CALIFORNIA BUNGALOW:
Compact, early twentieth-century single-storey house.
CALIFORNIA RANCH:
One-storey house, in a post-Second-World-War style, known for its ground hugging design and low, pitched roof.
CALL OPTION (PROVISIONS, RIGHTS):
A lender's right to demand payment of the outstanding balance of the loan at a time specified in the loan agreement.
CANCELLATION CLAUSE:
Provision in a contract that gives one or more parties the right to terminate the contract if a specific event occurs.
CAP:
A limit. In variable rate mortgages, a limit as to how high periodic payments may go or how much the interest may change within a given time period or over the life of the mortgage.
CAP RATE:
Short form for capitalization rate.
CAPE COD COLONIAL:
A one-storey house, compact in design and in an early-American style. Symmetrical layout with a central entrance. Steep, gable-type roof, usually shingled, with a low central chimney.
CAPITAL ASSET:
A property to which certain tax rules (capital gains and capital losses) apply.
CAPITAL EXPENDITURE:
Money spent to improve a property and enhance its value over an extended period of time (as opposed to a repair). May be added to the adjusted cost base of the property improved or depreciated over the useful life of the improvement.
CAPITAL GAIN:
Increase in value of a capital property (a property other than a principal residence) upon which tax is payable, either upon disposition of the property or the deemed disposition of the property under tax rules.
CAPITAL IMPROVEMENT:
Value enhancing work carried out on a capital property.
CAPITAL LOSS:
Decrease in value of a capital property (a property other than a principal residence). May be set off against capital gains or against regular income according to the tax rules.
CAPITAL:
The working money in a business venture.
CARRYING CHARGES (COSTS):
The expense required to maintain a property over a given period of time, including property taxes, maintenance, insurance payments, interest charges on financing, etc.
CASH FLOW:
Description of the net income from a property after all expenses of holding and carrying the property are paid.
CASH RESERVE:
An amount of money that the purchaser of a property still has after the transaction closes. Some lenders require a certain level of cash reserve (equal to two payments) before granting a mortgage.
CASH-OUT REFINANCE:
When an owner renegotiates or negotiates a new mortgage and the proceeds of the new financing exceed the money required to pay out the old mortgage and any other costs, liens or expenses, leaving money for the borrower.
CAUTION:
An instrument registered on title to a property which serves notice of a competing interest in the property and, thus, blocks dealings with that property.
CAVEAT EMPTOR:
Latin, meaning "Let the Buyer beware". Maxim which applies to real estate transactions where the onus is on the Purchaser to satisfy herself as to the suitability and condition of the property she is considering for purchase. Vendor is not responsible to the Purchaser for the condition of the property and, unless he is specifically asked, does not generally have an obligation to reveal problems to the Purchaser (except where the defect is hidden, serious and could not be discovered by the Purchaser after reasonably prudent inquiries and investigations).
CC&R'S:
Short form for "covenants, conditions, and restrictions", which are the rules of general application governing the relations between land owners in a specific subdivision, development, condominium development or cooperative housing facility. May be registered on title.
CEILING:
The limit over which the interest rate on a variable rate mortgage may not rise over the life of the loan.
CERTIFICATE OF INSURANCE:
A document, issued by the insurance company, setting out the particulars of the insurance coverage for a particular property.
CERTIFICATE OF OCCUPANCY:
Document issued by the local municipality indicating that a new dwelling is suitable for occupation. Generally confirms that the dwelling complies with local building, safety and health by-laws.
CERTIFICATE OF TITLE:
A written opinion of the quality of a person's ownership of property, issued by a lawyer or a title insurance company after a search of the title records has been conducted. May contain qualifications to the certification regarding defects found or potential defects not investigated.
CHAIN OF TITLE:
A part of a title search. A listing, in chronological order, of successive legal owners of a property, often listing as well the registration particulars of the document by which title is transferred from each owner to his successor in title.
CHANGE FREQUENCY:
Term describing the period of time between changes in the interest rate and/or payments of a variable rate (adjustable rate) mortgage or loan (i.e. one week, one month etc.).
CLEAR TITLE:
Ownership of land which is marketable and free of competing claims, liens, mortgages or other encumbrances.
CLAIM:
A right asserted against another party. One might register a claim on title to the property to which the claim applies, file a claim under an insurance policy or file a Statement of Claim in court to assert one's rights.
CLOSED MORTGAGE:
A land loan that cannot be prepaid or re-negotiated before the end of its term without the payment of an interest penalty.
CLOSED-END MORTGAGE:
A mortgage with a set principal amount which cannot be increased or extended during the life of the mortgage.
CLOSING:
The culmination of any transaction in which the interested parties (or their representatives) meet to exchange documents, funds, and property and, if necessary, to register the transfer of title.
