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[ Dictionary of Terms ]

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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PACKAGE MORTGAGE a mortgage arrangement whereby the principal amount loaned is increased because personalty (e.g., appliances) as well as realty serve as collateral.

PAD SITE an individual freestanding site for a retailer, often adjacent to a larger shopping center.

PAPER credit given, evidenced by a written obligation that b backed by property.

PAPER PROFIT an increase in value above original cost or basis that would be realized if the property were sold; how the property is not offered for sale.

PARCEL a part of portion of a piece of land.

PAROL verbal, not in writing.

PAROL CONTRACT An oral contract as compared to one that is in writing

PAROL EVIDENCE RULE An evidence rule of law which says that oral agreements which modify the subject matter of a written contract will be inadmissible in a court of law for the purpose of contradicting what is written in the contract.

PARTIAL INTEREST a less than fee simple interest in real property.

PARTIALLY AMORTIZED MORTAGAGE a method of loan repayment in which the balance of the outstanding loan is not zero at maturity and thus a balloon payment is required.

PARTIAL TAKING acquisition by condemnation of only part of the property or some property rights.

PARTICIPATION (or PARTICIPATING) MORTGAGE one that allows the lender to share in part of the income or resale proceeds.

PARTITION the division of real property between those who own it with undivided interest

PARTNERSHIP an agreement between 2 or more entities to go into business or invest. Either partner may bind the other, within the scope of the partnership. Each partner is liable for all the partnership's debts. A partnership normally pays no taxes, but merely files an information return. The individual partners pay personal income tax on their share of income.

PARTY WALL a wall built along the line separating 2 properties, partly on each parcel. Either owner has the right to use the wall and has an easement over that part of the adjoining owner's land covered by the wall.

PASSIVE ACTIVITY INCOME under the 1986 tax act, is generated by: 1, any trade or business conducted for profit in which the taxpayer does not materially participate. 2. any rental activity, whether or not the taxpayer materially participates.

PASSIVE INCOME 1. Generally, income from rents, dividends, interest, and gains from the sale of securities. 2. a new meaning created by the Tax Reform Act of 1986, distinguishes passive income or loss from active income and portfolio income.

PASSIVE INCOME GENERATOR a business or investment that produces passive income which can be used to offset passive losses.

PASSIVE INVESTOR 1. one who invests money but does not manage the business or property.

PASSIVE SOLAR HEATING a system of features incorporated into a building's design to use and maximize the effects of the sun's natural heating capability.

PASS-THROUGH CERTMCATES (OR SECURITIES) interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates.

PATENT conveyance of title to government land.

PAYBACK PERIOD the amount of time required for cumulative estimated future income from an investment to equal the amount initially invested. It is used to compare alternative investment opportunities.

PAYMENT CAP a contractual limit on the percentage amount of adjustment allowed in the monthly payment for an adjustable rate mortgage at any one adjustment period. Generally it does not affect the interest rate charged. If the allowable payment does not cover interest due on the principal at the adjusted rate of interest, negative amortization will occur.

PENALTY money one will pay for breaking a law or violating part or all of the terms of a contract.

PENTHOUSE a luxury housing unit located on the top floor of a high-rise building.

PERCENTAGE LEASE a lease of property in which the rental is based on a percentage of the volume of sales made upon the leased premises. It usually stipulates a minimum rental and is regularly used for retailers who are tenants.

PERCENTAGE RENT rent payable under a percentage lease. Typically the percentage applies to sales in excess of a pre-established base amount of the dollar sales volume.

PERCOLATION TEST a procedure to measure the drainage characteristics of the soil on a lot. Required in the proper design of septic tank drainfields.

PERFORMANCE in contract law, the completion of duties and obligations specified in a contract.

PERFORMANCE BOND one issued by an insurance company; posted by a party who is to perform certain work. If the work is not performed, the insurer promises to complete the work or pay damages up to the amount of the bond.

PERMANENT MORTGAGE a mortgage for a long period of time (over 10 years).

PERMIT a document, issued by a government regulatory authority, that allows the bearer to take some specific action.

PERPETUITY the condition of being never ending. Most states attempt to outlaw perpetuities because of potential problems. A perpetual income stream may cause bankruptcy. A deed that keeps property in a family in perpetuity can cause financial hardship.

PERSON in law, an entity having legal responsibility. Legally, a natural person is a human being who has reached majority. (Compare with minor.) An artificial person may be a corporation; in some instances partnerships, governments, and certain other bodies are considered persons.

PERSONAL RESIDENCE the dwelling unit that one claims as one's primary home, This dwelling establishes one's legal residence for voting, tax, and legal purposes.

PERSONALTY personal property, i.e., all property that is not realty. Property that is movable, not fixed to land.

PER STIRPES a legal method of distributing an estate to include the descendants of a deceased legatee, whose share is apportioned among linear descendants.

PHOTOVOLTAIC the process of converting light directly into electricity using specially designed silicon cells.

