PACKAGE MORTGAGE – Commonly used in new home sales for major appliances and floor coverings, a form of MORTGAGE which includes the financing of PERSONAL PROPERTY with the financing of REAL PROPERTY.
PACKAGE POLICY – A combination of two or more individual POLICES or COVERAGES into a single POLICY as a HOMEOWNERS POLICY combines LIABILITY, PROPERTY and THEFT coverage.
PAD SITE – Often adjacent to a larger shopping center, an individual, freestanding SITE for a retailer,.
PAID-UP INSURANCE – 1) INSURANCE on which all required PREMIUMS have been paid; 2) the reduced paid-up INSURANCE available as a NON-FORFEITURE OPTION.
PAIN AND SUFFERING – Also known as GENERAL DAMAGES – DAMAGES awarded to an injured person for INTANGIBLE LOSS which cannot be measured directly by dollars. General damages are distinguished from SPECIAL DAMAGES which are awarded for actual ECONOMIC LOSS, such as medical costs, loss of income, etc.
PANIC PEDDLING – Also known as BLOCKBUSTING – The illegal act of inducing homeowners to sell their REAL PROPERTY by making misrepresentations concerning the entry or potential entry of minority persons into the neighborhood.
PAPER – CREDIT given as evidenced by a written obligation that is backed by PROPERTY.
PAPER PROFIT – An increase in VALUE above the original cost that would be realized if the PROPERTY were sold even though the PROPERTY is not offered for sale.
PARAMEDICAL EXAMINATION – A physical examination of an applicant by a trained person other than a physician.
PARCEL – Also known as LOT – A specific portion of a larger TRACT of LAND.
PAROL EVIDENCE – Oral evidence, rather than that contained in documents. The PAROL EVIDENCE rule states that when parities put their agreement in writing, all previous oral agreements merge into the written agreement which cannot be contradicted by oral testimony unless there was a mistake or FRAUD.
PARQUET – Also known as PARQUET FLOOR – A finished floor constructed of wood blocks laid in rectangular or square patterns.
PARQUET FLOOR – Also known as PARQUET – A finished floor constructed of wood blocks laid in rectangular or square patterns.
PARTIAL DISABILITY – 1) The result of an injury or illness which prevents an INSURED from performing one or more of the functions of his/her regular job; 2) a BENEFIT sometimes found in DISABILITY INCOME POLICIES providing for the payment of reduced monthly INCOME in the event the INSURED cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.
PARTIAL EVICTION – When the possessor of the PROPERTY, such as a TENANT, is deprived of a portion thereof.
PARTIAL INTEREST – 1) Ownership of a part of the ownership rights to a PARCEL of REAL ESTATE; 2) infrequently used to describe an undivided interest in property shared with several other owners.
PARTIALLY AMORTIZED LOAN – A LOAN that requires some payments toward PRINCIPAL but does not fully RETIRE THE DEBT thus requiring a BALLOON PAYMENT.
PARTIAL RELEASE – A provision in a MORTGAGE that allows some of the PROPERTY pledged to be freed from serving as COLLATERAL.
PARTIAL TAKING – Acquisition by CONDEMNATION of only part of the PROPERTY or some PROPERTY rights.
PARTICIPATING INSURANCE – INSURANCE issued by an insurance company providing participation in DIVIDEND distribution.
PARTICIPATING MORTGAGE – Also known as PARTICIPATION MORTGAGE – One that allows the lender to share in part of the INCOME or RESALE PROCEEDS.
PARTICIPATING POLICY – A LIFE INSURANCE POLICY under which the company agrees to distribute to POLICYHOLDERS the part of its SURPLUS which its Board of Directors determines is not needed at the end of the business year which serves to reduce the PREMIUM the POLICYHOLDER had paid. See also POLICY DIVIDEND and NONPARTICIPATING POLICY.
PARTICIPATION MORTGAGE – Also known as PARTICIPATING MORTGAGE – One that allows the lender to share in part of the INCOME or RESALE PROCEEDS.
PARTICLE BOARD – Also known as FIBERBOARD and INSULATION BOARD – A prefabricated building material composed of wood or other plant fibers, compressed and bonded into sheet.