CLOSING COSTS:
Moneys expended by a party in completing a transaction, over and above the purchase price, including: legal fees, taxes, mortgage application charges, interest adjustments, registration fees, appraisal fees, etc.
CLOSING DATE:
Also known a Completion Date. The date set in the Agreement of Purchase and Sale upon which the transaction is to be completed, the purchase price paid and the transfer of title registered.
CLOUD (ON TITLE):
Any unresolved claim against ownership of all or part of a property, affecting the owner's title to the property and marketability of that title.
COLLATERAL:
Property (real or personal) which is pledged to secure a loan or mortgage. If the debt is not paid, the lender has the right to sell the collateral to recoup the outstanding principal and interest on the loan.
COLLATERAL MORTGAGE:
A loan which is secured by some sort of written note of indebtedness (such as a Promissory Note) which is secondarily secured by a mortgage registered against a property.
COMMERCIAL BROKER:
A real estate professional who deals in properties with commercial (business, retail, etc.) uses.
COMMERCIAL PROPERTY:
As opposed to residential or industrial property. Property zoned, designed or intended for use retail, office, or similar users.
COMMISSION:
Payment to a salesperson (a listing real estate agent or broker) for her efforts in marketing and selling a property, usually expressed as a percentage of the purchase price.
COMMISSION SPLIT:
The division of the payment made to the listing agent between that agent and her broker, or between the listing agent and agent representing the Purchaser (the selling agent).
COMMITMENT FEE:
The fee charged by the lender to commit itself to a mortgage or loan on specific terms.
COMMON AREA ASSESSMENTS:
Also known as Common Element Fees. A periodic charge levied against all of the owners of units in a condominium or planned unit development (PUD) project which is used by the condominium corporation or homeowner's association to pay for repair, maintenance and other expenses of the common areas in the development.
COMMON AREAS:
Portions of the property and buildings owned by a condominium corporation or planned unit development (PUD) homeowners' association, or a cooperative development's association that are available for the use of all unit owners. Also used in rental properties to refer to those facilities for the use of all tenants.
COMMUNITY ASSOCIATION:
Any organization established and run by property owners in a particular area, often to represent the common interests of the owners in dealings with government, planning bodies, developers or other outside parties.
COMPARABLES:
Used in assessing or establishing the fair market value of a property, a property which has been sold recently that is similar in size, condition, location and amenities to the subject property.
COMPONENT DEPRECIATION:
For tax purposes, allocating a portion of the total cost of renovation to each component of the renovation (roof, plumbing, electrical, foundation, etc.) and then depreciating the cost of each component separately.
COMPOUND INTEREST:
As opposed to simple interest. The accumulation of interest on a loan over time where interest is charged not only on the principal of the loan but also on all interest accrued against the principal to the end of the last compound period.
CONCESSIONS:
Sacrifices made by a party to convince another party to enter a contract.
CONDEMNATION:
An order made by a health or building department barring the use of a dangerous or hazardous property.
CONDITION(S):
Clauses in the Agreement which must be fulfilled before the Agreement becomes firm and binding. If the condition is not fulfilled, the Agreement will usually become null and void and any deposit paid returned to the Purchaser.
CONDITIONAL OFFER:
An offer to purchase a property which is contingent on the fulfillment of certain conditions before it becomes firm and binding. Also known as "Conditional Sales Contract".
CONDOMINIUM:
A development where individuals own dwelling units but share common areas with the other unit owners of the complex. The maintenance of the common areas etc. is taken care of by the Condominium Corporation in which every unit owner owns a share and has voting rights.
CONFORMING:
Complying with the requirements of a certain statute, by-law or organization.
CONSIDERATION:
The value, asset, service, information etc. which is offered to another party in a contract in exchange for that party's agreeing to enter the contract. A contract is not binding if each party does not offer at least some consideration to the other party(ies).
CONSTANT PAYMENT LOAN:
A type of loan which requires equal, periodic payments over a certain term, at the end of which the amount owing under the loan will be completely paid out.
CONSTRUCTION LIEN:
A statutory lien in favour of any person who supplies services or materials for the improvement of real property which arises as soon as those services and materials are first supplied. The lien, which secures the value of the services or materials supplied, may be registered on title to property ("preserved") and subsequently the subject of a law suit ("perfected").
CONSTRUCTION LOAN:
A structured, short-term loan to a builder or developer to allow for the development of land. Funds are advanced at certain stages of the development project to pay for specific expenses, fees or costs.
CONSUMER REPORTING AGENCY (OR BUREAU):
Also known as Credit Bureau. The source to which the banks or other lenders turn for information on the credit history of an applicant.
CONTINGENCY:
An event which may (or may not) happen in the future, a condition that must be fulfilled before a contract becomes firm and binding.
