ABANDONMENT:
Abandonment occurs when a person with a right or interest in a property voluntarily gives up that right or interest, either by physically "abandoning" the property or by showing the intention to give up the right or interest.
ABATEMENT:
A decrease or reduction in the price of a property (or in rent chargeable to a tenant). Usually occurs as a result of the discovery of a negative fact about the property which decreases its value from the price originally agreed upon by the parties.
ABSENTEE OWNER:
An owner of a property who lives elsewhere, leaving tenants in control and occupation of the property.
ABSTRACT OF TITLE:
A summary listing of the documents registered in the local land registry office and which affect title (ownership) of a particular property.
ABSTRACTION (EXTRACTION) METHOD:
A method by which the value of land may be established. Uses comparable, improved properties and establishes a ratio of their original land value to their value after they have been developed.
ABUT:
Adjoin or share a common boundary, or share even a small portion of a boundary.
ACCELERATED DEPRECIATION:
Depreciation is the reduction of the value of a property as a result of the passing of time (i.e. a new car may be worth $20,000.00, $18,000.00 after one year, $16,000.00 after two years etc.). Usually used for tax purposes, the depreciation in the value of a property may be used as a tax deduction. If a property loses its value quickly, this depreciation rate may be accelerated so that most of the value is lost in the first few years and then the depreciation rate decreases later in the property's life span. Also known as "Writing down" the value of a property.
ACCELERATION CLAUSE:
A clause in a mortgage or loan. If the borrower fails to live up to her obligations under the mortgage, the lender has the legal right to demand that the full principal of the mortgage may become due and payable immediately upon the failure.
ACCEPTANCE:
A positive response to an offer or a counter-offer that creates a binding agreement between the parties. Acceptance may be conditional upon the occurrence of certain events.
ACCESS:
The right to enter a property. Access may be restricted to certain times, to certain persons and to certain purposes (i.e. access for the purpose of inspection).
ACCESSIBILITY:
The ease with which one can reach a certain place, person or thing. A property may be inaccessible because it is located far back along a winding, mountainous road that is often blocked in winter. A property may also be said to have good accessibility to highways, shopping, schools etc.
ACCESSORY BUILDING:
A structure on a property that serves a specific purpose, complementing the home or main building. A garage or storage shed.
ACCRUED:
An adjective describing something that has come into existence but has not yet been claimed by or distributed to its rightful owner.
ACCRUED DEPRECIATION:
From a tax standpoint, the amount of value of a property which has already accumulated (but has not been claimed) as a result of the decrease in the value of that property due to the passage of time and the use of the property.
ACCRUED INTEREST:
Interest which has already been earned but has not yet been paid.
ACQUISITION:
The process of taking title to or ownership of something.
ACQUISITION COST:
The cost to the purchaser of obtaining title to anything, including real property. Acquisition cost includes the cost of the transaction of obtaining title, including legal fees and expenses, interest charges on mortgages, land transfer tax, etc.
ACRE:
An imperial measure for land, replaced in Canada by the metric hectare. Equals 43,560 square feet; 4,047 square meters; or 0.047 hectares.
ADDENDUM:
An addition to a document that forms part of it. Similar to a Schedule to an Agreement of Purchase and Sale. May be used to add specific and detailed information material to the contract or upon which contractual terms are based.
ADDITIONAL PRINCIPAL PAYMENT:
A one-time or lump-sum payment made by a borrower in addition to the regular payments on a loan or mortgage which reduces the principal owing on the debt.
ADJACENT LAND:
An inexact term used to described any property which is situated near or abutting a certain piece of property. Note, an abutting property will always be adjacent but an adjacent property may not be abutting.
ADJUSTABLE RATE MORTGAGE (ARM):
Also known as a Variable Rate Mortgage, a loan secured against land which has an interest rate that changes according to some outside index -- such as the federal prime rate or the interest rate paid on government bonds -- over the term of the mortgage. The change in interest rate will result in a change in the periodic payments due under the mortgage.
ADJUSTED COST BASE:
For the purposes of determining capital gains or losses. The acquisition cost of a property or chattel, plus the cost of any improvements to the property.
ADJUSTED SALES PRICE:
The result of estimating the value of a property by comparison to comparable properties. Take the actual sale price of a property comparable to the subject property, then add the value of any extras which the subject property has but the comparable property did not, then subtract the value of any deficiencies in the subject property not shared by the comparable property.
ADJUSTMENTS:
In real estate sales, the changes made to the selling price to account for the advantages and disadvantages of the subject property, market conditions etc. When closing a real estate transaction, the changes to the purchase price made as a result of realty taxes over- or under-paid by the Vendor, fuel oil provided, tenant's rental payments etc. (Contained on the Statement of Adjustments).