PARTITION – 1) Also known as PARTITION WALL – Any wall that subdivides the interior space of a building; 2) the separation through legal action of the interests of CONCURRENT OWNERS resulting in the individual ownership of the INTERESTS of each.
PARTNER – An entity that is a member of a PARTNERSHIP.
PARTNERSHIP – An agreement between two or more entities to go into business or INVEST. Within the scope of the PARTNERSHIP, either PARTNER may bind the other and each PARTNER is LIABLE for all the PARTNERSHIP’S DEBTS. A PARTNERSHIP normally pays no taxes, but files an information return, though each individual PARTNER pays personal income TAX on their share of INCOME.
PARTY WALL – A wall constructed on a PROPERTY LINE as a common support to structures on both sides which are under different ownerships.
PARTY WALL EASEMENT – An EASEMENT created by two adjacent REAL PROPERTY owners for the protection of their individual interests in a common wall.
PASSIVE ACTIVITY INCOME – Under the 1986 Tax Act, INCOME 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 including all activities that generate income from payments for the use of property rather than for the performance of services, such as LONG-TERM RENTALS of APARTMENTS, NET LEASED PROPERTY, automobiles and office equipment. In contrast, the rental of hotel rooms or transient apartments and short-term car rentals are not passive because of the extent of services provided.
PASSIVE INCOME GENERATOR (PIG) – A business or INVESTMENT that produces passive income which can be used to offset passive losses.
PASSIVE INVESTOR – 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 CERTIFICATES – Also known as PASS-THROUGH 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.
PASS-THROUGH SECURITIES – Also known as PASS-THROUGH CERTIFICATES – 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 – The conveyance document from the government used to transfer the ownership of PUBLIC LANDS to a private party.
PAYBACK PERIOD – Used to compare alternative investment opportunities, the amount of time required for cumulative estimated future INCOME from an INVESTMENT to equal the amount initially invested.
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. Though it generally 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.
PENSION BENEFIT GUARANTY CORPORATION (PBGC) – The Federal body responsible for administering the plan termination insurance program under ERISA.
PENSION BENEFITS – A series of payments to be provided in accordance with the plan of BENEFITS.
PENSION PLAN – A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable BENEFITS to participants after retirement.
PENTHOUSE – A luxury-housing UNIT located on the top floor of a HIGH-RISE building.
PERCENTAGE LEASE – Usually on retail business PROPERTY, a LEASE under which the RENT paid is a percentage of the gross sales volume of the business. Some percentage LEASES also have a BASE RENT.
PERCENTAGE PARTICIPATION – A provision in a HEALTH INSURANCE CONTRACT that the INSURER and INSURED will share covered LOSSES in agreed proportions. See also COINSURANCE.
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 test of soil to determine its ability to absorb and drain water.
PERFORMANCE – In CONTRACT LAW, the completion of duties and obligations specified in a CONTRACT.
PERFORMANCE BOND – A BOND issued by an INSURANCE COMPANY that is 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.
PERIL – The cause of a LOSS INSURED against in a POLICY such as windstorm, fire, explosion, theft or riot.
PERIODIC TENANCY – Also known as ESTATE FROM PERIOD TO PERIOD, TENANCY FROM MONTH TO MONTH, TENANCY FROM PERIOD TO PERIOD and TENANCY FROM YEAR TO YEAR – A LEASEHOLD interest for a definite period of time which automatically renews itself at each expiration. Because of the automatic RENEWAL, one of the parties must take some positive action, such as proper notification to the other party, to terminate the LEASEHOLD.
PERJURY – Lying under oath.
PERMANENT LIFE INSURANCE – 1) Generally, INSURANCE that accrues cash value such as WHOLE LIFE or ENDOWMENT; 2) a phrase used to cover any form of LIFE INSURANCE except TERM.
PERMANENT MORTGAGE – A MORTGAGE for a long period of time (over 10 years).
PERMIT – Issued by a government regulatory authority, a document 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. For example, a DEED that keeps PROPERTY in a family in perpetuity can cause financial hardship and a perpetual INCOME stream may cause BANKRUPTCY.
PERSISTENCY – The length of time INSURANCE remains in force through the continued payment of RENEWAL PREMIUMS.
