Adjustment Date

Date agreed to by both parties to a real property transaction for the adjustment of property taxes, rent, interest, and other terms.

Amortization

The number of years it takes to repay the entire amount of a mortgage. Amortization periods are most often 15, 20, or 25 years long.

Appraisal (Bank Appraisal)

An estimate of a property's market value, used by lenders in determining the amount of the mortgage.

Appraisal (Valuation)

The estimation of the value of a legal interest in land.

Appreciation

The increase of a property's value over time.

Assessment (Municipal Assessment)

The value of a property, set by the local municipality, for the purposes of calculating property tax.

Assumable Mortgage

A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments.

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. 

Balanced Market

Where demand for property equals the supply of available property. Sellers usually accept reasonable offers and houses generally sell in sufficient time periods. Prices remain stable and there is usually a good number of homes to choose from.

Benchmark property

A property against which other properties can be evaluated.

Blended Mortgage

A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates.

Blended Payment

A mortgage payment that includes 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.

Breach of Contract

Failure, without legal excuse, to perform any promise which forms the whole or part of a contract. 

Buy-Down

When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender, or to the purchaser, in one lump sum or monthly installments.

Buyer’s Agent

This is the REALTOR® who is representing the buyer of the property.

Buyer's Market

When there is a higher number of homes to choose from than buyers in comparison. Prices of homes tend to be lower and they remain available for sale longer. Buyers usually have more leverage in negotiating a purchase.

Bylaw

A law of local or limited application, typically regulatory in nature.

Closed Mortgage

A mortgage that cannot be prepaid, renegotiated or refinanced during its term.

Closing

The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.

Closing (Completion) Date

The date on which the title and keys to the property are transferred from the seller to the buyer, and the money is paid.

Closing Costs

Expenses in addition to the purchase price for buying and selling a property.

CMHC

Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also creates and sells mortgage loan insurance products.

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 Property

The portions of a condominium development owned in common (shared) by the unit owners.

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.

Condition (Subject) Removal 

A document that indicates the buyer's satisfaction and removal of a Condition Precedent which then allows the contract to be binding upon the parties. 

Condition Precedent (Subject) 

Legal term for a "subject to" clause. In contract law, a condition precedent calls for the happening of some event or the performance of some act before the contract shall be binding upon the parties. 

Conditional Offer

An Offer to Purchase that is subject to specified conditions such as home inspection or lender financing, usually within a time limit where the conditions must be met. 

Contract of Purchase & Sale

A contract of purchase or sale of land which contains the rights and obligations of the vendor and purchaser with respect to the purchase and sale.

Conventional Mortgage

A mortgage loan that does not exceed 80 % of the lending value of the property..

Conveyance

The process of changing an interest in land from one person to another by way of a transfer document. Conveyancing usually refers to the transfer of title to land but also includes dealing such as assignments, leases, and mortgages.

Counteroffer

One party's written response to the other party's offer during negotiation of a real estate purchase between buyer and seller.

Debt Service Ratio

The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes. (and condominium fees, when applicable)

Deposit

An amount deposited with the brokerage by the purchaser when an offer to purchase is made. 

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 legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property.

Encroachment

An intrusion onto an adjoining property. A neighbour's fence, storage shed, or overhanging roof line that partially (or even fully) intrude onto your property are examples of encroachments.

Encumbrance

A judgment, mortgage or lien or any other claim which is registered against the title to land.

Equity

The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's stake in the property.

Estoppel Certificate

A written statement of a condominium unit's current financial and legal status.

First Mortgage

The first security registered on a property. Additional mortgages secured against the property are "secondary" to the first mortgage.

Fixture

A chattel attached to a real property; anything which has become so attached to the land as to form, in law, part of the land.

Foreclosure

A legal process by which the lender takes possession and ownership of a property when the borrower doesn't meet (defaults on) the mortgage obligations.

Gross Debt Service Ratio

A general rule is that your housing costs (mortgage payments, taxes, heating costs, and 50% of condominium fees, if applicable) should not be more than 32% of your gross monthly income.

High-ratio Mortgage

A mortgage that exceeds 80% of the loan-to-value ratio; must be insured by either the Canada Mortgage and Housing Corporation or a private insurer to protect the lender against default by the borrower who has less equity invested in the property.

Improvement

A structural addition to the land which can be considered to be a fixture.

Incurable Depreciation

Wear and tear or outmoded design which can only be corrected at considerable expense and, in fact, correction may be cost-prohibitive (eg. narrow hallways). 

Joint Tenancy

A form of ownership in which two or more individuals (often spouses) have an equal share in the ownership of a property. In the event of one owner's death, his or her share is automatically transferred to the surviving owner(s), apart from the deceased's will.

Land Transfer Tax

A tax paid to the provincial and/or municipal government(s) for transferring property to the buyer from the seller. Typically 1-3% of the purchase price, additional 15% is due in the Greater Vancouer Regional District if purchaser is a foreign entity.

Latent Defect

A hidden or concealed defect that would not be discovered during the course of a reasonable inspection.

Leverage

Controlling a large asset with a relatively small amount of cash. In real estate, $20,000 down payment (or less) can be used to purchase (control) a $100,000 home, for example.

Lien

Any legal claim against a property, filed to ensure payment of a debt.

Listing Agreement

The contract between the listing broker and an owner, authorizing the REALTOR® to facilitate the sale or lease of a property.

Listing Broker

The REALTOR® who signs a contract with an owner to sell the property.

Listing Price

The value at which a property is advertised for sale.

Maintenance Fee (Strata Fee)

A monthly fee paid by condominium owners for maintaining the development's common areas.

