The day on which all calculations of interest, tax adjustments and utility bill adjustments (if applicable) are made to either the buyer or seller. This is often (but not always) the same as the possession date.
A statement of declaration in writing and sworn or affirmed before an authorized individual, such as a Notary Public.
A relationship where an agent is authorized by a principal to engage in certain acts on their behalf, usually in dealing with one or more third party(s).
Length of time over which the debt will be repaid to zero, given regular payments.
A process for estimating the market value of a property.
An estimate of property value written by a qualified individual. Appraisals performed for mortgage lending purposes, may not reflect the market value of the property, or the purchase price.
An appraiser provides an opinion of the fair market value of real estate based on a review comparable properties while making adjustments for differences.
The increase in value of something because it is worth more now than when you bought it.
A lending institution, such as a bank, which is authorized by the government of Canada to make loans under the terms of the National Housing Act. Only approved lenders can offer CMHC-Insured Mortgages.
Something which is outside the property itself, but belongs to the land and is joined thereto, e.g. a road over another's land providing an access (right-of-way) is an appurtenance.
To be "in arrears" is to be behind in the payments called for under a mortgage agreement.
A valuation assigned to taxable property, as set by BC assessment, for the purpose of equalizing the burden of taxation by the local municipalities when calculating property tax.
One who takes the rights or title of another by assignment.
The transfer of any right, claim or interest to another person or corporation. An assignment would be done when a purchaser of a home is needing to “assign” the purchased property to another buyer prior to the completion date. In BC in order to assign the property the seller also needs to agree, unless otherwise stated in the contract.
Assignment of Mortgage
The assigning of a mortgagee's interest in the mortgage to a new mortgagee. The legal sale of the mortgage with or without an agreement to repurchase.
Assignment of Rents
The enforceable diversion of income from mortgaged property to the mortgagee.
One who transfers or assigns the rights or title to another.
The legal right given by a principal to an agent to act on the principal's behalf in performing specific acts or negotiations.
Balance Due on Completion
The amount of money a purchaser will be required to pay to the vendor to complete the purchase, after all adjustments have been made.
Breach of Contract
Failure to fulfill an obligation under a contract. breach confers a right of action on the offended party.
Regulations established by the government providing for structural requirements.
The value of a property based on the net income.
The rate of return anticipated by an investor in property.
A carriage, or link home, is joined by a garage or carport.
"Let the buyer beware". A buyer must examine fully before the purchase is made.
Moveable possessions and personal property that may be removed without damage to the property, (eg. appliances).
Also known as the Completion. Day in which monies are transferred from the buyer to the seller. Date on which the sale of the property becomes final and the new owner takes title to the home.
Costs in addition to the purchase price of the home, such as legal fees, taxes, transfer fees and disbursements, that are payable on closing day, aka completion day. They range from 1.5% to 4% of a home’s selling price & are calculated by the notary or lawyers.
The Canada Mortgage and Housing Corporation is a Canadian Crown Corporation which administers the National Housing Act. CMHC services include the insuring of high ratio mortgage loans for lenders.
CMHC Insurance Premiums
When a home buyer takes out a mortgage loan with less than a 20% down payment, an insurance premium is paid to CMHC, and a mortgage loan insurance policy is issued to the lender. The CMHC mortgage loan insurance premium is calculated as a percentage of the loan and is based on a number of factors such as the purpose of the property (owner occupied or rental), the type of loan (i.e. purchase/construction or refinance loan), the ability of a self-employed borrower to supply income verification, and the size of your down payment (i.e. the higher the percentage of the total house price/value that you borrow, the higher percentage you will pay insurance premiums).
Commitment Letter (or 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.
That part of the law formulated, developed and administered by the old common law courts, based originally on unwritten common customs.
Also known as the Closing. Day in which monies are transferred from the buyer to the seller. Date on which the sale of the property becomes final and the new owner takes title to the home.
Interest on both the principal and on interest that has accrued.
An offer to purchase that is subject to specified conditions, for example, the arrangement of a mortgage or an inspection. There is usually a stipulated time limit within which the specified conditions must be met. This is also known as an accepted contract of purchase and sale subject to removal. This removal process is called “subject removal.”
An event or action necessary before an agreement becomes binding.
A condition referring to a future event upon the happening of which the contract becomes no longer binding on the parties.
Also known as strata property or a type of attached home. You own the unit you live in (eg. highrise or lowrise) and share ownership rights for the common areas (such as the lobby) of the building along with the development’s other owners. Condo’s have a monthly maintenance fee each unit has to pay for, as well as bylaws/rules/regulations that need to be followed by the owners and tenants of each unit.