PERSON – 1) In law, an ENTITY having legal responsibility; 2) a NATURAL PERSON is a human being who has reached MAJORITY. An artificial person may be a CORPORATION; in some instances PARTNERSHIPS, governments, and certain other bodies are considered persons.
PERSONAL ARTICLES FLOATER – A form of COVERAGE designed to meet the needs for INSURANCE on PROPERTY of a moveable nature such as furs, jewelry, fine art and silverware. The COVERAGE usually protects against all physical LOSS, subject to special EXCLUSIONS and conditions.
PERSONAL INJURY PROTECTION (PIP) – First-party NO-FAULT coverage in which an INSURER pays, within the specified limits, the wage loss, hospital, medical and funeral expenses of the INSURED.
PERSONAL LIABILITY – An individual’s responsibility for a DEBT.
PERSONAL LINES – INSURANCE for individuals or families rather than for businesses or organizations.
PERSONAL PROPERTY – Also known as CHATTEL or PERSONALITY – Any
PROPERTY that is movable and which is not REAL PROPERTY.
PERSONAL REPRESENTATIVE – A person appointed through the WILL of a deceased or by a court to settle the ESTATE of one who dies.
PERSONAL RESIDENCE – Used to establish one’s legal residence for TAX, voting and legal purposes, the DWELLING UNIT that one claims as one’s primary home.
PERSONALITY – Also known as CHATTEL – PROPERTY that is movable, not fixed to LAND.
PER STRIPES – A legal method of distributing an ESTATE to include the descendants of a DECEASED LEGATEE.
PHOTOVOLTAIC – The process of converting light directly into electricity using specially designed silicon cells.
PHYSICAL DAMAGE – Also known as MATERIAL DAMAGE – DAMAGE to or LOSS of the auto resulting from collision, fire, theft or other perils.
PHYSICAL DETERIORATION – Also known as NORMAL WEAR AND TEAR – Normally attributable to deferred MAINTENANCE, the LOSS in PROPERTY VALUE because of the aging process, such as broken windowpanes, peeling paint, flaring shingles, etc.
PHYSICIAN’S EXPENSE INSURANCE – Also known as MEDICAL EXPENSE
INSURANCE – COVERAGE which provides BENEFITS toward the cost of such services as doctor’s fees for non-surgical care in the hospital, at home or in a physician’s office and X-rays or laboratory tests performed outside the hospital.
PIGGYBACK LOAN – 1) one MORTGAGE held by more than one lender, with one lender holding the rights of the others in subordination; 2) a combination of the construction LOAN with the permanent LOAN commitment.
PITCH – The slope or incline of a roof from the ridge to the lower edge, expressed in inches of rise per foot of length or by the ratio of the rise to the span.
PLAINTIFF – The person who complains or sues in a personal action.
PLAN ADMINISTRATOR – Usually designated in the plan agreement, the person or persons controlling the money or PROPERTY contributed to the plan.
PLANNED UNIT DEVELOPMENT (PUD) – A ZONING classification that allows flexibility in the design of a subdivision which 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 – Also known as planning board, ZONING commission or ZONING board – Depending on locality, 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.
PLAT – A map of a country, municipality, parish or subdivision indicating the location and boundaries of individual PARCELS of REAL PROPERTY.
PLAT BOOK – Usually maintained at a recorder’s office or courthouse, a book in which the SURVEY maps for that area are compiled.
PLATE – Any horizontal member that forms a base for supports. The wall plate rests on top of the STUDS and forms the base for the RAFTERS; the SILL PLATE OR SOLE PLATE rests on the foundation and forms the base for the STUDS.
PLEDGE – The depositing of PERSONAL PROPERTY by a DEBTOR with a CREDITOR as SECURITY for a DEBT.
PLEDGED ACCOUNT MORTGAGE (PAM) – A type of MORTGAGE in which part of the cash down payment is put aside in a special savings account from which the lender draws to supplement the MORTGAGE payments which makes smaller payments possible during the first few years of the LOAN term.
PLOT PLAN – A diagram showing the proposed or existing use of a specific PARCEL of LAND.
