Agreement For Sale
Assumption of Mortgage
Buying Down the Rate
Contract of Purchase and Sale
Gross Debt Service
High Ratio Mortgage
Property Transfer Tax
Registration of Title
Rights of Way
Strata Titled Condominiums
"Subject To" Clause
Term of Mortgage
Terms of Contract
Total Debt Service
Acceptance occurs when the contract is signed by both parties.
Adjustment Date the day from which all calculations of interest, tax
adjustments, utility bill adjustments (if applicable)
and other ongoing expenses are made to the credit
of either the buyers or the sellers. This is usually
(not always) the same as the possession date.
Adjustments Statements are closing statements in a real estate
transaction which set out the sources of funds
which make up the purchase price, adjustments
to and from the purchase price, the final amount
required from the buyer and the amount due to
Agency Disclosure a requirement of the Real Estate Act and the Code
of Ethics to explain and document the nature of
your agency relationship with the party or parties
involved in the transaction.
Agreement For Sale a contract where the registered owner sells
property without losing title to it; the buyer is
registered under charges as the holder of a
“right to purchase” or “RP”.
Amortization Period the length of time over which the regular payments
have been calculated to fully pay out the mortgage
in equal blended payments of principal and interest
Appraisal a report which establishes the market value of a
property at a particular time; prepared by a
certified appraiser; more formal than a CMA; most
licensees do not perform appraisals as they are not
covered under mandatory errors and omissions
insurance unless they hold an MVA & Residential
designation and are covered by the required errors
and omissions insurance.
Assessment a valuation for tax purposes; not the same as either
CMA or an appraisal; not reliable as a factor in
determining market value of a property; a “ market
value” snapshot as a mid-year based on somewhat
Assumption of Mortgage a procedure where the buyers take over the sellers mortgage; may be with or without qualification of
the buyers; can involve both benefit and risk for
the sellers; usually of benefit to the buyers,
reduced legal fees and, at times, the opportunity to
acquire a mortgage higher than the lender would
permit otherwise; importance of having sellers’
Brokerage Fee the commission charged by a mortgage broker for
arranging financing: either paid by the lender or
the buyer (or both with appropriate disclosure)
Buying Down the Rate a method for reducing the rate on an assumed
is the procedure where a lump sum
is paid by the seller to the lender in exchange
for a lower interest rate to be assumed by the
buyer on an assumable mortgage; there are other
ways to achieve the same goal and other situations
where this is done (consult a mortgage broker for
Collateral Mortgage a mortgage on one property for a mortgage on
Common Law our general system of law based on court
decisions; the law of contract is one area of
Completion Date the day when the seller receives the funds from the
sale of the property; often also the day the title is
registered in the buyer’s name.
Condition part of a contract; if fulfilled, the contract becomes
firm and binding; often phrased as a “subject to”
clause; not the same as a “term”.
Consideration the deposit that serves to bind the parties tangibly
in their exchange of promises on the contract.
Contract of Purchase and Sale a standard form contract for the purchase and
sale of real property.
Conventional Mortgage a debt secured against real property where the
loan-to-value ratio is 75% or less.
Conveyance the term used to describe the process of
transferring the sellers’ title to the buyers;
includes all the necessary steps to complete the
transfer. A conveyance lawyer (or notary)
means a lawyer (or notary) responsible for the
Conveyancer the lawyer or notary who handles the documents
for the buyers or sellers; this term is also used in
common practice to refer to the “conveyance
secretary” in a real estate office who handles the
files before they are sent to the actual
Co-op a means of owning real property without
conveyance of a title, but rather through the
purchase of shares in a corporation (the co-op),
which owns the building and the land (or leases
the land); in exchange for shares. Buyers will
receive exclusive use of a designated portion of
the property (such as an apartment).
Counter-offer occurs when changes are made to an offer by one
of the parties. The effect is to create a new offer
and extinguish the previous offer.
Covenant a covenant means a promise contained in a
contract to do or refrain from doing something;
its breach entitles the other party to sue for
Defects two types: latent defects (undiscovered through
normal inspection), which must be revealed
(when known or should be known by a licensee)
to the buyers and patent defects (obvious).