CONTRACT:
A legally binding agreement (oral or written) between two or more persons regarding an exchange of some sort. A legally binding contract must include consideration passing between the parties, an intention on the part of all parties to be bound to the contract, a meeting of the minds of the parties as to the contents of the contract, and an element of clarity such that the terms of the contract may be interpreted, understood and enforced by a court.
CONVENTIONAL LOAN:
1. A loan or mortgage to which the normal rules of such transactions apply without the inclusion of a government program (i.e. CMHC, VA or FHA insurance).
2. A loan or mortgage with a fixed interest rate, fixed payments and a fixed term.
CONVERSION CLAUSE:
A provision in a variable rate mortgage (adjustable rate mortgage) which allows the borrow to change the mortgage to a fixed rate mortgage upon the occurrence of certain events.
CONVERSION:
A change in the use of a property, or in the way a property is owned (i.e. from private to condominium ownership).
CONVEY:
To transfer title to (or any other interest in) a property to someone else.
CONVEYANCE:
The act of transferring an interest in property to someone else or the document which effects the transfer.
CO-OP:
Short for Cooperative, a mode of land ownership where the occupiers of individual units in a building own an interest in the Cooperative Corporation that owns the whole property.
COOPERATING BROKER:
A Broker who is involved in a real estate transaction and is, therefore, entitled to share in the commission from the transaction.
COST APPROACH:
An appraisal method where a property's value is estimated using the cost of the property plus cost of all improvements, minus depreciation.
COST ESTIMATING:
Predicting the total cost of a construction project by estimating, in advance, the actual costs of all elements in the project, including legal fees, labour, permits, materials etc.
COST PLUS CONTRACT:
An agreement with a contractor or builder which sets the contractor's compensation for the project as a percentage of the total cost of all labour and materials.
CO-TENANCY:
When more than one person owns a piece of property. Title will be held by the owners as Joint Tenants (each owns the land equally and, in the event of the death of one of the owners, the survivors continue to share title equally by right of survivorship) or as Tenants in Common (each owner has title to a specific percentage of the land and may sell, mortgage, or bequeath her interest to a third party without consent of the other owners).
COUNTER OFFER:
An answer to an offer. If a prospective Purchaser presents an offer to purchase a property to the owner of the property, that owner may accept the offer as it stands, reject it outright or respond with a "counteroffer" which changes certain terms of the original offer.
COUNTY:
A territorial division of land in a geographic region (state or province). Similar to Regions and Regional Municipality.
COVENANT:
A promise contained in a contract or agreement.
COVENANT RUNNING WITH THE LAND:
A covenant that is literally attached to the land and binds present and future owners to the requirements of the covenant. In new developments, such covenants may be restrictive: the owner is not allowed to alter grading patterns of the land, or erect new fences, or put up TV aerials, or to change the colour of the exterior of the house. Such restrictive covenants may be enforced by a Homeowners' Association.
CREATIVE FINANCING:
An arrangement for the financing of the purchase of a property which is outside the normal practice of residential financing.
CREDIT HISTORY:
A statement of the debts and obligations, whether current or past, of a person which helps a lender to assess the risk of a loan to that person.
CREDIT RATING:
Based on an analysis of a person's credit history, an evaluation of that person's ability to manage a new debt or debts overall.
CREDIT RISK:
The potential for a borrower to fail to live up to her obligations under a loan arrangement.
CREDITOR:
Any person to whom money is owed. May be secured (the debt has been registered against the property of the debtor) or unsecured.
CUMULATIVE INTEREST:
The total amount charged as interest on a loan or mortgage to a certain date.
CUSTOM BUILDER:
A builder or developer who specializes in creating homes to the specifications and requirements of individual land owners.
DATE OF INSTRUMENT:
The specific day, month and year a legal document was signed or prepared.
DATE OF REGISTRATION:
The specific day, month and year upon which an instrument was registered on title to the property.
DEBT COVERAGE RATIO (DCR):
A comparison of the net income of a property with the cost of payments (principal and interest) on the mortgage on the property, used to assess the ability of the property to generate enough income to pay for itself.
DEBT EQUITY RATIO:
A comparison of the amount owing on a property with the equity (value of property minus amount owed).
DEBT RATIO:
Also known as Debt-to-Income ratio. A comparison of the total monthly payments of all of the borrower's debts (including the mortgage) with the gross monthly income of the borrower, used to assess borrower's ability to pay mortgage.
DEBT SERVICE:
The mortgage payment for a given period of time.
DEBTOR:
A person who has borrowed and therefore owes (opposite of Creditor).
DEED:
The instrument by which title to property is conveyed from one person to another.
DEFAULT:
Failure. In mortgages, the failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.
DEFAULT JUDGMENT:
A decision rendered by a Court when the defendant has failed to respond to the claim.
DEFEASANCE CLAUSE:
A clause in a mortgage which ensures that, once the borrower has met all of her obligations under the terms of the mortgage and paid out the entire principle and interest borrowed, the lender's legal interest in the property is extinguished.
