EARNEST MONEY DEPOSIT:
A sum of money paid by a potential purchaser as proof of her intention to complete the purchase transaction. Held in trust, usually by the Listing Agent, and credited to Purchaser off purchase price. May be forfeited if Purchaser fails to complete transaction.
EASEMENT:
The right of the owner of one parcel of land to use all or part of the land of another for a specific purpose. Runs with the land. Requires one property to be in dominant position (enjoys the benefit of the easement) and one property to be in servient position (is subject to the right).
ECONOMIC BASE:
The commercial or industrial foundation of a community which provides opportunities for employment.
ECONOMIC DEPRECIATION:
The decline in value of a property which is caused by reasons outside of the property itself.
ECONOMIC LIFE:
The length of time an improvement to real estate can be expected to provide more value than the its operating or upkeep costs.
ENCROACHMENT:
The intrusion across the property line and into one property of an improvement to a neighbouring property. May result in a claim for adverse possession if the encroachment is unchallenged for a long period of time.
ENCUMBRANCE:
Any right, interest or other claim against land which is registered on title and affects the owner's ability to sell the property.
ENTITLEMENT:
The legal right to a benefit or program.
EQUITY:
The difference, in dollars, between the market value of a property and the principal owing on debts secured against the property. The amount of money the owner will be able to keep from a sale transaction once the mortgages are paid out. Also known as "owner's interest".
EQUITY LOAN:
A loan to a home owner secured against the equity the owner enjoys in the property.
EQUITY OF REDEMPTION:
The right a borrower has to pay out in full a mortgage against a property that has gone into foreclosure or power of sale proceedings, thus redeeming the property.
ESCALATOR CLAUSE:
Part of a net net lease. A provision that increases the rent payable under a lease when certain costs of the building increase (i.e. taxes, utility charges, etc.).
ESCAPE CLAUSE:
Any provision in a contract that allows one or more parties to end the contract upon the occurrence of certain events.
ESCROW:
A state wherein consideration, benefits, legal rights, money, documents or other valuables are transferred to another party in advance of that party's legal entitlement to them, on the basis that the legal entitlement will arise at a given point in the future. A form of trust.
EVICTION:
The forced removal of a tenant from occupation of a property. Also known as "Actual eviction". See also "constructive eviction".
EXCLUSIVE AGENCY LISTING:
A contract whereby the owner of a property grants a single agent or broker the right to market the property for sale.
EXCULPATORY CLAUSE:
The term of a mortgage giving the borrower the right simply to surrender the property to the lender as payment for the loan without personal liability to the borrower for any shortfall.
EXPROPRIATION:
The government's act of taking title to property owned by a private party without that party's consent under the authority of a law or statute, while paying compensation to the former owner.
FAIR MARKET VALUE:
The value of an item as established by a consideration of how much an independent buyer would pay to an independent seller in a completely free transaction for the item.
FARM MORTGAGE:
A mortgage secured against agricultural land.
FARMLAND:
A category of land for zoning or other legal purposes, denoting property used for agricultural purposes.
FINANCING:
The manner in which a proposed purchaser intends to make up the difference between cash on hand and the purchase price.
FIRM COMMITMENT:
A promise from a lender to lend a specific borrower a specified amount of money on specified terms to be secured against a specific property.
FIRM OFFER:
An offer to purchase delivered to the potential Vendor by a potential Purchaser who will not negotiate any changes to the offer.
FIRM PRICE:
An indication in a real estate advertisement that the price asked for the property is not open for negotiation.
FIRST LIEN:
The registered legal claim which stands first in line to enjoy the proceeds of a sale of the property. Liens generally are ordered according to time or registration but various statutes allow some liens (realty taxes) to jump to the head of the line.
FIRST MORTGAGE:
A mortgage that, when registered, is first in line on the property, giving the lender superior right to the proceeds of the sale of the property over other, later claimants.
FIXED INSTALLMENT:
The periodic payment made for principal and interest on a loan.
FIXED RATE MORTGAGE (FRM):
A loan registered on title to the property against which it is secured which charges an interest rate that does not change over the term of the mortgage.
FLAT:
English term for apartment. A portion of a building designed to serve as a home for a single family group.
FLIP:
The rapid turnover of a piece of property by one person who buys it for a certain price then sells it soon thereafter for more.
FLOATING RATE:
Rate of interest chargeable on a loan that is variable according to a specified index or the national prime rate. The loan rate is said to "float" on top of the specified index by a set amount: i.e. the loan may be set at Prime Rate plus 2%, meaning if the Prime Rate is 6%, the loan interest rate will be 8%.
FLOOD PLAIN:
The area around a body of water which may at times be under water and may at other times be dry land, depending on the level of the water in the lake, river, pond, etc.
FLOOR:
The lowest the interest rate on a variable or adjustable rate mortgage may go.
FLOOR AREA:
The total space covered by all floors in a building.
FLOOR AREA RATIO (FAR):
A comparison of the total area of the floor of a building with the total area of the land upon which it stands. Maximum or minimum FARs may be established by local zoning rules.
FOR SALE BY OWNER (FSBO):
Indication that the owner of a property is attempting to find a purchaser for her property on her own, without employing an agent.
FORBEARANCE:
Any indulgence a party gives to another party to a contract who is late in meeting her obligations under the contract.
FORCED SALE:
The marketing of a property as a result of some outside influence, such as bankruptcy, where the price obtained might not be optimum.
FORECLOSURE:
An enforcement process in which the lender under a defaulted mortgage takes title to the property for the purposes of selling it to recoup moneys owed under the mortgage.
FORFEITURE:
The loss of a right, claim, interest or item of property as a result of one's failure to meet one's legal obligations.
FRACTIONAL INTEREST:
A legal claim or right to a portion of a property.
FREE AND CLEAR:
A description of title to property which is unencumbered and subject to no competing claims.
FREEHOLDER:
She who has a freehold interest in a property.
FREE-STANDING BUILDING:
A structure which does not depend on other structures for support, an independent structure.
FRONT-END RATIO:
A comparison of a borrower's monthly cost of housing with that borrower's monthly gross income.
FULL DISCLOSURE:
The revelation to another party in a contract or legal dispute of all relevant information in one's possession. An agent acting for both parties in a real estate purchase must fully disclose this conflict of interest to all parties.
FULL-PRICE OFFER:
A proposal by a purchaser to buy a property at the price and on the terms asked by the vendor in her property listing.
FULLY AMORTIZING PAYMENT:
A periodic mortgage payment which, if paid consistently throughout the amortization period of the mortgage, will result in the total principal and interest owing on the loan being retired at the end of the amortization period.
FULLY ASSUMABLE MORTGAGE:
A land loan that may be transferred to a new owner without any change to the terms, as long as the new owner qualifies.
FULLY EXECUTED SALES CONTRACT:
An agreement in which all parties have agreed and signed to all terms of the agreement.
FULLY INDEXED INTEREST RATE:
The interest rate as set out in the variable or adjustable rate mortgage, equaling the index rate plus the float of the mortgage.
