package loan
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.

parcel
A legally described piece of land.

parol evidence rule
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be modified by oral or written negotiations.

partial release clause
A mortgage provision under which the mortgagee agrees to release certain parcels from the lien of the blanket mortgage upon payment of a certain sum of money by the mortgagor. The clause is frequently found in tract development construction loans.

partial zoning
Zoning that does not consider its effect on other areas.

participation financing
Where a lender becomes a partner in a development.

participation mortgage
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.

partition
Co-tenants who wish to terminate their co-ownership may file an action in court to partition the property. Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination. If the court determines that the land cannot be divided physically into separate parcels without destroying its value, the court will order the real estate to be sold. The proceeds of the sale will then be divided among the co-owners according to their fractional interests.

partnership
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a partnership is regarded as a group of individuals rather than as a single entity.

parts per billion (ppb)
Units commonly used to express contamination ratios, as in establishing the maximum permissible amount of a contaminant in water, land, or air. These ratios can also be expressed in "parts per million (ppm)."

parts per million (ppm)
Units commonly used to express contamination ratios, as in establishing the maximum permissible amount of a contaminant in water, land, or air. These ratios can also be expressed in "parts per billion (ppb)."

party wall
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.

party wall easement
A party wall can be an exterior wall on a building that straddles the boundary line between two lots, or it can be a commonly shared partition wall between two connected properties. Each lot owner owns the half of the wall on his or her lot, and each has an appurtenant easement in the other half of the wall. A written party wall agreement must be used to create the easement rights. Expenses to build and maintain the wall are usually shared. A party driveway shared by and partly on the land of adjoining owners must also be created by written agreement, specifying responsibility for expenses.

passive income
Income generated when a person is not active in a business or occupation. Examples of situations where passive income is generated include limited partnerships or rental income remaining after allowable deductions.

passive losses
Losses left over when deductions for annual operating expenses, loan interest, and depreciation exceed annual rents. For tax purposes, passive losses can only be used to offset passive income.

pass-through security
A security issued by the Government National Mortgage Association (Ginnie Mae) to mortgage investors. Cash flows from the underlying block individual mortgage loans are "passed through" to the holders of the securities in pro rata share, including loan prepayments. With a mortgage-backed security, the timely payment of principal and interest is guaranteed by Ginnie Mae. In 1982, the Federal National Mortgage Association (Fannie Mae) instituted its own mortgage-backed securities program designed to attract billions of dollars into the conventional mortgage market from pension funds and other investors.

patent
The instrument that conveys real property from the state or federal government to an individual.

patent defect
A defect that is obvious from a reasonable inspection of a property.

payee
The person to whom a debt instrument, such as a check or promissory note, is made payable; obligee, the "receiver."

payment cap
The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.

payor
The debtor on a promissory note or the party who makes payment to another.

percentage fee
A property management fee expressed as a percentage of the gross collectable income from a property.

percentage lease
A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises. It usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.

pension funds
Pension funds usually have large amounts of money available for investment. Because of the comparatively high yields and low risks offered by mortgages, pension funds have begun to participate actively in financing real estate projects. Most real estate activity for pension funds is handled through mortgage bankers and mortgage brokers.

per annum
Per year, each year.

per diem
per day, each day.

percolation
1) The movement of water downward in a circular direction through subsurface soil layers, usually continuing downward to ground water. Can also involve upward movement of water. 2) Slow seepage of water through a filter.

percolation test
A test of the soil to determine if it will absorb and drain water adequately to use a septic system for sewage disposal.

periodic tenancy
A leasehold interest from period to period that renews automatically unless a notice of termination is given.

personal income
A person's gross income from wages, salaries, commissions, interest and profits from businesses or investments.

personal property
Things that are tangible and movable; property that is not classified as real property, such as chattels. Title to personal property is transferred by way of a bill of sale, as contrasted with a deed for real property.

Items of personal property frequently become the object of dispute between buyer and seller, most often due to whether an item is considered a fixture or due to the seller's attempt to substitute a similar item. Some cautious buyers insert a clause in their purchase contracts to the effect that the buyer will get the appliances "as currently installed and used in the premises."

A tree is real property while it is rooted in the ground, but when severed it is transformed into personal property. When lumber is assembled, however, and used as material to construct a house, it once again becomes a fixture or real property. (See fixture)

physical deterioration
A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.

piggyback loans
A loan divided into two parts with one lender taking a secondary security position.

PITI
Acronym for Principal, Interest, Taxes & Insurance.

planned unit development (PUD)
A relatively modern concept in housing designed to produce a high density of dwellings and maximum use of open spaces. This efficient use of land allows greater flexibility for residential land and development. It also usually results in lower-priced homes and minimum maintenance cost. Often, PUDs are specifically provided for in zoning ordinances or are listed as a conditional permitted use, sometimes called planned development housing.

plaintiff
A person who brings an action; the party who complains or sues in a personal action and is so named on the record.

plat book
A book of maps showing the location and the boundary lines of individual properties.

plat map
A map of a town, section or subdivision indicating the location and boundaries of individual properties.

plottage
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.

