GLOSSARY of American & Mexican Real Estate Terms
P
Package Mortgage
A mortgage, used in the purchase of a new residential property which, in addition to real property, covers certain personal property items and equipment (Washer, dryer, drapes, refrigerator, stove).
Parol Evidence Rule
A rule of evidence designed to achieve a degree of certainty in a transaction and to prevent fraudulent and perjured claims. Although the word parol means oral, in this context, it refers to evidence that is extrinsic to, or outside and separate from, the writing (Must be in writing to be enforceable in court).
Partial Payment
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department.
Partial Release Clause
A part of a mortgage, which provides for the release of part of the property (used as security in the loan) upon payment of a certain amount of the mortgage. Blanket mortgage.
Partially Amortized Mortgage
A method of loan repayment in which the balance of the outstanding loan is not zero at maturity, and thus a balloon payment is due at that time.
Participation Mortgage
An agreement between a mortgagee and a mortgagor which provides the lender with a certain percentage of ownership in the project once the lender makes the loan.
Partition Suit
The dividing of real estate held by two or more people which results in each of the parties holding individual or severalty ownership (Tenants in common and joint tenants).
Payment Change Date
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date.
Percentage Lease
The lessor receives a percentage of the gross sales or net profits as the rental payment for the lease of the property.
Percolation
Ability of soil to absorb water; used for septic systems.
Periodic Payment Cap
For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period.
Periodic Rate Cap
For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.
Periodic Tenancy
A lease, which has the original terms automatically renewed for successive periods, until proper notice to terminate is given by either the landlord or tenant. Month to month rental.
Permit - Gestoria
The document that allows consent to expressly or formally do an act.
Personal Property
Movables, which are not annexed to or part of, the land; also referred to as chattels.
Physical Deterioration
The loss in value due to wear and tear of the structure.
PITI
An abbreviation which means "Principal, Interest, Taxes and Insurance." In residential financing, it is common for the monthly mortgage to include these four payments.
PITI reserves
A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
Planned Unit Development (PUD)
A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.
Planning Commission
A local government agency which determines plans for the physical growth of a community.
Plat
A map showing the division of land into lots and blocks.
Plottage
Occurs when two or more sites are combined, with the result that the value of the assembled site is worth more than the value of the sum of each of the individual sites.
PMI
Private Mortgage Insurance.
Point
A point is 1 percent of the amount of the mortgage.
Police Power
The inherent power of the state to regulate in order to promote public health, safety, morality or welfare. For example, zoning and building codes.
Policy (Insurance) - Poliza
The coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.
Possession
The physical control of real property.
Power of Attorney - Poder Nacional
A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
Pre-Approval
A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification.
Premium (Insurance) - Prima
The consideration paid for a contract of insurance.
Prepayment
Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.
Prepayment Penalty
The charge levied by the lender for paying off a mortgage prior to its maturity date.
Pre-Qualification
This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.
Prescription
A means of acquiring title to property through open and continuous use.
Prescriptive Easement
An easement obtained by the open, notorious, hostile and continuous use of the property belonging to someone else for a statutory period of time.
Preventative Notice - Noticacion de Prevencion
The document filed at the Public Registry notifying all interested parties that a transaction is pending on a specific property. Duration is generally 30 days.
Price - Precio
An amount usually expressed in terms of money paid for property.
Prime Rate
The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.
Principal - Capital
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
Principal Balance
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.
Principal, Interest, Taxes, and Insurance (PITI)
The four components of a monthly mortgage payment on impounded loans. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.
Private Mortgage Insurance
A private insurance program which insures the lender for loan amounts in excess of 80% of value.
Pro-rata - Proratas
To divide or distribute proportionately.
Probate
The process of proving a will before a duly authorized court or person.
Procuring Cause
The actions by a broker which result in the owner being able to make a sale.
Project - Proyecto
The plan to develop a property.
Promise to Trust - Contrato de Promesa
A promissory agreement that is executed once both parties have agreed to the basic conditions to purchase the property. It is used when there is a delay between the execution of the offer and acceptance and the execution of the final transfer.
Promissory Note - Pagare, Contrato de Promesa
The primary legal financing obligation in which the borrower promises to pay back a sum of money borrowed (A contract).
Property - Propiedad
The rights of ownership in lands or goods. Land.
Property Taxes - Impuestos Predial
The amount of tax levied on a piece of real estate.
Proration - Proratas
Dividing property taxes, hazard insurance and other expenses or income between the buyer and seller, as of date of settlement.
Public Auction
A meeting in an announced public location to sell property to repay a mortgage that is in default.
Public Deed - Escritura Publica
A public instrument.
Public Notary - Notario Publico
Under Mexican law, only Notaries are authorized to prepare and record a property deed. Notaries are attorneys appointed by the state government to specialize in various matters (including real estate transactions). Notaries are also responsible for collecting taxes at closing.
Public Registry of Property/Catastro - Registro Publico de la Propiedad
The Public Registry of Property is the central recording entity for all public documentation concerning property. In order to ensure its ownership rights against the seller and third parties, a buyer must record all property transfer at the Public Registry of Property for the jurisdiction in which the property is located. (Timeshare acquisitions are the lone exception to this recording requirement.) Notaries typically handle registration.
Public Report - Reporte Publico
The Public Report is considered both a "license for a developer to offer" Mexican property for sale in Arizona and a public information statement providing valuable information to the buyer.
Puffing
To exaggerate - for example, to refer to a house as having "the most gorgeous view in the city.".
Purchase - Compra
To acquire (real estate) by means other than descent or inheritance, to obtain by paying money or its equivalent.
Purchase Agreement - Contracto Compra y Venta
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Purchase and Leaseback
The simultaneous buying of property and leasing it back to the seller.
Purchase Money Mortgage
A mortgage given by the seller to the buyer to cover all or part of the sale price. Seller financing.
Purchase Money Transaction
The acquisition of property through the payment of money or its equivalent.
Purchase Option - Opcion de Compra
A contract conveying a right to buy designated securities, commodities, or property interest at a specified price during a stipulated period.
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