Real Estate Glossary "P"

package mortgage - A loan arrangement used to finance both real and personal property in a real estate transaction.

parol evidence rule - Oral evidence will not be allowed to contradict a written contract.

partition - The right of parties in a tenancy in common or joint tenancy to have the courts force the dissolution of the tenancies.

partnership - An agreement between two or more per­sons to conduct a business. A partnership can be either limited or general. See also general partnership, limited partnership.

party wall - A wall built on the line separating two properties. Because the wall is built partly on each property, each owner has an easement on the adjoining owner's land that is covered by the wall.

pension funds - These funds invest in packages of real estate loans, primarily from mortgage bankers and brokers.

percentage lease - A lease arrangement in which the rent is determined by a percentage of the tenant's gross income.

perfecting title - The process of removing defects on the title.

perils - Hazards or risks that may be protected against with insurance policies.

periodic estate - A leasehold estate that continues for an indefinite period of time. Also called an estate from period to period.

personal property - All property that is not classified as real property. The primary characteristic of personal property is mobility.

physical deterioration - Loss of value caused by wear and tear on the building, such as a leaking roof or peeling paint. Physical deterioration may be either curable or incurable. One of the three types of depreciation calculated in the cost approach to estimating value.

PITI - An acronym describing principal (P), interest (I), taxes (T) and insurance (I), the most common com­ponents of a mortgage payment.

planned unit development (PUD) - Mixed-use developments of several acres that set aside areas for residences; commercial property; and public areas such as schools, parks, etc.

plat - A property map recorded in plat books in the public records.

plat-of-survey method - Also called recorded plat and lot-block-tract, this is one of the methods used to describe real estate. Divides land into blocks, lots and tracts.

plottage - Combining lots to increase the value of the new larger lot over the sum of values of the smaller ones. A principle of value used in appraisal.

point of beginning - In the metes-and-bounds method of describing real estate, the description begins and ends at the point of beginning.

points - Points are interest, usually payable at closing. A point is 1 percent of the loan amount.

police powers - Government powers that give the state and local governments the authority to pass laws to protect the public health and safety.

portfolio lenders - Lenders who hold loans they originate rather than selling them to investors.

power of attorney - A written instrument authorizing one person (called the attorney-in-fact) to act as an agent for another person.

property management agreement - A document that establishes the working relationship between a building owner and a property manager. A contract between the parties that establishes an agency in which the manager is the agent and the owner is the principal.

prepaid expense - An expense that has been paid but not yet incurred.

prepayment clause - A mortgage clause that determines the borrower's rights and duties if the loan is pre­paid.

prescriptive easement - See easement by prescription.

price - In appraisal, what a property actually sells for.

price fixing - An illegal practice (violation of the anti­trust laws) in which brokers conspire to establish a standard commission rate.

principal meridians - Lines running north and south and intersected by base lines. Used in the rectangular survey system of describing real estate.

prior appropriation - Ownership and use of water are controlled by the state, and property owners must apply to the state to appropriate (divert) water.

private conduits - Organizations that often purchase and pool nonstandardized loans for selling in the secondary market.

private mortgage insurance (PMI) - Insurance written by a private company that protects a mortgage lender against loss if a borrower defaults. The insurance is usually used when the loan-to-value ratio exceeds 80 percent. PMI insures the top 20 percent to 25 percent of the loan, and borrowers are charged a fee at closing as well as an annual fee.

probate - The legal process of determining a will's validity, paying the debts of the estate and distributing the estate's remaining assets.

procuring cause - The broker whose actions resulted in completion of the sales transaction.

progression - The idea that the value of a poorer prop­erty will increase if it is near a better quality property. A principle of value used in appraisal.

promissory note - A contract agreement between a bor­rower and a lender whereby the borrower commits to pay the lender the loan amount following specific terms. The note is a negotiable instrument, allowing the lender to sell the note to investors.

proprietary lease - A lease given by the corporation that owns a cooperative apartment building to the share­holder, giving the shareholder the right as a tenant to one of the units in the building.

prorated expenses - Expenses shared between the buyer and seller.

puffing - Statements of opinion and exaggeration by the broker.

pur autre vie - A type of life estate based on the life of someone other than the life tenant. Means for the life of another.

purchase-money mortgage - A loan given by the seller to finance part of the purchase price. Also called a take-back mortgage.

pyramiding - Obtaining additional investment property by borrowing on the equity of existing investments.

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