PLOTTAGE – Also known as ASSEMBLAGE – The creation of one large PARCEL of REAL PROPERTY through the acquisition and combination of many smaller ADJACENT PARCELS.
PLOTTAGE INCREMENT – Also known as PLOTTAGE VALUE – The increase in VALUE created by joining smaller ADJACENT PROPERTIES into one large PARCEL. The large PARCEL is worth more that the sum of the smaller PROPERTIES.
PLOTTAGE VALUE – Also known as PLOTTAGE INCREMENT – Increment in the VALUE of LAND comprised by ASSEMBLAGE of similar plots into one ownership.
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.
POINT-OF-SERVICE PLANS – Often known as open-ended HMOS or PPOs, these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.
POINTS – Also known as DISCOUNT POINTS – Fees paid to induce lenders to make a MORTGAGE LOAN. Each point equals 1percent of the LOAN PRINCIPAL and have the effect of reducing the amount of money advanced by the lender.
POLICE POWER – The right of the government to enact laws for the protection of the general public. Common in REAL ESTATE are laws such as BUILDING CODES, ZONING ORDINANCES and health and safety requirements.
POLICY – The printed legal document stating the terms of the INSURANCE CONTRACT that is issued to the POLICYHOLDER by the company.
POLICY DIVIDEND – A refund of part of the PREMIUM on a participating LIFE INSURANCE policy reflecting the difference between actual experience and the PREMIUM charged.
POLICYHOLDER – A person who pays a PREMIUM to an INSURANCE COMPANY in exchange for the protection provided by an INSURANCE POLICY. Usually the INSURED person, this may also be a PARTNERSHIP, a relative of the INSURED or a CORPORATION.
POLICYHOLDERS’ SURPLUS – Sums left after LIABILITIES are deducted from ASSETS, including paid-in capital and special voluntary reserves. An additional financial protection to POLICYHOLDERS in the event a company suffers unexpected or catastrophic LOSSES, it is in effect the financial base that permits a company to sell INSURANCE.
POLICY LOAN – A LOAN made by a LIFE INSURANCE company from its general funds to a POLICYHOLDER on the SECURITY of the cash value of a POLICY.
POLICY OWNER – A person, persons or business that owns an INSURANCE POLICY.
POLICY RESERVES – The measure of the funds that a LIFE INSURANCE company holds specifically for fulfillment of its POLICY obligations. Reserves are required by law to be so calculated that, together with future PREMIUM payments and anticipated interest earnings, they will enable the company to pay all future CLAIMS.
POLICY TERM – That period for which an insurance policy provides COVERAGE.
POLITICAL UNIT – Also known as POLITICAL SUBDIVISION – Any governmental jurisdiction such as a state, county, parish, city, municipality, taxing district, school district, etc.
POLLUTION LIABILITY – Exposure to lawsuits for injury or cleanup costs that result from pollution damage.
POOL – An organization of INSURERS or RE-INSURERS through which particular types of RISK are UNDERWRITTEN and PREMIUMS, LOSSES and expenses are shared in agreedupon amounts.
POOLING ARRANGEMENT – Also known as RISK POOLING ARRANGEMENT – An agreement to divide any LOSSES that might occur equally among two or more people, typically with each paying the average LOSS.
PORTABILITY – The transfer of PENSION rights and credits when a worker changes jobs.
POSITIVE LEASEHOLD – Advantageous to the LESSEE, a situation in which the CONTRACT RENT being paid is less than the ECONOMIC RENT.
POSSESSION OF PROPERTY – Person or persons that hold or control a PROPERTY.
POWER OF ATTORNEY – A written, recorded document authorizing one person, the ATTORNEY IN FACT, to act on behalf of another person, the PRINCIPAL.
PREADMISSION CERTIFICATION – Process in which a health care professional evaluates an attending physician’s request for a patient’s admission to a hospital by using established medical criteria.
PRECEDENT – A court decision or opinion which acts as an example for future decisions or opinions in similar situations.
PRE-CLOSING – Used when closings are expected to be complicated, a rehearsal of the closing whereby instruments are prepared and signed by some or all parties to the CONTRACT.
PRE-EXISTING CONDITION – A physical or mental condition that existed before the effective date of coverage.
