National Association of Realtors. The NAR only allows members to use this professional title. All realtors are real estate agents, but not all agents are realtors. This is important to note because all realtors are bound by the NAR’s code of ethics and standards.
Rebate: When a charge is reduced. In some cases, this is used during at or after closing a transaction. A part of the commission paid by the seller’s broker to the agent who brought the buyer is credited/rebated to the buyer.
Reduction Certificate: A reduction certificate is a document provided by a lender. This document outlines and breaks down the outstanding balance on a mortgage loan. The original loan amount and the current balance payable are provided, as well as any fees or charges that must be paid before the loan can be closed out.
Refinancing: Using a new mortgage loan to pay off an existing mortgage. Refinancing typically happens when interest rates go down, thus letting an owner get better loan terms. The owner then has lower monthly payments and a smaller principal to repay with the lower interest rate.
Reformation: A legal action conducted to fix or alter a contract or paperwork. This occurs when the paperwork does not accurately reflect the parties’ intentions. For instance, a technical flaw, such as a typographical error in the legal description, may result in the document’s reformation.
Release deed: Also called a deed of release, this is a legal document that releases the parties from all previous obligations. In real estate, release deeds typically come after a mortgage has been fully paid off. For the mortgage duration, the lender has the title to the property, holding it as collateral. The release deed ends the legal obligations between borrower and lender and returns the title to the borrower.
Relisting: When a seller withdraws their house from the market and lists it again for sale later. This may be with the same agent or a different one. Relisting typically happens when a property spends too much time on the market and becomes ‘stale.’ Sellers will also typically make improvements before the house goes back on the listing service.
Rental Agreement: A rental agreement, unlike a long-term lease, offers tenancy for a shorter period of time—usually 30 days. Most rental agreements automatically renew at the end of each term period, unless the renter or landlord specifies otherwise. The landlord and tenant have the freedom to modify the terms of a rental agreement at the conclusion of each period. Keep in mind, proper legal procedures should be taken when terms are modified.
Rental Pool: Rental pools are multi-party agreements that share the usage of a resource. These agreements are commonly used in real estate for tax purposes since they allow members of a pool to deduct taxes from their passive income.
Repurchase agreement: A financial instrument. In a repurchase agreement, a seller (e.g., mortgage originator) sells a mortgage to a buyer (e.g., a bank), with a simultaneous agreement that the seller will later buy back the mortgage within one year of the purchase date.
This gives the seller liquid cash to finance the mortgage, which the buyer will receive back once the repurchase comes through. The bankruptcy code also protects repurchase agreements, making them safe and low-interest.
Rescission: The legal remedy for discontinuing, dissolving, or nullifying a contract. When this occurs, parties revert to their original positions. For example, let’s say a buyer discovers flooding issues on a property and believes the seller was aware of the problem. In that case, if they misrepresented the situation, the buyer must rescind the sale as quickly as possible after learning of the property’s flooding problem.
Retaliatory Eviction: Retaliatory eviction occurs when a landlord evicts a tenant or refuses to renew a lease agreement as retaliation due to issues that are not covered by the lease. Retaliatory evictions are illegal in most cases, as they occur even when a tenant is operating within their legal rights. A retaliatory eviction could occur, for instance, if a tenant complains about building code violations or withholds rent as leverage for the landlord to make needed repairs.
Rider: A document that modifies the provisions of the contract it is attached to. This saves the trouble of having to rewrite the contract from scratch. Simple riders can come from the parties themselves, and more complex ones from an attorney.
Risk of Loss: Between the completion of the purchase agreement and the transmission of legal title, there is a risk that the real estate asset could be damaged or destroyed. Because the doctrine of equitable conversion has granted the buyer equitable title, the majority of states hold that the buyer must take on the risk of loss.
Until legal title passes to the buyer, a minority of states maintain that the seller shoulders the risk of loss. Also, a few other states believe that the buyer should take on the risk of loss only if the buyer is in possession of the property or has obtained legal title.
Conclusion
There may be a lot of complicated terms and definitions, but you’ll get the hang of it with practice and patience. No one gets everything right the first time. Don’t forget to check back on our site for the next installment or take a look at our previous articles on the topic to refresh your memory!
Is there a word you’d like us to tell our readers about? Comment down below!
Image courtesy of Andrea Piacquadio