PACKAGE MORTGAGE – A method of financing in which the loan that finances the purchase of a home also finances the purchase of personal items such as a washer and dryer, refrigerator, stove and other specified appliances.
PARCEL – A specific portion of a larger tract; a lot.
PARTIAL RELEASE – A clause found in a mortgage which directs the mortgagee to release certain parcels from the lien of the blanket mortgage upon the payment of a certain sum of money.
PARTICIPATION MORTGAGE – A mortgage in which the lender participates in the income of the mortgaged venture beyond a fixed return, or receives a yield on the loan in addition to the straight interest rate.
PARTITION – The dividing of common interests in real property owned jointly by two or more persons.
PARTNERSHIP – “An association of two or more persons to carry on as co-owners a business for profit,” as defined in the Uniform Partnership Act, which is in force in a majority of the states.
PARTY WALL – A wall which is located on or at a boundary line between two adjoining parcels and is used or is intended to be used by the owners of both properties in the construction or maintenance of improvements on their respective lots.
PENTHOUSE – An apartment located on the roof of a building, or more commonly, an apartment on the top floor of a building.
PERCENTAGE LEASE – A lease whose rental is based on a percentage of the monthly or annual gross sales made on the premises.
PERCOLATION TEST – A hydraulic engineer’s test of soil to determine the ability of the ground to absorb and drain water.
PERFORMANCE BOND – A bond, usually posted by one who is to perform work for another, which assures that a project or undertaking will be completed as per agreement or contract.
PERIODIC TENANCY – A leasehold estate which continues from period to period, such as month to month, year to year. All conditions and terms of the tenancy are carried over from period to period, and continue for an uncertain time until proper notice of termination is given.
PERMANENT FINANCING – A long-term loan, as opposed to an interim loan.
PERSONAL PROPERTY – Things which are tangible and moveable; property which is not classified as real property; chattels; personalty.
PIGGYBACK LOAN – A joint loan with two lenders sharing a single mortgage.
PLANNED UNIT DEVELOPMENT (PUD) – A modern concept in housing designed to produce a high density of dwellings and maximum utilization of open spaces.
PLAT – A map or a town, section, or subdivision indicating the location and boundaries of individual properties.
PLOTTAGE – The merging or consolidating of adjacent lots into one larger lot, with the consequent result of improved usability and increased value; also called assemblage.
POCKET LISTING – A listing which is retained by the listing broker or salesperson, who does not make it available to other brokers in the office or to other Multiple Listing Service members.
POINT OF BEGINNING – The starting point in a metes and bounds description of property, which is usually a street intersection or a specific monument.
POINTS – A generic term for a percentage of the principal loan amount which the lender charges for making the loan; each point is equal to one percent of the loan amount.
POLICE POWER – The constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals and general welfare.
PORTE COCHERE – A roofed structure extending from the entrance of a building over an adjacent driveway to shelter those getting into or out of vehicles.
POSSESSION – The act of either actually or constructively possessing or occupying property.
POWER OF ATTORNEY – 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.
POWER OF SALE – A clause written into a mortgage authorizing the mortgagee to sell the property in the event of default.
PREMISES – The subject property, such as the property which is deeded or the unit that is leased.
PREPAID INTEREST – The paying of interest before it is due.
PREPAYMENT PENALTY – The amount set by the creditor as a penalty to the debtor for paying off the debt prior to its maturity. The prepayment penalty is charged by the lender to recoup a portion of interest that he had planned to earn when he made the loan.
PREPAYMENT PRIVILEGE – The right of the debtor to pay off part or all of the debt without penalty prior to maturity, such as in a mortgage or agreement of sale.
PRE-SALE – A pre-construction sale program by a condominium developer who is required to sell a certain percentage of units before a lender will commit to finance construction of the project.
PRESCRIPTION – The acquiring of 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.
PRESENT VALUE OF ONE DOLLAR – A doctrine which is based on the fact that money has a time value. The present worth of a payment to be received at some time in the future is the amount of the payment less the loss of interest.
PRIME RATE – The minimum interest rate charged by a commercial bank on short-term loans to its largest and strongest clients(those with the highest credit standings).
PRINCIPAL – The capital sum; interest is paid on the principal. NOT spelled principle.
