P&I, or Principal and Interest, payments refer to the periodic payments made on a mortgage or loan that include both the loan principal and the interest accrued. These payments are common in various types of loans, including mortgages, auto loans, and personal loans.
A P&L statement, also known as a profit and loss statement, is a financial document that provides a summary of a company's revenues, expenses, and profits/losses over a specific period.
A package mortgage is a type of mortgage arrangement where the principal amount loaned is increased by including both personalty (e.g., appliances) and realty (real estate) as collateral.
Packed deals are mortgage loans that include excessive fees in the balance owed, which might be potentially illegal due to regulations in certain jurisdictions.
A pad site is an individual freestanding retail space that typically encompasses ¾ to 1½ acres, often located near larger shopping centers or commercial developments.
In the context of condominium or cooperative housing, 'paint-to-paint' defines the boundaries of exclusive unit ownership. The ownership typically extends to the interior walls, floors, and ceilings, described as being from 'paint to paint,' with the housing complex retaining ownership and responsibility for common structural elements like walls separating the units.
Paired Sales Appraisal is a comparative method used to determine the value of a specific property attribute by comparing similar properties that differ in just that one attribute.
Panic selling refers to the sudden, widespread urgency to dump properties on the market, typically incited by fear of a rapid decline in property values, often due to perceived detrimental changes in neighborhood conditions.
Paper credit is a term used in real estate to describe a written obligation given or received instead of cash. It often includes negotiable instruments such as promissory notes or bonds.
A concept map for showing how a parcel of land might be divided for residential or commercial development without the detailed surveying or official approvals from planning or zoning departments.
Paper profit refers to the unrealized gain in value of a property which would be realized if the property were sold at its current market value. As long as the property remains unsold, the profit remains a 'paper' valuation and is not actual profit.
A parcel is a defined piece of property under one ownership. It can be a standalone lot or part of a larger subdivision.
A Parcel Identification Number (PIN), also known as an Assessor Parcel Number (APN), is a unique numerical identifier assigned by local tax assessors to uniquely identify a parcel of real estate.
Parking ratio refers to the number of parking spaces provided per 1,000 square feet of gross leasable area (GLA) in a property, ensuring adequate parking for tenants and visitors.
Parol Evidence concerns the use of oral agreements made prior to or at the time of writing a contract. The Parol Evidence Rule states that such oral agreements are generally inadmissible in court to contradict written agreements, except in cases of mistake or fraud.
Partial Interest refers to the ownership of a part of the ownership rights in a parcel of real estate, which can include rights like mineral rights or easements. It can also describe an undivided interest in a property shared with several other owners.
Partial Payment is a payment that is less than the required monthly mortgage payment. Normally, lenders do not accept partial payments, but a lender may make exceptions during times of difficulty.
A provision in a mortgage that allows some of the property pledged to be freed from serving as collateral.
Partial taking refers to the acquisition by condemnation of only a portion of a property or specific property rights, rather than the entire property.
A partially amortized loan is a type of loan that includes a regular payment schedule over a set period but does not fully pay off the principal within that time, resulting in a balloon payment at the end of the term.
A Participating Mortgage (Loan) is a financing arrangement where the lender is permitted to share in a portion of the property's income or the resale proceeds, alongside the fixed principal and interest payments.
Participation refers to the sharing of ownership in a loan by two or more investors, enabling them to collectively pool resources and share the risks and rewards associated with the loan.
Partition refers to the division of real property among co-owners who hold it with undivided interests, ensuring each party receives a specific portion or the equivalent value in cases of physical impracticability.
A partnership is an agreement between two or more entities to enter into a business or investment together, where each partner may bind the other within the scope of their arrangement, and all partners share liability for the partnership's debts.
Parts Per Billion (PPB) measures the concentration of a contaminant within a specific volume, expressed as the number of molecules of the contaminant per billion molecules of the total volume. It is a crucial metric used to ensure safety and compliance with environmental regulations.
