-A-

Acceptance

Consent by the person receiving the offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes a binding legal agreement.

Additional principal payment

A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.

Agreement

The written contract for the sale and purchase of property between the seller (vendor) and the buyer (purchaser).

Amortize

To repay a mortgage with regular payments that cover both Principal and Interest.

Appraisal

A written analysis of the estimated value of a property prepared by a qualified appraiser, typically for a bank as part of the mortgage approval process.

Appraiser

A person qualified by education, training, and experience to estimate the value of real property and personal property.

Appreciation

An increase in the value of a property due to changes in market conditions or supply and demand, etc.

Asking Price

The listed price of the property may not always be the selling price. The owner may be willing to negotiate.

Assessed Value

The valuation placed on a property for the purposes of taxation by an authority.

-B-

Balloon Payment

A large loan payment to clear a debt.

Boundary

The lines that define the perimeter of a property.

Building Code

Local regulations that control design, construction and materials used in construction.

Business Day

A standard day for conducting business. 9.00am – 5.00pm. Excludes weekends and national holidays.

Buyers Market

When the demand for property is less than supply so the advantages shift to the buyer.
 
-C-

Capital

Money used to create income, either as an investment in a business or an income property. 

Capital Gain

The gain on the sale of a capital asset.

Caveat Emptor

A Latin phrase for “Let the buyer beware”, i.e.: the onus is on the buyer to be satisfied with any item before purchasing.

Certificate of Occupancy

A document issued by a local government to a developer permitting the structure to be occupied. This generally indicates that the building is in compliance with public health and building codes.
 
Chattels

Movable and removable items of personal property. In real estate transactions, chattels included in the sale usually include the stove, carpets, blinds, curtains, drapes and light fixtures. However, unless chattels are specified in the agreement, they are not sold as part of the property.

Clear Title

A title that is free of or legal questions as to ownership of the property.

Collateral

An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

Commission

A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction.

Common Property

Area of building, land or amenities that are shared by all owners.

Contingency

An offer on a home has been made and the seller has accepted it, but the finalized sale is contingent upon certain criteria that have to be met. These criteria, or contingencies, typically fall under three major categories: appraisal, home inspection and mortgage approval.

Covenant

Terms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.

Credit History

A record of an individual’s current and repaid debts which is usually used by a lender to assess the risk of a potential borrower.

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 creditworthiness.

-D-

Deed

A legal document conveying title to a property.

Default

Failure to make mortgage payments regularly or to comply with other requirements of the mortgage.

Depreciation

A decline in the value of property due to changes in market conditions or other clauses.

Disbursement

A cash expenditure for the purpose of settling a debt.

Down Payment

A percentage of the purchase price given to bind the sale of real estate.

Duplex

A house divided into two apartments, with a separate entrance for each.

-E-

Easement

A right that someone has to use the land belonging to another, i.e. a water authority may have a sewerage easement across part of your property.

Encroachment

Part of a house or establishment illegally overhanging the street or a neighbor’s property.

Encumbrance

An impediment to the use or transfer of the property in the form of an interest or right in the property.

Equity

The amount of an asset actually owned, Equity is the difference between the market value of the property and the amount still owed on its mortgage.

Estate

The total of all the real estate and personal property owned by an individual at the time of death.

Exclusive Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

-F-

Fee Simple

The greatest possible interest a person can have in real estate.

Fiduciary

A person who essentially holds the character of a trustee. Real Estate agents and salespersons are considered by law to be fiduciaries, thus they have a duty to act primarily for the benefit of the principal (the person who employed them) and not their own. A fiduciary must act with the highest degree of care and good faith in relations with the principal and on the principal’s business. Penalties for failing in fiduciary duties may be quite severe.

First Mortgage

A mortgage that is the primary lien against a property.

Fixed Installment

The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

Fixed Rate Mortgage

A mortgage in which the interest rate does not change during the term of the loan.

Fixtures

Fixed items that cannot be removed without damaging either the property or the fixture itself, eg: cupboards.

Foreclosure

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the selling the property by auction and the proceeds being used to service the mortgage debt.

For Sale by Owner (FSBO)

A home the owner is telling without the service of a licensed real estate agent.

Freehold

An estate in real property which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates which are created by acts of parties, such as an ordinary life estate, or by operation of law.

-G-

Good Faith Estimate

An legally required estimate that must include an itemized list of fees and costs associated with the loan and must be provided within 3 business days of application. These mortgage fees, also called settlement costs or closing costs, cover every expense associated with a home loan, including inspections, title insurance, taxes and other charges.

Gross Income

Income before taxes are deducted.

Guarantor

A person who agrees to indemnify the holder of a loan all or a portion of the unpaid principal balance in case of default by the borrower.

