Glossary of Real Estate Terms
Abandonment - The voluntary surrender or relinquishment of possession of real property with the intention of terminating one's possession or interest, but without vesting this interest in any other person.
Abatement - A reduction or decrease in amount, degree, intensity or worth.
Absorption bed - A leaching bed constructed on or above the existing terrain as part of a waste disposal system through the use of imported soil and/or special filters.
Absorption rate - An estimate of the rate at which a particular classification of space - such as new office space, new housing, new condominium units and the like - will be sold or occupied each year.
Abstract Book - (also referenced as an Abstract Index) represents the central reference source within the Land Registry system.
Abstract of title - A concise, summarized history of the title to a specific parcel of real property, together with a statement of all liens and encumbrances affecting the property. The abstract of title does not guarantee or assure the validity of the title of the property. It merely discloses those items about the property which are of public record, and thus does not reveal such things as encroachments, forgeries, and the like.
Accelerated depreciation - A method of calculating the depreciation of certain property (that property which is used in a trade or business, or which is held for the production of income) at a faster rate than would be achieved from using the straight-line method of depreciation.
Acceleration clause - A clause in a promissory note, agreement of sale, or mortgage which gives the lender the right to call all sums due and payable in advance of the fixed payment date upon the occurrence of a specified event, such as a sale, default, assignment or further encumbrance of the property.
Acceptance - The expression of the intention of the person receiving an offer (offeree, usually the seller) to be bound by the terms of the offer.
Access - A general or specific right ingress and egress to a particular property.
Accrued - That which has accumulated over a period of time such as accrued depreciation, accrued interest or accrued expenses.
Acknowledgment - A formal declaration made before a duly authorized officer, usually a Notary Public, by a person who has signed a document.
Acre - A measure of land equalling 43,560 square feet; 4,840 square yards; 160 square rods; 0.405 hectares.
Actual age - The number of years which has elapsed since an original structure was built. This is sometimes referred to as historical or chronological.
Adhesion contract - A contract, which is very one-sided and favours the party who drafted the document.
Adjacent - Lying near to, but not necessarily abutting, the property.
Adjustments- Refers to those terms requiring apportionment as of the date of closing.
Adverse possession - The acquiring of title to real property owned by someone else, by means of open, notorious and continuous possession for the statutory period of time.
Aerobic treatment - A system of treating waste which involves the pumping of quantities of air into the sewage to accelerate its breakdown.
Affidavit - A sworn statement reduced to writing and made under oath before a Notary Public or other official authorized by law to administer an oath.
Agency - A relationship created when one person, the "principal," delegates to another, the "agent," the right to act on the principal's behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations and high standards of good faith and loyalty.
- Designated Agency - A relationship in which one or more industry members, licensed with the same brokerage, are designated in writing by the brokerage to act as sole agents for the buyer or a seller with respect to the same trade.
- Dual Agency - Occurs when the same agent has an agency relationship with more than one party to the same real estate transaction, and both parties must give their informed consent to this form of representation. The agent must advise the seller and the purchaser of the dual aspect of representation and must provide full and timely disclosure to all parties of all pertinent information.
- Single Agency - Either with the seller or buyer, is that relationship between the seller or buyer and an agent wherein the agent is considered in law to represent only the principal.
- Sub Agency - That relationship whereby an individual is empowered by an agent to act on his/her behalf.
- Transaction Brokerage - A relationship in which a brokerage or industry member provides facilitation services to the buyers and the seller in the same trade.
- Undisclosed Dual Agency - This situation arises when a professional is found to be acting in an agency role for conflicting interests without prior understanding, approval and agreement of the parties.
Agent - One who is authorized to represent and to act on behalf of another person (called the principal). A real estate broker is the agent of his client, be it the seller or buyer, to whom he owes a fiduciary obligation. A salesman is the agent of his broker and does not have a direct personal contractual relationship with either the seller or buyer.
Aggregate rent - The total or gross amount for a lease term.
Agreement of purchase and sale - An agreement between the seller (seller) and buyer (purchaser) for the purchase of real property.
Air rights - The rights to use space above the physical surface of the land while the surface can be used for some other purpose.
Alienation clause - A clause in a promissory note or mortgage which provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the sale or transfer of the property by the mortgagor.
Amendment to agreement - Formalizes any mutual agreement between purchaser and seller that affects an original contract, and which is acceptable to both parties.
Amenities - Features, both tangible and intangible, which enhance and add to the desirability of real estate.
Amortization - The gradual repayment of a debt by means of systematic payments of principal and interest over a set period, where at the end of the period there is a zero balance.
Amortization period - The time period required to completely retire the debt through scheduled payments of principal and interest.
Anaerobic treatment - The use of bacteria which can survive without oxygen in the breakdown of sewage within a waste disposal system.
Anchor tenant - Major department or chain stores which are strategically located at shopping centers so as to give maximum exposure to smaller satellite stores.
Annexation - Refers to the attachment or incorporation of one parcel of land within an adjacent municipality.
Annual percentage rate - The relationship of the total Finance Charge to the total amount to be financed.
Appraisal - The process of estimating, fixing, or setting the market value of real property. An appraisal may take the form of a lengthy report, a completed form, a simple letter, or even an oral report.
Appraisal report - A written summary estimating the value of property and the conditions and limitations at the time of the appraisal.
Appreciation - An increase in the worth or value of property due to economic or related causes, which may prove to be either temporary or permanent.
Appurtenance - Rights that go with a property. Something, which is outside the real property itself, but belongs to the land and is joined thereto and adds to greater enjoyment of the land.
Appurtenant - Belonging to; adjunct; appended or annexed.
Arbitration - The non-judicial submission of a controversy to selected third parties for their determination in the manner provided by agreement or by law.
Arm's length - A transaction freely arrived at in the open market, unaffected by abnormal pressure or by factors limiting competitive negotiations.
Arrears - The circumstance of being behind in payments, commonly used with respect to delinquent payments under a mortgage document.
Assessed valuation (tax assessment) - The value of real property as established by the government for purposes of computing real property taxes.
Assemblage - The combining of two or more abutting parcels of land into one ownership or use.
Assessment - A specific levy for a definite purpose, such as adding curbs or sewers in a neighborhood. Individual condominium owners are subject to special assessments benefiting the project as a whole and not funded through regular maintenance charges.
Assignment - The transfer of the right, title and interest in the property of one person, the assignor, to another, the assignee. In real estate, there are assignments of mortgages, contracts, agreements of sale, leases, and options, among others.
Assignor - An individual or firm who transfers or assigns rights or title to another.
Assumption of mortgage - The act of acquiring title to property which has an existing mortgage on it and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
Attachment - The legal process of seizing the real or personal property of a defendant in a lawsuit, by levy or judicial order, and holding it in the custody of the courts as security for satisfaction of the judgment which the plaintiff may recover in any action upon a contract, express or implied.
Attorney-in-fact - One who is authorized by another to act in his place under a power of attorney.
Attornment - The act of a tenant formally agreeing to become the tenant of a successor landlord; as in attorning to a mortgagee who has foreclosed on the leased premises.
Auctioneer - An individual who conducts a public sale of property and/or goods to the highest bidder subject, in some cases, to restrictions established by the seller.
Authority - The legal power or right given by a principal and accepted by the agent to act on the principal's behalf in business transactions with a third party, such as a listing agreement.
Automatic renewal clause - A commercial lease provision that automatically ensures renewal of the lease unless either the tenant or the landlord notifies the other party of a desire to terminate the agreement.
Balloon payment - The final payment of a note or obligation, which is substantially larger than the previous instalment payments, and which repays the debt in full; the remaining balance which is due at the maturity of a note or obligation.
Base lease - A contract stating the minimum established tenancy requirements that are applicable to all tenants and are used in both residential and IC & I properties.
Base line and meridian - An imaginary set of lines used by surveyors to locate and describe land under the Rectangular Survey Method of property description used in most mainland states.
Base rent - The minimum rent payable by the tenant under a commercial tenancy agreement, often referenced as net/net/net rent or alternatively a triple net lease.
Bench mark - A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area.
Beneficiary - A person who receives the benefits from the gifts or acts of another, such as one who is designated to receive the proceeds from a will, insurance policy or trust.
