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Glossary


Real Estate Terms and Definitions

A

  • ADJACENT - In law, implies that two or more properties are not widely separated though they may not physically touch.
  • ADJOINING - In law, implies that tow properties are contiguous or touching each other as opposed to being adjacent to one another.
  • ADJUSTMENT DATE - Date agreed to by both parties to a real proerpty transaction for the adjustment of property taxes, rent, interest and other items.
  • AGENCY - The relationship between principal and agent which arises out of a contract, written or oral wherein an agent is employed and authorized by the principal to represent him/her in business transactions with a third party.
  • AGENT - One who is authorized by a principal to represent him/her in business transactions with a third party, in the real estate profession it refers to a licensed brokerage.
  • AGREEMENT FOR SALE - a contract for the sale of an interest in land under which the purchaser agrees to pay the purchase price over a period of time, in the manner stated in the contract, and on payment of which the vendor is obliged to transfer the interest in land to the purchaser.
  • AGREEMENT TO LEASE - A contract by which one party agrees to rent real estate to another party for a rental fee or other compensation.
  • AMORTIZATION PERIOD - The number of years it takes to repay a mortgage in full. This is not the same thing as the “term” of the loan.
  • ANNIVERSARY - Most lenders allow borrowers to make payments against the principal on the anniversary of the mortgage.
  • APPRAISED VALUE - An estimate of the market value of the property used as security for the mortgage.
  • APPRAISAL - The act of process of estimating the value of a property.
  • APPRECIATION - The increase in value in a home from when the home was first purchased.
  • APPROVED LENDER - A lending institution authorized by the Government of Canada to make loans under the terms of the National Housing Act. Only approved lenders can negotiate mortgages that require mortgage insurance.
  • APPURTENANCE - Something which is outside the real property itself, but belongs to the land and is joined thereto. It adds to greater enjoyment of the land. A right-of-way is an appurtenance.
  • ARM'S LENGTH TRANSACTION - Transaction in which the parties involved are not inclined toward making voluntary concessions to each other.
  • ASSESSED VALUE - A valuation placed upon property as a basis for municipal taxation.
  • ASSESSOR - An official who has the responsibility of determining assessed value for tax purposes. In BC this is the BC Assessment Authority.
  • ASSIGN - To transfer over to another.
  • ASSUMPTION OF MORTGAGE - The taking of title to property by a grantee, wherein grantee assumes liability for an existing mortgage against a property and becomes personally liable for the payment of such mortgage debt.
  • ASSURANCE FUND - A fund established by the BC provincial government to compensate any person who is deprived of land because of the operation of the Land Title Act in certain cases where there has been a fraud committed, a mistake made, or an improper act of the Registrar of Titles or his employees.
  • AUTHORITY - The legal power or right given by a principal and accepted by the agent to act on the principal's behalf in business transactions with a third party.

B

  • BALANCED MARKET - A market condition where the demand for property equals the supply of available properties for sale. There would typically be a good number of homes homes available to choose from at fair and stable prices.
  • BALANCE DUE ON COMPLETION - The amount of money the purchaser will be required to pay to the vendor to complete the purchase, after all adjustments have been made.
  • BALLOON PAYMENT - Any payment of principal over and above the regular payment.
  • BLANKET MORTGAGE -  A single mortgage registered against two or more individual parcels of real property.
  • BLENDED MORTGAGE PAYMENT - The mortgage payment consisting of both principal and interest in which part is applied toward the accumulated interest and the remainder is applied toward the principal.
  • BORROWING - Incurring an obligation to repay a debt in order to invest or consume more than one currently owns.
  • BREACH OF CONTRACT - Failure, without legal excuse, to perform any promise which forms the whole or part of a contract.
  • BRIDGE FINANCING - A loan required to provide the funds needed for the closing of the property you have purchased to the time of the later closing of the property you have sold.
  • BROKERAGE - the real estate company under which the individual (REALTOR®) is licensed.
  • BUILDING CODES - Regulations established by local governments providing for structural requirements for building.
  • BUILDING PERMIT - A document issued by the municipal authority certifying the blueprints for construction and allowing work to commence.
  • BUILDERS' LIEN - A claim registered against the title to land by a contractor, supplier of materials or workman with respect to work done or materials supplied to improve that land.
  • BUILDING SCHEME - refers to a scheme of development which comes into existence where defined land is laid out in parcels and intended to be sold to different purchasers or leased tor subleased to different tenants each of whom enters into a restrictive covenant with the common vendor or landlord agreeing that his particular parcel should be subject to certain restrictions as to use.
  • BUYER'S MARKET - A market condition where there are a higher number of homes to choose from than buyers able to purchase. Houses will typically remain unsold fro longer periods and atend to sell at lower prices allowing for increased negotiating leverage for buyers.