Exclusive Buyer’s a standard form used to bind a buyer and a buyer’s
Agent Contract agent for a specified period, with or without a
deposit, which would be used as either part of the
buyer’s deposit on a purchase or as a fee to the
agent if the buyer bought through another agent
during this contract period.
Exclusive Listing usually takes the form of an exclusive right to sell
being granted to one real estate company. The
commission anticipated is commonly lower than
for a multiple listing, but all commissions are
negotiable between the parties.
Gross Debt Service the amount that a lender will permit a borrower to
(GDS) Ratio use from their gross income in order to qualify for
High-Ratio Mortgage a mortgage that exceeds 75% of the value of the
property; must be insured by CMHC or GE Capital
to protect the lender against default by the
borrower who has less equity invested in the
Improvements anything attached to the land such as buildings and
other structures of any sort.
Inter-alia mortgage mortgage whose security includes more than one
property so that more than one title is encumbered
by it; often used in bridge or interim financing
when a buyer is trying to sell one home, but wants
to complete on another.
Latent Defect a defect that is not visible upon ordinary
inspection, but which materially affects the
property’s use or value.
Mortgagee the creditor to whom a mortgage is made; i.e., the
Mortgagor the debtor who makes a mortgage; i.e., the
Open Mortgage allows for the payment of some or all of the
principal at any time. Usually has a higher interest
Patent Defect a defect that is readily visible and/or blatantly
obvious upon ordinary inspection that may also
materially affect the property’s use or value.
Pre-Approved a mortgage approval prior to the actual purchase.
Mortgage Usually valid for a limited period of time. A letter
or certificate is often provided to the buyer as
Prepayment Privilege a fee paid by the borrower to the lender in
(Penalty) exchange for the privilege of paying off lump sums
of the principal, thus reducing the total interest
Prequalification a procedure where buyers consult a lender before
writing an offer to determine the maximum
mortgage loan they could obtain based on their
income, assets and liabilities.
Property Disclosure part of the listing documentation; three types;
Statement Residential, Strata Title and Farms and Acreage;
a statement from the seller to the buyer at a
specific point in time-a snapshot.
Property Transfer Tax a registration tax which applied to all transferees
who register transfers of property at a Land Title
1% on 1st $200,000
2% on fair market value up to and including $2 Million
3% on fair market value over $ 2 million up to and including $ 3 million
5% for the portion of the fair market value that is in excess of $ 3 million
Registration of Title procedure done by a lawyer or notary prior to the
release of funds from the trust account to the
sellers; formal documentation of ownership.
Restrictive Covenants prohibitions not related to zoning that owners and
tenants must obey; (e.g., exterior finishing of
homes, size of homes, keeping of horses).
Rights-of-Way indicated on title at the Land Title Office; often for
use of utilities for city or municipality in order to
make repairs to pipes, etc.; no permanent structure
may be built on a right-of-way.
Seller Financing the property owner becomes the lender of either a
first or second mortgage or holds an Agreement for
Strata-Titled condominiums (apartments or townhomes),
Properties detached homes in strata-titled developments,
bare land stratas, strata-titled office space and
manufactured home pads can all be considered in
“Subject To” Clause a statement of a condition to be fulfilled before the
contract will become firm and binding ; must
include a specific deadline for removal; not the
same as a term.
Survey Certificate a document produced by a surveyor indicating the
exact dimensions and boundaries of the lot, the
measurements of all improvements, any easements
or rights-of-way, and the exact location within the
lot boundaries of all improvements; may be
necessary when a new mortgage is prepared; if it is
not too old and if no changes to the property have
occurred, a survey certificate used by the sellers
originally may be adequate (check with the lender)
a statutory declaration from the sellers may be
required if the survey is old or if minor changes
have been made.
Term of Mortgage the length of time the mortgagee will lend the
money. Terms may vary from six months to ten
years or more, during which time the interest rate
is usually, but not always, fixed. Variations occur
depending on the lender.
Terms of Contract the specific factors creating a contract; e.g., price,
items included or excluded, financing
arrangements or tenancy.
Title Search the act of checking the title of a piece of property
to establish ownership and charges against the title,
which may inhibit a sale.
Total Debt Service the maximum percentage of a borrower’s income
(TDS) Ratio that a lender will consider for all debt repayment,
including a mortgage.