Berm - Contoured landscapes areas, normally surrounding commercial or industrial properties, which act as a buffer within the overall site plan for that particular enterprise.
Bilateral contract - A contract in which each party promises to perform an act in exchange for the other party's promise to perform.
Bill of sale - A written agreement by which one person sells, assigns or transfers his right to, or interest in, personal property to another.
Blanket mortgage - A mortgage, which is secured by several structures or a number of lots. A blanket mortgage is often used to finance proposed subdivisions or development projects, especially cooperatives.
Blended payment - The method of repayment where periodic payments of principal and interest are made in such a way that the payments remain constant in amount, although the portions attributed to principal and interest will vary with each payment.
Boundaries - The perimeters or limits of a parcel of land as fixed by legal description, which is usually a metes and bounds description.
Breach of contract - Violation of any of the terms or conditions of a contract without legal excuse; default, non-performance, such as failure to make payment when due.
Brick masonry wall - Is a load-bearing component of the building that transfers the weight of the roof and the floors down to the foundation and are typically constructed of brick, stone, concrete block, cinder block, clay tile or glass block.
Brick veneer wall - A wood frame wall with an exterior single layer of brick and transmits the roof and floor loads down to the foundation.
Bridge loan - A form of interim financing, which in residential sales, can occur when a purchaser is committed to completing the purchase of a property on a specific date, but will not have sufficient funds until a later time.
Bridging/bracing - Acts to restrain the joists from twisting and helps to transmit loads from one joist to the next thereby reducing the springiness of the floor.
Broker - One who acts as an intermediary between parties to a transaction. A real estate broker is a properly licensed person who, for a valuable consideration, serves as an agent to others to facilitate the sale or lease of real property.
Brokerage - That aspect of the real estate business which is concerned with bringing together the parties and completing a real estate transaction. Brokerage involves exchanges, rentals, trade-ins, and management of property, as well as sales. Brokerage is also a name given to a company licensed to trade in real estate.
Buffer zone - A strip of land separating one parcel from another.
Build to suit - An agreement between a landlord and tenant whereby the landlord assumes the obligation of fitting up the demised space to the tenant's specification within the constraints of building standards.
Building codes - Regulations established by local governments providing for minimum acceptable structural standards for buildings.
Building line - A line fixed at a certain distance from the front and/or sides of a lot, beyond which no building can project.
Building permit - A written permission granted by the Municipal Building Department and required prior to beginning the construction of a new building or other improvement (including fences, fence walls, retaining walls and swimming pools).
Building residual technique - A method of determining the value of an improvement normally used in appraising income property.
Built-up roof - Commonly referenced as a tar and gravel roof and is very popular in industrial buildings. It usually consists of two, three, four or even five plies of roofing felts with a mopping of asphalt between layers. A flood coat of asphalt is then applied over the top and covered with gravel to reflect ultraviolet light and protect the roof from mechanical damage. Some roofers use roll roofing rather than gravel to protect the membrane.
Bundle of rights - An ownership concept describing all those legal rights which attach to the ownership of real property, including the right to sell, lease, encumber, use, enjoy, exclude, will, etc.
Business - Any undertaking for the purpose of profit, including any interest in any such undertaking.
Business cycles - Is a consequence of supply and demand factors combined with a host of intrusive elements from both private and public sectors, associated with three major phases: prosperity with high employment, consumer confidence and intense market activity; recession with rising unemployment, waning consumer confidence and no real growth; and recovery denoted by economic corrections and improvement in key growth indicators.
Business days - Days of week excluding Saturdays, Sundays, and holidays; normal working days.
Business opportunities - Any type of business which is for sale.
Business taxes - Taxes levied and due to the appropriate municipality for the operation of a business as defined by, and located within, that municipality.
Cancellation clause - A provision, commonly found in industrial or commercial leases, that confers upon one or both of the parties to a lease the right to terminate the lease upon the occurrence of the condition or contingency set forth in the said clause.
Cantilever - A projecting beam or overhanging portion supported at one end only.
Capital cost allowance (CCA) - Capital assets, though durable, have a limited lifetime and at some point will be replaced. CCA is the maximum rate set, under the Income Tax Act, which the taxpayer can claim for depreciation.
Capital gain - The taxable profit derived from the sale of a capitol asset.
Capital improvement - Any structure which is erected as a permanent improvement to real property; any improvement which is made to extend the useful life of a property, or to add to the value of the property.
Capitalization - A mathematical process for converting net income into an indication of value, commonly used in the income approach to appraisal.
Cap rate (capitalization rate) - The percentage selected for use in the income approach to valuation of improved property. The cap rate is designed to reflect the recapture of the original investment over the economic life of the improvement, to give to the investor an acceptable rate of return (yield) on the original investment, and to provide for the return on borrowed capital.
Casement windows - Hinged at one side and can open either inwardly or outwardly. Materials may include wood, metal, vinyl, or a combination thereof.
Cash flow - The net operating income of a property less its debt service.
Caveat emptor - (Let the buyer beware) A long standing legal principle based on the concept the purchaser is buying at his/her own risk. This places a responsibility on the purchaser to inspect and establish the terms for what is being purchased. The seller cannot be held responsible for the quality of a product unless express warranties have been given.
Certificate of insurance - Issued by an insurance company or its agent, verifying that a specific insurance policy is in effect for stated amounts and coverages, and sets out the names of those insured.
Certification - To attest to something as being certain, the truth or fact.
Certified cheque - A cheque which the bank guarantees to be good, and against which a stop payment is ineffective.
Certified property manager (CPM) - A professional property manager who has qualified for membership in and is a member of the Institute of Real Estate Management, and is designated a CPM.
Chain of title - The recorded history of matters which affect the title to a specific parcel of real property, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title.
Change order - An order issued any time there is a change in the specifications, price, or time set forth in the building contract as authorized by the owner, architect, and/or engineer.
Charge - An encumbrance on land by way of a mortgage as registered in the Land Titles System.
Chattel - Personal property which is tangible and moveable.
Chattel mortgage - A mortgage given on moveable possessions (e.g., automobiles, boats, trailors, mobile homes) or personal property (e.g., appliances, televisions, and stereos), that may be removed without injury to the freehold estate.
Clear title - Title to property that is free from liens, defects or other encumbrances, except those which the buyer has agreed to accept, such as mortgage to be assumed, the ground lease of record, and the like; established title; title without clouds.
Client - A person who has an agency relationship with a brokerage.
Client trust account - A Trust Account set up by a broker to keep a client's monies segregated from the broker's main Trust Account.
Closed mortgage - A mortgage that does not provide for any prepayment of principal during the term.
Closing - The final stage of consummating a real estate transaction when the seller delivers title to the buyer, in exchange for the purchase price.
Closing costs - Expenses of the sale which must be paid in addition to the purchase price (in case of the buyer's expense), or be deduced from the proceeds of the sale (in the case of the seller's expenses).
Closing date - The date set for the completion of a transaction in an Agreement of Purchase and Sale.
Closing statements - A detailed cash accounting of a real estate transaction prepared by a lawyer or other person designated to process the mechanics of the sale, showing all cash that was received, all charges and credits which were made, and all cash that was paid out in the transaction; also called a settlement statement.
Cloud on title - Any document, claim, unreleased lien or encumbrance which many impair or injure the title to property or make the title doubtful because of its apparent or possible validity.
Cluster development - The grouping of housing units on less than normal size homesites, with remaining land being devoted to common areas.
Code of ethics - A written system of standards of ethical conduct.
Collar ties - Laterally placed wood members that are installed between opposing rafters approximately halfway up to the attic space.
Collateral - Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the mortgaged property itself, which has been hypothecated.
Collateral mortgage - A loan backed by a promissory note and then further secured by means of a mortgage on real property.
Collateral security - An additional form of security, pledged to reduce the risk to a mortgagee, which can be used to recover all or part of the debt.
Commission (fee) - Remuneration paid to a brokerage on the sale or lease of property, usually as a percentage of the sale amount involved, but is sometimes a fixed amount.
Common expenses - The costs of operating, managing, maintaining, and repairing a condominium's common elements and administering the Condominium Corporation.
Common law - That part of the law, formulated, developed and administered by the common law courts, mostly unwritten and founded originally on common customs.
Compensation - Payment or reward for performance of service.
Competition act - (formerly known as the Combines Investigation Act) is a federal statute addressing many forms of competition.
