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.
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.
Zoning that does not consider its effect on other areas.
Where a lender becomes a partner in a development.
A mortgage loan wherein the lender has a partial equity
interest in the property or receives a portion of the
income from the property.
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
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)."
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
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.
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.
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.
The instrument that conveys real property from the state
or federal government to an individual.
A defect that is obvious from a reasonable inspection of
The person to whom a debt instrument, such as a check or
promissory note, is made payable; obligee, the
The limit on the amount the monthly payment can be
increased on an adjustable-rate mortgage when the
interest rate is adjusted.
The debtor on a promissory note or the party who makes
payment to another.
A property management fee expressed as a percentage of
the gross collectable income from a property.
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
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
Per year, each year.
per day, each day.
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.
A test of the soil to determine if it will absorb and
drain water adequately to use a septic system for sewage
A leasehold interest from period to period that renews
automatically unless a notice of termination is given.
A person's gross income from wages, salaries,
commissions, interest and profits from businesses or
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
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)
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.
A loan divided into two parts with one lender taking a
secondary security position.
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
A person who brings an action; the party who complains
or sues in a personal action and is so named on the
A book of maps showing the location and the boundary
lines of individual properties.
A map of a town, section or subdivision indicating the
location and boundaries of individual properties.
The increase in value or utility resulting from the
consolidation (assemblage) of two or more adjacent lots
into one larger lot.
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
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.
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
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.
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.
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
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
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
A letter from a lender that informs a seller about the
amount of money that a potential buyer can obtain.
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
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.
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.
A fee paid to an insurance company.
premium (in excess of par)
A price paid for a security in excess of its face value.
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.
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.
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.
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
The discounted present-day value of money to be
collected in the future.
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.
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.
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.
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.
Originators of real estate loans including commercial
banks, savings and loan associations and mutual savings
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.
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.
The balance owed on a loan
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
A concept of water ownership in which the landowner's
right to use available water is based on a government
administered permit system.
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.
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.
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.
That effort which brings about the desired results. Also
called predominant efficient cause or the contributing
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
An appraisal principle that states that, between
dissimilar properties, the value of the lesser-quality
property is favorably affected by the presence of the
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.
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
That aspect of the real estate industry devoted to
marketing, leasing, managing, and the maintenance of the
property of others.
Someone who manages real estate for another person for
compensation. Duties include collecting rents,
maintaining the property and keeping up all accounting.
Assessment made by county or city assessor's office for
real property taxes. Payment dates may vary according to
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
Expenses, either prepaid or paid in arrears, that are
divided or distributed between buyer and seller at the
Locating owners of properties who are interested in
selling, or buyers who are interested in purchasing
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.
Records which by law give constructive notice of matters
relating to property.
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
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
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.
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.
In conjunction with; as a part of; in accordance with.
The process of acquiring properties by refinancing
properties already owned and investing the loan proceeds
in additional properties.