PMI
Acronym for Private Mortgage Insurance.

point of beginning (POB)
In a metes-and bounds legal description, the starting point of the survey, situated in one corner of the parcel; all metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning.

points
A percentage of the principal conventional loan amount. A lender often charges a borrower "service-charge" points for making a loan. Points may cover expenses in origination of the loan to increase a lender's yield or to "buy down" the rate. In conventional financing, points may be paid by the buyer or seller.

police power
The inherent right of the state to regulate for the purpose of promoting health, safety, welfare, and morality. Police power gives the state the right to impose certain restraints on human conduct which are reasonably necessary in order to safeguard the public interest. This right is the basis of zoning, the official map, building codes, and subdivision regulations.

pollution
Any substances in water, soil, or air that degrades the natural quality of the environment, offends the senses of sight, taste or smell, or causes a health hazard. The usefulness of the natural resource is usually impaired by the presence of pollutants and contamination.

pollution prevention
Actively identifying equipment, processes, and activities which generate excessive wastes or use toxic chemicals and then making substitutions, alterations, or product improvements. Conserving energy and minimizing wastes are pollution prevention concepts used in manufacturing, sustainable agriculture, recycling, and clean air/clean water technologies.

portfolio loan
A loan originated and maintained by the lender and not sold in the secondary mortgage market.

potentially responsible party (PRP)
Any individual or company that is potentially responsible for or has contributed to a spill or other contamination at a Superfund site. Whenever possible, EPA requires PRP's to clean up sites they have contaminated.

power-of-attorney
A written instrument authorizing a person, the attorney-in-fact, to act as the agent on behalf of another to the extent indicated in the instrument. (See attorney-in-fact)

power-of-sale clause
A clause in a mortgage authorizing the holder of the mortgage to sell the property in the event of the borrower's default. The proceeds from the public sale are used to pay off the mortgage debt first, and any surplus is paid to the mortgagor. A power-of-sale clause is also found in trust deeds, giving the trustee authority to sell the trust property under certain circumstances.

pre-approval letter
A letter from a lender that informs a seller about the amount of money that a potential buyer can obtain.

preliminary notice
Notifies a customer that work to be completed is subject to the lien rights of the contractor. Preliminary notice must be given prior to recording of a mechanic's lien, and should be filed by a contractor at least 20 days prior to the start of work. If notice is given later, liens will cover only the work starting 20 days prior to filing.

preliminary public report
Under the Subdivided Land Law the preliminary public report can be issued before the public report, and allows a sub-divider to take reservations from buyers but not sell parcels.

preliminary report
A title report that is made before a title insurance policy is issued or when escrow is opened. A preliminary report or policy of title insurance reports only on those documents having an affect on the title and should not be relied on as being an abstract. An abstract of title, on the other hand, reflects all instruments affecting title from the time of the original grant and also includes a memorandum of each instrument, and makes no attempt to determine which of the documents currently affects record title. The "preliminary" is not a binder or commitment that the title company will insure the title to the property, although this commitment may be obtained at an added cost.
premium
A fee paid to an insurance company.

premium (in excess of par)
A price paid for a security in excess of its face value.

prepaid items
On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which he or she must be reimbursed by the buyer.

prepayment penalty
The amount set by the creditor as a penalty to the debtor for paying off the debt before it matures; an early-withdrawal charge. The prepayment penalty is charged by the lender to recoup a portion of interest that the lender had planned to earn when the loan was made. It covers the lender for initial costs to set up the loan, to service it and to carry it in the early years of high risk. This punitive device also may represent the loss of income to the lender for the time the mortgage is paid off and the funds remain uncommitted. The reason most lenders are willing to allow prepayment after five years without penalty is that much of the total note's interest has been paid in by that time.

pre-qualify
Determine the maximum loan amount a prospective buyer qualifies for prior to showing them properties. Failing to pre-qualify may result in wasted efforts showing the prospect properties they cannot afford to purchase.

prescription
Acquiring a right in property, usually in the form of an intangible property right such as an easement or right-of-way, by means of adverse use of property that is continuous and uninterrupted for the prescriptive period established by state statute. Use of land is adverse when it is made under a claim or right. Therefore, there is no adverse use if the owner has granted permission, or if the user has paid for the use of the property, or if the user has admitted that the owner has a superior right in the property.

Prescription is often used interchangeably with the term adverse possession, which more strictly refers to the acquiring of title to lands. As in adverse possession, the essential elements are that the prescriptive right be adverse, under claim of right, continuous and uninterrupted, open, notorious and exclusive, with the knowledge and acquiescence of the servient owner, and continuing for the full prescriptive period. By "continuous" is meant that the property is used on a regular basis.

present worth
The discounted present-day value of money to be collected in the future.

preventive maintenance
Includes regularly scheduled activities such as painting and seasonal servicing of appliances and systems. Preventive maintenance preserves the long-range value and physical integrity of the building. This is both the most critical and the most neglected maintenance responsibility. Failure to perform preventive maintenance invariably leads to greater expense in other areas of maintenance.