PHYSICAL DEPRECIATION OR DETERIORATION the loss of value from all causes of age and action of the elements.

PIGGYBACK LOAN 1. a combination of the construction loan with the permanent loan commitment

PLAINTIFF the person who brings a lawsuit. Contrast with defendant.

PLANNED UNIT DEVELOPMENT (PUD) a zoning classification that allows flexibility in the design of a subdivision. Planned Unit Development zones generally set an overall density limit for the entire subdivision, allowing the dwelling units to be clustered to provide for common open space.

PLANNING COMMISSION a group of citizens appointed by local government officials to conduct hearings and recommend amendments to the zoning ordinance. The planning commission generally oversees the work of a professional planning department, which prepares a comprehensive plan. May also be called a planning board, zoning commission, or zoning board, depending on locality.

PLAT a plan or map of a specific land area.

PLAT BOOK a public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels.

PLEDGED ACCOUNT MORTGAGE (PAM) a type of home.

PLOTTAGE VALUE increment in the value of land comprised purchase loan under which a sum of cash contributed by the by assemblage of smaller plots into one ownership. owner is set aside in an account pledged to the lender.

PLOT PLAN a diagram showing the proposed or existing use of a specific parcel of land.

PLOTTAGE creating plottage value of land by assembling small, adjacent parcels of land into a larger, more useful parcel.

POCKET CARD required for salespersons and brokers in most states. Issued by the state licensing agency, it identifies its holder as a licensee and must be carried at all times.

POINTS fees paid to induce lenders to make a mortgage loan. Each point equals 1% of the loan principal. Points have the effect of reducing the amount of money advanced by the lender. Same as discount points.

POLICE POWER the right of any governmental body to enact and enforce regulations for the order, safety, health, morals, and general welfare of the public.

PORTFOLIO INCOME interest, dividends, royalties (unless earned in the ordinary course of business) and gains from the sale of property that generates this type of income. Under the Tax Reform Act of 1986 this type of income cannot be used to offset passive activity losses.

POSITIVE CASH FLOW same as cash flow.

POSITIVE LEVERAGE the use of borrowed funds that increases the return on an investment.

POSSESSION the holding, control, or custody of property for one's use, either as owner or person with another right.

POTENTIAL GROSS INCOME the amount of income that could be produced by a real property assuming no vacancies or collection losses. Does not include miscellaneous income. Contrast with cash flow, net operating income.

POWER OF ATTORNEY an instrument authorizing a person to act as the agent of the person granting it.

POWER OF SALE a clause sometimes inserted in mortgages or deeds of trust; grants the lender (or trustee) the right to sell the property upon certain default. The property is to be sold at auction but court authority is unnecessary.

PRAIRIE HOUSE an early-twentieth-century-style house with a long, low roof line, continuous row of windows and an un-ornamented exterior. Designed to satisfy the physical and psychological needs of the inhabitants, it is unlike the traditional concept of a house that is a box subdivided into smaller boxes (rooms), each with some doors and windows. Architectural development is credited to Frank Lloyd Wright.

PREAPPROVAL to receive pre-approval for a loan, the lender completes a thorough assessment of your ability to pay for a home, and confirms the amount you can borrow. However, you must complete the loan application to close the loan.

PREAPPROVAL LETTERS this is a letter from a lender that informs a seller about the amount of money that a potential buyer can obtain.

PRECLOSING a rehearsal of the closing whereby instruments are prepared and signed by some or all parties to the contract. Used when closings are expected to be complicated.

PREFABRICATED 1. constructed, as building components, in a factory prior to being erected or installed on the construction site. 2. constructed, as a house, of prefabricated components.

PRELEASE to obtain lease commitments in a building or complex prior to its being available for occupancy.

PREMISES land and tenements; an estate; the subject matter of a conveyance.

PREMIUM 1. the cost of an insurance policy. 2. the value of a mortgage or bond in excess of its face amount

PREPAID EXPENSES amounts that are paid prior to the period they cover.

PREPAID INTEREST interest paid in advance of the time it is earned.

PREPAYMENT CLAUSE a clause in a mortgage that gives a mortgagor (borrower) the privilege of paying the mortgage indebtedness before it becomes due. Sometimes there is a penalty for prepayment, with waiver of the interest that is not yet due.

PREQUALIFICATION when you pre-qualify for a loan, a lender completes a preliminary assessment of your ability to pay for a home. You get the lender's estimate of how much you can borrow.

PAYMENT PENALTY fees paid by borrowers for the privilege of retiring a loan early.

PREPAYMENT PRIVILEGE the right of a borrower to retire a loan before maturity.

PREPAYMENTS advance payments of expenses such as insurance and taxes, often into an escrow account.

PRESALE sale of proposed properties, such as condominiums, before construction begins.

PRESCRIPTION acquiring rights through adverse possession.

PRESENT VALUE OF ANNUITY the value now of a level stream of income to be received each period for a finite number of periods.

