A
ABSTRACT:
This is the written history of your property. You can view at your local registry office at any time.
ACCELERATION CLAUSE:
A provision in a loan agreement that allows the lender to require the balance of the loan to become due immediately if mortgage payments are not made or there is a breach in your obligation under your mortgage or note.
ADDENDUM:
Any addition to, or modification of, a contract. Also called an amendment or rider.
AGREEMENT OF SALE:
This document is also known as the contract of purchase, purchase agreement, or sales agreement. It is the agreement by which the seller agrees to sell you his or her property if you pay a certain price. It contains all provisions and conditions for the purchase, must be written, and is signed by both parties.
AMORTIZATION PERIOD:
The amount of time it takes to pay back the entire mortgage.
AMORTIZATION:
The method of paying back a loan by regular periodic payments. The payments are made up of both interest and principal portions. Amortization isn't to be confused with the term, which is the duration of a mortgage contract. When the amortization ends, the mortgage has been totally paid out but when the term ends, the outstanding balance is due (although most people simply refinance for another term).
APPRAISAL:
A formal estimate of property value by a certified professional using disciplined technological method regulated by law and independent financial or personal interest in the amount of the estimate.
ASKING (or List) PRICE:
This is the price placed on the property for sale by the seller.
ASSESSED VALUE:
The assessed value is the value of your property (according to your local county tax assessor) for the purpose of determining your property taxes.
B
BREACH OF CONTRACT:
This is when there is a failure to perform part or all promises of a contract.
BRIDGE LOAN:
If you find yourself in the inadvisable situation where you have closed on a new home before you have sold your old one, you may need a short-term bridge loan. Such loans enable you to borrow against the equity that is tied up in your old house until it sells.
BROKER:
A person licensed by provincial or territorial government to trade in real estate. Real estate brokers may form companies or offices which appoint sale representatives to provide services to the seller or buyer, or they may provide the same service themselves.
BROKERAGE FEE:
The amount charge by a mortgage broker for arranging your mortgage. Mortgage brokers can sometimes find mortgage money where conventional lenders can't.
BUILDER'S LIEN:
A demand or claim charged against the property's title for any work or materials that haven't been paid for during the home's construction. It is considered a "cloud" against title.
BUILDING LINE OR SETBACK:
The exact distance from the front, back, or side of a lot beyond which construction or improvements may not extend without permission from the proper governmental authority. The building line may be established by a filed plat of subdivision, by building codes, or by zoning ordinances.
BUYER BROKERAGE AGREEMENT:
A written agreement between the buyer and buyer's agent, outlining the agency relationship between the two parties and the manner in which the buyer's agent will be compensated.
BUYER'S AGENT:
This is a person or firm that represents the buyer. A Buyer's Agent primary allegiance is to the buyer. The buyer is the Buyer Agent's client.
BUYER'S MARKET:
Market conditions that favor the buyer. A buyer's market is usually expressed when there are too many homes for sale, and a home can be bought for less money.
C
CERTIFICATE OF TITLE:
A documents or instrument issued by a local government agency to a homeowner, naming the homeowner as the owner of a specific piece of property. At the sale of the property, the certificate of title is transferred to the buyer. The agency then issues a new certificate of title to the buyer.
CHAIN OF TITLE:
This is the lineage (who all owned) of ownership of a particular property.
CHATTEL:
This is movable personal property, such as a car, stove, or furniture.
CLOSING DATE:
The closing date of a transaction is the day that the full price is paid and the deed is delivered along with any other necessary details involved in completing the transfer of property.
CLOSING STATEMENT
(statement of adjustments) A summary of money owing and owed prepared for both the seller and the buyer.
CLOUD ON TITLE:
This is an outstanding claim or claims on title of the property. These must be settled before a transfer is completed.
CMHC:
CMHC stands for Canada Mortgage and Housing Corporation. A Crown corporation providing information services and mortgage loan insurance.
CONDITION PRECEDENT:
This is something that must be done before the contract is judged binding. For example, "subject to the sale of the purchaser's home."
CONDOMINIUM:
These are separately owned units of a multi-unit building that each unit has its own title.
CONSIDERATION:
This is either a change in price or an incentive that encourages a party to enter into a contract. Consideration can be in the form of money, profit or interest.
CONTINGENCY:
A provision in a contract that sets forth one or more conditions that must be met prior to closing. If the contingency is not met, usually the party who is benefiting from the contingency can terminate the contract. Some common contingencies include financing, inspection, attorney approval, and toxic substances.