C

  • CAVEAT EMPTOR - "Let the buyer beware." The buyer must examine the goods or property he/she is buying and he/she, therefore, buys at his/her own risk.
  • CERTIFICATE OF PENDING LITIGATION - A notice of a pending court action registered against the title to property for the purpose of warning all persons that the title to the property is in litigation and preventing dealings with respect to the property.
  • CHARGE - The name given to a mortgage document when title is registered under the Land Titles Act.
  • CHATTEL - Personal property which is tangible and moveable.
  • CLOSED MORTGAGE  - A mortgage that cannot be prepaid over and above the stated prepayment privileges without a penalty fee.
  • CLOSING COSTS - are all the other costs involved in the conveyance of the property title, excluding the purchase price of the property. These can include lawyer or notary fees, commission, GST, Land Title registration fees, costs of mortgage, drafting of documents, appraisals, insurance, property transfer tax etc.
  • CMHC - The Canada Mortgage and Housing Corporation is Canada’s national housing agency and, among other things, they provide mortgage loan insurance to lenders.
  • COMMISSION - Remuneration paid to an agent on sale or lease of property, usually as a percentage of the amount involved.
  • COMMITMENT LETTER/MORTGAGE APPROVAL - Written notification from teh mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
  • COMMON LAW - That part of the law formulated, developed and administered by the old common law courts, based originally on common customs and mostly unwritten.
  • COMPARATIVE METHOD - An appraisal method which bases the value of the subject property on the price of similar properties wchich have sold recently.
  • COMPLETION DATE - The date specified in the agreement of purchase and sale, when the Seller is entitled to receive the funds due and the Buyer is entitled to have the title transferred into their name.
  • COMPOUND INTEREST - Interest which, during the life of the loan, is charged or calculated at regular intervals and if not immediately paid (as in an interest only loan) will, in subsequent periods, earn interest itself (as in an interest accruing loan).
  • CONDITION - A fundamental term of a contract, a breach of which allows the injured party to terminate the contract and/or sue for damages or specific performance
  • CONDITIONAL OFFER - An Offer to Purchase that is subject to specified conditions. For example, on approved financing or upon an approved home inspection. Conditional offers typically have a stipulated time limit within which the specified conditions must be met.
  • CONDOMINIUM - is usually a housing unit in an apartment building or a townhouse complex. The purchaser owns the unit itself and also a share in the common elements for which he/she pays a monthly fee. The common elements are such things as elevators, halls, parking areas, landscaping.
  • CONTRACT - A contract is a legally binding agreement between two or more capable persons for consideration or value, to do or not to do some lawful and genuinely intended act. If affecting real estate it must be in writing.
  • CONTRACT OF PURCHASE AND SALE - a contract in which, generally through a real estate agent, the buyer offers to the seller a certain price for a home and if the seller accepts the offer within a stipulated time limit, it becomes a binding agreement. Sometimes, within this time limit, the vendor changes some of the terms and/or conditions of the offer and sends it back to the buyer (called a counter-offer) for acceptance within a specified time. Often called an Offer until accepted.
  • CONVENTIONAL MORTGAGE - A first mortgage of up to 75% of the property's value.
  • CONVEYANCE - The transfer of an interest in property from one person to another.
  • COST METHOD - A method of appraisal which determines the value of a property by adding the market value of the site to the cost of replacing the existing building.
  • COUNTER OFFER - When an original offer to the seller is not accepted on all terms presented the seller may make changes and present to the Buyer a counter offer. The buyer may then make further changes and present the seller with a counter offer as well. This can go on until an agreement is made on all terms and conditions or until it is determined that the two sides will not come to an agreement.
  • COVENANT - An agreement contained in a deed and creating an obligation. It may be positive, stipulating the performance of some act. It may be negative or restrictive, forbidding the commission of some act.

