Title Insurance and Closing Services Since 1954
Terms Defined
The Real Estate Industry has its own unique language and, without some knowledge of this language, you may find yourself a bit confused if you become involved in a real estate transaction. Wayne County Title Agency, Inc. has compiled the following Definition of Terms commonly used in the real estate industry. Whether you are entering the real estate market for the first time or have invested in it before, this handy reference will provide an understanding of basic real estate words and phrases.
P.M.I.
Private Mortgage Insurance. An insurance contract which insures that the named lender will re cover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on higher percentage loans.
Parcel
Any area of land contained within a single description.
Partial Release
A provision in some mortgages allowing part of the collateral (which, in this case is the property underlying the mortgage) to be released under certain stated circumstances. For example, once the property owner has repaid a given percentage of the principal, part of the property may be released from the collateral under a partial release provision.
Partition
Division of land, usually by a legal proceeding, among the parties who were formerly co-owners.
Partnership
An association of two or more persons who have contracted to join in business and share the profits.
Party Wall
A wall erected on a property boundary or between two lots for the common benefit and use of the property owners on either side.
Patent
A conveyance of title to land by the Federal or State Government.
Permanent Financing
A loan secured by land after improvements have been completed.
Personal Property
Any property that is not designated by law as real property (i.e., mobile homes, money, goods, evidences of debt, rights of action, furniture, automobiles).
PITI
Abbreviation for principal, interest, taxes and insurance, all of which are lumped together in your monthly mortgage payment.
Planned Unit Development (PUD)
A project consisting of individually owned parcels of land together with common areas and facilities that are owned by an association of which the owners of all the parcels are members.
Plat (of survey)
A map of land made by a surveyor showing boundary lines, buildings, and other improvements on the land.
Points
A one-time-only fee you pay up front to your lender, sometimes in exchange for a slightly lower mortgage rate. One point equals one percent of the total amount you plan to borrow.
Power of Attorney
An instrument in writing by which one person, the principal, authorizes another, the attorney in fact, to act in the specific actions described in the instrument. If a power of attorney is to be used to sell or mortgage real estate, the original power of attorney must first be recorded in the county where the land is located.
Premium
The amount paid for an insurance policy.
Prepayment
Payment of mortgage loan, or part of it, before due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment. The Federal Housing Administration does not permit such restrictions in FHA insured mortgages.
Prepayment Penalty
Penalty to the mortgagor for payment of the mortgage debt before it becomes due.
Prescription
The doctrine by which easements are acquired by long, continuous, and exclusive use and possession of property.
Prescriptive Easement
A right to use another’s property that is not inconsistent with the owner’s rights and that is acquired by an open, notorious, adverse and continuous use for the statutory period, for example 20 years.
Principal
The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.
Priority
The order of preference, rank or position of the various liens and encumbrances affecting the title to a particular parcel of land. Usually, the date and time of recording determine the relative priority between documents.
Pro Rate
To allocate between seller and buyer their proportionate share of an obligation paid or due.
Public Domain
Land owned by the government and belonging to the community at large.
Public Records
Records which by law impart constructive notice of matters relating to land.
Purchase Money Mortgage
A mortgage given by the purchaser to the seller simultaneously with the purchase of real estate to secure the unpaid balance of the purchase price.