CONTRACT:
A legally binding agreement between competent parties to perform or not perform specific actions.
CONVEYANCE:
This is the transfer of property to the purchaser utilizing the required documentation.
COUNTEROFFER:
When the seller or buyer responds to a bid. If you decide to offer $100,00.00 for a home listed at $150,000.00, the seller might counter you offer and propose that you purchase the home for $140,000.00. That new proposal, and any subsequent offer, is called a counteroffer.
COVENANT:
Assurances or promises set our in the deed or a legally binding contract, or implied in the law. For example, when you obtain title to a property by warranty, there is the Covenant of Quiet Enjoyment, which gives you the right to enjoy your property without disturbances.
CURB APPEAL:
This real estate talk used to describe how attractive a house appears from the outside.
D
DEED:
A deed is the document that conveys title to real property.
DEPOSIT:
Money given by the buyer to the seller with a signed contract to purchase or offer to purchase.
DISCHARGE:
To pay off the entire mortgage loan.
DOWN PAYMENT:
The cash put into a purchase by the borrower. Lenders like to see the borrower put at least 25 percent down in cash, because lenders generally believe that if you have a higher cash down payment, it is less likely the home will go into foreclosure. In recent years, however, lenders have become more flexible about cash down payments; lenders have begun accepting cash down payments of as little as 5 percent.
DUAL AGENT:
A real estate broker or salesperson who acts as agent for both the seller and the buyer in the same transaction. Both the buyer and the seller are the agent's client.
E
EASEMENT:
A right of land given by a landowner to a third party to make use of the land in a specific way. There may be several easements on your property, including for passage of utility line or poles, sewer or water mains, and even a driveway. Once the right is given, it continues indefinitely, or until released by the party who received it.
ENCROACHMENT:
When your neighbour builds a garage or a fence, and it occupies your land, it is said to "encroach on" your property.
ENCUMBRANCE:
This is a claim or lien or interest in a property by another party. An encumbrance hinders the seller's ability to pass good, marketable, and unencumbered title to you.
ESCROW:
This is to hold documents, or money, etc. until a certain happening and then releasing the documents, money, etc.
F
FEE SIMPLE:
This mean clear title, you have absolute ownership of your property (subject to expropriation, liens, etc.).
FIXTURE:
Personal property, such as a built-in bookcase, furnace, hot water heater, and recessed lights, that becomes "affixed" because it has been permanently attached to the home.
FORECLOSURE:
The legal action taken so extinguish a homeowner's right and interest in a property, so that the property can be sold in a foreclosure sale to satisfy a debt.
G
GIFT LETTER:
A letter to the lender indicating that a gift of cash has been made to the buyer and that it is not expected to be repaid. The letter must detail the amount of the gift, and the name of the giver.
GUARANTOR:
A second party, who signs for your mortgage and who provides backup liability in case of default on your payments. Guarantor are only required in certain instances. For instance, a guarantor may be stipulated when you're new to the work force and have little collateral when applying for a mortgage.
H
HAZARD INSURANCE:
This is insurance that covers the property from damages that might materially affect its value. Also known as homeowner's insurance.
HOMEOWNER'S INSURANCE:
This is coverage that includes hazard insurance, as well as personal liability and theft.
HOUSE INSPECTION:
The following should be inspected: overall condition of the property, inside and out; electrical, heating, and plumbing systems; foundation; roof; pest control and dry rot; and seismic/slide risk.
I
INSTRUMENT:
This is a legal document, for example the deed in an instrument.
INTEREST RATE:
Interest is what lenders charge you to use their money. Lenders generally charge higher rates of interest on higher-risk loans.
J
JOINT TENANCY:
An equal, undivided ownership in a property, taken by two or more owners. Under joint tenancy there are rights of survivorship, which means that if one of the owners dies, the surviving owner rather that the heirs of the estate inherits the other's total interest in the property.
JUDGEMENT:
A formal award granted by the courts to a party involved in an action or suit.
K
L
LANDSCAPE:
This is the trees, flowers, plantings, lawn, and shrubbery that surround the exterior of a dwelling.
LEASE WITH AN OPTION TO BUY:
When the renter or lessee of a piece of property has right to purchase the property for a specific period of time at a specific price. Usually, a lease with an option to buy allows a first-time buyer to accumulate a down payment by applying a portion of the monthly rent toward the down payment.