PRE-EXISTING USE – Also known as NON-CONFORMING USE – The allocation of their proportionate share of INCOME and EXPENSES to the buyer and seller. The BANKING MONTH (30 days) and the BANKING YEAR (360 days) are often used in PRORATIONS rather than the actual number of days in the month or year.
PRE-FABRICATED – See also MANUFACTURED HOME, MOBILE HOME, MOBILE HOME PARK – 1 ) As building components, constructed in a factory prior to being erected or installed on the construction site; 2) as a house, constructed of PREFABRICATED components.
PREFERRED PROVIDER ORGANIZATION (PPO) – An arrangement whereby a THIRDPARTY payer CONTRACTS with a group of medical care providers who furnish services at lower than usual fees in return for a certain volume of patients and prompt payment.
PREFERRED STOCK – Evidence of ownership which entitles the owners to receive DIVIDENDS from the corporation before the common stockholders and which usually also provides a prior CLAIM to corporate ASSETS if the corporation is dissolved.
PRE-LEASE – To obtain LEASE commitments in a building or complex prior to its being available for occupancy. See also PRE-SALE.
PREMISES -1) The subject matter of a CONVEYANCE; 2) an ESTATE; 3) LAND and TENEMENTS.
PREMIUM – 1) The VALUE of a MORTGAGE or BOND in excess of its FACE AMOUNT; 2) the sum paid by a POLICYHOLDER to keep an INSURANCE POLICY in force; 3) an amount over MARKET VALUE paid for some exceptional quality or feature.
PREMIUM FINANCE – Allows the INSURED to pay part of the PREMIUM when COVERAGE takes effect and pay the rest during the POLICY period.
PREMIUM LOAN – A POLICY LOAN made for the purpose of paying PREMIUMS.
PREMIUM TAX – Imposed by each state, a TAX on the PREMIUM INCOME of INSURERS doing business in that state.
PRE-PAID EXPENSES – Amounts that are paid prior to the period they cover.
PRE-PAID GROUP PRACTICE PLAN – 1) One form of HEALTH MAINTENANCE ORGANIZATION (HMO), a plan under which specified health services are rendered by participating physicians to an enrolled group of persons with a fixed periodic payment made in advance by or on behalf of each person or family; 2) if a HEALTH INSURANCE carrier is involved, a CONTRACT to pay in advance for the full range of health services to which the INSURED is entitled under the terms of the HEALTH INSURANCE CONTRACT.
PRE-PAID INTEREST – INTEREST paid in advance of the time it is earned.
PRE-PAID ITEMS – On a CLOSING STATEMENT, those items, such as HAZARD INSURANCE, which have been paid in advance by the seller and are usually PRO-RATED at the CLOSING.
PRE-PAYMENT CLAUSE – Also known as PREPAYMENT PENALTY and PREPAYMENT PRIVILEGE – The FEE charged by the lender to the borrower when the borrower pays off the LOAN ahead of schedule in CONVENTIONAL LOANS.
PRE-PAYMENT PENALTY – Also known as PREPAYMENT CLAUSE and PREPAYMENT PRIVILEGE – The FEE charged by the lender to the borrower when the borrower pays off the LOAN ahead of schedule in CONVENTIONAL LOANS.
PRE-PAYMENT PRIVILEGE – Also known as PREPAYMENT CLAUSE and PREPAYMENT PENALTY – The FEE charged by the lender to the borrower when the borrower pays off the LOAN ahead of schedule in CONVENTIONAL LOANS.
PRE-PAYMENTS – Often paid into an ESCROW ACCOUNT, Advance payments of EXPENSES such as INSURANCE and TAXES.
PRE-SALE – Sale of proposed PROPERTIES, such as CONDOMINIUMS, before construction begins. See also PRE-LEASE
PRESCRIPTION – Usually as a result of occupancy and use requirements set by law, the securing of TITLE or an EASEMENT by 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 – Based on a compound interest rate, the VALUE today of an amount to be received in the future.
PRESERVATION DISTRICT – A ZONING designation covering a sensitive environmental area, scenic area, park land or HISTORIC DISTRICT and placing especially strict limitations on private landowner’s and non-owners’ freedom to change the essential character of SITES within the district.
