Free Real Estate Glossary

• Abstract - A written history of the title to a parcel of real estate as recorded in a Land Registry Office.
  
  
• Acceptance - The date when both parties, seller and buyer, have agreed to and completed signing and /or initialing the contract.
  
  
• Acre - An imperial measurement of land area equaling 43,560 square feet.
  
  
• Adjustable Rate Mortgage - A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.
  
  
• Adjustments - The apportionment or other division of costs between buyer and seller as of the closing date.
  
  
• Affordability Index - An index typically measuring the cost of home ownership in relation to required income to service mortgage payments, property taxes, and utilities.
  
  
• Agency - The relationship between principal and agent, wherein an agent is employed and authorized by the principal to represent the principal in business transactions with a third party.
  
  
• Agency Disclosure - The process of informing clients and/or other parties regarding an agency relationship including the role(s) performed.
  
  
• Agent - One who is authorized by a principal to represent the principal in business transactions with a third party. In the real estate profession it refers to a broker.
  
  
• Air Rights - Rights above the physical surface of the land.
  
  
• Amortization - The gradual retirement of a debt by means of partial payments of the principal at regular intervals.
  
  
• Appraisal - An estimate of real estate value, usually using recent comparable sales in the neighbourhood is the most important factor in determining value. This should be contrasted against the home inspection.
  
  
• Appreciation - An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
  
  
• Assessed Value - A current market value placed on a property as a basis for municipal taxation.
  
  
• Associate Broker - An individual meeting educational qualifications to be a broker, but currently employed as a salesperson by a broker.
  
  
• Assumable Mortgage - Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage.
  
  
• Bill of Sale - Document used to transfer title (ownership) of PERSONAL Property.
  
  
• Blended Payment - A mortgage payment in which the payment amount remains constant, but interest and principal components may vary.
  
  
• Broker - A person authorized to act for another in a trade of real estate, as set out in appropriate provincial statutory/regulatory requirements.
  
  
• Brokerage - A company, under the control of a real estate broker, that is authorized to trade in real estate. Regulatory requirements vary by provincial/territorial jurisdiction.
  
  
• Brownfields - Contaminated land typically located in an urban area.
  
  
• Building Inspector - An individual appointed by the local municipality to enforce Ontario Building Code provisions.
  
  
• Building Permit - A document issued by the municipal authority certifying the blueprints for construction and allowing work to commence.
  
  
• Buyer Agency - An agency relationship in which the broker owes fiduciary duties to the buyer.
  
  
• Buyer Agency Agreement - An agreement setting out the agency relationship between broker and buyer.
  
  
• Canada Mortgage & Housing Corporation - A federal agency mandated to carry out various housing-related activities, including participation in the residential mortgage market.
  
  
• Canadian Real Estate Association (CREA) - A national organization representing organized real estate that was formed in 1943.
  
  
• Chattel - Personal property, which is tangible and moveable.
  
  
• Closing Costs - Various expenses associated with the completion of a sale transaction, e.g., real property taxes, legal expenses, and insurance coverage.
  
  
• Commission - Remuneration paid to an agent on sale or lease of property; usually as a percentage of the sale amount.
  
  
• Commission Split - A method of sharing commission, most commonly in reference to a broker/salesperson split, typically as per an agreement between the parties as employer/employee or two independent contracting parties.
  
  
• Comparable Sales - Sales that have similar characteristics as the subject property and are used for analysis in the appraisal process.
  
  
• Comparative Market Analysis - An informal analysis designed to establish the listing price of a property, as opposed to estimating market value.
  
  
• Compound Interest - Interest charged at specific intervals within the loan term with earned interest being reinvested.
  
  
• Concession - Strips of land making up a township, each separated by a road allowance.
  
  
• Concurrent Ownership - Two or more persons having ownership at the same time.
  