DEFECTIVE TITLE:
Ownership of property which is subject to some competing claim.
DEFERRED INTEREST:
Interest which is not paid as it accumulates but which is added, instead, to the loan principle.
DEFERRED INTEREST MORTGAGE:
A technique for reducing the amount of each periodic payment on a mortgage monthly by postponing the payment of a portion of the interest until a certain date in the future (or to when the property is sold), at which time the interest postponed is added to the principle owing.
DEFICIENCY JUDGMENT:
A Court order against a borrower under a mortgage to pay to the lender an amount sufficient to make up for the difference between what the borrower owes under the mortgage and the amount the lender sold the property for under a mortgage remedy action.
DELINQUENCY:
The condition of being late on a payment but not yet in default.
DEMAND LOAN:
A type of loan where the lender may require payment in full of the principal (and accumulated interest) at any time.
DENSITY:
A measure of the number of a certain thing within a defined space. Population density, for example, measures the number of people in a given area (a square-mile, an acre etc.)
DEPOSIT:
The money paid up-front by a purchaser as security for her completing the transaction. Also known as "good faith money" or "earnest money".
DEPOSIT OF TITLE DEEDS:
When a lender requires ownership documents to be left with it as further security for a loan.
DEPRECIABLE BASIS:
The initial acquisition cost of an improvement on land, used for income tax purposes. Land may not be depreciated but the improvements (buildings, etc.) may be.
DEPRECIABLE LIFE:
An estimation of the useful, valuable life of certain assets (such as buildings or production machinery).
DEPRECIATION:
1. The lessening of the value of a property over time.
2. A tax adjustment accounting for the reduction in value of an asset (a building or a piece of machinery) over time.
DESCRIPTION:
Also known as "Legal Description". The manner in which a piece of land is identified.
DETACHED SINGLE-FAMILY HOME:
A free-standing dwelling that is designed to house one family unit.
DEVELOPER:
A person or company who makes a business of turning vacant or underused parcels of land into new housing (or business, commercial or industrial) surveys.
DEVELOPMENT RIGHTS:
The legal ability to develop a parcel of land, usually purchased from the owner of a vacant tract of land by the developer. Title to the property does not change hands until the new survey of properties is sold to third-party purchasers.
DEVISE:
The act of leaving a piece of land to another person in a will.
DEVISEE:
The beneficiary under a will who receives a gift of real estate under the will.
DEVISOR:
The deceased person under whose will the beneficiary receives real estate. More commonly called the "testator".
DIRECT COSTS:
Those expenses in the improvement of property which can be directly attributed to the improvement itself (i.e. labour, material, taxes, etc.). Also known as "hard costs".
DIRECT REDUCTION MORTGAGE:
A kind of mortgage where the principal and interest to be paid are based on the principal remaining. An amortized mortgage.
DISBURSEMENT:
An expenditure of money.
DISCHARGE:
1. A document registered to remove a mortgage from title to a property.
2. To pay out a debt.
3. To meet one's obligations.
DISCLAIMER:
A statement of refusal, of responsibility, of a legal right etc.
DISCLOSED PRINCIPAL:
The person on whose behalf an agent is acting when that person's identity is made know to the person with whom the agent is dealing.
DISCLOSURE:
Sometimes known as "Vendor's Disclosure", a legal requirement in some jurisdictions in which the Vendor of a property must provide a written statement to a prospective purchaser setting out defects in the property known to the Vendor.
DISCOUNT REAL ESTATE BROKER:
A licensed real estate broker who charges a commission at a lower rate.
DISTRESS:
The right of a party to sell the real or personal property of another party to pay for arrears in rent or loan payments.
DISTRESSED PROPERTY:
A property which is to be sold in order to pay arrears on a mortgage.
DISTRICT:
A terms used to classify neighbourhoods according to their use: residential, commercial, industrial, etc.
DOWN PAYMENT:
The amount of money provided by the Purchaser toward the total price of the property (not including legal fees or other acquisition costs). In general, downpayment plus mortgage equals purchase price.
DRAGNET CLAUSE:
A term of a mortgage which establishes the subject property as security for the present and for all future debts of the owner to the lender.
DRY MORTGAGE:
Also known as "non-recourse loan" because the lender has no personal right of action against the property owner in the event of default. The lender may only sell the property to enforce the loan obligation.
DUAL AGENCY:
A breach of agency rules which must be disclosed to the parties. Where one agent (often a real estate broker or agent) represents both sides in a contract (i.e. the Vendor and the Purchaser) such that the agent has a conflict of interest.
DUE ON SALE CLAUSE:
A clause in a mortgage which requires that the mortgage be paid out in full upon the sale of the property against which it is secured. A mortgage with this clause may not be assumed by a purchaser.
DUPLEX:
A building which houses two separate dwelling units.