PRETAX INCOME – The amount earned from a business or investment before deducting INCOME TAX.
PRICE FIXING – Illegal effort by competing businesses to maintain a uniform price, such as the COMMISSION rate on the sale of REAL ESTATE.
PRICE-LEVEL-ADJUSTED MORTGAGE – A LOAN whose payment is adjusted according to the rate of INFLATION. Not commonly used in the U.S., he payments are generally quite low, typically 3percent to 5percent annually of the DEBT.
PRIMARY BENEFICIARY – Also known as BENEFICIARY – 1) The LENDER under a DEED OF TRUST; 2) the recipient of the proceeds of a living TESTAMENTARY or LAND TRUST; 3) the person designated or provided for by the POLICY terms to receive any BENEFITS provided by the POLICY or plan upon the death of the INSURED.
PRIMARY INSURANCE – INSURANCE that pays compensation for a LOSS ahead of any other INSURANCE COVERAGES the POLICYHOLDER may have.
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 PMSA’S 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 creditworthy customers. Though not the same as the long-term MORTGAGE RATE, it may influence these rates. MORTGAGE RATES and consumer loan rates, such as those charged on PERSONAL PROPERTY LOANS and credit cards, are generally higher than the PRIME RATE, but exceptions occur at times.
PRIME TENANT – The TENANT which occupies the most space in a shopping center or office building. PRIME TENANTS are considered creditworthy and attract customers or traffic to the center.
PRINCIPAL – 1) As distinct from the INTEREST paid the amount of money raised by a MORTGAGE or other LOAN; 2) the one who owns or will use PROPERTY; 3) also known as CLIENT – the person who authorizes another to represent him or her.
PRINCIPAL AND INTEREST PAYMENT (P&I) – Commonly used with AMORTIZING LOANS, a periodic PAYMENT usually paid monthly, that includes the INTEREST charges for the period plus an amount applied to AMORTIZATION of the PRINCIPAL balance.
PRINCIPAL BROKER – The licensed BROKER responsible for the operations conducted by the BROKERAGE firm.
PRINCIPAL, INTEREST, TAXES AND INSURANCE PAYMENT (PITI) – Also known as BUDGET PAYMENT – The periodic, typically monthly. payment required by an AMORTIZING LOAN that includes ESCROW deposits that covers the four basic costs of home ownership: repayment of INTEREST, PRINCIPAL, HAZARD INSURANCE, and REAL ESTATE TAXES
PRINCIPAL MERIDIAN – The major north-south line used as a reference point in the GOVERNMENT SURVEY METHOD. RANGE LINES are measured east and west from the PRINCIPAL MERIDIAN.
PRINCIPAL NOTE – Also known as PROMISSORY NOTE – 1) the note which is secured by a MORTGAGE or DEED OF TRUST; 2) a promise to pay a specified sum to a specific person under specified terms.
PRINCIPAL RESIDENCE – The place one lives in most of the time. Eligible for deferment of
CAPITAL GAINS TAXES on the profit from a home, the home may be a single-family house, CONDOMINIUM, MOBILE HOME or houseboat.
PRINCIPAL SUM – The amount payable in one sum in the event of accidental death and in, some cases, accidental DISMEMBERMENT. When a CONTRACT provides benefits for both accidental death and accidental DISMEMBERMENT, each DISMEMBERMENT benefit is an amount equal to the PRINCIPAL SUM or some fraction thereof.
PRIORITY – 1) Legal PRECEDENCE; 2) having preferred status. Generally, upon FORECLOSURE, lenders are repaid according to priority.
PRIVATE MORTGAGE INSURANCE (PMI) – Generally required by the lender when the DOWN PAYMENT is less than 20 percent of the PROPERTY VALUE, INSURANCE provided by a private company which protects the lender against a LOSS in case of FORECLOSURE.
PRIVATE OFFERING – Generally under exemptions to registration allowed by the SECURITIES AND EXCHANGE COMMISSION and state securities regulation laws, an INVESTMENT or business offered for sale to a small group of investors,.
PROBATE – The court-supervised process of validating or establishing a distribution of the ASSETS of a deceased including the payment of outstanding obligations.