Compound interest - Interest charged on the initial principal for monies borrowed, and also on interest amounts accrued from previous periods, and are charged at specified intervals (e.g., monthly, daily, quarterly).
Concurrent ownership - When two or more persons have a right of ownership at the same time.
Condition precedent - A condition in a contract, which calls for the happening of some event, or performance of some act, before the offer becomes binding on the parties.
Condition subsequent - A condition in a contract referring to a future event upon the happening of which the Agreement becomes no longer binding on the parties.
Conditional sales contract - A contract, usually involving the sale of goods, in which the property remains in the seller's name until all installments set out in the contract have been paid by the buyer.
Condominium - Enables a person to share in the ownership and operation of a housing development while having negotiable title to his/her own unit.
Condominium corporation - A governing body, without share capital, arising from the registration of a declaration and description for a condominium, (whose members are the owners) to manage the property and assets of the corporation.
Consideration - Something of value given or promised to make an agreement legally binding.
Contract - A legally binding agreement between two or more capable persons for consideration or value.
Convection system - A system in which heat is transferred through circulatory motion of air that occurs when the temperature varies. (hot water or steam radiator is one such system)
Conventional mortgage - A first mortgage granted by an institutional lender wherein the amount of the loan does not exceed 75 % of the appraised lending value of the property.
Conveyance - The transfer of an interest in property from one individual to another.
Cooperative - Provide affordable housing while permitting resident members the opportunity to have a say in the upkeep and management of their residence. The underlying premise of cooperatives is open, voluntary membership where members accept responsibilities of membership in return for the coop's services.
Corporation - A form of business organization created by statute law which is legally considered as a separate entity.
Cost approach - Based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property.
Counter-offer - An offer by a seller to sell the property, open for an acceptance for a specified period of time, and offered to particular purchasers.
Covenant - An agreement contained in a deed, which creates a legal obligation.
CPM (Certified Property Manager) - Designation awarded by the Real Estate Institute of Canada to individuals involved in the management of residential, commercial or industrial properties.
CRA (Canadian Residential Appraiser) - Designation awarded by the Appraisal Institute of Canada. The CRA denotes members who are qualified in the appraisal and valuation of individual, undeveloped residential dwelling sites and dwellings containing not more than four self-contained housing units.
CRB (Certified Real Estate Broker Manager) - Designation awarded by the Real Estate Brokers Managers Council of the National Association of Realtors.
Credit bureau - A central clearinghouse for all types of credit related information.
CRES (Certified Real Estate Specialist) - Designation awarded by the Real Estate Institute of Canada to persons involved in the sale of residential real estate.
Crown patent - An original title deeded by the government.
CRS (Certified Residential Specialist) - Awarded by the Residential Sales Council of the National Association of Realtors (US).
Customer - A person who receives services from a brokerage, but who does not have an agency relationship with the brokerage.
Damages - Compensation or indemnity for loss owing to breach of contract, or a tort (civil wrong).
Dampproofing - Usually involves the coating of exterior foundation walls with a one-quarter inch layer of mortar or tar, which ideally extends down to the footing. The foundation/footing joint is also covered to improve the seal and direct the water into the drainage tile.
Damper - A valve or plate operated mechanically or manually to regulate airflow to or from any prescribed point.
Debt ratio - One of several commonly used financial ratios using data found on the balance sheet, profit and loss statement, or a combination of the two.
Declaration - The constitution of a condominium corporation which creates the condominium and defines the responsibilities of the owners and the corporation.
Deed - A legal document, duly executed and delivered, that conveys title or an interest in real property.
Deed restriction - An imposed restriction in a deed to limit the use of the land.
Default - Failure to fulfill a promise or obligation.
Deferred maintenance - Ordinary maintenance that is not performed and negatively affects a property's use and value.
Delegation of duties - The authorization given by one party to another to carry out the specific responsibilities that party has undertaken on behalf of a client.
Demand loan/line of credit - An arrangement between the business customer and a financial institution respecting the maximum amount of credit allowed that business.
Demised premises - Premises, or parts of real estate, in which an interest or estate has been transferred temporarily, such as an interest in real property conveyed in a lease.
Density - References the maximum allowable usage for a given parcel of land e.g., number of people, amount of residential units, or square footage .
Deposit - Payment of money or other valuable consideration as a pledge for fulfillment of a contract.
Depreciation - Any decline in the value of a physical asset, usually resulting from physical (ordinary wear and tear) deterioration and functional/ locational obsolescence.
Description, legal - A legal identification of land or premises.
Developer - One who engages in the subdivision or improvement of land.
Diffuser - A device for reducing the velocity of air flow from a mechanical duct system supplying air within a structure. Its shape is usually circular or square and is set in the ceiling at predetermined locations to diffuse air within a defined space. Diffusers, in residential property, are the small rectangular grates normally located at floor level.
Disbursements - The term disbursement, for real estate purposes, normally refers to those items requiring apportionment as of the date of closing. Such disbursements include any rents, mortgage interest, realty taxes, local improvement rates, unmetered public or private utility charges, and unmetered cost of fuel. Such disbursements are apportioned and allowed to the day of completion, the day of completion itself to be charged to the purchaser.
Disclaimer - The repudiation or denial of a claim.
Disclosure - The open and forthright discussion of relevant matters by an agent to his/her principal.
Discounting - The process of purchasing the face or remaining value of a mortgage at a lower cost to increase yield.
Distrain (distress) - Right of the mortgagee or landlord to seize and suction chattels, after due notice of a public auction, in settlement of the mortgagor's or tenant's debt.
Distribution panel - An electrical panel providing the interface between the service entrance wires to a structure and dispersing of power throughout that structure.
Dominant tenement - The estate (i.e., property) which derives benefit from an easement over a servient tenement, as in right-of-way.
Double hung window - Made up of two movable parts, an outer part in the top half of the opening and an inner part on the bottom half of the opening. They move up and down on their guides.
Dower - To give a widow a life interest in one-third of her husband's real estate. To convey clear title, a wife would have to release her interest or bar her dower rights if the husband was an owner and wished to sell or mortgage the property.
Dual agency - Representation of two principals (usually seller and buyer) by the same agent in the same transaction.
Duplex - A two-family dwelling or house have two self-contained residential units. There is only one deed for the ownership of both units.
Duress - The threat of violence, force or undue pressure to coerce a person into an action against his/her will.
Easement - A right enjoyed by one tenement over another tenement, usually granted for a specific purpose rather than for the general use and occupation of the land, and once granted attaches to the land and binds subsequent owners.
Economic life - The period over which improvements to real estate contribute to the value of the property.
Economics - The study of how individuals and society allocate scarce resources in satisfying their wants and needs, including production, distribution, and consumption of goods and services to meet the needs of various economic units.
Effective age - The estimated age in years as indicated by the condition and utility of a structure based on the age of structures of equivalent utility, condition, and remaining life expectancy, as distinct from chronological age.
Effective date - The day or date upon which something occurs or ceases to occur.
Effective rate of interest - The true rate of interest charged on a mortgage loan.
Electrical service size - The size of the electrical service (amps) provided from the primary line to the building. (e.g., 6OA, 100A, 200A)
Elevation - The exterior of a structure usually viewed from the front or otherwise identified: e.g., side elevation, rear elevation.
Eminent domain - The right of a government or municipal quasi-public body to acquire private property for public use.
Equalization (taxation) - The raising or lowering of assessed values for tax purposes in a particular county or taxation district to make them equal to assessments in other counties or districts.
Equity capitalization rate - Expresses the relationship between cash flow and the equity invested in a property, usually obtained from comparable properties.
Equity of redemption- The right of the mortgagor to reclaim clear title to the property upon full repayment of the debt. It is a right granted to mortgagors but is extinguishable upon foreclosure.
Escalation clause - A clause in a contract providing for increases or decreases in rent payments in accordance with fluctuations of certain direct costs or expenses of the landlord.
Escheat -The reversion of property to the state or some agency of the state in the event the owner thereof dies leaving no will and having no legally qualified heir to whom the property may pass by lawful descent.
Escrow - A written agreement between two or more parties providing that certain instruments of property be placed with a third party to be delivered to a designated person upon the fulfillment or performance of some act or condition.
