Real Estate Glossary

Want to Understand Real Estate Terms & Phrases?

 
This glossary includes many of the terms common to the real estate process. Contact Brett if there are any terms that you do not understand.
 
Acceleration Clause
A term in the contract which brings the maturity date of the loan forward if the borrower defaults, so that the outstanding balance is immediately due and payable.
 
Acceptance
Occurs when the contract is signed by both parties
 
Accrual basis
An accounting procedure which recognizes revenue at the time it is earned, as opposed to when it is actually received.
 
Addendum
A form on which clauses are written that form part of a contract or amendment to a contract.
 
Adjacent
Two or more properties that are not widely separated
 
Adjoining
Two or more properties that are contiguous or touching each other.
 
Adjustment Date
Date agreed to by both parties to a real property transaction for the adjustment of the property taxes, rent, interest, and other items. This is usually (not always) the same day as the possession date.
 
Age of Mortgage
The amount of time left in the amortization period at the time of assumption. For example, a mortgage with 22 years remaining in the orginal 25-year amortization period is 22 years old.
 
Agency
Refers to the type of relationship with the party or parties involved in the real estate transaction.
 
Agent
At common law, an agent is any person who acts for or on behalf of another, who in turn, is known as the principal.
 
Agreement For Sale
A contract where the registered owner sells property without losing title to it; the buyer is registered under charges as the holder of a “right to purchase”.
 
Amortization Period
The length of time over which the regular payments have been calculated to fully pay out the mortgage in equal blended payments of principle and interest.
 
Appraised Value
The estimated value of a property that is completed by a certified appraiser for mortgage financing.
 
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.
 
Assessment
A valuation for tax purposes.
 
Assumption of Mortgage
A procedure where the buyers take over the sellers mortgage.
 
Balanced Market
A market whose conditions favour neither buyers or sellers.
 
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 Payment
A mortgage payment that includes principal and interest. The principal portion increases over time and the interest portion decreases over time.
 
British Columbia Assessment
The provincial body responsible for property valuations for property tax purposes.
 
British Columbia Real Estate Association (BCREA)
The provincial voice of the real estate industry.
 
Brokerage
A licensee (often corporate) on behalf of which other licensees must provide real estate services.
 
Building Permit
A certificate obtained from the municipality by the property owner or contractor before a building can be erected or repaired.
 
Buyer’s Market
A market whose conditions are favourable to buyers.
 
Canada Mortgage and Housing Corporation (CMHC)
The Canada Mortgage and Housing Corporation is a crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for Canadians.
 
Caveat
A notice registered against the title warning those looking at the title that a claim has been made.
 
Certificate of Pending Litigation
A notice of a pending court action registered against the title to property.
 
Clearance Certificate
A document required by Revenue Canada when non-resident owners sell real property in Canada.
 
Closed Mortgage
A mortgage loan that has a locked-in mortgage schedule which does not vary over the life of the closed term.
 
Collateral Mortgage
A mortgage on one property for a mortgage on another property.
 
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 Law
The Canadian general system of law based on court decisions.
 
Comparative Market Analysis (CMA)
An analysis of the market done by a real estate agent to assist the seller in establishing an appropriate asking price for the property.
 
Completion Date (closing date)
The day that the seller receives the funds from the sale of a property; generally also the day that the title is registered in the buyer’s name.
 
Conditional Offer
An Offer to Purchase that is subject to specificed conditions for a specified period of time.
 
Contract of Purchase and Sale
An agreement between two or more parties to purchase real property that creates binding legal rights and obligations on both sides (seller and buyer).
 
Conveyance
The term used to describe the process of transferring the seller’s title to the buyer’s.
 
Conveyancer
The lawyer or notary who handles the documents for the buyers or sellers; this term is also used in common practice to refer to the “conveyancing secretary” in a real estate office who handles the files before they are sent to the actual conveyancer.
 
Co-op
A means of owning real property without conveyance of a title; but rather through the purchase of share through a cooperative (the co-op), which owns the building and the land (or leases the land); in exchange for shares.
 
Counter-offer
Occurs when changes are made to an offer by one of the parties. The effect is to create a new offer and extinguish the previous offer.
 
Court-ordered sale
A listing which is authorized by someone other than the registered owner such as a bank foreclosing; a sale which must be approved by the court after it is firm in order to be binding on the registered owner.
 
Covenant
A covenant means a promise contained in a contract to do or refrain from doing something.
 
Credit Report
A report required by most lenders to confirm the buyer’s history of loan repayment.
 
Creditor
The person to whom a debt is owed.
 
Customer
In terms of agency law, a customer is a person not being represented.
 
Debtor
The person who owes a debt.
 
Defects
Latent defects are not discoverable through normal inspection and must be revealed. Patent defects are discoverable through normal inspection.
 
Dominant Tenement
Land to which the benefit of a right is attached.
 
Easement
A right acquired for access to or over, or for the use of, another person’s land for a specific purpose , such as a driveway or public utility.
 
EMILI
The electronic mortgage approval and appraisal service used by many major lenders.
 
Encroachment
A fixture such as a fence which illegally intrudes into or invades on public or private property.
 
Encumbrance
A registered claim for debt against a property, such as a mortgage.
 
