Real Estate
Glossary
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PACKAGE MORTGAGE:
A loan secured against both land and
chattels.
PAD SITE:
An independent location for a retailer that may be
near to but not part of a mall or shopping center.
PAPER PROFIT:
A description of the increase in the value of
an asset that has not been realized (i.e. the asset has not been sold so
that owner does not enjoy the profit).
PAPER:
Slang term for a loan note given instead of a cash
payment.
PARCEL:
Another word for a piece of land.
PARCEL REGISTER:
The abstract index for a property registered
in the Torrens System of land registration.
PAROL:
Not written, verbal.
PAROL CONTRACT:
An agreement that is not reduced to writing,
that is created through spoken words.
PAROL EVIDENCE RULE:
A legal rule of evidence. A court will
not allow evidence of oral discussions which purport to modify a written
contract.
PARTIAL INTEREST:
Ownership of property that is less than
100% or on a lower level than fee simple.
PARTIAL PAYMENT:
Any payment which is insufficient to meet
the full amount required.
PARTIAL RELEASE:
A document signed by the mortgagees holding
a blanket
mortgage registered on title to several properties which removes the
mortgage from title to just one of the properties.
PARTIAL TAKING:
Where a government body takes only a portion
of a landowner's land or rights to land by condemnation.
PARTIALLY AMORTIZED MORTGAGE:
A very common form of mortgage
in which the term is less than the amortization period such
that, at the maturity date, the mortgage is not fully paid out and either
refinancing or a large balloon payment is required.
PARTICIPATION (OR PARTICIPATING) MORTGAGE:
A mortgage in
which the lender is entitled to a stated share of the income of the
property or of sale proceeds.
PARTITION:
An court ordered division of property owned by two
or more owners, may take the form of a physical division of the property
or a forced sale and division of the proceeds.
PARTNERSHIP:
A form of business enterprise where two or more
persons join together without forming a corporation. The partners are
capable of binding each other to contracts, are liable for each other's
actions.
PARTY WALL:
A shared wall between two pieces of property,
most often in row-houses, semi-detached houses, or townhouses. The shared
wall generally stands on the property line.
PASSIVE SOLAR HEATING:
The maximization of the sun's heating
abilities through careful design of a building.
PATENT:
The initial transfer of title to land from government
to private ownership.
PAY OUT:
To provide the lender with the total amount then
required to retire a loan obligation.
PAYMENT ADJUSTMENT INTERVAL:
The period of time between
changes in the amount of each periodic payment on a variable or adjustable rate
mortgage.
PAYMENT CAP:
A term of some variable
or adjustable rate
mortgages in which the level to which the monthly payment may rise is
limited to a certain dollar figure.
PAYMENT CHANGE DATE:
The date when the amount of each payment
under an adjustable, variable or graduated payment mortgage changes.
PAYMENT DECREASE CAP:
A contractual limit on the amount of
each periodic payment may drop at any one payment change date. Expressed
as a percentage.
PAYMENT INCREASE CAP:
A contractual limit on the amount of
each periodic payment may rise at any one payment change date. Expressed
as a percentage.
PAYMENT PENALTY:
Also known as "prepayment penalty" or "early
payment penalty", the fee paid by a borrower when she pays out some or all
of the principal of a loan at a time when such a payment is not allowed
under the terms of the loan.
PRIME TENANT:
The biggest tenant in a commercial complex.
Also known as "key tenant" or "anchor tenant".
PENALTY:
Fine for breaching a rule, term of a contract or
law.
PENTHOUSE:
The dwelling(s) located at the top of a tall
building, often luxurious.
PER STIRPES:
Latin term, meaning by representation. A method
of dividing an estate equally among the heirs of the deceased. If an heir
has predeceased, her share is divided equally by her linear descendants.
PERC TEST (PERCOLATION):
A method of determining the ability
of the soil of a property to absorb liquids, used in construction projects
and for septic systems.
PERCENTAGE LEASE:
A rental agreement in which the tenant's
monthly payment is a percentage of the gross sales of the tenant's
business (although a minimum payment is usually set out in the agreement).
PERFORMANCE:
Meeting one's obligations under a contract or
agreement.
PERFORMANCE BOND:
A written promise from an insurance
company, stating that if a given person does not complete work required
under a contract, the insurer will pay someone else to complete the work
or pay damages.
PERIODIC PAYMENT CAP:
See "payment
cap".
