Adjustments:
Normally refers to those
items requiring apportionment as
of the date of closing a
transaction. Such adjustments
include rent, mortgage interest,
realty tax, local improvement
rates, un-metered public or
private utility charges, and
non-metered cost of fuel.
Amortization:
Paying off a debt, such
as a mortgage, by
instalments. The
conventional
amortization period for
a mortgage is anywhere
between 15 and 25 years.
The shorter the
amortization period, the
less interest you have
to pay.
Appraisal:
An estimate of a
property's value.
Asking (or list)
price: The
price placed on the
property for sale by the
seller.
Blended
payments:
Payments consisting of
principal and interest
components, paid during
the amortization period
of a mortgage.
Broker:
A person licensed by the
provincial or
territorial government
to trade in real estate.
Real estate brokers may
form companies or
offices which appoint
BROKERs to
provide services to the
seller or buyer, or they
may provide the same
services themselves. In
parts of Canada, brokers
are referred to as
agents.
Buyer's Agent
(also known as "Buyer's
Broker" or "Purchaser's
Agent"): A
person or firm
representing the buyer.
A Buyer's Agent's
primary allegiance is to
the buyer. The buyer is
the Buyer Agent's
client.
Buyer Brokerage
Agreement: A
written agreement
between the buyer and
the buyer's agent,
outlining the agency
relationship between the
two parties and the
manner in which the
buyer's agent will be
compensated. In some
provinces, a buyer
agency relationship
evolves automatically,
without a written
agreement.
Client:
The person being
represented by an agent.
The agent owes the
client the duties of
utmost care, integrity,
confidentiality and
loyalty.
Closing:
The day the legal title
to the property changes
hands.
CMHC:
Canada Mortgage and
Housing Corporation. A
Crown corporation
providing information
services and mortgage
loan insurance.
Commission:
An amount agreed to by
the seller and the real
estate broker/agent and
stated in the listing
agreement. It is payable
to the broker/agent on
closing and shared, if
applicable, among those
salespeople involved in
the sale.
Customer:
A person who receives
valuable information and
assistance from a real
estate broker or
salesperson, but is not
represented by that
individual.
Debt-Service
Ratio: The
measurement of debt
payments to gross
household income which
may include, in addition
to the main wage
earner's salary,
salaries of other wage
earners, commissions,
bonuses, overtime, etc.
Dual Agent:
A real estate broker or
salesperson who acts as
agent for both the
seller and the buyer in
the same transaction.
Both buyer and seller
are the agent's clients.
Equity:
The
difference between the
value of the property
and the amount owing (if
any) on the
mortgage.
Financial
Institutions:
Banks, credit unions,
insurance or trust
companies.
GE Capital
Mortgage Insurance
Company: GE
Capital Mortgage
Insurance Company is the
only private sector
source of mortgage
insurance to lenders in
Canada.
Gross Debt
Service:
The
amount of money needed
to pay principal,
interest, taxes and
sometimes, energy costs.
If the dwelling unit is
a condominium, all or a
portion of common fees
are included, depending
on what expenses are
covered.
Gross Debt
Service Ratio:
Gross debt service
divided by household
income. A rule of thumb
is that GDS should not
exceed 30%. It is also
referred to as PIT
(Principal, Interest and
Taxes) over income.
Sometimes energy costs
are added to the
formula, producing PITE,
which moves the rule of
thumb GDS to 32%.
Incurable Depreciation:
A loss in value
resulting from physical
deterioration or
functional obsolescence
that either cannot be
corrected, or can only
be corrected at a cost
greater than its
contribution to the
value of the property.
Joint Tenancy:
Ownership of land by two
or more persons whereby,
on the death of one, the
surviving tenant(s)
acquire the whole
interest in the
property.
Knob-and-Tube:
Knob-and-tube wiring was
used in residential
construction during the
early part of the last
century(pre-1950).
Listing
Agreement: The
legal agreement between
the listing broker and
the seller, setting out
the services to be
rendered, describing the
property for sale and
stating the terms of
payment. A commission is
generally payable to the
broker upon closing.
MLS®, Multiple
Listing Service®:
These are trademarks
owned by The Canadian
Real Estate Association.
They are used in
conjunction with a real
estate database service,
operated by local real
estate boards, under
which properties may be
listed, purchased or
sold. An MLS® listing
means REALTORS have
agreed to work together
for the marketing of a
listing.
Mortgage:
A contract providing
security for the
repayment of a loan,
registered against the
property, with stated
rights and remedies in
the event of default.
Lenders consider both
the property (security)
and the financial worth
of the borrower
(covenant) in deciding
on a mortgage loan.
Mortgage Broker:
A person or company
having contacts with
financial institutions
or individuals
wishing
to invest in mortgages.
The mortgagor pays the
broker a fee for
arranging the mortgage.
Appraisal and legal
services may or may not
be included in the fee.
Mortgage
Insurer: In
Canada, high-ratio
mortgages (those
representing greater
than 75% of the property
value) must be insured
against default by
either CMHC or private
insurers. The borrower
must arrange and pay for
the insurance, which
protects the lender
against default.
Mortgagee:
The person or financial
institution lending the
money, secured by a
mortgage.
Mortgagor:
The property owner
borrowing the money,
secured by a mortgage.
Null and Void:
Having no legal force or
effect.
Offer of
Purchase and Sale:
The document through
which the prospective
buyer sets out the price
and conditions under
which he or she will buy
the property.
Plan of
Subdivision: A
plan prepared by a land
surveyor showing lots,
blocks, or parcels of
land intended to be
dealt with separately,
as such separation has
been fully approved by
the planning authorities
, registered in the land
registration office, and
complies with provincial
planning legislation.
Quantum
Merit:
The amount that should
be paid as merited by
the extent and quality
of the original service
performed in a contract.
Real Estate
Board: A
non-profit organization
representing local real
estate brokers/agents,
salespeople, which
provides services to its
members and maintains
and operates a MLS®
system in the community.
REALTOR:
Trademark identifying
real estate
professionals in Canada
who are members of The
Canadian Real Estate
Association, and as
such, subscribe to a
high standard of
professional service and
to a strict Code of
Ethics.
Servient
Tenement: Land
over which an easement
exists in favour of a
dominant tenement.
Seller's Agent:
The Seller's Agent
represents the seller --
either as a Listing
Agent under the listing
agreement with the
seller or by cooperating
as a Sub-Agent,
typically through the
MLS® system. In dealing
with prospective buyers
-- customers-- the
Seller's Agent can
provide a variety of
information and services
to assist the buyer in
his/her decision-making.
The Seller's Agent does
not represent the buyer.
Term:
The actual life of a
mortgage contract-- from
six months to ten years
-- at the end of which
the mortgage becomes due
and payable unless the
lender renews the
mortgage for another
term (See Amortization).
UFFI (Urea
Formaldehyde Foam
Insulation:
Used for insulation,
UFFI is a low density
foam made from plastic
resins, a foaming agent
compressed air.
Variable-rate
Mortgage: A
mortgage in which
payments are fixed, but
the interest rate moves
in response to trends.
If interest rates go up,
a larger portion of your
payment goes to the
interest; if rates go
down, more goes to cover
the principal.
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