Fiduciary
A person who holds a position of trust with respect to someone else and is obliged to act in the other person’s benefit.
 
Foreclosure
A legal procedure in which the lender gets ownership of the property if the borrower defaults on a mortgage loan.
 
FINTRAC
The Financial Transactions and Reports Analysis Centre of Canada.
 
Guarantor
A person who becomes contingently responsible or secondarily liable for another person’s debt or performance.
 
High-Ratio Mortgage
A mortgage that must be insured to protect the lender against default by the borrower who has limited equity invested in the property.
 
Home Owner Grant
A BC provincial program designed to provide property tax relief for most owners of residential properties that are owner-occupied.
 
Institutional Lender
Banks, trust companies, insurance companies, credit unions, finance companies, savings and loan organizations, which lend money for many purposes.
 
Inter-alia Mortgage
A mortgage whose security includes more than one property so that more than one title is encumbered by it; often used in bridge or interim financing when a buyer is trying to sell on home, but wants to complete on another.
 
Invitation to Treat
A type of advertisement used to induce the public or an individual to submit offers.
 
Joint Tenancy
Two or more persons have an equal undivided interest in a property.
 
Law and Equity Act
Requires that dealings in land be in writing.
 
Legal Description
The detailed description of a property registered on title at the Land Title Office.
 
Licensee
A person holding a license under the Real Estate Services Act.
 
Lien
A claim against property for money owing.
 
Life Estate
An interest in land to be enjoyed during a person’s life that ends on that person’s death.
 
Limited Dual Agency
An agency relationship between a brokerage and a buyer and a seller where both parties have expressly permitted the brokerage to act for both parties with the limitations outlined in the Working With a REALTOR brochure.
 
Mortgage Commitment Letter
A letter sent by the lender to the borrower outlining the details of the mortgage it is prepared to advance – borrowers generally remove their “subject to financing” clause on the strength of this letter.
 
Mortgagee
The creditor to whom the mortgage is made, such as the lender/mortgage company.
 
Mortgagor
The debtor who makes the mortgage – the borrower.
 
Occupancy Rate
The percentage of rented versus vacant units in a rental building.
 
Offer to Purchase
A written contract setting out the terms under which the buyer agrees to buy.
 
Option Agreement
A document stipulating that, in exchange for a deposit, a specified individual is to be given the first chance to buy a property at or within a specified period of time.
 
Personal Information Protection Act (PIPA)
An act in BC that governs the collection, use and disclosure of personal information.
 
PID (Parcel Identifier)
A nine-digit number assigned to a title to property that is unique to that property.
 
PIT
Principal, Interest and Taxes.
 
Possession Date
The day when the buyer is the actual legal owner of the property and is entitled to the keys.
 
Power of Attorney
A document conferring authority to one person to act as another person’s agent on his or her behalf.
 
Pre-approved Mortgage
A mortgage approval prior to the actual purchase that is valid for a limited period of time.
 
Pre-qualification
A procedure where buyers consult a lender before writing an offer to determine the maximum mortgage they could borrow based on their income, assets, and liabilities.
 
Profit a Prendre
The right to take the produce or part of the soil from the lands of another.
 
Property Disclosure Statement
Part of the listing documentation and a statement from the seller to the buyer at a specified point in time.
 
Property Transfer Tax
A tax in BC that applies to transferees who register transfers of property at a Land Title Office.
 
Real Estate
Refers to real property, a cooperative interest, shared interest in land or time share interest and a right in relation to real property.
 
Real Estate Professional
A licensee licensed under the Real Estate Services Act.
 
Real Estate Services Act
The act in BC that sets forth the laws pertaining to the listing and sale of real estate.
 
Restrictive Covenants
Prohibitions not related to zoning that owners and tenants must obey.
 
Rights-of-Way
Indicated on the title at the Land Title Office; often for use of utilities for the city or municipality in order to make repairs to pipes, etc.
 
Seller’s Market
A market whose conditions are favourable to sellers.
 
Serviant Tenement
Land bearing the burden of an easement or other right.
 
Single Agency
The type of agency relationship when a brokerage acts for only one party in a real estate transaction.
 
Strata Property Act
BC legislation governing strata owners and those who transact with strata corporations.
 
“Subject to” Clause
A statement of condition to be fulfilled before a contact becomes firm and binding. Offers often have several of these clauses.
 
Survey
A document that illustrates the property boundaries and measurements, specifies the location of buldings on the property, and indicates any easements or encroachments.
 
Tenants in Common
Two or more people acquire interests in a single property.
 
Title
Legal possession of land and buildings.
 
Title Search
The act of checking the title of a property to establish ownership and charges against the title.
 
Vancouver Island Real Estate Board (VIREB)
The body comprised of member brokerages on Vancouver Island (not including Victoria) to establish a Multiple Listing Service and to provide other services to the members and to the public where appropriate.
 
Warranty
A promise by a party in a contact as to a particular state of affairs.
 
Working With a REALTORĀ®
The brochure produced by the BC Real Estate Association that discusses, among other things, the types of agency relationships that can be offered by brokerages in real estate transactions.
 
Zoning Bylaws
Municipal or regional laws that specify or restrict land use.