  
• Condominium - The fee simple ownership of a specified amount of space (the unit) in a multiple dwelling or other multi-occupancy building with tenancy-in-common ownership of portions used jointly with other owners (the common elements).
  
  
• Confirmation of Representation - Statements included in the OREA Agreement of Purchase and Sale confirming agency relationships between listing and/or selling broker and the buyer/seller.
  
  
• Conservation Authority - An agency authorized under conservation legislation to oversee regulated areas.
  
  
• Conservation Land Tax Incentive Program - A provincial program providing tax exemption for conservation lands.
  
  
• Consumer Price Index (CPI) - An indicator of consumer price fluctuations, most commonly associated with comparisons of purchasing power and inflationary pressures. The overall CPI tracks 600 items, but sub-indexes are also tracked for specific groupings, e.g., shelter.
  
  
• Crown Patent - Original deed issued from the Crown (government) representing the root of title for a particular property.
  
  
• Curtain Principle - A principle under land titles, which states that the register is the sole, current source of information and individuals need not be concerned with prior recorded information.
  
  
• Date of Completion - The date specified in the agreement of purchase and sale, when the buyer is to deliver the balance of money due and the seller to deliver a duly executed deed and vacant possession of the property (unless otherwise agreed).
  
  
• Declaration - A condominium document required for registration that sets out the responsibilities of the owners and condominium corporation.
  
  
• Deed - An instrument in writing, duly executed and delivered, that conveys title or an interest in real property.
  
  
• Depreciation - A loss in value due to any cause.
  
  
• Direct Capitalization - The process of converting the income of a property into capital value by means of a capitalization rate, as opposed to discounting future cash flows through yield capitalization.
  
  
• Discount Rate - A rate representing the cost of a lost opportunity. In other words, an investor seeks a rate of return that represents what could have been obtained had another investment been selected.
  
  
• Double Front Township - A township originally consisting of 100-acre half-lots.
  
  
• Dual Agency - An agency relationship in which the broker owes fiduciary duties to both the seller and the buyer.
  
  
• Easement - The right to use the land of another.
  
  
• Economic Life - The span of time in which a structure adds value to a property, as distinct from the number of years that the structure exists.
  
  
• Economics - The study of how society chooses resources, which have alternative uses to produce various commodities over time and distribute them for consumption, now and in the future, among various people and groups in society.
  
  
• Effective Age - The age of a structure based on its condition and utility, as opposed to its chronological age.
  
  
• Effective Interest Rate - Rate of interest on a loan, which includes compounding, as opposed to the stated rate. For example, a loan rate might be published at 10%, but with compounding the true (effective) rate is somewhat higher based on number of compounding periods.
  
  
• Encumbrance - Anything that burdens (limits) the fee title to property, such as a lien, easement, or restriction of any kind.
  
  
• Energy Audit - An analysis of energy loss in a structure, typically including recommendations.
  
  
• Environmental Assessment - A systematic method of determining the impact of a development project on the environment.
  
  
• Environmental Protection Act - Provincial legislation impacting the ownership and use of property within Ontario.
  
  
• Equity - The value of real estate over and above the liens against it. It is obtained by subtracting the total liens from the value.
  
  
• Escheat - The reversion of property to the state in the event the owner thereof dies leaving no will or heirs.
  
  
• Escrow Payment - That portion of a mortgagor's monthly payment held in trust by the lender to pay for taxes, hazardous insurance, mortgage insurance, lease payments and other items as they become due.
  
  
• Estate - An interest in land, i.e., the status or extent of rights associated with tenure.
  
  
• Expropriation - Taking of private property by the state for public use, with fair compensation to the owner, through the exercise of the right of eminent domain.
  
  
• Fee Appraiser - Professional appraisers who market services on the basis of time, cost, and effort required to arrive at a value estimate.
  
  
• Fiduciary Duties - Duties owed to a principal by an agent including disclosure, competence, obedience, accountability, confidentiality and loyalty.
  
