Glossary of Terms
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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.
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