Market Value (of a property)

In appraisal, the expected or forecasted sales price, taking into account what similar properties in the area have sold for recently.

Mortgage

A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt. Lenders consider both the property (security) and the financial worth of the borrower (covenant) in deciding on a mortgage loan.

Mortgage Broker

A person or company having contacts with financial institutions or individuals wishing to invest in mortgages.

Mortgage Insurance

Government-backed or privately-backed insurance protecting the lender against the borrower's default on high-ratio (and other types of) mortgages.

Mortgage Insurer

In Canada, high-ratio mortgages (those representing greater than 80% of the property value) must be insured against default by either CMHC or private insurers. The borrower must arrange and pay for the insurance, which protects the lender against default.

Mortgage Life Insurance

Insurance that pays off the mortgage debt, should the insured borrower die.

Mortgage Payment

The regular installments made towards paying back the principal and interest on a mortgage.

Mortgage Prepayment Penalty

Is a fee paid by the borrower to the lender in exchange for being permitted to break a contract (a mortgage agreement); usually three months' interest, but it can be a higher or it can be the equivalent of the loss of interest to the lender.

Mortgage Term

The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage, or renegotiate the mortgage for another term.

Mortgagee

The lender.

Mortgagor

The borrower.

Multiple Listing Service® (MLS®)

A system for relaying information to REALTORS® about properties for sale.

Open Mortgage

A mortgage that can be prepaid or renegotiated at any time and in any amount without penalty.

Partially Open Mortgage

(Also called a "partially closed" mortgage.) Allows the borrower to prepay a specific portion of the mortgage principal at certain times with or without penalty.

Physical Depreciation

The loss in value due to wear and tear (eg. Peeling paint) which may be curable or incurable. 

Portability

A mortgage feature that allows borrowers to take their mortgage with them without penalty, when they sell their present home and buy another one.

Possession Date

Date on which the purchaser is entitled to possession of the property. 

Power of Attorney

A document conferring authority to one person to act as another's agent on his or her behalf. 

Pre-Approved Mortgage

Tentatively approved by a financial institution for a specified amount, interest rate and monthly payment.

Prepayment Privilege

A mortgage feature that allows the borrower to prepay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times.

Principal

The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.

Property Disclosure Statement

Homeowners listing a property for sale will be asked by their REALTOR® to complete a detailed residential Property Disclosure Statement (PDS). A PDS can reduce the chance of a misunderstanding by allowing sellers to advise buyers about the condition of the property.

Rate (Interest)

The return the lender receives for advancing the mortgage funds required by the borrower to purchase a property.

REALTORS®

Real estate professionals who are members of a local real estate board and the Canadian Real Estate Association. Only these professionals can call themselves REALTORS®.

Refinancing

The process of obtaining a new mortgage, usually at a lower interest rate, to replace the existing mortgage.

Reserve Fund

The portion of a condominium maintenance fee that is set aside to cover major repair and replacement costs.

Restrictive Covenant

A covenant restricting the use of the land. An example would be a restriction on the height of a building on one piece of land so that adjacent or adjoining lands are not put in shadow.

Second Mortgage

A second financing arrangement, in addition to the first mortgage, also secured by the property. Second mortgages are usually issued at a higher interest rate and for a shorter term than the first mortgage.

Secondary Financing

Second, third, fourth, etc. mortgages, secured by a property "behind" the first mortgage.

Seller’s Agent (Listing Agent)

This is the REALTOR® who is representing the seller of the property, could also assist the seller in the purchase of a new home.

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 quickly.

Staging

This is a strategy where a home is purposely prepared so that it appeals to potential buyers. Staging may involve cleaning, de-cluttering, rearranging furniture, redecorating, and more.

Strata Corporation

A legal entity created by the deposit of a strata plan in the Land Title Office. The corporation's responsibilities are set out in the Strata Property Act and include the duty to manage, repair, maintain, and insure common property and common assets. 

Strata Council

An executive body elected by the strata lot owners to carry out the duties of the strata corporation and oversee its affairs. Generally speaking, only strata lot owners are eligible to sit on the council.

Strata Lot

The parts shown on the strata plan that are created for individual ownership.

Strata Special Levy (Special Assessment)

A special levy is money collected from strata lot owners in addition to monthly strata fees for a specific purpose and for shared common expenses. 

Subdivision

This is a defined term in various statutes. Basically, a subdivision is the division of land into two or more properties. 

Survey (Municipal or Legal Plan)

A document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments.

Take-Back Mortgage

(also referred to as Vendor-Take-Back Mortgage) When sellers use their equity in a property to provide some or all of the mortgage financing in order to sell the property.

Term

(also referred to as Mortgage Term) The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage, or renegotiate the mortgage for another term.

Term Mortgage

A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.

Title

The legal evidence of ownership of a property.

Title Search

A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller's ownership claim.

Total Debt Service Ratio

The maximum percentage of a borrower's income that a lender will consider for all debt repayment (other loans and credit cards, etc.) including a mortgage.

Unit

Term used to describe the individual home or apartment held by the owner within a condominium development.

Variable-rate Mortgage

A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a large portion of the payment is applied to the principal.

Vendor Take-Back Mortgage

When sellers use their equity in a property to provide some or all of the mortgage financing in order to sell the property.

Zoning Regulations

Strict guidelines set and enforced by municipal governments regulating how a property may or may not be used.

Fiduciary duties of agency

(a)  The duty of confidentiality;

(b)  The duty to avoid a conflict of interest, or, where a conflict cannot be avoided, make disclosure;

(c)  The duty to obey all lawful instructions of the client; and

(d)  The duty to make full disclosure of all material information.