LEGAL DESCRIPTION:
A written description definitely describing the property and acceptable for registration.
LENDER:
This is a person, company, corporation, or entity that lends money for the purchase of real estate.
LETTER OF INTENT:
A formal statement, usually in letter form, from the buyer to the seller stating that the buyer intends to purchase a specific piece of property for a specific price on a specific date.
LIEN:
This is an encumbrance against the property, which may be voluntary or involuntary. Types of property liens include the following; tax liens (for unpaid federal, provincial, or real estate taxes), judgment liens (for monetary judgments by a court of law), a mortgage lien (when you take out a mortgage), and a construction lien (for work done by a contractor on the property that has not been paid for). For a lien to be attached to the property's title, it must be filed or recorded with local sheriff's office.
LOAN COMMITMENT:
This is a written document that states that a mortgage company has agreed to lend a buyer a certain amount of money at a certain rate of interest for a specific period of time, which may contain sets of conditions and a date by which the loan must close.
LOCATION:
This is where the property is geographically situated. "Location, location, location" is a broker's maxim that states that where the property is located is its most important feature, because you can change everything about a house, except its location.
LOCK-IN:
This is when a borrower signals to a mortgage company that he or she has decided to lock in, or take, a particular interest rate for a specific amount of time. The mechanism by which a borrower locks in the interest rate that will be charged on a particular loan. Usually, the lock lasts for a certain time period, such as thirty, forty-five, or sixty days. On a new construction, the lock may be much longer.
M
MAINTENANCE FEE:
The monthly or annual fee charged to condo, co-op, or town house owners, and paid to the homeowner's association, for the maintenance of common property. Also called an assessment.
MARKET VALUE OF PROPERTY:
The amount a purchaser is willing to pay a vendor for his property. As with property appraisals, the market is changeable.
MATERIAL ENCROACHMENTS:
A situation in which the position of your structure and/or neighboring structures has crossed the property line. It most often applies to fences.
MISREPRESENTATION:
A misrepresentation is a false statement of fact and must be avoided when advertising or selling your home. "Negligent misrepresentation" is false information given by a qualified person (a real estate agent, a building inspector, etc.). Because of the person's assumed skills, he or she may be held liable for false representations.
MLS, MULTIPLE LISTING SERVICE:
These are trademarks owned by The Canadian Real Estate Association. They are used in conjunction with a real estate database service operated by local real estate boards, under which properties may be listed, purchased or sold.
MORE OR LESS:
A vague term used in some agreements for sale to indicate the quantity or extent of the owner's property.
MORTGAGE BROKER:
A mortgage broker is a person who can help you find a mortgage.
MORTGAGE INSURER:
In Canada, either CMHC or private insurers must insure any high-ratio mortgages, (those representing greater than 75% of the property value) against default. The borrower must arrange to pay for the insurance, which protects the lender against default.
MORTGAGE LIFE INSURANCE:
Mortgage life insurance guarantees that the lender will receive its money in the event that you meet an untimely demise. Many people may try to convince you that you need this insurance to protect your dependants and loved ones. We recommend that you do not waste your time or money with this insurance. Mortgage life insurance is expensive. If you need life insurance, buy low-cost, high-quality term life insurance rather than mortgage insurance.
N
O
OPEN MORTGAGE:
This type of mortgage has a fixed term. There is no penalty imposed if the mortgagor wishes to discharge this loan before the end of its term.
OPTION:
When a buyer pays for the right or option to purchase property for a given length of time, without having the obligation to actually purchase the property.
OWNERSHIP:
This is the absolute right to use, enjoy, and dispose of property. You own it.
P
PERSONAL PROPERTY-CHATTELS:
This is the part of the property, which are not fixed, such as appliances, furniture and rugs.
POSSESSION:
Being in control of a piece to property, and having the right to use it to the exclusion of all others.
POWER OF ATTORNEY:
This is the legal authorization given to an individual to act on behalf of another individual.
PREPAYMENT PENALTY:
A fine imposed when a loan is paid off before it comes due. Many states now have laws against prepayment penalties, although banks with federal charters are exempt from provincial laws. If possible, do not use a mortgage that has a prepayment penalty, or you will be charged a fine if you sell your property, or you will be charged a fine if you sell your property before your mortgage has been paid off.