PRINCIPAL BROKER – The licensed broker directly in charge of and responsible for the real estate operations conducted by a brokerage company.
PRIVATE MORTGAGE INSURANCE – 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.
PROBATE – The formal judicial proceeding to prove or confirm the validity of a will. The will is presented to the probate court, and creditors and interested parties are notified to present their claims or to show cause why the provisions of the will should not be enforced by the court.
PROCURING CAUSE – That effort which brings about the desired result, as in producing the buyer for the listed property.
PRO FORMA STATEMENT – A projection of future income and expenses.
PROMISSORY NOTE – An unconditional written promise of one person to pay a certain sum of money to another, or order, or bearer, at a future specified time.
PROPERTY – The rights or interests a person has in the thing owned; not, in the technical sense, the thing itself. These rights include the right to possess, to use, to encumber, to transfer and to exclude, commonly called the “bundle of rights.”
PROPERTY MANAGEMENT – That aspect of real estate devoted to the leasing, managing, marketing and overall maintenance of the property of others.
PROPERTY REPORT – A disclosure document required under the federal interstate land sales act where applicable to the interstate sale of subdivided lots.
PROPRIETARY LEASE – A written lease in a cooperative apartment building, between the owner-corporation and the tenant-stockholder, in which the tenant is given the right to occupy a particular unit.
PRORATE – To divide or distribute proportionately.
PROSPECT – A person or corporation who may be interested in buying or selling real property. The prospect does not become a client until the parties establish a fiduciary relationship, such as upon signing a listing contract or upon executing a DROA.
PROSPECTUS – A printed statement distributed to describe, advertise and give advance information on a business, venture, project or stock issue.
PUFFING – Exaggerated or superlative comments or opinions not made as representations of fact and thus not a grounds for misrepresentation. A statement such as “the apartment has a fantastic view,” is puffing because the prospective buyer can clearly assess the view in each case.
PUNCH LIST – A discrepancy list showing defects in construction which need some corrective work to bring the building up to standards set by the plans and specifications.
PURCHASE MONEY MORTGAGE – A mortgage given to the seller 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 simultaneous part of the transaction.
QUALIFIED FEE – An estate in fee which is subject to certain limitations imposed by the owner.
QUANTITY SURVEY – A method of estimating construction cost or reproduction cost; a highly technical process used in arriving at the cost estimate of new construction and sometimes referred to in the building trade as the price take-off method.
QUIET ENJOYMENT – The right of a new owner or a lessee legally in possession to uninterrupted use of the property without interference from the former owner, lessor or any third party claiming superior title.
QUIET TITLE ACTION – A circuit court action intended to establish or settle the title to a particular property, especially where there is a cloud on the title.
QUITCLAIM DEED – A deed of conveyance which operates, in effect, as a release of whatever interest the grantor has in the property; sometimes called a release deed.
RANGE – A measurement, used in the government survey system, consisting of a strip of land six miles wide, running in a north-south direction.
RATE OF RETURN – The relationship (expressed as a percentage)between the annual net income generated by a business and the invested capital, or the appraised value, or the gross income, etc., of the business.
RAW LAND – Unimproved land; land in its unused natural state prior to the construction of improvements such as streets, lighting, sewers, and the like.
REAL ESTATE – The physical land and appurtenances, including any structures; for all practical purposes synonymous with real property.
REAL PROPERTY – All land and appurtenances to land, including buildings, structures, fixtures, fences, and improvements erected upon or affixed to the same; excluding, however, growing crops.
REALTOR – A registered word which may only be used by an active real estate broker who is a member of the state and local real estate board affiliated with the National Association of Realtors. The use of the name REALTOR and the distinctive seal in advertising is strictly governed by the rules and regulations of the National Association.
REALTY – Land and everything permanently affixed thereto.
REBATE – A reduction or kickback of a stipulated charge.
RECAPTURE CLAUSE – A clause usually found in percentage leases, especially in shopping center leases, giving the landlord the right to terminate the lease (and thus “recapture” the premises)if the tenant does not maintain a specified minimum amount of business.
RECEIVER – An independent party appointed by a court to impartially receive, preserve and manage property which is involved in litigation, pending final disposition of the matter before the court.