Estate - An interest in land or more specifically the degree, quantity, nature, and extent of interest that a person has in real property.
Estoppel - A bar to alleging or denying a fact because of one's own previous actions or words to the contrary.
Estoppel certificate - The Estoppel certificate provides a reasonably complete report on the financial health of the condominium corporation but it is by no means exhaustive.
Eviction - The forced removal, by legal means, of a tenant from the leased premises.
Eviction notice - A written notice to a tenant to vacate the leased premises within a specified time for infractions of the lease or other specified causes.
Exclusive agent - An agent with the exclusive rights to sell, lease or exchange the property owned by another for a fixed period.
Executor/executrix - A person appointed by testator to carry out the provision of the testator's will.
Expansion joint - An opening designed for expansion that is located between independent segments within a structure.
Expense ratio - The fraction of gross income consumed by expenses.
Express authority- A precise instruction, either in writing or orally, in which an authority is granted.
Expropriations - 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.
False representation - A false statement of fact.
- Innocent misrepresentation - A statement by one party of a material fact, that is untrue, but is believed to be true.
- Fradulent Misrepresentation - Made with the knowledge of its falsity or with reckless disregard for its truth on the part of the person making it; the purpose must have been to induce the other party to enter a contract; it must have been acted upon to the other party's prejudice.
- Negligent Misrepresentation - if there is a special relationship between the parties and a misrepresentation is made negligently, then the person who is mislead will have an action for damages.
Fee simple - The highest estate or absolute right in real property.
Fiduciary relationship - A person to who power or property is entrusted for the benefit of another.
Fiduciary responsibilities - An agent owes to his/her principal various fiduciary duties such as competence, obedience, good faith, and full disclosure, and full accounting.
- Competence - A degree of care and skill that might be expected from an average person in that trade or profession.
- Obedience - A duty to follow the principal's lawful instructions whether the agent agrees with them or not.
- Good faith and full disclosure - Honesty of intention, abstention from taking advantage of another and freedom from knowledge of circumstances that ought to cause a reasonable person to investigate.
- Full accounting - The requirement for full and complete accounting, such as details of all funds held in trust, and all monies handled on behalf of the principal.
Finder's fees (mortgage) - Often referenced as a mortgage referral fee, is paid to persons such as real estate brokers or mortgage brokers for successfully referring customers to lending institutions.
Fit up - Sometimes referenced as fitting up or build-outs, it is the construction necessary within the enclosing walls to divide and improve the tenant's space into a functional layout.
Fixed assets - Frequently referenced as capital assets, add value to a business and are used in the operation of the enterprise, and are being held by the company for the intention of resale in the marketplace.
Fixed expenses - Charges that do not vary with occupancy, and have to paid whether the property is occupied or vacant.
Fixtures - An item that is attached to the real property or building to become part of it.
Flashing - Sheet metal or other material used in roof and wall construction to shed water.
Flat payment - A payment structure in which the borrower is not required to repay any of the principal until the maturity date.
Flood plain - The area, usually low lands, adjoining a watercourse that has been, or may be covered by floodwater.
Footing - The widen section, usually concrete, at the base or bottom of a foundation wall, pier or column.
Foreclosure - Remedial court action taken by a mortgagee, when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor, and also subsequent encumbrancers' equity of redemption.
Framing - The rough timberwork of a house, including the flooring, roofing, partitioning, ceiling and beams.
FRI (Fellow of the Real Estate Institute) - Designation to licensed individuals who have completed the Real Estate Institute of Canada (REIC) education program.
FRI (A) (Fellow of the Real Estate Institute Appraisal Specialist) - Members who specialize in residential appraisals.
FRI (E) (Fellow of the Real Estate Institute Executive) - Designation for unlicensed management professionals, who are not involved in residential or commercial sales.
Functional obsolescene - Impairment of functional capacity or efficiency. Reflects the loss in value brought about by such factors as overcapacity, inadequacy, and changes in technology that affect the property item itself or its relation with other items comprising a larger property.
Gabions - A metal enclosure made of mesh or chain links normally filled with stone designed to act as a retaining wall.
Gable - An inverted 'V' or triangular shaped portion of a wall, extending down to the roof line, above the first floor level and may or may not contain a window or a decorative structure.
Garnishment - A proceeding whereby property, money, or credits of a debtor; in the possession of another (the garnishee), are applied to the payments of debts by means of process against the debtor and the garnishee.
General contractor - Normally selected through bidding procedures, is responsible for completion of the project in a skillful manner that is acceptable to both architect and owner.
Goodwill - The expectation of continued business activity arising from the reputation of a business, and can be a salable asset of a corporation and as such can be included in the balance sheet.
Graduated lease - A lease that provides for specific increases or decreases in rent at definite times based on specified conditions during the term of the lease.
Graduated payment - A blended payment plan with regular increases of individual payments to a predetermined level.
Grandfather clause - A colloquial expression pertaining to a rule or regulation placed in force, but exempts various persons or situations owing to pre-existing conditions.
Grant - A legal term used in deeds of conveyance to indicate a transfer of an interest or estate in real property by the Grantor to the Grantee.
Grantee/grantor - The grantee is the party to whom an interest in real property is conveyed. The grantor conveys an interest in real property.
Gross debt service ratio (GDS ratio) - Refers to the relationship between a borrower's income and the sum of principal, interest, and property tax payment during the year.
Ground fault circuit interrupter - A ground fault specifically designed to shut the power off to a circuit when as little as .005 amps are leaking.
Guarantor - Person providing a separate personal covenant over and above a named party in a contract regarding some obligation(s): e.g., mortgage, personal loan or lease.
Industrial, commercial, & investment (IC&I) as a specialty field - While the field tends to be specialized, the degree is largely reflected in the extent of urbanization within the local marketplace. In smaller centres, it is usual for residential real estate brokerages to have one or two individuals focused on IC&I activities. In larger urban centres, the business tends to become more specialized, with companies specifically focusing on selected areas.
Implied - Created by the conduct or words of other parties, and not arising from explicit agreements.
Impossibility of performance - A contract may be discharged because of the impossibility of performance, or frustration due to supervening and unanticipated circumstances.
Income approach - A procedure in appraisal analysis that converts anticipated benefits (dollar income) to be delivered from the ownership of property into a value estimate.
Income source verification - Lenders will vary in terms of the type of proof required to support an application for mortgage financing. The most complete form is an Income Verification Form completed by the applicant's employer, which provides information concerning both the reliability and durability of the applicant's income stream.
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 their contribution to the value of the property.
Indemnify - To secure against hurt, loss or danger; to make compensation for incurred hurt, loss or damage.
Indenture - A deed or agreement setting out specific objects and executed by the parties.
Independent contractor - Generally an individual who works according to his/her own methods and judgment.
Inducements - The act of persuading or in some way influencing the actions and/or attitudes of others.
Infill housing - Any project that create new housing within an existing established neighbourhood.
Inheritance - Land passes to heirs after the death of the owner.
Instrument - A form of written legal document.
Intensification - Regarding urban planning, involves the expanded use of buildings and serviced land to provide additional housing stock and more effectively use of existing municipal services as opposed to the creation of new housing stock through subdivision developments, and has various dimensions which includes the increased use of existing housing stock through the creation of accessory apartments.
Interest adjustment date - The date in a blended payment plan, prior to commencement of the mortgage term, to which accrued interest computed on the various advances is calculated.
Interior partitions - All types of interior non-load-bearing partitions that enclose or subdivide space and may be of steel, wood, glass, masonry, or combinations of these materials and can be either movable or non-movable, prefabricated, or built on the job.
Intestate - A person who dies without a will, or leaves one defective in form, in which case his/her estate descends by operation of law to the heirs or next of kin.
Irrevocable - Incapable of being recalled or revoked; unchangeable, unalterable.
Joint and several - This is a term that is normally used regarding loans and mortgages in which one or more parties are liable for the repayment of a debt.
Joint tenancy - Ownership of land by two or more persons whereby, on the death of one, the surviving tenants take the whole interest in the property.
Joint venture - A real estate project undertaken by a group of investors in which the parties share in the project including any profits or losses.
Judgment - The decision of the court and is most commonly found as a lien registered against land and is more fully described as a charge, or lien, upon the lands of a debtor.