PERIODIC RATE CAP:
See "rate cap".
PERMANENT LOAN/MORTGAGE:
A long-term mortgage, often
registered after construction is complete and the property is occupied.
Also known as "end loan."
PERMIT:
The government body's written permission to do
something which is regulated by that body.
PERPETUITY:
Endlessness. Forever. Many jurisdictions have
laws against tying up a title to a property in perpetuity.
PERSON:
A legal term referring to any entity which is capable
of entering a contract or suing and being sued. Generally, an adult,
mentally capable human being, an incorporated company, a partnership or a
government body.
PERSONAL PROPERTY:
Items owned by someone which are not land.
PERSONAL RESIDENCE:
A person's home, used to establish their
place for voting, taxation and other civic issues.
PERSONALTY:
See "personal property".
PIPELINE RISK:
Slang term describing the possibility that a
lender will lose money as a result of committing to a loan at a given
interest rate only to see interest rates rise in the interim before the
loan transaction is closed.
PIPESTEM LOT:
See "flag pole lot". A piece of land connected to a street by a
long, narrow strip of land.
PITI RESERVES:
The amount of extra money a borrower must have
to cover the cost of principal, interest and taxes on a mortgage for a set
number of months.
PLAINTIFF:
The person who sues in court. The person who makes
a legal claim. As opposed to "defendant".
PLANNED UNIT DEVELOPMENT (PUD):
A housing development where a
homeowner's association administers common property owned and shared by
all dwelling owners in the project. Dwellings are often clustered to allow
for more common space and special zoning is required for this kind of
development.
PLANNING COMMISSION:
An appointed board which conducts
hearings to consider applications for minor variances of planning
ordinances. Also known as "Planning Board, "Zoning Board", etc.
PLAT BOOK:
A public record of plans, street maps, etc.
PLAT:
A detailed map which sets out lots, streets, common
areas and other features of a tract of land.
PLEDGED ACCOUNT MORTGAGE (PAM):
The payment of funds into a
pledged account to be used to reduce mortgage payments at a later date.
PLOT PLAN:
A survey-like diagram of a property showing
current or planned improvements and uses of the land.
PLOTTAGE:
The act of acquiring a number of smaller, adjacent
parcels to create one larger, more useful plot of land.
POCKET CARD:
Identification required by most state's
licensing commissions for real estate salespersons and brokers.
POINT:
Equal to 1% of the principal of a mortgage, a charge
levied on the borrower by the lender for originating the mortgage as
prepaid interest. Also known as "loan discount points".
POOL:
1. Gather into a group for greater effectiveness.
2. An artificial body of water for recreational swimming.
POSSESSION:
The state of occupying, controlling, using
property to the exclusion of all others, exhibiting one's right or title
to property.
POTENTIAL GROSS INCOME:
The amount of money that a property
will generate if it is fully utilized with no gaps, vacancies or other
interruptions in income.
POWER OF ATTORNEY:
A document, signed by the donor in front
of witnesses, authorizing another person to act on the donor's behalf and
to bind the donor to those actions.
POWER OF SALE:
Generally the fastest and cheapest mortgage
enforcement method open to lenders. A common clause in a mortgage
agreement which gives the lender the right to take over and sell the
property to cure the borrower's default. The sale proceeds are allocated
first to principal and interest, then to penalties, then to the lender's
costs in exercising the power, then to other registered claimants and
finally to the borrower if there is any left.
PRAIRIE HOUSE:
A long low house of the early twentieth
century style, with a row of windows across the front and a plain
exterior.
PRE-APPROVED MORTGAGE:
A commitment from a lender to provide
a mortgage loan on stated terms to a borrower before the borrower has
found a property to buy. The pre-approved mortgage allows the borrower to
make a firm, cash offer on the property of choice.
PREARRANGED REFINANCING AGREEMENT:
An arrangement between
lender and borrower in which the lender agrees to favorable terms for the
borrower on a future refinance as an inducement to the borrower to place
the original mortgage with the lender.
PRECLOSING:
A meeting of the parties to a transaction prior
to the scheduled closing date to allow some or all of the documents to be
signed and more complicated issues settled prior to closing.
PREFABRICATED:
Descriptive term for a building that is put
together on site from components (walls, floors, roof, etc.) built
off-site (in a factory, for example).