-H-

Home Equity Line of Credit

A mortgage loan which allows the borrower to obtain multiple advances of the loan proceeds up to a specified percentage of the borrower’s equity in a property.

Home Inspection

A thorough inspection that evaluates the structural and mechanical condition of a property.

-I-

Interest

The fee charged for borrowing money.

Interest Rate

The rate of interest in effect for the monthly payment due.

Investment Property

A property that is not occupied by the owner, but provides a return to the owner through letting or leasing to a tenant.

-J-K-

Joint Tenancy

A form of co-ownership that gives each tenant equal shares and rights in the property including the right of survivorship, i.e. ownership of a property passes to the surviving owners.

-L-

Landlord

A person who rents property to another, a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.

Leasehold

You buy the right to own the home and lease the land for a certain time. You pay rent to the landlord for the land. You can sell the lease if you want to move on. There may be restrictions on your use of the property.

Lessee

A person leasing a property.

Lessor

The owner of a property that is leased to another person.

Liabilities

A list of debts owed.

Lien

A legal claim against a property that must be paid off when the
property is sold.

Life Estate

Also called Tenancy for Life. A freehold interest (in real property) that expires upon the death of the owner or some other specified person.

Liquid Asset

An asset, cash or otherwise, that can be converted into cash.

Listing

A written contract between an owner and a real estate, authorizing the agent to perform services for the principal involving the owner’s property. The property so listed.

Loan

A sum of borrowed money that is generally repaid with.

Loan Origination Fee

A fee paid to a lender for processing a loan and usually calculated as a percentage of the total loan, usually between 0.5 and 1 percent.

Loan to Value Ratio

The amount of the loan financed as a proportion of the property value, expressed as a percentage.

-M-

Market Value

The price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price. Establishing the market value is the objective of an appraisal.

Mortgage

A legal document that pledges a property to the lender as security for payment of a debit.

Mortgage Broker

An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. 

Mortgagee

The lender in a mortgage agreement.

Mortgagor

The borrower in a mortgage agreement.

-N-

Negotiation

Make an offer and we will attempt to negotiate a concluded contract between the parties.

Net Income

Income after taxes are deducted.

Net Worth

The value of a person’s assets minus liabilities.

Notice of Default

A formal written notice to a borrower that has occurred and that legal action may be taken.

Null and Void

That which cannot be legally enforced, as with a contract provision not in conformance to the law.

-O-

Offer

Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.

-P-

Power of Attorney

The person who has authority to execute documents on behalf of the grantor of the power. Also a legal document which authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre-qualification

The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

Prime Rate

The interest rate that banks charge their preferred customers. Changes in this rate can influence other rates including mortgage interest rates.

Principal

The amount borrowed or still to be repaid. The part of the monthly payment that reduces the balance of the mortgage.

-Q-

Qualified Buyer

A buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender as part of the loan process.

-R-

Real Estate Agent

A person or Company licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner.

Refinance

The process of paying off one loan with the proceeds from a new loan using the same property as security.

Right of First Refusal

A provision in an agreement that gives a party the first opportunity to purchase or lease the property before it is offered for sale or lease to others.

Right of Survivorship

When jointly owned property includes a right of survivorship, the surviving owner automatically absorbs a deceased owner’s share of the property.

Right of Way

A right of one property or the general public for access to or across another property.

-S-

Second Mortgage

A mortgage that, on the sale of a property, is paid off only when the first mortgage is paid.

Security

The property that is pledged as collateral.

Seller’s Market

When demand for property is greater than supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price.

Settlement

The sale of a property is finalized by the legal representatives of the vendor and the purchaser, mortgage documents come into effect, costs are paid and the new owner takes possession of the property and receives the keys.

Exclusive Agency

Exclusive agency precludes all other agents from working on the disposal of the property.

Survey

A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

-T-

Tenancy

The right to occupy a property under agreed terms and conditions.

Tenants in Common

A type of joint tenancy in a property where two or more purchasers own a property in unequal shares. If one dies, his or her shares pass to his or her beneficiaries under the terms of the will. The shares can be sold without consultation of the other owners.

Title

A legal document evidencing a person’s right to or ownership of a property.

Title Search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or
outstanding.

Townhouse

A dwelling unit, generally having two or more floors and attached to other similar units via party walls. 

Trustee

A person who holds or controls property for the benefit of another.

-U-V-

Unconditional Agreement

The legal contract that binds both the purchaser and the seller to settle on the agreed date at the agreed price. It is either not subject to any conditions or those conditions have already been satisfied. An unconditional agreement commits you to purchasing the property.

Utilities

The private or public service such as gas, electricity, telephone, water and sewer that are provided as part of the
development of the land.

Void

Having no legal force or effect. Unenforceable.

-W-X-Y-Z-

Zoning

Zoning is the guidelines for how land and property may be used.