Judicial sale - Is one type of remedy available to a mortgagee when the mortgage is in default. The mortgagee looks to the court to sell the property with the proceedings being applied against the mortgage debt.
Jurisdiction - Refers to the authority to act and the defined limitations of that authority.
Land - Includes the surface of the earth, air space, and subsurface area.
Landscaping - The planting of shrubs, grass and trees, including alterations to the contours of the property to improve the overall aesthetic appeal of the site.
Latent defect - A physical deficiency or construction defect not readily ascertainable from a reasonable inspection of the property, such as a defective septic tank or underground sewage system, or improper plumbing or electrical lines.
Lawful object - Being within the bounds of the law, in regards to a real estate transaction, it is the transferal of ownership of the seller's property to a purchaser.
Leaching bed - One component of a disposal system normally built using two or more rows of buried distribution pipe.
Lease - A contract between the landlord (lessor) and tenant (lessee) for the occupation or use of the landlord's property by the tenant, for a specified time and for a specified consideration (rent).
Lease buyout - A cash payment or other settlement made by the tenant to the landlord to terminate a lease.
Letter of intent - A general understanding of the parties that may ultimately lead to a detailed agreement setting out various provisions, covenants, terms and other matters between those parties.
Letter of opinion - A brief, unsubstantiated statement of an appraiser's opinion of value or value range.
Leverage - The use of borrowed funds to make investment(s) in real property in the hope of realizing a profit in addition to monies necessary to pay for the borrowed funds.
Levy - To impose or assess a tax on a person or property.
Licence - Permission given by an authority to engage in an action for a particular purpose.
Licence law - A general reference in real estate to the regulatory controls imposed on real estate practitioners by a governing body.
Lien - A right of encumbrance affecting any property, and can be either in the form of an agreement between two parties, namely, the party owing the money (lienor) and the party to whom those funds are due (lienee).
Life estate - An interest in property that continues for the life of an individual and terminates in favour of others in the event of his/her death.
Limited liability - Responsibility for the debts of a business in relation to the amount of investment one makes within that enterprise.
Limited partner - A participant in a limited partnership whose liability is confined to his/her investment and who does not have a voice in the management of the partnership.
Limited partnership - An investment arrangement that limits the partner's liability to the amount invested and also limits the profit he/she can make.
Line of credit - A line of credit is a highly flexible form of interim financing that is based on the past performance and strength of personal or corporate covenants.
Lintel - A horizontal structural member (beam) that supports the load over an opening, such as a door or window.
Listing agreement - A written agreement under which the owner appoints a real estate broker for a designated period of time to sell, lease or exchange the property based on the owner's stated terms, and under which the owner agrees to pay the broker a commission.
Listing types - There are three major listing types:
- Open Listing - These are usually written arrangements in which the owner gives one or more brokers authority to find a purchaser for the property.
- Exclusive Listing - Gives one broker the authority to offer the property for sale (lease, exchange, etc.) during a specified time period.
- MLS® Listing - A signed multiple listing form contains an authority from the seller permitting the broker to employ the services of cooperating brokers who are members of the real estate board or association. The responsibility regarding promotion, negotiations, and payment of commission to cooperating brokers is that of the listing agent.
Loan ratio - The ratio of the principal amount of the loan to the lending value of the property.
Lot grading - The general topography of the lot.
Market indicators - They include: list to sale price ratio, number of days on the market, average and median price, inventory turnover ratios, and sales volume/sales unit production figures.
Market position - The concept of positioning based on the premise that market niches exist.
Market rent - The rental income that a property would most probably command on the open market, as indicated by current rentals being paid for comparable space as of the effective date of the rental appraisal.
Market value - 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 purchaser, buying with the knowledge of all the uses to which it is adapted and for which it can be legally used, and neither party acting under necessity, compulsion or peculiar and special circumstances.
Marketable title - A title that a court of equity considers to be so free from defect that it will legally force its acceptance by a purchaser.
Master/servant - A master directly controls and supervises the work of the servant, who is bound to comply with all of the master's reasonable orders. The master is responsible to third parties for the servant's actions in the performance of that work. Although this relationship may have originated with the ancient doctrines of servitude, the concept persists today in relationships involving most employees in the typical business situation. It is also true of the registered real estate salesperson employed by a broker.
Matrimonial home - Any property in which a person has an interest, and that is or was at the date of separation occupied by the person and the spouse as their family residence.
Maturity date - The final day in the term of an agreement, most frequently used in real estate with respect to mortgages.
Mechanic's lien - a claim against a property which is filed by a person or corporation in the land registry office for labour, services or materials supplied.
Mental incompetence - In terms to parties to a contract, any person declared to be mentally incompetent is incapable of contracting.
Metes and bounds - A system of written land description whereby all boundary lines are set forth by use of terminal points and angles; metes referring to a limit or limiting mark (i.e., distance) and bounds referring to boundary lines (i.e., directions)
Minimum lot size/area - Normally set out in square feet/meters or acres/hectares upon which a building may be built in compliance with local zoning By-Laws.
Mistake - In legal terms, applying to real estate contracts has a narrow meaning. Not every mistake or simple error affects a contract and is considered a legal mistake of fact. The law does not simply declare a contract void simply because one or other of the parties make a mistake. Only certain types of mistakes give rise to a remedy. Obviously, the determination of a mistake and its impact on a contract is a legal issue.
As a general description for real estate practitioners, mistakes can be grouped under three common headings.
- Common - Both parties to the contract know the intention of the other, accept it, but are somehow mistaken concerning some underlying material or fundamental fact. As an example, both seller and buyer believe that the property includes the right of way to the beach, but in fact there is nothing to support this belief.
- Mutual - The parties misunderstand each other and are at cross-purposes. In other words, the seller owns two lots on opposing sides of the lake. The buyer believes he/she is buying the south shore property, while the seller believes the north shore property is being sold.
- Unilateral - One party is mistaken and the other party knows of this mistake concerning fundamental aspect of a contract. As an example, the buyer believes that the lot is approximately one acre in size, and the seller is clearly aware of this mistaken belief.
Mixed use project - A planned development that provides at least two types of uses (e.g., retail/office, office/residential, etc.) within a single project.
More or less - Term often found in a property, intended to cover slight, unimportant or insubstantial inaccuracies of which both parties are willing to assume the risk.
Mortgage - A conveyance of property to a creditor (mortgagee) as security for payment of a debt, with a right of redemption upon payment of the debt.
Mortgage renewal - An agreement whereby the lender may agree to extend the loan, but possibly on revised terms, concerning such items as principal repayments and interest rate.
Multiple Listing Service ®(MLS®) - The trademarks known as MLS®, Multiple Listing Service® and the MLS® design marks are Certification Marks registered and owned by The Canadian Real Estate Association (CREA). These marks are protected throughout Canada for the exclusive use of members of CREA in connection with services defined as listing to affect the purchase and sale of real estate. The Certification Marks may only be used in association with listing services performed as part of a plural system arrangement and are performed by members in good standing of The Canadian Real Estate Association.
Mutual agreement - This is one of the essential elements of a contract. It is created by an offer, the acceptance of the offer and communication of the acceptance back to the offeror. It is the basis for a meeting of the minds between the contracting parties.
National Housing Act - The National Housing Act (1954) revised and superseded previous housing and mortgage policies. It facilitates the insuring of National Housing Act (NHA) loans made by approved lenders and for direct mortgage lending under a variety of programs by Canada Mortgage and Housing Corporation (CMHC).
Native lands - Those reserved lands held by the Crown for the use and benefit of native people.
Net (single-net) lease - An agreement in which the tenant pays the rent and certain expenses connected with the leased premises.
Net-net lease - An agreement in which the tenant pays all maintenance and operating expenses, plus property taxes.
Net-net-net (triple net) lease - An agreement in which the tenant pays maintenance and operating expenses, property taxes, and insurance.
Net operating income - Annual net income remaining after deducting all fixed and operating expenses, but prior to deducting financial charges such as expenses for debt service, and income taxes.
Non-conforming use - Use of land prohibited by the terms of he current approved zoning By-Law.
Normal wear and tear - This refers to the physical deterioration that occurs while using the property without negligence .
Notary public - An officer appointed by the Province with authority to take the acknowledgment of persons executing documents and to witness the signature(s) and affix a notarial seal.
Notice - Information about or warning of something. Notice may be by personal observation or by written or oral message from another person.