D

  • DEFAULT - Failure to abide by the terms of a mortgage loan agreement. A failure to make mortgage payments may give cause to the morgage holder to take legal action to foreclose the mortgaged property.
  • DELINQUENCY - Failing to make a mortgage payment on time.
  • DEPOSIT - is the amount of money the purchaser presents to the vendor with the Offer on the property, generally through a real estate agent, to show serious commitment on the buyer’s part. If the vendor accepts the Offer and sells his/her home to the purchaser, the deposit will be applied to the down payment. If the vendor does not accept the Offer, the deposit will be returned to the purchaser.
  • DEPRECIATION - The decrease in value in a home from when the home was first purchased.
  • DESCRIPTION - A legal identification of land or premises.
  • DEVELOPER - One who engages in the subdivision or improvement of land.
  • DISCHARGE OF MORTGAGE - A signed document by the mortgage lender given to the borrower when a mortgage loan has been repaid in full.
  • DOWN PAYMENT - is the portion of the purchase price of the property that the buyer puts down (pays) at the time of purchase.

E

  • EASEMENT - An easement is a right or privilege one party has to use the land of another for a special purpose. Examples are: easements given to telephone and electric companies to erect poles and run lines over private property, easements given to people to drive or walk across someone else’s land, and easements given to gas and water companies to run pipelines to serve their customers.
  • ECONOMICS - The study of how persons and society choose resources which have alternative uses, to produce various commodities over time and distribute them for consumption now and in the future, among various people and groups in society.
  • ENCROACHMENT - The unauthorized extention of the boundaries of land.
  • ENCUMBRANCE - Outstanding claim or lien recorded against property or any legal right to the use of the property by another person who is not the owner.
  • EQUITY - is the difference between the current value of the property and what is owed on it - what’s left is the owner’s equity.
  • EXCLUSIVE LISTING - The giving of the sole right to offer the described property for sale according to the terms of the agency agreement.

F

  • FEE SIMPLE - The highest estate or absolute right in real property.
  • FIRST MORTGAGE - A mortgage which is registered first in priority against the property.
  • FIRST TIME HOME BUYERS’ PROGRAM – If you are purchasing your first home you may qualify for an exemption from property transfer tax if certain requirements are met.
  • FIXED RATE MORTGAGE - The rate of interest that is fixed for the term.
  • FIXTURES - Permanent improvements to property that may not be removed at the expiration of the term of lease or tenure.
  • FLASHING - Sheet metal or other material used in roof and wall construction to shed water.
  • FOOTING -The widened section, usually concrete, at the base or bottom of a foundation wall, pier or column.
  • FORECLOSURE - A legal process in which the lender is given court approval to sell the property if the borrower defaults on the mortgage loan.
  • FRAMING - The rough timber work of a house, including the flooring, roofing, partitioning, ceiling and beams.

G

  • GDS RATIO - Gross Debt Service Ratio. Lender's allowable ratio of gross monthly payment to gross monthly income of mortgage applicant.
  • GST - Goods & Services Tax, If you purchase a newly constructed home you may be subject to GST on the purchase price. There may be some rebates available depending on the value of the home. For further information visit the Canada Revenue Agency website
  • GUTTER - An eavestrough used to convey rainwater from the roof to the downspout

H

  • HIGH-RATIO MORTGAGE - A mortgage loan higher than 80% of the lending value of the property. Such types of mortgages may need to be insured.
  • HOLDBACK - The amount of money withheld by the lender during construction of a property to ensure that construction at every state is satisfactory.

I

  • INTEREST ADJUSTMENT DATE (IAD) - A date from which interest on the mortgage advanced is calculated for regular payments. This date is usually one payment period before regular mortgage payments begin. Interest due between the date teh mortgage is advanced and the IAD is due on closing.
  • INTEREST RATE - The percentage which is charged for the use of borrowed money.

J

  • JOINT TENANCY - Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.
  • JOIST - One of a series of horizontal wood members used to support a floor, ceiling or roof.

