Real Estate Glossary
Acceptance: When the terms of an Agreement of Purchase and Sale have been accepted by both the Buyer and the Seller then they have entered into a contract and are bound by the terms of the contract.
Amortization: The period of time required to reduce the mortgage debt to zero when all regular blended payments are made on time and provided the terms (payment and interest rate) remain the same.
Amortization Schedule: A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
Appraisal: A process for estimating the market value of a particular property.
Appreciation: The increase in the value of a property due to changes in market conditions, inflation, or other causes.
Assumption: The term applied when a buyer assumes the seller's mortgage.
Blended Payment: A mortgage payment that includes both principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.
Clear Title: A title that is free of liens or legal questions as to ownership of the property.
Closing Costs: Cost in addition to the purchase price, such as legal fees, transfer fees and disbursements, that are payable on closing day.
Closing Date: The date when the sale of a property becomes final and the new owner takes possession.
Cloud on Title: Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.
Comparable Sales: Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps".
Commitment Letter/Mortgage Approval: Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
Common Areas: Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
Conditional Offer: An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage, or the sale of the Purchaser's home. There is usually a stipulated time limit within which the specified conditions must be met.
Condominium Fee: A payment made by all owners of condominiums or townhouse corporations that is allocated to pay expenses such as maintenance, repairs and management costs.
Counteroffer: If your original offer to the vendor is not accepted, the vendor may counteroffer. This means that the vendor has amended something form your original offer, such as the price or closing date. If a counteroffer is presented, the individual has a specified amount of time to accept or reject.
Credit Report: A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's credit worthiness.
Curb Appeal: The first impression that Buyers have of a home is important. The home that has good curb appeal will have attractive landscaping and a well-maintained exterior.
Deed: The legal document conveying title to a property.
Deposit: A sum of money given in advance of a larger amount being expected in the future. When an Offer to Purchase is made, this money is placed in trust by the Purchasing Agent. This sum is held by the real estate representative or lawyer until the sale is closed and then it is paid to the Vendor.
Down Payment: The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Easement: A right of way giving persons other than the owner access to or over a property such as a driveway or public utilities
Encroachment: An improvement that intrudes illegally on another's property.
Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
Estoppel Certificate: Also called a certificate of Status. It is a certificate that outlines a condominium corporation's financial and legal state. Fees may vary.
Fair Market Value: The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fixture: Personal property that becomes real property when attached in a permanent manner to real estate.
Foreclosure: The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. When you default on a loan or mortgage and the lender feels that you are unable to make payments, you may lose your home to foreclosure.
Home Inspection: An examination of the structure and mechanical systems to determine a home's safety. This will allow the potential homebuyer to be aware of any repairs or concerns that may be needed to complete the sale.
Land Transfer Tax: A fee paid to the provincial and/ or municipal government for transferring property to the buyer from the seller
Interest: A fee charged for the borrowing of money. Interest is usually paid to the lender in regular payments along with repayment of the principal amount.
Lien: A claim against a property for money owing. A lien may be filed by a supplier or subcontractor who has provided labour or materials but has not been paid.
MLS (Multiple Listing Service): A multiple listing service is a Real Estate Salespersons' cooperative service that contains descriptions of most of the homes that are for sale. Most Real Estate Salespeople use this computer-based service to keep up with the local properties they are listing for sale.
Mortgage: A mortgage is a security for a loan on the property you own and is repaid in regular mortgage payments usually in blended payments that will include both principal and interest. It may also include a portion of the property taxes.
Mortgage Life Insurance: This insurance provides coverage for your family should you die before your mortgage is paid off. This insurance can be purchased through your lender and the premium added to your mortgage payments or from an insurance broker.
Mortgage Payment: A regular scheduled payment that is often blended to include both principal and interest.
Net Worth: A person's total financial worth, calculated by subtracting the total liabilities for their assets
Offer to Purchase: A written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract that binds those who have signed subject to the terms and conditions stated in the document. Also called the Agreement of Purchase and Sale.
Principal: the amount of money borrowed
Property Insurance: Insurance that you buy for the building(s) on the land you own. This insurance should be high enough to pay for the building(s) to be re-built if it is destroyed by fire or other hazards.
Reserve Fund: This is an amount set aside by the homeowner or condo corporation on a regular basis so that funds are available for emergency or major repairs.
Seller's Market: More buyers are looking for homes than there are homes for sale. There is a smaller inventory of homes available for sale and many buyers looking to purchase. House prices generally increase and homes sell faster.
Survey: A document that illustrates the property boundaries and measurements, specifies the location of the buildings, fences, etc., on the property, and indicates and easements or encroachments.
Tarion (Formerly known as New Home Warranty Program): A guarantee that if something covered under the warranty needs to be repaired, it will be. If the builder does not repair it, the repair will be made by the organization that provided the warranty. All provinces and Yukon Territory have New Home Warranty Programs for newly built homes.
Title (Freehold or Leasehold): Legal possession. A freehold title gives the holder ownership of land and building for an indefinite period of time. A leasehold title gives the holder a right to use and to occupy land and buildings for a defined period of time. In a leasehold arrangement, actual ownership of the land, sometimes along with the buildings, remains with the landlord.
Title Insurance: Insurance against loss or damage caused by a matter affecting the title to immovable property, in particular by a defect in the title or by an existence of a lien, encumbrance or servitude.
Total Debt Service Ratio (TDS): The percentage of gross monthly income required to cover the monthly housing payments and other depts., such as car payments.
Vendor Take-Back Mortgage: Mortgage financing arranged between the seller of the property and the buyer. The title of the property is transferred to the buyer who makes mortgage payments directly to the seller. Usually these arrangements are not renewable or transferable to the next owner of the house.
Zoning Bylaws: Municipal or regional law that specify or restrict land use.