ADMINISTRATOR:
A person appointed by a Court to deal with the estate of a deceased person who died without leaving a will. Note, an executor is a person who is named in a will to deal with the estate of a deceased person.
ADVERSE POSSESSION:
A method of acquiring or claiming title (ownership) to a piece of land owned by another by occupying it in defiance of the other's title. Most jurisdictions have statutes that set out a certain period of time throughout which the person claiming adverse possession must occupy the land before title passes to that person by operation of law.
AESTHETIC VALUE:
A subjective element in the overall market value of a property created by the physical presentation of the land or buildings.
AFTER-TAX CASH FLOW:
The net proceeds from an income-producing property, after all costs (taxes, mortgage interest, maintenance costs etc.) of owning and operating the property have been deducted.
AGENCY:
The relationship between a person (the Principal) and another person (the Agent) who was appointed, selected, empowered, given authority by the Principal to represent the interests of the Principal in dealings with third parties and to bind the Principal to statements, warranties or contracts.
AGENT:
A person empowered by a Principal to act on behalf of the Principal in dealings with third parties. The third party is entitled to rely upon the agreement, assurances or statements of the Agent as being binding on the Principal.
AGREEMENT OF SALE:
Also known as Purchase Agreement, Agreement of Purchase and Sale, Land Agreement etc. A legal contract in which one party agrees to buy and another agrees to sell a property. Contains terms and conditions of the transaction and is signed by the parties.
ALIENATION CLAUSE:
A term of a mortgage which allows the creditor to demand payment in full of principal and interest due upon the sale of the property.
ALLOCATION (ABSTRACTION) METHOD:
Estimating the value of land only by deducting the value of the buildings etc. on the land from the actual market value of the property as a whole.
AMENITIES:
Positive features of a particular property (such as a pool, central air conditioning, etc.) or attractions located near a particular property (highways, school, shopping, etc.) which have the effect of enhancing the property's value.
AMORTIZATION:
The preparation of a payment plan for a loan which allows for equal payments to be made to the creditor at consistent intervals over the life of the loan (the amortization period). Each payment covers interest accrued over the interval period with the remainder of the payment being applied to reduce the principal owed. If every payment is made on time and in full over the amortization period, the loan will be completely repaid at the end of the amortization period.
ANNUAL DEBT SERVICE:
The total amount required to service a loan in a given year.
ANNUAL LOAN CONSTANT:
Ratio of Annual Debt Service to original principal of the loan. Also known as a mortgage constant.
APPORTIONMENT:
Also known as adjustment. The division of responsibility for certain costs between the parties to a transaction, such as realty taxes.
APPRAISAL:
An estimation of the value of a property on a certain date given by a qualified person, usually after an inspection of the property.
APPRAISED VALUE:
The estimated market value of a property on a given date, given by a qualified person as a result of an inspection of the property and a consideration of other market forces.
APPRAISER:
A professional who has been trained to assess the value of property.
APPRECIATION:
The increase over time in the value of a property caused by many factors: market conditions, inflation, changes to area around the property, etc.
APPURTENANCE:
A right or entitlement which forms part of the ownership of a property and which passes to a new owner when title passes (i.e. an easement or right of way over another property).
ARREARS:
Money which is not paid when due, under a payment plan or amortization schedule. Could lead to enforcement of loan agreement by lender.
AS IS:
Implied in most Agreements of Purchase and Sale, suggests the Purchaser is accepting the property in its current condition and releases the Vendor from any liability for problems found before or after closing.
ASKING PRICE:
The price at which the Vendor advertises a property. When used in the advertisement, may suggest flexibility on the part of the Vendor regarding the price.
ASSESSED VALUE:
The value assigned to a given property by the municipality for the purpose of establishing realty taxes payable by the owner of the property.
ASSESSMENT:
Generally, the apportionment of liability of a general cost among individuals. The act of estimating the value of land for tax purposes or the method by which municipalities raise taxes (property tax assessment).
ASSESSOR:
A person who is employed by the municipality to estimate the value of properties for the purpose of taxes.
ASSET:
A thing of value.
ASSIGN:
To transfer interest in a property, contract, right etc.
ASSUMABLE MORTGAGE:
A mortgage that can be taken over ("assumed") by the buyer when a home is sold. If interest rates have risen, an assumable mortgage at a low rate may prove a selling point for the property.
ATTACHED HOUSING:
Duplex, triplex, row housing, or townhouses. Two or more dwellings that are attached physically but are owned and/or occupied by different people.
ATTACHMENT:
The binding by a court of a piece of property (real or personal) as security for a debt.