Something of value given to make a promise of repayment enforceable.
An agreement between two or more parties given receipt of lawful consideration to do or refrain from doing some act.
Moneys advanced to the borrower under a construction loan.
A claim against property pursuant to labour, services, or materials supplied.
A short-term loan made to a builder for construction of buildings, usually to be paid out by another mortgage upon final completion. Also, a description used in reference to a mortgage which is advanced in predetermined stages, according to the amount of work completed.
Contract of Purchase and Sale
A written agreement to buy property in which the purchaser and vendor agree to sell upon terms and conditions as set forth in the agreement.
A mortgage loan up to a maximum of 80% of the lending value of the property. Typically, the lending value is the lesser of the purchase price and market value of the property. Mortgage insurance is usually not required for this type of mortgage.
The process of transferring the seller’s title to the buyer, usually undertaken by a conveyancing lawyer (or notary) acting for the buyer.
The ownership of a separate amount of space in a multiple dwelling or multiple-occupancy building with proportioned tenancy in common ownership of common elements. Used jointly with other owners, however, the owner does not have clear title to a specific unit, but becomes a shareholder of the corporation which owns all the property and occupies by way of a tenancy agreement subject to shareholders agreement administered by an elected board of directors.
An agreement contained in an instrument 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.
A subsequent offer made from the seller back to the buyer altering one or several terms and/or conditions to the original offer.
A record of your credit history/activity collected by credit reporting agencies. Mortgage lenders use this report to determine your creditworthiness for getting a mortgage.
How attractive a home looks from the street. A home with good curb appeal will have attractive landscaping and a well-maintained exterior.
Compensation or indemnity for loss owing to breach of contract.
Date of Completion
The date specified by an agreement of purchase and sale, when the purchaser is to deliver the balance of money due and the vendor to deliver a title clear of financial encumbrances.
The amount of principal and interest payments made under a mortgage.
Debt Service Ratio
The percentage of a borrower’s income that can be used for housing costs. Gross Debt Service (GDS) ratio is the amount that a lender will permit a borrower to use from his/her gross income in order to qualify for a loan for housing costs, including mortgage payment and taxes (and strata fees when applicable). Total Debt Service (TDS) ratio is the maximum percentage of a borrower’s income that a the lender will consider for all debt repayment (other loans and credit cards, etc.) including a mortgage.
Failure to fulfill an obligation
Payment of money or other valuable consideration as pledge for fulfillment of contract. Money placed in trust by the purchaser when an offer to purchase is made. The sum is held by the real estate office or lawyer/notary until the sale is closed and then it is paid to the vendor. This amount is typically =/- 5% of the purchase price and is typically due upon or within 24 hours of subject removal. In a hotter market with subject-free offers, the deposit is often presented with the contract of purchase and sale at the time of offer presentations for negotiation purposes, thus proving that they are a ready and motivated buyer.
A loss in value due to any cause.
Discharge of Mortgage
A document executed by the mortgagee and given to the mortgagor when a mortgage loan has been repaid in full before, at, or after the maturity date.
The estate which derives benefit from an easement over a subservient estate, as in a right-of-way.
The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage. The Deposit forms a part of the down payment. Down payments range from 5% upwards and are typically between the 5% to 25% range. Down payments that are less than 20% in BC are subject to CMHC insurance premiums which can be added on to the monthly mortgage payment. Note that the down payment is different from the deposit, although the deposit can be used towards the down payment.
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.
A fixture, such as a wall or fence, which illegally intrudes into or invades on public or private property diminishing the size and value of the invaded property.
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
The value of real estate over and above the mortgage(s) against it.
The degree, quantity, nature and extent of interest which a person has in real property.
The act of forcefully taking private property for public use.
An analysis to determine the feasibility of a project. Details of construction costs, projected income from the project plus location and economic factors affecting the project will be required. Similar to a feasibility study by a developer conducted to decide whether to proceed with plans and required by the lender to decide whether to provide funds.
In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. It is a way that real estate and land may be owned in common law countries and is the highest possible ownership interest that can be held in real property.
The mortgage agreement which has the first claim on the property in the event of default.
Fixed Rate Mortgage
This is the usual form of mortgage where the interest rate remains the same during the entire life of the loan.
Permanent improvements to property that may not be removed at the expiration of the term of lease or tenure. Fixtures are considered included with a property sale.