RECORDING – The act of entering into the book of public records the written instruments affecting the title to real property, such as deeds, mortgages, contracts of sale, options, assignments, and the like. Proper recordation imparts constructive notice to all the world of the existence of the recorded document and its contents.
REDEMPTION, EQUITABLE RIGHT OF – The right of a mortgagor who has defaulted on the mortgage note to redeem or get back his title to the property by paying off the entire mortgage note prior to the foreclosure sale.
REDUCTION CERTIFICATE – An instrument which shows the amount of the unpaid balance of a mortgage, the rate of interest and the date of maturity.
REFINANCE – The act of obtaining a new loan to pay off an existing loan; the process of paying off one loan with the proceeds from another.
REFORMATION – A legal action to correct or modify a contract or deed which has not accurately reflected the intentions of the parties due to some mechanical error, such as a typo graphical error in the legal description.
RELEASE – The discharge or relinquishment of a right, claim or privilege. Releases involving real property transactions should be acknowledged and recorded.
RELEASE CLAUSE – A provision found in many blanket mortgages enabling the mortgagor to obtain partial releases of specific parcels from the mortgage upon the payment of, typically, a larger-than-pro-rata portion of the loan.
REMAINDER ESTATE – A future interest in real estate created at the same time and by the same instrument as another estate, and limited to arise immediately upon the termination of the prior estate.
RENEWAL OPTION – A covenant in some leases which gives the lessee the right to extend the lease term for a certain period, on specified terms.
RENT – Fixed periodic payment made by a tenant or occupant of property to the owner for the possession and use thereof, usually by prior agreement of the parties.
RENT CONTROL – Regulation by state or local governmental agencies restricting the amount of rent landlords can charge their tenants; such regulation is a valid exercise of the state’s police power.
RENTAL AGREEMENT – An agreement, written or oral, which establishes or modifies the terms, conditions, rules, regulations, or any other provisions concerning the use and occupancy of a dwelling unit and premises; a lease on residential property.
RENTAL POOL – A rental arrangement whereby participating owners of rental apartments agree to have their apartment units available for rental as determined by the rental agent, and then share in the profits and losses of all the rental apartments in the pool according to an agreed formula.
REPRODUCTION COST – The cost, on the basis of current prices, of reproducing a new replica property with the same or fairly similar material.
RESCISSION – The legal remedy of canceling, terminating or annulling a contract and restoring the parties to their original positions; a return to the status quo.
RESERVE FUND – Monies set aside as a cushion of capital for future payment of items such as taxes, insurance, furniture replacement, deferred maintenance, etc.; sometimes referred to as an impound account.
RESIDUAL PROCESS – An appraisal process used in the income approach to estimate the value of the land and/or the building, as indicated by the capitalization of the residual net income attributable to it.
RESTRICTIONS – Limitations on the use of property. Private restrictions are created by means of restrictive covenants written into real property instruments, such as deeds and leases.
RESTRICTIVE COVENANT – A private agreement, usually contained in a deed, which restricts the use and occupancy of real property.
RETALIATORY EVICTION – An act whereby a landlord evicts the tenant in response to some complaint made by the tenant.
REVERSION – A future estate in real property created by operation of law when a grantor conveys a lesser estate than he has. The residue left in the grantor is called a reversion which commences in possession in the future upon the end of a particular estate granted or devised, whether it be freehold or less-than-freehold.
RIGHT OF SURVIVORSHIP – The distinctive characteristic of a joint tenancy (also tenancy by entirety) by which the surviving joint tenant(s) succeeds to all right, title and interest of the deceased joint tenant without the need for probate proceedings.
RIGHT-OF-WAY – The right or privilege, acquired through accepted usage or by contract, to pass over a designated portion of the property of another.
RIPARIAN – Those rights and obligations which are incidental to ownership of land adjacent to or abutting on watercourses such as streams and lakes.
RISK OF LOSS – Responsibility for damages caused to improvements. The risk of loss passes to the vendee when either title or possession passes, and he should protect himself by securing proper insurance.
RUNNING WITH THE LAND – Rights or covenants which bind or benefit successive owners of a property are said to run with the land, such as restrictive building covenants in a recorded deed which would affect all future owners of the property.