  
• Fixed Rate Mortgage - A loan that fixes the interest rate at a prescribed rate for the duration of the loan.
  
  
• Fixture - Permanent improvements to property that may not be removed at the expiration of the term of lease or tenure.
  
  
• Flat Depreciation Method - A specific depreciation rate applied by appraisers in determining depreciation for improvements under the cost approach.
  
  
• Flood Plain - Area along a stream or watercourse that is subject to flood hazard.
  
  
• Footing - The widened section, usually concrete, at the base or bottom of a foundation wall, pier, or column.
  
  
• Framing - The rough timberwork of a house, including the flooring, roofing partitioning, ceiling, and beams.
  
  
• Frontage - Linear distance along a public road or, in the case of waterfront recreational, linear distance on the lakeside of the lot.
  
  
• Future Estate - An interest in land that arises at the end of a life estate.
  
  
• Graduated Payment Mortgage - Any loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its life.
  
  
• Green Building - House construction techniques advancing energy efficiency, resource conservation and environmental goals.
  
  
• Green Roof - A roof constructed of various landscaping materials.
  
  
• Gross Debt Service (GDS) Ratio - Lender's allowable ratio of principal, interest, and tax (PIT) payment to gross monthly income of the mortgage applicant.
  
  
• Hectare - A metric measurement of land area equivalent to 2.4711 acres.
  
  
• Hot Water Heater - A device used for heating water that typically, but not always, has a tank or reservoir.
  
  
• HVAC - An acronym for heating, ventilation and air-conditioning.
  
  
• Income Multiplier - A number representing the relationship between rent obtained from a property and the sale price of that property, in order to estimate the value of comparable properties.
  
  
• Inspection - The right of the Registrar or duly authorized representatives to review real estate brokerage records pursuant to authority granted under the Real Estate and Business Brokers Act.
  
  
• Interest Adjustment Date - Date that the mortgage officially begins.
  
  
• Investment Value - Value, closely associated with market value, but also impacted by cash flows, investment objectives, and investor-specific criteria.
  
  
• Investor - The holder of a mortgage or the permanent lender for whom the mortgage banker services the loan. Any person or institution that invests in mortgages.
  
  
• Joint Tenancy - Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.
  
  
• Joist - One of a series of horizontal wood members, usually 2-inch nominal thickness, used to support a floor, ceiling, or roof.
  
  
• Land Severance - The division of land by means of consent under the Planning Act.
  
  
• Land Titles - One of two land registration systems found in Ontario.
  
  
• Land Transfer Tax - A sliding scale tax that applies to ownership transfers including beneficial interests.
  
  
• Leasehold Estate - An interest in land for a specified period of time.
  
  
• Lease Purchase Agreement - Buyer makes a deposit for future purchases of a property with the right to lease the property for the interim.
  
  
• Letter of Opinion - A brief letter setting out an estimate of value, typically with only limited details concerning the property.
  
  
• Life Estate - An ownership right to an individual for a lifetime period.
  
  
• Listing Agreement - An oral or written agreement between a property owner and a broker authorizing the broker to offer the owner's real property for sale or lease.
  
  
• Listing Price - The price at which a property is offered for sale in the marketplace.
  
  
• Loan to Value Ration (LTV) - The ratio of the mortgage loan principal (amount borrowed) to the property's appraised value (selling price). Example - on a $100,000 home, with a mortgage loan principal of $80,000 the loan to value ratio is 80%.
  
  
• Locational Obsolescence - Depreciation resulting from loss of value due to negative influences from external factors, e.g., railway tracks and commercial uses directly adjacent to residential property.
  
  
• Lot - A parcel of land. Lots formed part of the basic land description system in Ontario.
  
  
• Market Bubble - The over expansion of a market due primarily to excessive buyer confidence resulting in inflated values. Real estate bubbles, when a burst occurs, can have significant negative impact on the overall economy.
  