Notice of power of sale - A notice delivered to the mortgagor (and spouse) and subsequent encumbrancers in accordance with the Mortgages Act (or the mortgage document), stating that a Power of Sale action is being commenced.
Notice to vacate - A legal notice requiring tenants to remove their possessions from the premises within a stated period or upon a specified date, and to deliver vacant possession of the premises to the owner, agent, or designated successor.
Nuisance - In real estate activity, a nuisance normally refers to an act that affects the enjoyment and/or use of a person's property.
Null and void - Having no legal force or effect. This term is commonly found in an Agreement of Purchase and Sale that involves a condition and related waiver.
Obsolescence - It is the impairment of desirability and usefulness caused by new inventions, changes in design, improved processes for production, or caused by external influencing factors. Obsolescence makes property less desirable and less valuable for a continued use. One of the causes of depreciation.
Occupancy permit - A permit issued by a municipality allowing the premises to be occupied for the uses intended.
Offer to lease - When accepted, an agreement between interested parties to enter into a lease that sets forth the basic lease terms.
Open house - The practice of licensed salespersons and brokers demonstrating listed property by inviting the public to inspect the property within selected hours on a specific day (or days).
Open listing - A listing given to any number of brokers without liability to compensate any, except the one who first acquires a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.
Open mortgage - Mortgage containing some form of prepayment privilege for the partial or total reduction of principal with or without penalty.
Option to buy/purchase - A right given by the owner of property to another (for valuable consideration) to buy certain property within a limited time at an agreed price.
Over-improvements - The placement of improvements on a property that are excessive and consequently inconsistent with the overall size, quality, or appearance of other improvements within the general vicinity.
Paper trail - A well-documented paper trail is critical, should past events come under scrutiny. Poorly documented files are a source of risk for real estate practitioners. Research indicates that the weakest link in a paper trail can attract liability. Injured parties, be they customers or clients, frequently undertake a careful examination of all documentation prepared by salespeople and brokers. It is vital that agreements, listing and other documents are accurate and complete.
Partial discharge - A discharge of a finite portion of the mortgaged lands, usually given after the mortgagor has prepared a specific portion of the mortgage debt.
Parties to a contract - The parties to a contract are those individuals or corporations directly involved in, and having a vested interest in, an Agreement of Purchase and Sale as seller(s) or buyer(s), or as duly authorized representatives of the seller or buyer. The parties to a contract must be clearly identifiable.
Partnership - Must consist of at least two partners. These individuals pool their resources of capital, ability and effort.
Possession - Right of an owner to occupy property. When the property is occupied by a tenant, possession is transferred to the tenant; however, the owner has constructive possession by right of title.
Possession date - The date of completion/closing is normally possession date, unless otherwise provided in the Agreement.
Postponement - For mortgage purposes, a term used in relation to a contract between mortgagor and mortgagee, whereby the mortgagee agrees to maintain a position of subsequent priority in the event of rearrangement and registration of a prior mortgage.
Power of sale - The right of the mortgagee to force the sale of a property without judicial proceedings, should default occur.
Pre-approved purchaser - Pre-approved mortgage financing has become increasingly popular. It adds negotiating strength in the marketplace as the buyer becomes virtually a cash buyer, subject to the conditions of the pre-approval.
Premises - This term most commonly appears in lease documents relating to retail space. It refers to the physical space leased and occupied by the tenant and specifically described by a site plan or similar schedule attached to and forming part of the lease document and often referenced as the demised premises in lease document.
Prepayment clauses - A clause inserted in a mortgage that gives the mortgagor the privilege of paying the mortgage debt in advance of the maturity date based on stipulated terms.
Preventive maintenance - A program of regular inspection and care that allows potential problems to be prevented or at least detected and solved before major repairs are needed.
Prime tenant - A tenant who occupies a significant part of the space available within a given building. The more common term used is anchor tenant.
Principal and agent - The relationship created by express or implied contract or by law, whereby one party delegates the transaction of some lawful business, with more or less discretionary power, to another who undertakes to manage the affair and render an account thereof.
Principle of anticipation - Affirms that value is created by the anticipation of benefits (money or amenities) to be derived in the future. (Value may be defined as the present worth of all rights of future benefits).
Principle of balance - This principle holds that value is created and maintained in proportion to the equilibrium attained in the amount and location of essential uses of real estate.
Principle of change - This principle holds that economic and social forces are constantly at work and that changes caused by these forces affect real property.
Principle of competition - This principle, in terms of appraisal theory, states that excessive profits in any line of business will tend to breed competition that, in turn, tends to destroy profits.
Principle of conformity - This principle states that to maintain maximum value, land must be utilized to reasonably conform with the existing standards of the area. The word reasonable is used to denote the degree of conformity. Too much conformity results in monotony, which could be as detrimental to value as not having any conformity at all. In residential areas, variety in the styling of buildings of the same quality presents a more pleasing appearance than rows of identical houses. Zoning regulations should protect a neighbourhood from conversion to or intrusion of inharmonious uses. This principle is particularly useful in detailing a neighbourhood analysis.
Principle of consistent use - When improved lands is in a state of transition to another highest and best use, it cannot be appraised with one use allocated to the land and another to the building or other improvements. If an appraiser is estimating the market value of a downtown parcel of land improved with an old house, and estimates that the highest and best use is for an office building development, then the appraisal should not accord any value to the house over that of the land.
Principle of contribution- A valuation principle that states that the value of any component of a property is measured by how much it adds to the net income (or market value if the subject property is a single family dwelling) by reason of its presence, or detracts from the net income (or market value) by reason of its absence. In other words, the value of any factor in production depends upon its contribution to net income or value and not upon its cost.
Principle of highest and best use - That use which, at the time of the appraisal, is most likely to produce the greatest net return in money or amenities to the land over a given period. The present use will continue, however, unless and until in its highest and best use exceeds the total value of the property in its existing use.
Principle of increasing and decreasing (diminishing) returns - A valuation principle that states that when successive increments of one or more factors of production are added to fixed amounts of the other factors, there is a resulting enhancement of income (in dollars, benefits, or amenities), initially at an increasing rate to a point of maximum return and then decreasing until eventually the increment value becomes increasingly less than the value of the added factor (or factors).
Principle of progression - The principle of progression, as an extension of the principle of conformity, states that between properties that are dissimilar, the value of the poorer property will be affected positively by the presence of the property of more value. The principle of conformity states that land must be utilized to reasonably conform with the existing standards of the area.
Principle of regression - The principle of regression is an extension of the principle of conformity. The principle of conformity states: To maintain maximum value, land must be utilized to reasonably conform with the existing standards of the area. The principle of regression extends that concept as follows: Between dissimilar properties, the value of the better property will be affected adversely by the presence of the property of lessor value.
Principle of substitution - A valuation principle that states a prudent purchaser would pay no more for real property than the cost of acquiring an equally desirable substitute on the open market.
Principle of supply and demand - A valuation principle that states that market value is determined by the interaction of the forces of supply and demand as of the date of the appraisal. According to this principle, if the supply increased but the demand remains constant, price will decrease. If the demand increases but the supply remains constant, price will increase. If both supply and demand increase or decrease proportionately, price will remain relatively stable.
Private access - The term is commonly used by recreational practitioners when referencing private roads leading to cottages properties.
Privity of contract - A basic principle of contract law, stating that, with few exceptions, only the parties to a contract can enforce or be bound by that contract.
Pro forma statement - Pro forma is literally translated from Latin as according to form. For most purposes, the term refers to actual financing statements showing the projected costs and income of an existing or new project. A pro forma statement prepared by a real estate broker usually concentrates solely on cash flow.
Progress advances - Loan advances made on a property under construction whereby the lender makes advances while retaining an amount of the loan which in his/her opinion will be sufficient to complete the building should the borrower be unable to finish it.
Property - Property is either real or personal. The distinguishing factor is mobility, with personal property being movable. Real property is the freehold ownership of land, including the tangible elements (physical elements) and intangible elements (rights that accrue from the ownership of physical real estate). Real estate usually refers to the physical tangible property, while real property is the more all encompassing term that includes both real estate and rights of ownership.