L

  • LANDLORD - The persosn from whom another holds tenancy.
  • LEASE - Contract between landlord (lessor) and tenant (lessee) for the occupation or use of the landlord's property by the tenant for a specified time and for a specified consideration (rental).
  • LEGAL DESCRIPTION - A written description by which property can be located, definitely.
  • LESSEE - Tenant under a lease.
  • LESSOR - The person who grants use of property under lease to a tenant.
  • LICENSEE - the managing broker, associate broker and/or representative of a Brokerage
  • LIEN - A right, given to a creditor, creating an interest in the real property until the debt is discharged.
  • LISTING - A written agreement between a property owner and a broker authorizing the brokerage to offer the owner's real property for sale or lease.
  • LUMP SUM PREPAYMENT - An extra payment made to reduce teh principal balance of a mortgage (with or without penalty). A closed mortgage typically restricst lump sum payments. However with open mortgages a lump sum prepayment can be made without penalty.

M

  • MARKET VALUE - The highest price which the property will bring to a willing Seller if exposed for sale on the competitive and open market allowing a reasonable time to find a willing, educated Buyer with neither party acting under necessity, compulsion or peculiar and special circumstances.
  • MATURITY DATE - The last day of the term of the mortgage. On this day the mortgage loan must either be paid in full or the agreement renewed.
  • METES AND BOUNDS - A system of land description whereby all boundary lines are set forth by use of terminal points and angles - mete referring to a limit or limiting mark, and bounds referring to boundary lines.
  • MILL RATE - a measure used to indicate the property tax rate
  • MORTGAGE – is a loan on the purchase of the property, also called a charge.
  • MORTGAGE LOAN INSURANCE - required by lenders for high-ratio mortgages. It is available from CMHC or a private insurer.
  • MORTGAGE TERM - In a mortgage "term" is the actual length of time for which the money is loaned.
  • MORTGAGE TERMS - relates to the conditions of repayment of a mortgage, for example, whether prepayments are permitted.
  • MORTGAGEE - The lender or creditor.
  • MORTGAGOR - The borrower or debtor.
  • MLS – Multiple Listing Service:  is a complex information-sharing and cooperative marketing network created by REALTORS® several decades ago to help the public buy and sell homes.

N

  • NET WORTH - An individual's total financial worth. This is calculated by subtracting total liabilities from total assets.

O

  • OFFER TO PURCHASE - A written contract detailing the terms under which the Buyer agrees to buy. If accepted by the Seller it forms a legally binding contract subject to the terms and conditions stated in the document.
  • OPEN MORTGAGE - A mortgage that can be prepaid or paid off or renegotiated at any time without penalty.

P

  • PERSONAL PROPERTY - All property, except land and the improvements thereon.
  • P.I.D. OR PARCEL IDENTIFIER – is a 9 digit number assigned by the Land Title Office.
  • POWER OF ATTORNEY - Delegated written authority to a person to legally act on behalf of another.
  • PREPAYMENT CLAUSE - A clause inserted in a mortgage, which gives the mortgagor the privilege of paying the mortgage debt in advance of the maturity date, on stipulated terms.
  • PRINCIPAL AMOUNT – is the amount of money borrowed.
  • PROPERTY DISCLOSURE STATEMENT - In BC a Seller may have completed this form which provides inofrmation about the state of the home and property they are selling and is to be completed to the best of their knowledge and to disclose any deficiencies that they are aware of.
  • PROPERTY TAX - Taxes charged to the homeowner by the municipality or regional district where the home is located based on the value of the property.
  • PROPERTY TRANSFER TAX – is a land registration tax. It must be paid when an application for a taxable transaction is made at any Land Title Office in BC to register changes to a certificate of title. Property Transfer Tax is payable on the fair market value of the property being transferred and the rate is dependent on the value of the property. On properties $200,000 or less the tax is 1%. If greater than $200,000 the tax is 1% of the first $200,000 and 2% of the remaining value over and above the $200,000.
  • PROSPECT - A potential buyer or customer.