PRESENT VALUE OF ONE the value today of an amount to be received in the future, based on a compound interest rate.

PRETAX INCOME the amount earned from a business or investment before deducting income taxes.

PRICE-LEVEL-ADJUSTED MORTGAGE a loan whose payment is adjusted according to the rate of inflation. The payments are generally quite low, typically 3 to 5% annually of the debt. This type of mortgage is not commonly used in the U.S.

PRIMARY LEASE a lease between the owner and a tenant whose interest, all or in part, has been sublet.

PRIMARY METROPOLITAN STATISTICAL AREA (PMSA) a classification of the U.S. Census Bureau applied to cities with the following classifications. Within a metropolitan area with a population of one million or more, there may be areas that would qualify as metropolitan areas on their own, yet are linked to other cities in close proximity. These individual areas are called Primary Metropolitan Statistical Areas, while the metropolitan area containing these PMSAs is called a Consolidated Metropolitan Statistical Area (CMSA).

PRIMARY MORTGAGE MARKET that portion of the credit market that originates mortgage loans, including institutional lenders, such as savings and loan associations and banks, and mortgage bankers and brokers.

PRIME RATE the lowest commercial interest rate charged by banks on short-term loans to their most credit-worthy customers. The prime rate is not the same as the long-term mortgage rate, though it may influence long-term rates. Also, it is not the same as the consumer loan rate that is charged on personal property loans and credit cards. Mortgage rates and consumer loan rates are generally higher than the prime rate, but exceptions occur at times.

PEME TENANT in a shopping center or office building, the tenant who occupies the most space. Prime tenants are considered creditworthy and attract customers or traffic to the center.

PRINCIPAL I - the one who owns or will use property.

PRINCIPAL AND INTEREST PAYMENT (P&I) a periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to amortization of the principal balance. Commonly used with amortizing loans.

PRINCIPAL BROKER the licensed broker responsible for the operations conducted by the brokerage firm.

PRINCIPAL, INTEREST, TAXES and INSURANCE PAYMENT (PITI) the periodic (typically monthly) payment required by an amortizing loan that includes escrow deposits. Each periodic payment includes a principal and interest payment plus a contribution to the escrow account set up by the lender to pay insurance premiums and property taxes on the mortgaged property.

PRINCIPAL MERIDIAN one of the prime meridians used in the government rectangular survey method of land description to locate range lines.

PRINCIPAL RESIDENCE the place one lives in most of the time. May be a single-family house, condominium, trailer, or houseboat. To defer capital gain taxes on the profit from a home, the home must be used as the taxpayer's principal residence. PRIORITY legal precedence; having preferred status. Generally, upon foreclosure, lenders are repaid according to priority.

PRIVATE MORTGAGE INSURANCE default insurance on conventional loans, provided by private insurance companies.

PRIVATE OFFERING an investment or business offered for sale to a small group of investors, generally under exemptions to registration allowed by the Securities and Exchange Commission and state securities registration laws.

PROBATE OR PROVE to establish the validity of the will of a deceased person.

PROCEEDS FROM RESALE same as resale proceeds.

PROCURING CAUSE a legal term that means the cause resulting in accomplishing a goal. Used in real estate to determine whether a broker is entitled to a commission.

PRO-FORMA STATEMENT (from Latin pro forma, "according to form"). Financial statements showing what is expected to occur.

PROGRESS PAYMENTS in construction, loan payments issued to the builder as building is completed.

PROJECTION PERIOD the time duration for estimating future cash flows and the resale proceeds from a proposed real estate investment.

PROMISSORY NOTE a promise to pay a specified sum to a specified person under specified terms.

PROPERTY 1. the rights that one individual has in lands or goods to the exclusion of all others; rights gained from the ownership of wealth.

PROPERTY MANAGEMENT the operation of property as a business, including rental, rent collection, maintenance, etc.

PROPERTY REPORT required by the Interstate Land S* Act for the sale of subdivisions of 50 lots or more, if the subdivisions are not otherwise exempt. Filed with HUD's Office of Interstate Land Sales Registration (OILSR).

PROPERTY RESIDUAL TECHNIQUE in appraisal, a method for estimating the value of property based on estimated future income and the reversionary value of the building and land.

PROPERTY TAX a government levy based on the market value of privately owned property. Sometimes referred to as ad valorem tax or real estate tax.

PROPRIETARY LEASE in a cooperative apartment building, the lease a corporation provides to the stockholders which allows them to use a certain apartment unit under the conditions specified.

PRORATE to allocate between seller and buyer their proportionate share of an obligation paid or due; for example, to prorate real property taxes or insurance.

PROSPECT a person considered likely to buy. A prospective purchaser.

PROSPECTUS a printed descriptive statement about a business or investment that is for sale, to invite the interest of prospective investors.

PROXY a person who represents another, particularly in some meeting. Also, the document giving to another the authority to represent.

PUBLIC HOUSING government-owned housing units made available to low-income individuals and families at no cost or for nominal rental rates.