AUCTION:
The process of selling property to the highest bidder.
AUTHORITY:
The right of an agent, conferred by his principal, to bind the principal in dealings with third parties.
AUTHORIZATION TO SELL:
A contract between a property owner and a real estate broker or agent which allows the broker to list the property for sale and which codifies the rights and obligations of the two parties.
BACKUP CONTRACT:
An Agreement of Purchase and Sale for a particular property which is conditional (becomes binding) upon the failure of another Agreement for the same property.
BALANCE:
Often as in "balance due", the amount of principal on a loan remaining to be paid at any given time.
BALLOON (LOAN) MORTGAGE:
A loan which is repaid by a series of small, periodic payments until a given date, when either the balance comes due in a single, large payment or the amount of the payments rises significantly.
BALLOON PAYMENT:
The single, large payment which pays out the balance due on a balloon mortgage.
BANKRUPTCY:
The state of being unable to pay your debts such that you submit yourself to the protection of the state. A person or business may voluntarily assign himself into bankruptcy or may be petitioned into bankruptcy by his creditors. Once in bankruptcy, the person surrenders his assets to a trustee in bankruptcy who sells the assets for the benefit of the bankrupt's creditors, first secured creditors then unsecured creditors. Once a person is discharged from bankruptcy, none of his former creditors may pursue him for his former debts.
BASIS POINT:
One 100th of 1%.
BELOW-MARKET INTEREST RATE (BMIR):
A subsidized interest rate on a mortgage or loan, often provided by a government to allow for acquisition of property or reduction in rents charged to tenants.
BID:
An offer of a certain amount of consideration.
BILL OF SALE:
Documentary evidence that title to personal property (chattels) has passed to the Purchaser for valuable consideration.
BLIGHTED AREA:
An area of a community where the infrastructure and buildings have been allowed to decay.
BLUEPRINT:
Construction plans, containing great detail about the particular building.
BONA FIDE:
Made in good faith, at fair market value, without deceit or fraud.
BORROWER (MORTGAGOR):
The person or company that receives money from a lender (often a bank, credit union or trust company) in exchange for a written promise to pay and a registered lien on property.
BREACH (OF CONTRACT):
A failure to meet one's obligations, whether under a contract or otherwise. A breach of contract allows the innocent party to enforce the contract, rescind the contract or sue for damages.
BRIDGE FINANCING:
Also known as a "swing loan", a loan used to fill a gap in financing, often between the purchase of a new home and the sale of the old one. If the purchase closes before the sale, the home owner needs to borrow enough money to pay for the new house for the period of time before the equity in his old house comes available as a result of the completion of the sale.
BROKER:
An intermediary who brings parties together for specific purposes. A mortgage broker brings borrowers together with lenders; a real estate broker brings purchasers together with vendors. Often charges a percentage of the contract price as a fee. Specific training required to become a Real Estate Broker, a professional designation.
BUFFER ZONE:
An area of land specifically designed to separate one zoning use from another, such as separating a residential neighborhood from an industrial area.
BUILDING CODE:
Set of regulations established by a municipality to govern the standards of construction in that municipality.
BUILDING LINE OR SETBACK:
The minimum distance a building or other improvement may be constructed from a property line. May be established by agreements, title documents or municipal by-laws or ordinances.
BUILDING PERMIT:
A document obtained from the local government, allowing for the construction of a structure in accordance with the terms of the permit.
BUILDING RESTRICTIONS:
Limiting rules which may appear in building codes or in title documents which control the size, placement, materials, design or location of new construction.
BUNGALOW:
A small, one-storey home built in a turn-of-the-century style, often with a prominent front verandah.
BUY-BACK AGREEMENT:
A contract between a purchaser and vendor in which the vendor agrees to repurchase the property from the purchaser if a certain event occurs within a specified period of time. The buy-back price is usually set out in the agreement.
BUY DOWN (ACCOUNT OR MORTGAGE):
The payment of extra money on a loan now so as to reduce the interest rate over a given period or over the life of the loan. This extra payment may be made by the borrower, by the lender (as an incentive to the borrower to borrow from the lender) or by the vendor/builder (as an incentive to the borrower to buy a certain property).
BUYER'S AGENT:
A real estate agent who contracts to represent the interests of a person wishing to purchase a home. (see also "selling agent", "Purchaser's agent").
BUYER'S MARKET:
A condition of the real estate market where there are more properties for sale than people interested in buying them. Buyer's have more choice and less competition for the available properties, resulting in lower prices.
BUY-SELL AGREEMENT:
A pact between partners in a business or shareholders in a company, obliging one to buy the other's interest (and obliging the other to sell) upon the occurrence of some event stated in the agreement.