The legal process by which the lender takes possession and ownership of a property when the borrower fails to meet the mortgage obligations.
The ownership of a tract of land on which the building(s) are located. The oldest and most common type of ownership of real estate.
Gross Rent Multiplier
Method of appraising the fair market value of property by multiplying the gross rents by a factor which varies according to the type of property, and the location of the property.
Gross Debt Service (GDS)
The percentage of gross annual income required to cover payments associated with housing.
Gross Debt Service Ratio
Allowable ration of payments for principal, interest and taxes to gross income.
The scheduled income from the operation of the business of the management of the property, customarily stated on an annual basis.
A third party without interest in the property who agrees to assume responsibility for a debt in the event of default by the mortgagor.
A mortgage loan higher than 80% of the lending value of the property. This type of mortgage must be insured — by CMHC or a private company, for the benefit of the approved lender, against payment default.
An amount of money retained by a construction lender or owner until satisfactory completion of the work performed by a contractor.
A home inspector will examine a home to tell you if anything is broken, unsafe or needs to be replaced. They may also be able to determine if there have been any major problems in the past.
An insurance broker can help you choose and buy insurance, including property insurance and mortgage loan insurance.
A form of written legal document.
The cost of borrowing money. Interest is usually paid to the lender in regular payments along with repayment of the principal (loan amount).
The price paid for the use of money borrowed from a lender.
Interest Only Loan
Borrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.
A person who dies without a will, or leaves one which is defective in form, in which case the estate descends by operation of law to the next of kin.
Incapable of being recalled or revoked; unchangeable, unalterable.
Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.
L.T.V. (Loan-to-Value Ratio)
The ratio of the loan to the lending value of a property, expressed as a percentage.
A land surveyor identifies land boundaries and features of land to determine ownership.
Lawyer or Notary
A lawyer can protect your legal interests and review contracts, title documents etc as well as assist with the conveyance of the property.
A type of interest in a property that is certain only for a specified period of time granted by contract.
A written description by which property can be definitely located, and which is acceptable for registration in a land registry system.
Lender or Mortgage Broker
Lenders will loan you money (a “mortgage”) to help you buy a home. Lenders include banks, trust companies, credit unions, pension funds, insurance companies and finance companies. A mortgage broker can work with many different lenders to get you a mortgage that meets your needs.
An independent appraiser's value interpreted by the lender as to the worth of a property in the current market given a reasonable time period to sell the property.
Tenant under a lease.
The person who grants us the property under lease to a tenant.
Upside leverage in real estate occurs when the yield or net return on property exceeds debt service for a loan. Downside or reverse leverage occurs when the debt service is greater than the net return on investment.
A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials but has not been paid.
Lien Hold Back
A percentage of the contract price or estimated cost of work to be done which is held back from the mortgage advance.
Line of Credit
A maximum credit limit allowed by a bank to a borrower, as long as the borrower maintains an acceptable balance on account or has a good credit rating. The credit line will vary from time to time according to the changing circumstances of the borrower or the bank.
A legal document giving notice that an action or proceeding is pending in the courts which affects the title to the designated property.
Lump Sum Prepayment
An extra payment, made in lump sum, to reduce the principal balance of your mortgage, with or without penalty.
The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement is 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.
MLS® (Multiple Listing Service)
A service offered by Canadian REALTORS® with descriptions of most of the homes that are for sale across the country.
Mixed Use Development
A large-scale real estate project which is developed for a number of uses. An example of mixed-use development is a shopping centre complex with dwelling units on upper floors.
The legal pledge of real estate as security for a loan.
The lender who provides the mortgage loan.
Connects you with mortgage lenders to find the terms and rates that will best suit you.
A formal indication by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms.
Government-backed or private-backed insurance protecting the lender against the borrower’s default on high-ratio (and other types of) mortgages.
Mortgage Life Insurance
Insurance which can protect your family by paying off your mortgage if you die.
Mortgage Loan Insurance
Insurance that protects your lender against default. If your mortgage is for more than 80% of the lending value of the property, your lender will probably require mortgage loan insurance from CMHC or a Private Insurance Company.
A regularly scheduled payment that is often blended to include both principal and interest.
The term of a mortgage is the length of time for which options are chosen and agreed upon, such as the interest rate. It can be as little as six months or as long as five years or more. When the term is up, you have the ability to renegotiate your mortgage at the interest rate of that time and choose the same or different options.
Mortgage - Blended
Equal or regular mortgage payments with both a principal and an interest component.