SALE AND LEASEBACK – A transaction in which, typically, an owner sells his improved property and as part of the same transaction signs a long-term lease and remains in possession.
SCHEMATICS – Preliminary architectural drawings and sketches; basic layouts not containing the final details of design.
SECOND MORTGAGE – A mortgage which is junior or subordinate to a first mortgage; typically, an additional loan imposed on top of the first mortgage, which is taken out when the borrower needs more money.
SECONDARY MORTGAGE MARKET – A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called secondary money market.
SECURITY AGREEMENT – A security document which creates a lien upon chattels, including chattels intended to be affixed to land as fixtures; known as a chattel mortgage prior to the adoption of the Uniform Commercial Code.
SECURITY DEPOSIT – Money deposited by or for the tenant with the landlord, to be held by the landlord for the following purposes: to remedy tenant defaults for damage to the premises (be it accidental or intentional), for failure to pay rent due, or for failure to return all keys at the end of the tenancy.
SEPTIC TANK – A sewage settling tank in which part of the sewage is converted into gas and liquids before the remaining waste is discharged by gravity into a leaching bed underground.
SETBACK – Zoning restrictions on the amount of land required surrounding improvements; the amount of space required between the lot line and the building line.
SETTLEMENT – The act of adjusting and prorating the various credits, charges and settlement costs to conclude a real estate transaction.
SEVERALTY – Sole ownership of real property.
SHELL LEASE – A lease wherein a tenant leases the unfinished shell of a building, as in a new shopping center, and agrees to complete construction himself by installing ceilings, plumbing, heating and air conditioning systems, and electrical wiring.
SHOPPING CENTER – A modern classification of retail stores, characterized by off-street parking and clusters of stores, subject to a uniform development plan, and usually with careful analysis given to the proper merchant mix.
SHORELINE – The dividing line between private land and public beach on beachfront property.
SIMPLE INTEREST – Interest computed on the principal balance only.
SPECIAL ASSESSMENT – A tax or levy customarily imposed against only those specific parcels of realty which will benefit from a proposed public improvement, as opposed to a general tax on the entire community.
SPECIAL WARRANTY DEED – A deed in which the grantor warrants or guarantees the title only against defects arising during the period of his tenure and ownership of the property and not against defects existing before the time of his ownership.
SPECIFIC PERFORMANCE – A legal action brought in a court of equity to compel a party to carry out the terms of a contract.
SPOT LOAN – A loan on a particular property, usually a condominium unit, by a lender who has not previously financed that particular condominium building.
STANDING LOAN – A commitment by the interim or construction lender to keep the money already funded in the project for a specified period of time after the expiration of the interim loan, usually until permanent take-out financing is secured.
STATUTE OF FRAUDS – That law which requires certain contracts to be in writing and signed by the party to be charged therewith in order to be legally enforceable.
STATUTE OF LIMITATIONS – That law pertaining to the period of time within which certain actions must be brought to court.
STEP-UP LEASE – A lease with fixed rent for an initial term and provision for pre-determined rent increases at specified intervals and/or increases based upon periodic appraisals; sometimes called a graduated lease.
STRAIGHT NOTE – A promissory note evidencing a loan in which “interest only” payments are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity.
SUBJECT TO MORTGAGE – A grantee taking title to real property “subject to mortgage” is not personally liable to the mortgagee for payment of the mortgage note. In the event the grantor-mortgagor defaults in paying the note, the grantee could, however, lose property, and thus his equity, in a foreclosure sale.
SUBORDINATION AGREEMENT – An agreement whereby a prior mortgagee agrees to subordinate or give up their priority position to an existing or anticipated future lien.
SUMMARY POSSESSION – A legal process used by a landlord to regain possession of the leased premises if the tenant has breached the lease or is holding over after the termination of tenancy.
SURRENDER – A premature conveyance of a possessory estate to a person having a future interest, as when a lessee surrenders the leasehold interest to the owner of the reversion interest, the lessor, before the normal expiration of the lease.
SURVEY – The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of houses in a lot including the determination of any existing encroachments or easements.
SURVIVORSHIP – The right of survivorship is that special feature of a joint tenancy whereby all title, right and interest of a decedent joint tenant in certain property passes to the surviving joint tenants by operation of law, free from claims of heirs and creditors of the decedent.