Property condition disclosure statement - During the past several years, various jurisdictions throughout North America have introduced property disclosure forms. These forms provide buyers with a statement from the seller regarding the condition of the main structures and systems in a house. The questions posed on any Seller Property Information Statement, or any similar document, should be carefully reviewed with the seller, completed and signed by the seller. It is important to note the completion of this form by the seller does not relieve the listing broker from those obligations that he/she would otherwise have with respect to ascertaining the condition on the form should be used to assist in meeting those obligations. It also does not relieve the buyer from carrying out their own due diligence.
Property management - Property management represents a specialty field within real estate. Real estate brokers usually become involved in property management as a result of rental or leasing activity.
Prospects - A common term often used to refer to potential buyers of a property.
Provincial associations - In organized real estate, provincial associations are defined to mean any duly incorporated provincial association or territorial association that are members of the Canadian Real Estate Association (CREA) as set out in CREA By-Law No.1, Appendix "A" Rules and Regulations.
Proviso - Exception or limitation relating to an overall statement or agreement.
Quiet enjoyment - A covenant, usually inserted into leases and conveyances on the part of the grantor, promising that the tenant or grantee shall enjoy possession of the premises in peace and without disturbance. In mortgages (often referred as quiet possession), it refers to the mortgagor's right to uninterrupted use of the property when not in default.
Quit claim deed - A general release of all claims or rights to a parcel of land.
Quorum - The minimum number of persons that must be present at a duly constituted meeting of an organization to transact business on behalf of that organization.
Salesperson - According to the Real Estate Trading Act, a salesperson is a person employed, appointed or authorized by a broker to trade in real estate on behalf of that Brokerage.
Seal - An impression made on a document to confirm in a formal manner the signing of a contract.
Security deposit - Money advanced by a commercial tenant and held by an owner or manager for a specific period to cover possible damages and ensure faithful performance of the lease by the tenant.
Septic tank - A watertight container usually made of concrete, steel or fiberglass. It serves as a holding tank that allows heavy solids to settle to the bottom of the tank. Lighter materials that float are also held in the tank. Within the tank, most solids are broken down to gases or liquids. The breakdown takes place as a result of bacteria action, both aerobic and anaerobic. The liquids are discharged from the tank into the tile bed. The gas escapes through plumbing vents.
Servient tenement - Land over which an easement exists in favour of the dominant tenement.
Sill - A level, continuous pad between the foundation top and the bottom of the framing system.
Simple interest - Interest computed on the principal balance only.
Site - A parcel of land that is improved to the extent that it is ready for its intended purpose.
Slab - A reinforced concrete floor between beams, columns, or walls. Also, any large, thin area of concrete such as a wall, roof, or balcony, is a slab.
Slider - A type of window normally identified by single panes of glass sliding on a wood or vinyl track with a simple locking device and pull knobs attached on the surface of the glass. This type of window was popular during the 1960's and is generally regarded as a poorer quality window.
Smoke chamber - The smoke chamber is found above the damper in a fireplace and below the chimney. It is often covered with a special cement parging to provide a smooth surface. The side walls of the smoke chamber are sloped to direct the smoke from the wide damper opening into a narrow chimney flue. The slope of the smoke chamber wall should not be more than forty-five degrees off vertical and should slope evenly from both sides. The smoother the walls of the smoke chamber, the more likely the smoke is to move freely through it.
Specific performance - A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.
Specifications - A detailed and exacting statement of what is to be done, including requirements, dimensions, and materials as in the case of a proposed building.
Special assessment - A tax or levy customarily imposed against only those specific parcels of realty, which will benefit from a proposed public improvement, as opposed to a general tax on the entire community.
Special warranty deed - A deed in which the grantor warrants or guarantees the title only against defects arising during the period of his tenure and ownership of the property and not against defects existing before the time of his ownership.
Standing loan - A commitment by the interim or construction lender to keep the money already funded in the project for a specified period of time after the expiration of the interim loan, usually until permanent take-out financing is secured.
Statement of adjustments - A statement, usually prepared by the solicitor for the seller, setting out in balance sheet form, all credits to the seller (for example, purchase price, prepaid taxes, prepaid utilities, and so on) and all credits to the buyer (for example, deposits, arrears in taxes prior to the date of closing) and the balance due on closing. The Statements of Adjustments provides all parties to the transaction a financial breakdown as of the closing date.
Statute of frauds - That law which requires certain contracts to be in writing and signed by the party to be charged therewith in order to be legally enforceable.
Statute of limitations - That law pertaining to the period of time within which certain actions must be brought to court.
Step-up-lease - A lease with fixed rent for an initial term and provision for predetermined rent increases at specified intervals and /or increases based upon periodic appraisals; sometimes called a graduated lease.
Studding - One of the series of vertical wood structural members (usually 2-inch nominal thickness) used as supporting elements in walls and partitions.
Subagent - An agent authorized by the listing agent to assist in transacting the affairs of the principal (with express or implied consent of the principal) and having the same duties to the principal as the agent.
Subcontractor - A subcontractor performs a particular task under the direction and coordination of the general contractor, who takes on the responsibility of managing the project according to the construction documents.
Subfloor - Transmits the live loads of people and furnishings to the floor joists, and may be covered with a finish or may serve as a finished flooring itself. Historically, one-inch thick wood boards were used. More recently, plywood and wafer boards have been used.
Subjective value - Is created and exists only in the minds of the potential buyers and sellers. It is the price that people will pay for a property, irrespective of its cost. This is differentiated from objective value in which value is associated with the cost of production or cost of creating the property.
Subject to mortgage - A grantee taking title to real property "subject to mortgage" is not personally liable to the mortgagee for payment of the mortgage note. In the event the grantor-mortgagor defaults in paying the note, the grantee could, however, lose property, and thus his equity, in a foreclosure sale.
Sublease - A lease executed by the lessee of a leasehold estate, to a third person, that conveys the same estate for a shorter term, or a portion of the real estate for the same or shorter term.
Subletting - Sublet should be clearly differentiated from assignment of a lease. When an entire interest is transferred, it is said to be assigned. Thus, the tenant as assignor may transfer all of his/her interest to a new tenant, the assignee. The original tenant remains liable for the lease obligations to the landlord. A tenant may assign or sublet at will without the approval of the landlord unless the lease stipulates otherwise. In fact, most leases contain an express covenant that the tenant will not assign or sublet, or a qualified covenant that there will not be any assignment or subletting without prior written consent of the landlord. This clause may be further qualified so that the landlord's consent will not be withheld arbitrarily. In these circumstances the tenant can apply to a judge to obtain approval for any appropriate tenant who intends to use the premises in a reasonable manner. Usually both the tenant and assignee or subtenant will sign a form agreeing to be bound by the main lease and the landlord will consent to this agreement. The parties will pay the landlord's reasonable costs in arranging for this consent and they will include the legal expenses, credit investigations and similar expenses.
Subordination - An agreement, by which a lienholder, a lessee, or one having an interest or claim in or against personal or real property, places the interest behind that of another.
Subordination agreement - An agreement whereby a prior mortgagee agrees to subordinate or give up their priority position to an existing or anticipated future lien.
Subrogation - The act of replacing one person with another in regard to a legal right, interest, or obligation; substitution such as an insured transferring claim rights to the insurance carrier in return for direct payment of the loss.
Summary possession - A legal process used by a landlord to regain possession of the leased premises if the tenant has breached the lease or is holding over after the termination of tenancy.
Surrender - A premature conveyance of a possessory estate to a person having a future interest, as when a lessee surrenders the leasehold interest to the owner of the reversion interest, the lessor, before the normal expiration of the lease.
Survey - The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of houses in a lot including the determination of any existing encroachments or easements.
Survivorship - The right of survivorship is that special feature of a joint tenancy whereby all title, right and interest of a decedent joint tenant in certain property passes to the surviving joint tenants by operation of law, free from claims of heirs and creditors of decedent.
Suspended ceiling -Suspended ceilings are normally built using the exposed T-bar arrangement, but variations exist in which the T-shaped metal framing pieces are either recessed or invisible, following final installation of the suspended tiles or panels. This lightweight ceiling system has proven attractive, owing to its cost efficiency in installation, the ability to reduce unneeded height within buildings, sound deadening qualities and ease of access of mechanical parts of the building.
Tax lien - A general statutory lien imposed against real property for failure to pay taxes.