Parts Per Million (PPM) is a unit used to measure the concentration of a substance in a mixture or solution, often used in environmental science, chemistry, and real estate for analyzing air, water, and soil contamination levels.
A Party Wall is a wall built along the line separating two 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.
Pass-Through Certificates (or Securities) represent interests in a pool of mortgages sold by mortgage bankers to investors, where money collected as monthly mortgage payments is distributed to certificate holders. These securities are often guaranteed by agencies like Ginnie Mae.
Pass-Throughs refer to operating expenses that a tenant may be required to pay in addition to base rent as detailed in the lease agreement.
Passive activity income refers to profits derived from business activities in which the taxpayer does not materially participate or rental activities, which are typically deemed passive regardless of material participation.
Passive income refers to earnings derived from a rental property, limited partnership, or other investment in which a person is not actively involved. Passive income often gives the benefit of regular earnings without actively working.
A Passive Income Generator (PIG) is a business or investment vehicle that produces passive income, which can be used to offset passive losses incurred from other passive activities, particularly in the context of rental real estate.
A passive investor is an individual who invests money into a business, project, or property without taking an active role in managing or operating it. This hands-off approach allows investors to potentially earn income while leveraging the expertise and efforts of others.
Passive Solar Heating is a system of features incorporated into a building’s design to use and maximize the effects of the sun’s natural heating capability.
Pasture and Grazing Land refers to a category of agricultural land utilized primarily for grazing livestock. This type of land can also be rotated or converted to crop use depending on economic and agricultural conditions.
Patent conveyance is the act of transferring a title to government land, often granted by the federal government to individuals or companies through an official document known as a patent.
The Payback Period is 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.
The payment adjustment date is the specific date on which the interest rate of an adjustable-rate mortgage (ARM) can be adjusted to reflect changes in market interest rates.
A contractual limit on the percentage amount of adjustment allowed in the monthly payment for an adjustable-rate mortgage at any one adjustment period, which can lead to negative amortization if the payment does not cover the interest due.
The payoff amount represents the total remaining balance on a loan, inclusive of any prepayment penalties, that must be paid upon settlement to release a lien and transfer the title of the property.
A penalty is a sum of money that one must pay for breaking a law or violating part or all of the terms of a contract. Penalties serve to ensure compliance with legal and contractual obligations.
The term 'Pencil Out' refers to using approximate figures to estimate whether a proposed investment is expected to be profitable. It is a preliminary assessment often used to quickly gauge investment viability.
The Pending Home Sales Index (PHSI)® is a data series produced by the National Association of Realtors® (NAR) that indicates the trends in sales contracts for houses, condos, and cooperatives. It serves as a leading indicator of closed home sales.
A nonprofit organization devoted to enhancing real estate investment by pension funds. PREA provides education, research, and advocacy to assist institutional real estate investment.
A penthouse is a luxury housing unit located on the top floor(s) of a high-rise building, often distinguished by premium views, expansive layouts, high-end finishes, and exclusive amenities.
Per Annum is a Latin term that translates to 'by the year' and is used to describe any annual occurrence or financial rate applied on a yearly basis.
'Per Stirpes' is a legal method of distributing an estate where the descendants of a deceased legatee inherit their ancestor's share.
PERC, or perchloroethylene, also known as tetrachloroethylene, is a chemical commonly used in dry cleaning that is highly toxic and can easily contaminate groundwater if it seeps through the ground.
A percentage lease is 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 includes a minimum base rental amount and is commonly used for retailers who are tenants.
Percentage rent is an additional rent under a percentage lease agreement, often applied to retail property tenants. It is calculated as a percentage of gross sales that exceed a pre-determined base amount or break point.
A percolation test, often referred to as a 'perc test,' is a scientific method used to measure the soil's ability to absorb and filter water, essential for designing septic systems.
"Perfecting title" refers to the legal process of removing any "clouds" or claims against a real estate title, ensuring that the property has a clear and legally sound ownership status. This often involves actions such as paying off liens, resolving disputes, obtaining quitclaim deeds, and addressing other title defects. The goal is to ensure that the title is marketable and can be transferred without any legal challenges to the ownership rights.