Mortgage - Closed
A closed mortgage usually carries a lower interest rate but doesn’t offer the flexibility of an open mortgage. However, most lenders allow homeowners to make additional payments of a determined maximum amount without penalty. Typically, most people will select a closed mortgage
Mortgage - Conventional
A first mortgage issued for up to 80% of the property’s appraised value or purchase price, whichever is lower.
Mortgage - High ratio
A mortgage that exceeds 80% of the loan-to-value ratio; must be insured by either the canada mortgage
and housing corporation (CMHC) or by a private insurer to protect the lender against default by the
borrower, who has less equity invested in the property.
Mortgage - Open
An open mortgage allows you to pay off your mortgage in part or in full at any time without any penalties. you may also choose, at any time, to renegotiate the mortgage. This option provides more flexibility but comes with a higher interest rate. An open mortgage can be a good choice if you plan to sell your home in the near future or to make large additional payments.
Mortgage - Variable Rate
A mortgage for which payments are fixed but whose interest rate changes in relation to fluctuating market interest rates; if mortgage rates go up, a larger portion of the payment goes to interest; if rates go down, a larger portion of the payment is applied to the principal.
Mortgage - Vendor Take-back
When the seller offers to lend the buyer funds in order to help facilitate the purchase of the property.
Net Operating Income (NOI)
The balance remaining after deduction of operating expenses from gross receipts and gross rental, but not including the deducting of debt service on mortgages. Free and clear return on property is calculated by the ratio of NOI to total investment including mortgages and equity. This gives a direct means of comparing the return on different properties.
Your financial worth, calculated by subtracting your total liabilities (everything you owe) from your total assets (everything you own).
New Home Warranty Program:
Coverage in the event that an item under the warranty needs to be repaired within the specific warranty period. The repair will be made by the organization that provided the warranty. also known as a 2-5-10 program in BC.
Offer to Purchase
A written contract setting out the terms under which the buyer agrees to buy the home. If the offer to purchase is accepted by the seller, it forms a legally binding contract that binds the people who signed to certain terms and conditions.
A period of time during which a house or apartment for sale or rent is held open for public viewing, usually hosted by a REALTOR®.
The monthly expenses that come with owning a home. These include property taxes, property insurance, utilities, and maintenance and repairs.
Generally speaking, all expenses, occurring periodically, which are necessary to produce net income before depreciation. Under some conditions these expenses are placed in two categories, namely, operating expenses and fixed charges.
A right given by the owner of property to another (for valuable consideration) to buy certain property within a limited time at an agreed price.
The lawful possessor of the title to real property.
A person liable on a debt to the full extent of his entire assets, as opposed to limited liability where a maximum or a ceiling is fixed on the amount of assets that can be drawn upon to satisfy a debt. Joint and several liability fixes the liability of each individual borrower for the total debt; joint liability binds all the borrowers together in one action; and several liability fixes the liability of each borrower to the extent of his share of the debt.
All property except land and the improvements thereon.
Often the same date as the adjustment date. The day you are entitled to the legal possession of the property you have purchased (you get the keys!). In BC, possession usually occurs within a day or two of completion.
The sum of money (the amount of extra interest as set out in the mortgage document) a mortgagee may require from a mortgagor to exercise the option in a mortgage to prepay any outstanding principal.
The rate charged by banks to their most credit-worthy borrowers. Sometimes also referred to as the rate of interest paid on government bonds.
Taxes charged by the municipality where the home is located, usually based on the assessed value of the home. In some cases the lender will collect a monthly amount as part of the mortgage payment to cover your property taxes, which is then paid by the lender to the municipality on your behalf.
Pro Forma (Statement)
A financial statement of the gross income, operating costs and net operating costs and net operating income for a specified financial period. e.g. one year, using specified assumptions.
An interview with a client (usually) prior to the writing of an offer to purchase real estate in order to determine the applicant’s qualifications for mortgage purposes.
The mortgage amount initially borrowed or the portion still owing on the mortgage; the money used to pay down the balance of the loan.
Refers to the rights which an individual enjoys by virtue of his/her ownership.
Property Disclosure Statement
A document completed by the seller which serves as a checklist for buyers and enables them to address concerns about the property’s condition.
Insurance that protects you in case your home or building is destroyed or damaged by fire or other hazards listed in the policy.
Taxes charged by the municipality where a home is located based on the value of home.
Property Transfer Tax
Payment to the provincial government for transferring the property from the seller to the buyer. certain exemptions are available for first-time buyers.
Real estate professionals licensed by the real estate council of BC who are members of the Victoria Real Estate Board, the BC Real Estate Association & The Canadian Real Estate Association.