PROBATE – Also known as PROVE – To establish the validity of the WILL of a deceased person.
PROBATE ESTATE – That portion of the ASSETS and LIABILITIES whose distribution is supervised by the courts in the PROBATE process.
PROBATIONARY PERIOD – Designed to eliminate coverage for a sickness actually contracted before the POLICY went into effect, a period from the POLICY date to a specified time, usually fifteen to thirty days, during which no sickness COVERAGE is effective.
PROCURING CAUSE – The cause starting a series of events which will result in the accomplishment of some objective. A REAL ESTATE BROKER must be the PROCURING CAUSE of the transaction to be eligible for the COMMISSION in that he/she was not only licensed and then employed, but was also responsible for obtaining a BONA FIDE offer form a READY, WILLING, AND ABLE buyer.
PRODUCT LIABILITY – Legal liability incurred by a merchant, manufacturer or distributor because of injury or damage resulting from the use of its product.
PRODUCT LIABILITY INSURANCE – Protection against financial LOSS arising out of the legal liability incurred by a merchant, manufacturer or distributor because of injury or damage resulting from the use of a covered product.
PROFESSIONAL REVIEW ORGANIZATION (PRO) – An organization in which practicing physicians assume responsibility for reviewing the propriety and quality of health care services provided under MEDICARE and MEDICAID.
PRO-FORMA STATEMENT – From the Latin meaning “according to form” – FINANCIAL STATEMENTS showing what is expected to occur, as opposed to actual results.
PROGRESS PAYMENTS – In construction, LOAN PAYMENTS issued to the builder as building is completed.
PRO-JECT – A computer program widely used by institutional investors that allows an analyst to simulate PROPERTY performance, including PROPERTY with multiple LEASES.
PROJECTION PERIOD – The time duration for estimating future cash flows and the resale proceeds from a proposed REAL ESTATE INVESTMENT.
PROMISSORY NOTE – Also known as PRINCIPAL NOTE – 1) the note which is secured by a MORTGAGE or DEED OF TRUST; 2) a promise to pay a specified sum to a specific person under specified terms.
PROOF OF LOSS – Documentation presented to the INSURANCE COMPANY by the INSURED in support of a CLAIM so that the INSURER can determine its LIABILITY under the POLICY.
PROPERTY – 1) REAL ESTATE; 2) the rights that one individual has in LANDS or goods to the exclusion of all others; 3) rights gained from the ownership of wealth;.
PROPERTY CHARGES – Also known as PROPERTY EXPENSES and OPERATING EXPENSES – Either FIXED or VARIABLE CHARGES, the EXPENSES associated with the MANAGEMENT of any INCOME producing REAL PROPERTY.
PROPERTY DAMAGE COVERAGE – An agreement by an INSURANCE carrier to protect an INSURED against legal LIABILITY for DAMAGE by an INSURED automobile of one to the PROPERTY of another.
PROPERTY INSURANCE – Provides financial protection against LOSS or DAMAGE to the INSURED’S PROPERTY caused by such perils as FIRE, hail, windstorm, etc.
PROPERTY LINE – The recorded boundary of a plot of LAND.
PROPERTY MANAGEMENT – The operation of PROPERTY as a business, including RENTAL, MAINTENANCE, rent collection, etc.
PROPERTY MANAGER – A person who MANAGES REAL PROPERTY for another for compensation and is responsible for preserving the VALUE of the REAL PROPERTY while generating INCOME as an AGENT for the owner.
PROPERTY PERFORMANCE – Examining how PROPERTY is financially operating.
PROPERTY REPORT – Required by various states and by the Interstate Land Sales Full Disclosure Act, a DISCLOSURE document which gives pertinent information about subdivided PROPERTY available for sale.
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 – Sometimes referred to as AD VALOREM TAX or REAL ESTATE TAX, a government LEVY based on THE MARKET VALUE of privately owned PROPERTY.
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.
PROPRIETORSHIP – Ownership of a business, including income-producing REAL ESTATE, by an individual, as contrasted with a PARTNERSHIP or CORPORATION.
PRO RATA – An equal amount according to the fraction held by each.
PRO-RATE – To allocate between seller and buyer their proportionate share of an obligation paid or due such as REAL PROPERTY TAXES or INSURANCE.