In contract law, performance refers to the completion of duties and obligations specified in the contract. Proper performance by all parties ensures that contractual objectives are met and can prevent disputes.
A performance bond is a type of surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.
A performing loan is a loan on which the borrower is making the scheduled payments without default or breach of terms. Performing loans are contrasted with nonperforming loans where payments are overdue by 90 days or more.
Perils in the context of real estate refer to various risks that can cause damage to a property, which are often covered under homeowner's insurance policies.
The period of redemption is a specific timeframe within which a borrower can reclaim their foreclosed property by paying off the total debt owed.
Periodic cash flow refers to the regular intervals of revenue generation and expenses within a specific timeframe for a real estate investment, providing insights into the liquidity and profitability of the property.
A Periodic Estate, also known as periodic tenancy, is a type of lease agreement that automatically renews at the end of each lease period unless either party provides notice of intention to terminate the agreement.
A permanent lender provides long-term financing for real estate projects, typically following the completion of construction. Unlike construction lenders, who offer short-term loans for building and development phases, permanent lenders focus on financing properties for extended periods.
A permanent mortgage is a long-term financing option, typically over 10 years, used to finance the purchase or sustainment of a real estate property. It becomes fully amortized over time and is often used in conjunction with construction loans.
Permeability refers to the ability of soil or other substrates to allow liquids and gases to pass through them. It's a key factor in determining soil's capacity to support different types of land uses, particularly in terms of drainage and agriculture.
A permit is a vital document issued by a government regulatory authority that grants the bearer the right to perform specific activities such as constructing, modifying, or occupying a building.
Perpetuity refers to a condition of endless or indefinite duration, commonly used in finance and real estate contexts to describe ongoing income streams or property rights.
In the context of real estate law, a person is an entity having legal responsibility. This can range from natural human beings to corporations, partnerships, governments, and other recognized bodies. Understanding these distinctions is crucial in contracts and legal obligations.
A personal assistant in real estate is an unlicensed staff person who works under the supervision of a licensed real estate agent, performing tasks that do not require a license.
Personal liability refers to an individual’s legal responsibility for a debt. In most mortgage loans on real estate, personal liability means that the borrower is accountable not only for the property but also for the repayment of the debt itself. Distinguishing it from nonrecourse loans and enhanced by additional clauses like the exculpatory clause, this concept is critical in financial and real estate transactions.
Personal property, also referred to as personalty, is any asset other than real estate. It includes items that are movable and not affixed to or associated with the land.
A personal residence is a dwelling unit that one claims as their primary home. This dwelling establishes one’s legal residence for voting, tax, and legal purposes.
Personalty refers to all property that is movable and not fixed to land. It is distinct from realty, which pertains to real estate and immovable property.
Phantom taxable income occurs when reported taxable income exceeds actual cash flow, often due to tax-related factors such as depreciation deductions that have been fully utilized.
A Phase I Environmental Site Assessment (ESA) is a preliminary investigation conducted to identify potential environmental contamination liabilities before acquiring or leasing a property. It typically includes a review of historical land use records, site inspections, interviews, and financial records.
PHASE II Environmental Site Assessment (ESA) involves a detailed field investigation to evaluate the presence of contamination following positive findings during Phase I ESA. Its aim is to confirm contamination and estimate the remediation cost.
The act of clearing up a contaminated site, involving specialized techniques and compliance with regulatory standards. Often referred to as 'remediation.'
Photovoltaic refers to the process of converting light directly into electricity using specially designed silicon cells. This term is commonly associated with solar energy systems that harness solar power to generate electricity.
Physical depreciation or deterioration refers to the loss of value in real estate due to the wear and tear of structures over time. This can be caused by a variety of factors including breakage, deferred maintenance, the effects of aging materials, and normal wear and tear.
Physical life refers to the expected period of time during which a real estate improvement or structure is expected to remain physically intact and usable if proper maintenance is conducted.