price fixing
The practice of conspiring to establish fixed fees or prices for services rendered or goods sold. In recent years, the setting of attorney fees by local bar associations and commission percentages and management fees by local realty associations has been successfully attacked as price fixing and thus a violation of the Sherman Antitrust Act.

prima facie
At first sight; on the first appearance; on the face of it; so far as can be judged from the first disclosure; presumably; a fact presumed to be true unless disproved by some evidence to the contrary.

prime rate
The minimum interest rate a commercial bank will charge to its largest clients. Prime rates are determined in part by the rate the bank pays for the money they lend to borrowers. Decisions of the Federal Reserve Bank (The Fed) to increase or decrease the supply of money can cause the prime rate that banks charge to fluctuate.

primary lenders
Originators of real estate loans including commercial banks, savings and loan associations and mutual savings banks.

primary mortgage market
The mortgage market in which loans are originated and consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks.

primary personal residence
The dwelling in which a taxpayer lives and occupies most of the time.

principal
1. One of the main parties to a transaction. For example, the buyer and seller are principals in the purchase of real property. 2. In a fiduciary relationship, the person who hires a real estate broker to represent him or her in the sale of property. The phrase, "principals only," often found in real estate ads, is meant to exclude real estate agents from contacting the owners of the property.

principal balance
The balance owed on a loan

principal meridian
The main imaginary line running north and south and crossing a base line at a definite point, used by surveyors for reference in location and describing land under the rectangular (government) survey system of legal description.

prior appropriation
A concept of water ownership in which the landowner's right to use available water is based on a government administered permit system.

priority
The order of position, time or place. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens. Thus the old adage "prior in time is prior in right" is applicable.

prescriptive easement
Acquiring an easement by continuous use over a statutory period of time.

private mortgage insurance (PMI)
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency. A special form of insurance designed to permit lenders to increase their loan-to-market-value ratio, often up to 95 percent of the market value of the property. Many lenders are restricted to 80 percent loans by government regulations, special loss reserve requirements or internal management policies related to mortgage portfolio mix. A lender, however, may lend up to 95 percent of the property value if the excess of the loan amount, over 80 percent of value, is insured by a private mortgage guaranty insurer.

probate
The formal judicial proceeding to prove or confirm the validity of a will, to collect the assets of the decedent's estate, to pay the debts and taxes and to determine the persons to whom the remainder of the estate is to pass.

procuring cause
That effort which brings about the desired results. Also called predominant efficient cause or the contributing cause.

profit a prendre
The right to remove such things as trees, soil, and minerals from the land of another.

profit and loss statement
A detailed statement of income and expenses of a business that reveals the operating position of the business over a period of time. Commonly referred to a P&L.

progression
An appraisal principle that states that, between dissimilar properties, the value of the lesser-quality property is favorably affected by the presence of the better-quality property.

promissory note
An unconditional written promise of one person to pay a certain sum of money to another person, order or bearer at a future specified time. A broker who accepts a promissory note as a deposit from a prospective purchaser must generally disclose to the seller that the buyer's deposit is in the form of a promissory note.

property analysis
A study made to familiarize a property manager with the nature and condition of a building, its relative market position, and its estimated income and operating expenses.

property management
That aspect of the real estate industry devoted to marketing, leasing, managing, and the maintenance of the property of others.

property manager
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting.

property taxes
Assessment made by county or city assessor's office for real property taxes. Payment dates may vary according to state regulation.

proprietary lease
A lease given by the corporation, which owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment.

prorations
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.

prospecting
Locating owners of properties who are interested in selling, or buyers who are interested in purchasing property.

protected class
Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation. Currently includes ethnic minorities, women, religious groups, the handicapped and others.

public records
Records which by law give constructive notice of matters relating to property.

public report
A disclosure statement required by the Subdivided Land Law stating that a buyer is not obligated until he or she has read the report and signed a receipt.

public water system
A system that provides piped water for human consumption to at least 15 service connections or regularly serves 25 individuals.

puffing
Exaggerated or superlative comments or opinions not made as representations of fact and thus are not grounds for misrepresentation, such as, "This property is a real good buy." One test used is whether a reasonable person would have relied on the statement. A statement such as, "The apartment has a fantastic view, " is puffing because the prospective buyer can clearly assess the view for himself or herself, whereas a statement such as "The apartment has a fantastic view of the lake," when in fact all its windows face the street, would be misrepresentation.

punitive damages
Damages awarded to one party to punish another party for dishonest conduct. Meant to deter others from committing a similar offense.

pur antre vie
"For the life of another." A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.

purchase-money mortgage
A mortgage given as part of the buyer's consideration for the purchase of real property, and delivered at the same time that the real property is transferred as a part of the transaction. It is commonly a mortgage taken back by a seller from a purchaser in lieu of purchase money. A purchase-money mortgage is usually used to fill a gap between the buyer's down payment and a new first mortgage or mortgage assumed, as when the buyer pays 10 percent in cash, gets an 80 percent first mortgage from a bank, and then the seller takes back a purchase-money second mortgage for the remaining 10 percent.

pursuant to
In conjunction with; as a part of; in accordance with.

pyramiding
The process of acquiring properties by refinancing properties already owned and investing the loan proceeds in additional properties.