PRO-RATION – The adjustment of BENEFITS paid because of a mistake in the amount of the PREMIUMS paid or the existence of other INSURANCE covering the same accident or DISABILITY.
PROSCRIPTION – A CLAIM not covered by an INSURANCE POLICY because it is filed after the time required in the language of the CONTRACT.
PROSPECT – A person considered likely to buy.
PROSPECTIVE PAYMENT – An advancement of payment for health care charges that are likely to occur.
PROSPECTUS – A printed descriptive statement about a business or INVESTMENT that is for sale, to invite the INTEREST of prospective investors.
PROTOTYPE PLAN – A standardized plan, approved and qualified as to its concept by the INTERNAL REVENUE SERVICE, which is made available by LIFE INSURANCE COMPANIES, BANKS and mutual funds for employers’ use.
PROVE – Also known as PROBATE – To establish the validity of the WILL of a deceased person.
PROVISION – A part (paragraph, clause, sentence, etc.) of an INSURANCE CONTRACT that describes or explains a BENEFIT, feature, requirement, condition, etc. of the INSURANCE protection afforded by the CONTRACT.
PROXIMATE CAUSE – 1) An unbroken chain of events between the occurrence and DAMAGE; 2) the dominating cause of LOSS or DAMAGE;
PROXY – 1) A person who represents another, particularly in some meeting; 2) 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.
PUBLIC LANDS – Generally undeveloped, acreage held by the government for conservation purposes.with limited uses such as wildlife management, grazing, timbering, recreation, mineral development, water development and hunting.
PUBLIC OFFERING – Generally requiring approval by the SEC and /or state securities agencies, soliciting the general public for the sale of INVESTMENT UNITS.
PUBLIC RECORD – Usually refers to LAND transaction records kept at the county courthouse.
PUBLIC SALE – An AUCTION sale of PROPERTY with notice to the general public advertised in advance in the local newspaper.
PUEBLO – Also known as ADOBE HOUSE – An early twentieth-century house that is made of adobe brick or some other material made to look like adobe brick. The characteristic projecting roof beams are called VIGAS.
PUFFERY – Also known as PUFFING – Informally referred to as the “salesmanship” of REAL PROPERTY, an opinion or exaggeration not made as a representation of FACT, but made merely to enhance the perceived desirability of the PROPERTY.
PUFFING – Also known as PUFFERY – Informally referred to as the “salesmanship” of REAL PROPERTY, an opinion or exaggeration not made as a representation of FACT, but made merely to enhance the perceived desirability of the PROPERTY.
PUNCH LIST – An enumeration of items that need to be corrected prior to a sale.
PUNITIVE DAMAGES – A court-awarded amount that exceeds the ECONOMIC LOSSES and general DAMAGES of a DEFENDANT and is intended solely to punish the PLAINTIFF
PUR AUTRE VIE – For or during the life of another. CONVENTIONAL LIFE ESTATES created when the GRANTOR conveys an interest in REAL PROPERTY to the LIFE TENANT contingent on the lifetime of another person. Both ESTATES IN REVERSION and ESTATES IN REMAINDER may be pur autre vie.
PURCHASE AGREEMENT – Also known as PURCHASE CONTRACT or SALES CONTRACT – The CONTRACT through which the seller and buyer agree to the TERMS of the sale of REAL PROPERTY.
PURCHASE CAPITAL – The amount of money used to purchase REAL ESTATE regardless of the source.
PURCHASE CONTRACT – Also known as PURCHASE AGREEMENT or SALES CONTRACT – The CONTRACT through which the seller and buyer agree to the TERMS of the sale of REAL PROPERTY.
PURCHASE MONEY MORTGAGE – A MORTGAGE given by a GRANTEE (buyer) to a GRANTOR (seller) in part payment of the purchase price of REAL ESTATE. See also CARRY BACK MORTGAGE
PURE CAPTIVE – INSURANCE COMPANY established and owned by a parent firm in order to INSURE its loss exposures while reducing PREMIUM costs, providing easier access to a REINSURER, and perhaps easing tax burdens. See also ASSOCIATION CAPTIVE; CAPTIVE INSURER.