  
• Market Correction - A market readjustment, typically occurring following a period of recession or prosperity, but typically associated with a downturn in demand and increasing supply.
  
  
• Market Indicators - Statistical tracking systems usually involving resource, business, and consumer markets. In real estate, specific indicators will vary for residential and commercial markets.
  
  
• Market Value - Broadly defined as the highest price in terms of money, which the property will bring to a willing seller if exposed for sale on the open market allowing a reasonable time to find a willing buyer, buying with the knowledge of all the uses to which it is adapted and for which it is legally capable of being used, and with neither buyer or seller acting under necessity, compulsion or peculiar and special circumstances.
  
  
• Metes and Bounds - A system of land description whereby all boundary lines are set forth by use of terminal points and angles-metes referring to limits or limiting marks, and bounds referring to boundary lines.
  
  
• Mineral Right - Rights regarding minerals on or below the land.
  
  
• Mortgage - A legal document that pledges a property to the lender as security for payment of a debt.
  
  
• Mortgage Insurance Premium (MIP) - The amount paid by a mortgagor for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower's default on a loan.
  
  
• Mortgagor - The borrower of money or the giver of the mortgage document.
  
  
• Multiple Listing Service (MLS) - An arrangement among brokers who are real estate board members, whereby each broker shares information regarding his listings with the other members, who may negotiate the transaction. Multiple Listing Service (MLS) is a trademark of The Canadian Real Estate Association.
  
  
• Nominal Interest Rate - The stated rate on a loan.
  
  
• Note - A written promise to pay a certain amount of money.
  
  
• Occupancy Permit - A municipal permit issued following final inspection permitting occupancy of a structure.
  
  
• Ontario Building Code - A provincial code establishing minimum standards for building design.
  
  
• Ontario Fire Code - A provincial code establishing minimum standards concerning fire hazards in and around buildings.
  
  
• Ontario Real Estate Association (OREA) - The largest provincial real estate association, formed in 1922, making up one of 11 provincial/territorial associations within organized real estate.
  
  
• Origination Fee - A fee paid to the mortgagee for paying the mortgage before it becomes due. Also known as prepayment fee or reinvestment fee.
  
  
• Overall Capitalization Rate - A rate used to convert net operating income into an estimate of value, which consists of two components; rate of return of the investment and rate of return on the investment.
  
  
• Overnight Rate - A daily rate that banks charge each other for large cash transfers, typically accomplished in the overnight period. The Bank of Canada uses the overnight rate in setting monetary policy. Overnight rates, together with the bond market, have a significant impact on mortgage rates.
  
  
• Payback - A term frequently associated with investment return, i.e., payback period. For example, a payback period typically represents the time required for net cash flows to equal initial cash outlay. Other payback measures exist in the marketplace. The term payback is sometimes referenced in Appraisal, the value of an improvement for adjustment purposes under the direct comparison approach.
  
  
• Plan of Survey - A survey that is not registered in a Land Registry Office, but is commonly attached to another document. E.g. a deed/transfer of land.
  
  
• Planning Act - Legislation that establishes the statutory framework for orderly planning in the province.
  
  
• Principal - The client of an agent or broker, who gives the agent or broker the authority to do some act for him/her.
  
  
• Profit a Prendre - The right to enter and take something from the land.
  
  
• Promissory Note - A written contract containing a promise to pay a definite amount of money at a definite future time.
  
  
• Rafter - Building component used to support the roof sheathing.
  
  
• Real Estate and Business Brokers Act - Statute governing real estate brokers and salespersons in Ontario.
  
  
• Real Estate Broker - A person who represents a principal in a real estate trade.
  
  
• REALTOR - A registered trademark that may only be used by an active member of a real estate board affiliated with The Canadian Real Estate Association.
  
  
• Recapture - The recovery of funds invested, i.e., the return of an investment as opposed to a return on an investment. Applies to capitalization rates and also tax considerations and capital cost allowance.
  
