Real Estate Definitions
Partial payment: A payment that is less than the agreed upon monthly payment on a loan.
Partition: The forced dividing of real estate among parties who were previously its co-owners.
Patent: A first in a series of documents by which the federal or state government transfers ownership of public lands to an individual.
Pay-off amount: The total balance on an existing loan or mortgage.
Percolation test: A testing of the soil on a property to evaluate if its absorption and drainage capacity will allow installation of a septic system.
Personal property: Property that does not qualify as real property.
PITI: Acronym for principal, interest, taxes and insurance, the four components of a monthly mortgage payment, which are taken into account when a lender is evaluating a borrower's financial qualifications for a loan.
Plat, or Plot: A map showing a piece of land subdivided into lots, streets and common area, if applicable.
P.M.I, or Private Mortgage Insurance: Acronym for Private Mortgage Insurance, see below.
Point: A one-time fee charged by the lender for originating a loan, one point being equal to one percent of the amount of the mortgage.
Power of attorney: A written legal document authorizing a person to act as agent for another, to the extent outlined in the document.
Power of Sale: A provision in a will, mortgage or trust agreement authorizing the sale or transfer of land in accordance with the terms of the provision.
Pre-Approval: A commitment from a lender to loan a certain amount of money to a buyer at a designated interest rate and for a specified period of time, which gives the buyer an advantage in competing to purchase real estate or a home.
Preforeclosure sale: The sale of a property by a mortgagor for less than the amount owed to the lender of the mortgage for the property, thereby allowing the mortgagor to avoid foreclosure, and done with the approval of the lender.
Prepayment penalty: A fee that is charged by the lender to a borrower who pays off a loan earlier than the due date, thereby costing the lender interest and other income from charges.
Pre-qualification: The process by which the amount of loan a prospective buyer will be eligible to borrow is determined, based on his or her income and expenses, which can be used to demonstrate the buyer's financial capability to the seller.
Prime rate: The most favorable interest rate that banks charge, usually to their preferred customers.
Principal: The amount borrowed, not including interest or other charges.
Principal balance: The portion of the original amount borrowed that is due on a loan or mortgage at any point in time.
Private mortgage insurance, or P.M.I.: A policy that insures that the lender will recover a specific percentage of the loan amount from the insurance company in the event that the borrower defaults; is not backed by any government agency; is usually required when a down payment of less than 20% is put on real estate or a home purchased.
Probate: The court proceedings to prove that a will is valid.
Procuring cause: The action or person who brings about the desired result; e.g., under an open listing, the broker who brings in the buyer who actually purchases the property.
Promissory note: A written promise to pay a specified amount of money in a designated period of time, which is also transferable to a third party.
Prorate: To divide the proportionate share of existing expenses on a piece of property between the seller and buyer, e.g., taxes owed at the time of a transfer of title from the seller to the buyer.
PUD (Planned Unit Development): A multi-unit property or subdivision that includes common property that is owned and maintained by a homeowners' association, for the use of the individual owners.
Purchase and sale agreement: A written contract signed by the buyer and seller that states the conditions under which a property will be transferred or sold.
Purchase money mortgage: An agreement whereby financing provided by the seller is included in the purchase price.