Glossary of Real Estate terms - P

PID Number

The parcel identifier (PID) is a nine-digit number assigned by the Land Title Office to a parcel of land and does not change when the property’s ownership is transferred.

PIT

The standard components of a monthly residential mortgage payment Principal, Interest, and Taxes. Some lenders do not include the Tax component and allow the borrower to pay their own taxes annually.

Possession Date

The date on which the purchaser is to take occupancy of the premises.

Power of Attorney

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

Prepayment

Any amount paid to reduce the principal balance of a loan before the due date. While a standard mortgage does not permit any prepayment, most lenders will allow a borrower to prepay a portion, typically 10% or 20% of the principal, once in each year. They may also allow a similar increase in the monthly payment once in each year.

Prepayment Penalty

A fee that may be charged to a borrower who pays off a loan before it is due.

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.

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 variable 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

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.

Promissory Note

A legal document verifying the existence of a debt and an unsecured promise to repay it, setting out the terms of repayment and the interest rate to be paid.

Property Condition Statement (PDS)

This form enables sellers to disclose known defects. If the seller decides not to complete the form and does not disclose known defects, he or she can still be held liable. The form also serves as a checklist for buyers enabling them to address concerns about the property's condition on the spot. The British Columbia Real Estate Association developed this form. Submission of the form is required before any listing is placed on the Real Estate Board's MLS® system.

Property Taxes

A levy affected by location and the value of the property as determined by BC Assessment. The rate of taxation is determined by local government and assessed annually.

Property Transfer Tax (PTT)

A Land Transfer Tax levied on the transfer of a real property by the Provincial Government. The rate is 1% on the first $200,000.00 and 2% on the balance. Certain exemptions exist for transfer between spouses or between certain related parties, and there are exemptions for people who have never owned real estate before. Many restrictions apply. Please consult the current rules to ensure that you qualify for an exemption before making a commitment to purchase your property.