A piggyback loan combines a construction loan with a permanent loan commitment or refers to a mortgage held by more than one lender, often used to avoid private mortgage insurance.
Piggybacking is a strategy used by individuals with poor credit histories to improve their credit scores by being added as an authorized user on the credit account of someone with a good credit rating. While it can temporarily boost a credit score, the practice is of dubious legality and may defraud lenders.
In real estate, pitch primarily refers to the slope or angle of a roof, which can greatly influence the property's design, function, and appeal. 'Pitch' can also denote a thick black substance used in construction and maintenance, such as driveway pavement or roof patching.
PITI stands for Principal, Interest, Taxes, and Insurance, which are the components of a mortgage payment. Understanding PITI is crucial for homeowners and prospective buyers as it determines the total cost of owning a home.
A plaintiff is the person or party who initiates a lawsuit by filing a complaint with the court against the defendant, seeking legal remedy.
A zoning classification that allows flexibility in the design of a subdivision, enabling a mixture of land uses and housing types in a defined area. PUD zones generally set an overall density limit for the entire development, allowing for clustering of dwelling units to provide common open spaces and amenities.
A Planning Commission is a group of citizens appointed by local government officials to conduct hearings and recommend amendments to zoning ordinances. Often collaborative with a professional planning department, the commission ensures the implementation of a comprehensive urban plan.
A plat is a detailed map or plan of a specific land area that outlines property boundaries, lot sizes, easements, utility locations, and streets. It is often used in real estate to provide a clear depiction of a subdivision or parcel of land.
A plat book is a public record containing detailed maps of land, showing the division of the land into streets, blocks, and lots, and indicating the measurements of the individual lots.
A platted lot is a parcel of land that has been surveyed and officially recorded on a final plat map, typically within a subdivision. This process includes specifications of lot boundaries, street locations, and utility installations.
A Pledged Account Mortgage (PAM) is a type of home purchase loan where the borrower sets aside a sum of cash in a pledged account that is used to supplement mortgage payments in the initial years, reducing the payment amount during this period.
A plot plan is a diagram that shows the proposed or existing use of a specific parcel of land, including structures, landscaping, utilities, and other components of the land development. It is a crucial part of the planning and permitting process in real estate and construction.
Plottage refers to the increase in value realized by combining multiple smaller parcels of land into a single, larger parcel. This process is often employed in real estate to optimize land use and maximize profit.
Plottage value refers to the increased value that results when multiple smaller adjacent plots of land are combined into a single larger plot. This increase in value is due to the greater potential utility and development options that the larger plot offers compared to the individual smaller plots.
A Pocket Card is 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.
A Pocket Listing is a real estate term referring to the practice of holding back a property from being listed in the Multiple Listing Service (MLS) in order to find a buyer within the listing broker's network, thereby retaining the full commission.
The 'Point of Beginning' (POB) is a crucial term in a Metes and Bounds survey. It refers to the specific location where the survey starts and ends, ensuring the accurate description and enclosure of a land tract.
Points are fees paid to lenders to reduce the interest rate or secure a mortgage loan. Each point is 1% of the loan principal, affecting the overall loan cost and effective interest rate.
Police power is the inherent authority of a governmental body to enact and enforce regulations to ensure the order, safety, health, morals, and general welfare of the public.
Polychlorinated biphenyls (PCBs) are a group of man-made organic chemicals known for their chemical stability and insulating properties. These compounds were widely used in various industrial applications including building materials before being banned due to their environmental and health impacts.
Polychlorinated Biphenyls (PCBs) are carcinogenic chemicals formerly used in electrical transformers and other equipment. Given their hazardous nature, specific measures must be taken to safely dispose of PCBs to prevent environmental contamination.
A Ponzi scheme is an illegal investment scam where returns to earlier investors are paid from the contributions of new investors. The scheme collapses when it can no longer attract new investors.
A Porte-Cochère is a porch or portico that allows a vehicle to pass through, providing protection from the elements for passengers as they exit the vehicle and enter the building. The term is French for 'carriage entrance.'