  
• RECO Code of Ethics - Standards of professional conduct required of all registered salespersons and brokers as members of the Real Estate Council of Ontario.
  
  
• Registry - One of two land registration systems found in Ontario. Registry is currently being phased out in the province.
  
  
• Rent with Option - A contract, which gives one the right to lease property at a certain sum with the option to purchase at a future date.
  
  
• Replacement Cost - The cost of construction, at current prices, of a structure having equal utility.
  
  
• Reproduction Cost - The cost of construction, at current prices, of an exact duplicate using the same materials, standards, design, etc.
  
  
• Restrictive Covenant - A limitation placed upon the use of property, contained in the deed.
  
  
• Right Of Survivorship - The distinguishing feature of joint tenancies which provides that, where land is held in undivided portions by co-owners, upon the death of any joint owner, his interest in the land will pass to the surviving co-owner, rather than to his estate.
  
  
• Right-of-Way - The right to pass over another's land, more or less frequently, according to the nature of the easement.
  
  
• Riparian Rights - The rights of the owners of lands on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his land, including the right to acquire accretions, wharf slips, and fish therefrom.
  
  
• Salesperson - An employee of a broker employed or otherwise authorized to trade in real estate, as set out in appropriate provincial statutory/regulatory requirements.
  
  
• Second Mortgage/Second Deed of Trust/Junior Mortgage or Junior Lien - An additional loan imposed on a property with a first mortgage. Generally, a higher interest rate and shorter term than a "first" mortgage.
  
  
• Seller Agency - An agency relationship in which the broker owes fiduciary duties to the seller.
  
  
• Sheathing - Roofing panels that support the roof covering (i.e., shingles) and other loads (e.g., snow).
  
  
• Sick Building Syndrome - Illness associated with poor air quality in structures.
  
  
• Simple Interest - Interest charged for a specific period with no compounding.
  
  
• Statement of Adjustments - A statement prepared by the solicitor for the seller setting out, in balance sheet form, a record, at the date of closing, of the financial breakdown of the transaction.
  
  
• Survey - The accurate mathematical measurement of land and buildings thereon, made with the aid of instruments.
  
  
• Tax Rate - The rate of tax applied to the assessed value of a property calculated by dividing the budget of the municipality by the tax base.
  
  
• Tenants In Common - Ownership of land by two or more persons; unlike joint tenancy in that interest of deceased does not pass to the survivor, but is treated as an asset of the deceased's estate.
  
  
• Tenure - A method of land holding for a temporary time period, but does not involve ownership of the land.
  
  
• Term - The actual length of time for which money is loaned, i.e., a mortgage.
  
  
• Terrorist Property - Property known to be owned or controlled by a terrorist or terrorist group.
  
  
• Title - The means of evidence by which the owner of land has lawful ownership thereof.
  
  
• Title Insurance - Insurance for owners and lenders regarding various risks and undisclosed interests affecting title.
  
  
• Total Debt Service (TDS) Ratio - Lender's allowable ratio of principal, interest, and tax (PIT) payment plus other personal debt to gross monthly income of the mortgage applicant.
  
  
• Value in Use - The value of an economic good to the owner, typically over and above market value.
  
  
• Vinyl Siding - Structural siding made of polyvinyl chloride most noted for its dent-resistant qualities.
  
  
• Volatile Organic Compounds - Products that off gas emissions which can impact indoor air quality.
  
  
• Water Well - Drilled, bored or dug wells for accessing water.
  
  
• Water Well Record - A record maintained regarding the initial installation of a water well.
  
  
• Wetlands - Lands covered by shallow water, as well as areas where the water table is close to or at the surface.
  
  
• Yield Capitalization - The conversion of a projected income stream into an estimate of value by analyzing forecasted operations and sale proceeds over a specified holding period.
  
  
• Zoning By-law - A by-law that defines zones for various types of uses and sets selected standards for erecting buildings.