PREQUALIFYING FOR A LOAN:
When a mortgage company tells a buyer in advance of the formal application approximately how much money the buyer can afford to borrow.
PRINCIPAL:
The amount of money you borrow.
PROPERTY LINES:
This is the border of an owner's property that is accurately defined on a survey.
PROPERTY TAX:
A tax levied by a county or local authority on the value of real estate.
PURCHASE AGREEMENT:
This is an agreement between the buyer and seller for the purchase of property.
Q
QUIT CLAIM DEED:
A deed that operates to release any interest in a property that a person may have, without representation that he or she actually has a right in that property.
R
REAL ESTATE:
REALTOR: Trademark identifying real estate professionals in Canada who are members of The Canadian Real Estate Association.
REFINANCE:
Refinance, or "re-fi", is a fancy word for taking out a new mortgage loan (usually at a lower interest rate) to pay off an existing mortgage (generally at a higher interest rate). Refinancing is not automatic, nor is refinancing guaranteed. Refinancing can also be a hassle and expensive. Carefully weigh the costs and benefits of refinancing.
RETAINER:
A fee paid in advance of performance to reserve the services of an agent, sometimes credited against service charges.
REVOCATION:
This is what happens when your purchaser withdraws the offer before you formally accept it. The contract is then legally cancelled.
RIGHT OF WAY:
The right of one property owner to pass over the land of another property owner which is established by an easement or a licensed agreement.
S
SALE-LEASEBACK:
A transaction in which the seller sells property to a buyer, who then leases the property back to the seller. This is accomplished within the same transaction.
SALES CONTRACT:
This is the document by which a buyer contracts to purchase property. Also known as the purchase contract of a contract to purchase.
SELLER/VENDOR:
Those listed on legal deeds as owners of the property. If any of the parties involved cannot be present, or is incapable of signing the purchase agreement, a legal power of attorney must be given to the other party, the lawyer, or third party who will act on that person's behalf.
SELLER'S AGENT:
The Seller's Agent represents the seller. They act either as a listing agent under the listing agreement with the seller of by cooperating as a sub-Agent, typically through the MLS system. In dealing with prospective buyers, (customers) the Seller's Agent provide a variety of information and services to assist the buyer in his/her decision making. The Seller's Agent does not represent the buyer.
STATEMENT OF ADJUSTMENTS:
The statement given by the lawyer after the sale is completed showing how the money paid by the purchaser is shown on the ledger.
SURVEY:
This is a plan of a parcel of land showing accurate measurements of its area.
T
"TAKING BACK" A MORTGAGE:
When the vendor decides to become a mortgagee for his property, this is known as "taking back" a mortgage.
TAX LIEN:
A lien that is attached to property if the owner does not pay his or her real estate taxes or federal income taxes. If overdue property taxes are not paid, the owner's property might be sold at auction for the amount owed in back taxes.
TAX SALE:
A public auction of property for non-payment of assessed taxes.
TIME IS OF THE ESSENCE:
A phrase used in an agreement of purchase and sale calling for punctual performance on stated dates with failure to comply resulting in a potential breach of contract unless otherwise agreed in writing.
TITLE:
Refers to the ownership of a particular piece of property.
TITLE COMPANY:
This is the corporation or company that insures the status of title (title insurance) through the closing, and may handle other aspects of the closing.
TITLE INSURANCE:
Insurance that protects the lender and the property owner against losses arising from defects or problems with the title to property.
TRANSFER:
This is to convey property from one person to another person.
U
UNDERWRITER:
This is a person who underwrites a loan for another. Your lender will have an investor underwrite your loan.
V
VENDOR:
This is the person who is selling the property.
VOID CONTRACT:
A contract that was never legally binding so can't be enforced. An avoidable contract, on the other hand, is considered in existence until one of the parties denies to tries to reject it.
VOLUNTARY LIEN:
This is a lien, such as a mortgage, that a homeowner elects to grant to lender.
W
WAIVER FORM:
WAIVER:
This is the surrender or relinquishment of a particular right claim or privilege.
WARRANTY:
A legally binding promise given to the buyer at closing by the seller, generally regarding the condition of the home, property, or other matter.
WITNESS:
A person subscribing his or her name for the purpose of attesting to a document's authenticity and proving he or she saw the parties place their signatures on the document.
X
Y
Z
ZONING:
The right of the local municipal government to decide how different areas of the municipality will be used. Zoning ordinances are the laws that govern the use of the land.