R

  • REAL ESTATE BOARD - associations in whose jurisdiction the property is located and/or of which the Brokerage or REALTOR® is a member. They are boards and associations which assist REALTORS® to market, sell or lease real estate. The Boards also provide ongoing training for their members, enforce ethical standards and help resolve disputes between members and the public. The Shuswap area falls under the jurisdiction of the Okanagan Mainline Real Estate Board
  • REAL ESTATE BROKER - A brokerage who represents a principal in a real estate trade.
  • REAL PROPERTY - is the land, building(s), and all permanent attachments and improvements to the land, such as a fence, trees.
  • REALTOR® - is often used interchangeably with licensee, real estate agent or representative and, in BC, is licensed under the Real Estate Services Act. A Licensee can use the term REALTOR® if he/she belongs to a local real estate board or association that enforces a strict Code of Ethics.
  • RENT - The compensation paid for the temporary use, and/or occupation of real estate.
  • RESALE HOME - is generally an existing home that has been or is currently used as a residence.
  • RESTRICTIVE COVENANT - A restrictive covenant places a specific limitation on the owner’s use or occupancy of the property. Such things as a prohibited type of exterior finish, the minimum size of the structure, or the maximum height of the structure are only a few examples of the type of restrictive covenants you may encounter. The act of purchasing a property which has a restrictive covenant compels you to abide by it.
  • RIGHT - The interest one has in a piece of property.
  • RIGHT OF SURVIVORSHIP - The distinguishing feature of joint tenancies which provides that, where land is held in undivided portions by co-owners, upon the death of any joint owner, his/her interest in the land will pass to the surviving co-owner, rather that to his/her estate.
  • RIGHT OF WAY - The right to pass over another's land, more or less frequently, according to the nature of the easement.
  • RIPARIAN RIGHTS - The rights of the owners of lands on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his land, including the right to acquire accretions, wharf slips, and fish therefrom.

S

  • SALESPERSON - A licensee of a brokerage authorized to trade in Real Estate (as defined within the Real Estate and Business Brokers Act). Also can be referred to as a Sales Representative or an Associate Broker.
  • SELLER'S MARKET - A market condition where there are a higher number of Buyers than homes available to purchase. Houses will typically sell faster and at a higher price during this kind of market.
  • SET BACK - The distance from the curb or other established line within which no buildings may be erected.
  • SPECIAL ASSESSMENT - An assessment which is not customarily levied and which is made against only those specific parcels of property directly benefiting therefrom.
  • STATEMENT OF ADJUSTMENTS - A statement prepared by the solicitor for the Seller setting out, in balance sheet form, the credits to the vendor (e.g. purchase price, prepaid taxes, prepaid insurance, etc.) and the credits to the Buyer (e.g. deposits, arrears in taxes prior to the date of closing) and the balance due on closing, so that both the Buyer and the Seller will have a record, at the date of closing of the financial breakdown of the transaction.
  • SURVEY - The accurate mathematical measurement of land and buildings thereon, made with the aid of instruments.Your lending institution may require a survey certificate to establish boundaries of the property and to ensure that all buildings are within those boundaries.

T

  • TENANTS-IN-COMMON - Ownership of land by two or more persons; unlike joint tenancy in that interest of deceased does not pass to the survivor, but is treated as an asset of the deceased's estate.
  • TENANT - One who occupies land or tenement under a landlord.
  • TENURE - A method of land holdings for a temporary period of time.
  • TERM MORTGAGE - A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date.
  • TIME IS OF THE ESSENCE - Requires punctual performance of a contract on closing date and is indicated by so stating as in an Agreement of Purchase and Sale.
  • TITLE - is evidence of legal ownership of land. Land includes any permanent structure(s) on the land.
  • TOTAL DEBT SERVICE RATIO - The total amount of the mortgage payments (principal and interest), heating costs and property taxes (and condominium fees when applicable) plus all other contractual debts of the borrower divided by the total gross income.
  • TRANSFER - To convey from one person to another.
  • TRUST ACCOUNT - is a separate bank account in which is deposited all the money received in trust for someone else. For example, in the deposit cheque, the words In Trust should be written after the name of the firm to whom it’s payable.

V

  • VARIABLE RATE MORTGAGE - The rate of interest will fluctuate in accordance with a bank trend setting rate. This is typically the bank prime rate. Adjusted on a predetermined basis, usually monthly, the rate can be set below, equal to or above the trend setting rate and will move up and down accordingly with that rate.
  • VENDOR – The Seller of real property.

Z

  • ZONING - Determined by the local government the zoning will set the type of buildings which may be built and how those buildings and the property may be used. It could be very important to know, not just the zoning of the property you own/are considering purchasing but also neighbouring properties.