To pay off (discharge) a mortgage and other registered encumbrances and arrange a new mortgage.
The cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.
An amount of money set aside on a regular basis for emergencies or major repairs. It is usually a good idea to save a percentage of your monthly income for emergencies.
Also known as the contingency reserve fund. A fund required to be set up and supported through regular payments and periodic special assessments to the strata corporation for major repair and replacement of common elements and assets of the corporation.
Restrictive covenant agreements are signed agreements usually between a property owner (covenantor) and covenantee that is registered on the title of a given property. The agreement usually specifies some restriction of activities, building, or land-use that is applied to a portion of the subject property.
The interest one has in a piece of property. A claim or title enforceable by law.
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 than his/her estate.
The right to pass over another's land, more or less frequently, according to the nature of an easement.
The rights of the owners of land on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his/her land, including the right to acquire decretions, wharf slips, and fish therefrom.
Running with the Land
A covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent owners to either liability to perform it or the right to take advantage of it.
Sealed and Delivered
A term indicating that a conveyor has received adequate consideration as evidenced by his/her voluntary delivery. The word "sealed" adds more strength, since under old conveyancing law an official seal was used as a substitute for consideration.
A mortgage loan granted, (and registered) when there is already a first mortgage registered against the property.
An estate or land over which an easement or some other service exists in favour of the dominant tenement.
The distance from the curb or other established line within which no buildings may be erected.
Single Family Dwelling
A residential property designed for occupancy by one family and situated on land zoned specifically for that purpose.
A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.
Speculative Builder or Developer
One who builds without having a commitment to buy or lease from a purchaser or tenant.
Statements of Adjustments
Closing statements in a transaction which set out the sources of funds making up the purchase price, adjustments to and from the purchase price, the final amount required from the purchase and the amount due to the seller. lawyers prepare statements for the seller and buyer.
State of Title Certificate
A copy of the title which lists charges against a property -- e.g. liens, mortgages, rights-of-way, etc.
A law established by an act of the legislature.
Strata Common Property
The portions of a strata development owned in common (shared) by the individual unit owners, e.g. pool exercise room, lobby, etc. A portion of the strata fee goes towards care and maintenance of common property.
A condition(s) that must be satisfied before a contract becomes firm (unconditional). Examples are... subject to financing, inspection or receipt and approval of strata bylaws and financial statements. The conditions must be removed from the contract in writing by a certain date in order for the contract to become firm and binding on all parties.
A period, typically a week or two, in which all subject clauses must be satisfied in order for the contract to become firm. The deposit is typically due once subject removal has been completed.
A statement of a condition to be fulfilled before the contract will become firm and binding; must include a specific deadline for removal.
Survey or Surveyor’s Certificate
A document that shows the legal boundaries and measurements of a property, specifies the location of any buildings, and states whether anyone else has the right to cross over your land for a specific purpose.
Tenancy in Common
Ownership of a property by two or more persons: unlike joint tenancy in that interest of the deceased does not pass to the survivor but is treated as an asset of the deceased's estate.
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.
A freehold title is an interest in land that gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title is an interest in land that gives the holder the right to use and occupy the land and building for a defined period.
A policy which insures the lender against loss due to a flaw in the title of property held as collateral for a mortgage.
An examination of the ownership documents ensuring there are no liens or other encumbrances on the property and no questions regarding the seller’s ownership claim.
System of title recordation provided by provincial law, it is a system for the registration of land title, indicating the state of the title, including ownership and encumbrances without the necessity of an additional search of the public records. also known as the “Land Titles System".
Total Debt Service (TDS)
The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations.
To convey from one person to another.
A person employed by a mortgage lender or mortgage broker who approves or turns down loan applications based upon the quality of the real property, credit-worthiness and ability to pay the applicant and guidelines of the lender with regard to ratio of mortgage loan to value of property.
A tax on public service businesses; may include the supply of water, sewage, garbage disposal and natural gas.
The granting of some beneficial right, interest, profit, or suffering of some detrimental forbearance, loss or default by one party in exchange for the performance of another.
A seller of real property.
Of no legal effect. A nullity.
Where one party to a contract is entitled rescind the contract at his/her option.
An international relinquishment of some right or interest, the renunciation, abandonment, or surrender of some claim.
To subscribe one's name to a deed, will or other document for the purpose of attesting its authenticity and proving its execution by testifying, if required.
Guidelines set and enforced by municipal governments regulating how a property may or may not be used.