A Glossary of Real Estate Terms, 2nd Edition
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RULE OF 72 -- A widely applied mathematical formula that permits the investor and his investment advisor to determine how much financial assets must grow to realize a given investment objective within prescribed time frames. The number 72, when divided by a quarterly compounded annual rate of interest, indicates the number of years required to double an investment. Conversely, to determine the approximate quarterly compounded rate of interest required to double an investment in a given number of years, divide by 72 the number of years available. The rule does not take into account the effect of taxes on the rate of return.
RULE OF 78 -- A widely applied mathematical formula for assessing a penalty for prepayment of an add-on or discounted contract. The effect of the rule is such that if a loan is paid off before maturity, the lender will receive a greater rate of interest than if the loan had been paid according to the original terms.
RULES OF ETHICS -- Widely accepted standards of honesty, fairness and common sense.
RUNNING WITH THE LAND -- Usually concerned with easements and covenants. Passing with the transfer of ownership of the land.
RURAL -- Referring to the country, as opposed to urban, concerning the city.
SAFE HARBOR RULE -- Referring to a ruling of the I.R.S. indicating under what circumstances the Service will issue a favorable ruling regarding flow through accounting treatment for a partnership and agree that it is not an association taxable as a corporation.
SAFETY CLAUSE -- A clause in a listing protecting the broker from having buyer and seller wait until the listing expires to make a deal, thereby avoiding the payment of commission. The clause states that if the property is sold during a specified period after the expiration of the listing (or any extension thereof) to a buyer provided during the listing period by the broker, the commission shall be paid.
SALARY -- A compensation for services, usually paid at specified intervals, and of a set amount.
SALE AGREEMENT -- A contract entered into between a buyer and seller, setting forth the terms, provisions and conditions of a sale of real estate.
SALE AND LEASEBACK -- A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser. The seller receives cash while the buyer is assured a tenant and a fixed return on buyer's investment.
SALE-LEASEBACK-BUY-BACK -- A sale and leaseback transaction in which the leasehold has the option to buy back the original property after a specified period of time.
SALES ASSESSMENT RATIO -- Ratio calculated by dividing the selling price by the assessed value.
SALES CONTRACT -- A contract containing the complete terms of the agreement between seller and buyer for the sale of a particular parcel or parcels of real estate.
SALESPERSON -- In real estate, "salesperson" means an independent contractor engaged in practice as a real estate broker or agent or employee of such duly licensed independent contractor practicing his or her profession under the laws of all jurisdictions in which he or she practices.
SALES TAX -- Tax on the sale of certain tangible personal property.
SALVAGE VALUE -- In computing depreciation for tax purposes, the reasonably anticipated fair market value of the property at the end of its useful life, and must be considered with all but the declining balance methods of depreciation.
S.A.M. -- (See: SHARED APPRECIATION MORTGAGE).
SANDWICH BEAM -- (See: FITCH BEAM).
SANDWICH LEASE -- A leasehold interest which lies between the primary lease and the operating lease.
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About the Book
The concept of "consumer protection" (which also implies "licensee protection") plays a major role in our present day business conduct, as it should. The author's personal experience of the lack of extensive knowledge on the part of licensees, let alone untrained personnel and clients, made evident the need for an accumulation of data under one cover, relating to all fields that a real estate transaction may be faced with. Of necessity, in some instances certain definitions had to be tailored to conform with particular laws. In this book, they were made to conform with present California laws. However, the adaptation to other states should be fairly straightforward.
About the Author
Mr. Levy came to the U.S. as a foreign student. While in the Army, he was sent to the University of W. Virginia to study civil engineering. Following his discharge, he went back to UCLA, and graduated in Engineering and then entered the aerospace field, where he established a strong reputation, and author numerous papers and books. In 1974 he entered the real estate field, and has been in it ever since, most of the time in a management capacity. He has authored a number of booklets on various phases of real estate, with the intent of educating both the licensees and the public. He has recently been nominated to the Board of Directors of the West San Gabriel Valley Association of Realtors, and is the President-elect of the Temple City Chamber of Commerce. He is listed in Who's Who in the West, in America, in the World, and in Science and Engineering.