PRE-FORECLOSURE SALE:
The sale of a property by a delinquent
borrower under an agreement with the lender. The sale may not produce
enough proceeds to pay out the loan but the lender will save the costs of
foreclosing and selling.
PRELEASE:
To find tenants for a property before construction
is completed.
PREMISES:
A descriptive term for the land, building or parts
thereof involved in a particular transaction.
PREMIUM:
1. The periodic payment on a policy of insurance.
2. The value of a debt instrument in excess of it face value.
3.
Of highest quality.
PREPAID EXPENSES:
Payments made on account of costs and
disbursements that are not yet incurred, may be placed in an escrow
account.
PREPAID INTEREST:
Charges for interest that are paid in
advance of their accrual (i.e. point charges, etc.).
PREPAYMENT:
Payment of all or part of the principal of a
mortgage or loan before it comes due.
PREPAYMENT CLAUSE:
A term in a mortgage that establishes the
rules regarding extra payments toward principal.
PREPAYMENT PENALTY:
A fee charged to a borrower for paying
out all or part of the principal of the mortgage or loan before it comes
due.
PREPAYMENT PRIVILEGE:
The right of the borrower to pay out
all or part of the outstanding principal before it comes due.
PRE-QUALIFICATION:
The act of going through the mortgage
application process before the borrower is ready to borrow, to establish
how much money the borrower could obtain under a loan.
PRESALE:
Marketing of properties under construction or simply
in the planning stages.
PRESCRIPTION:
A legal term describing the acquisition of
rights or obligations through the passage of time (such as adverse
possession).
PRESCRIPTIVE EASEMENT:
A legally enforceable right to make
use of all or part of the property of another as a result of continuous
and uninterrupted use of that property for a period of time as established
by statute.
PRICE-LEVEL-ADJUSTED MORTGAGE:
An adjustable or variable
payment loan which uses the rate of inflation as an index.
PRIMARY LEASE:
The main lease, under which other sub-leases
exist.
PRIME RATE:
The best rate charged on loans, usually saved for
the best clients of the lenders. May also be set by a national institution
as a benchmark or index for other lenders.
PRINCIPAL:
1. The amount of money borrowed or still owed on a
loan, without including interest.
2. The person on whose behalf an
agent acts.
PRINCIPAL AND INTEREST PAYMENT (P&I):
A blended, periodic
payment that is enough to pay off accumulated interest and a portion of
the principal.
PRINCIPAL BALANCE:
The outstanding amount owing on a mortgage
without including accumulated interest.
PRINCIPAL BROKER:
The head of a real estate brokerage,
licensed as a broker, who is responsible for all transactions run through
the firm.
PRINCIPAL RESIDENCE:
The dwelling in which a person resides
for the majority of the time.
PRINCIPAL, INTEREST, TAXES AND INSURANCE (PITI):
The four
parts of many periodic loan payments.
PRIVATE MORTGAGE INSURANCE (PMI):
A policy of insurance
issued by a non-governmental entity which protects a lender against the
default of the borrower.
PROBATE OR PROVE:
Establishment of the validity of a will
through a court process.
PRO-FORMA STATEMENT:
Latin meaning a statement "according to
form". Financial projections.
PROGRESS PAYMENTS:
Loan advances issued to a builder as
construction of a building moves forward.
PROMISSORY NOTE:
A document signifying an indebtedness.
PROPERTY:
1. The rights of ownership in lands or goods.
2. Land.
PROPERTY TAX:
Also known as "realty tax", the tax levied on
ownership of property.
PROPRIETARY LEASE:
A rental agreement between a cooperative
housing corporation and a share holder allowing use of a certain unit in
the premises.
PRORATE:
To apportion a divisible item among parties
according to their share.
PROSPECT:
1. To investigate land for valuable mineral
deposits.
2. A potential buyer.
PUBLIC AUCTION:
A public meeting at which properties are sold
to pay defaulted mortgages.
PUBLIC HOUSING:
Accommodation offered by the government to
low income people for nominal rents.
PUBLIC SALE:
See "public auction".
PURCHASE AGREEMENT:
See "agreement of sale"
or "agreement of purchase and sale".
PURCHASE MONEY MORTGAGE (PMM):
See "mortgage back". A loan
from the vendor to the purchaser to help finance the purchase of the
property.
PURCHASER:
The person who buys a property.
PURCHASE PRICE:
The consideration paid for the purchase of a
property as set out in the agreement.