Tax rate - Based on the value of the property. The requirement that property tax be paid is one of the basic limitations upon the rights of ownership or real property. The basis of the real property tax system is the ad valorem or according to value system. The amount of property tax to be paid by a homeowner is simply a percentage of the value of the real property. To apply the system to any individual property, a municipality must be capable of determining two factors: (1) the value of the property (assessment), and the percentage of value to be paid (tax rate).
Tax shelter - A phrase often used to describe some of the tax advantages of real estate investment, such as deductions for depreciation, interest, taxes, etc., which may offset the investor's other ordinary income to reduce the investor's overall tax payment.
Tenancy at sufferance - A tenancy which exists when a tenant wrongfully holds over after the expiration of a lease, without the landlord's consent, as where the tenant fails to surrender possession after termination of the lease.
Tenancy at will - A tenancy in which a person is in a possession of real estate with the permission of the owner, for a term of unspecified or uncertain duration, as when an owner permits a tenant to occupy a property until it is sold.
Tenancy by the entirety - A special joint tenancy between a lawfully married husband and wife, which places all title to the property into the marital unit, with both spouses having an equal, undivided interest in the whole property.
Tenancy for years - A less-than-freehold estate in which the property is leased for a definite, fixed period of time, be it for 60 days or any fraction of a year, a year, ten years, etc.
Tenancy in common - A form of concurrent ownership of property between two or more persons, in which each has an individual interest in the whole property; frequently found when the parties acquire title by descent or by will.
Tenancy in severalty - Ownership of property vested in one person alone, and not held jointly with another; also called Several Tenancy or Sole Tenancy.
Tenant - In general, one who holds or possesses property, such as a life tenant or a tenant for years; commonly used to refer to a lessee under a lease.
Tenant breaches -
Damages - If the tenant vacates possession, the rent must still be paid until proper termination of the lease occurs. The tenant has agreed to pay a sum and is liable for the total amount. The landlord can sue for damages for any loss resulting from the tenant's failure to pay rent as agreed: however, the landlord must take reasonable steps to mitigate the damages. That loss may include the actual unpaid rent, any deficiency in monies received from a replacement tenant, and the cost of re-renting, including legal expenses and commission paid to a leasing agent.
Forfeiture - The landlord can take possession and terminate a commercial lease if rents is in arrears for fifteen days or if a breach has not been corrected after appropriate notice. The lease terms, or statute, may outline specific requests of notice to be followed, such as notice to the non-owner spouse if it's a matrimonial home. The tenant may be able to obtain relief from the forfeiture by paying all arrears and costs and remedying any other breaches of covenants. This is a discretionary remedy of the court and the tenant must show good faith, and demonstrate that no third party, such as a new tenant, would be prejudiced.
Tenancy types - The relationship of a landlord to the tenant depends on ancient feudal doctrines. Over the years, four major categories have developed.
- Fixed term - The tenant has exclusive possession for a specific term, which is normally agreed to in a written contract. The commencement and expiry date must be determined before the lease takes effect.
- Periodic - A tenancy may be for a fixed period but indefinite length that can be made certain by notice of termination. In other words, the periodic tenancy automatically renews itself (usually on a weekly, monthly, or yearly basis) unless notice is given to the contrary. It should be noted that if a residential tenant remains on the property following the expiration of a fixed term tenancy, the tenancy relationship converts into a periodic tenancy automatically.
- Tenancy at will - A tenancy agreement can occur by contract or by implication from the acts of the parties. An implied tenancy at will may arise when a trespasser occupies premises without rent. An express tenancy at will may arise when a real estate transaction does not close on the scheduled date.
- Tenancy at sufferance - This rare type of tenancy will occur if a person has possession without the consent of the owner and without paying rent. It arises by implication of law, in situations where the tenancy has been terminated but the tenant does not vacate.
Tenant duties - The tenant is one who occupies land or tenement under a landlord. The tenant is given possession of the premises and must treat the premises as would a careful and prudent owner. Following are some typical duties of the tenant.
- Use of the premises: The tenant covenants to use the premises in a reasonable manner, and further promises to deliver up to the premises to the landlord at the end of the term in substantially the same condition as at the commencement of the term.
- Repair: It may be that tenant is granted a lease of the premises and is required to maintain the premises for the term, or the tenant leases the land and with it obtains the building, but the landlord has not warranted the continued existence of the structure. Accordingly, most leases will have specified provisions dealing with the standard of repair, arrangements for insurance, procedures on total partial destruction, and inspections. In current leases the landlord may be obligated only for the exterior structure and the tenant for everything else.
- Insurance: The landlord must insure the building and those contents and obligations that are not the landlord's must be insured by the tenant. Depending on the repair clause, liability provisions and specific provisions (e.g., concerning plate glass and boilers) in the lease, the prudent tenant will deliver a copy of the lease, to an insurance agent to arrange proper coverage that adequately protects the tenant.
- Fixtures: A tenant can remove any personal belongings at the end of the lease term, and may also remove trade fixtures, repairing any damage caused by the removal.
- Rent: The tenant covenants to pay rent without deduction. It must be paid to the landlord on the date it is due. The tenant may not deduct from the rent any claims for alleged breaches of covenants by the landlord. The landlord has a right to receive the rent as consideration for the loss of the exclusive possession of the property.
Tenants-in-common - Ownership of land by two or more persons, but unlike joint tenancy the interest of a deceased person does not pass to the survivor, but is treated as an asset of the deceased's estate. Tenancy-in-common requires only the unity of possession as opposed to joint tenancy that has four unities. Tenants-in-common need not have equal shares of the property and can be terminated by the sale of one tenant's interest to the other tenant(s), the sale of the entire property to another party, or the dissolution of the tenant-in-common relationship by a court order. Upon the death of a tenant-in-common, the interest in the land passes to the individual's estate and does not automatically transfer to the remaining tenants-in-common.
Term - A fixed period of time.
Termination of agreement - Where conditions must be fulfilled and the appropriate party is unable to do so, a notification to the other party to the transaction is required that fulfillment of the condition is impossible and thus the Agreement is terminated.
Thermopane - A brand name (now used generally) for a window-glass construction that has insulating qualities due to two layers of glass separated by an airspace: also called double-glazing, or insulating glass.
Time is of the essence - The clause in a contract, which emphasizes that punctual performance is an essential requirement of the contract.
Timeshare - A modern approach to communal ownership and use of real estate which permits multiple purchasers to buy undivided interests in real property (which is usually in a resort condominium or hotel) with a right to use the facility for a fixed or variable time period. Timeshare ownership, a relatively new concept in property ownership, generally falls under two broad categories.
- Fee Ownership Interest - This carries with is the right to encumber, convey, or otherwise transfer the interest for all future time.
- Right-to-Use Ownership - This is a non-fee interest in the designated property and the purchaser receives no registrable title. Instead, the owner of this interest has a contractual right to enjoy the use of the property for a specific period.
Title - The lawful ownership of property; also, the means of evidence by which the owner has lawful ownership thereof.
Title insurance - A comprehensive contract of indemnity under which the title company agrees to reimburse the insured for any loss if the title is not as represented in the policy.
Title search - An examination of the public records to determine what, if any, defects there are in the chain of title.
Townhouse - A type of dwelling unit, attached to two or more similar units, normally having two floors, with the living area and kitchens on the base floor and the bedrooms located on the second floor.
Trade fixtures - Articles of personal property annexed to leased premises by the tenant, as a necessary part of the tenant's trade or business.
Triple net lease - A net, net, net clause, where in addition to the stipulated rent, the lessee assumes payment of all the expenses associated with the operation of the property.
Topography - Surface features of land, such as elevation, ridges, slope and contour.
Total debt service ratio - The ratio of annual (or monthly) mortgage charges for principal, interest, and taxes; plus payments on various other debts (normally bank or finance company loans etc.), compared with annual gross income of the borrower.
Trading - Includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for sale, exchange, option lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt.
Trade fixtures - Articles installed by a commercial tenant under the terms of a lease and removable by the tenant before the lease expires.
Transaction broker - A person licensed under a regulatory act concerning the trade of real estate who assists one or more parties to the transaction, but not an agent for the interests of either party.
Traps - Traps are provided below house plumbing fixtures and are designed to hold some water in the waste piping system and is designed to prevent sewer odours from coming back through the fixture drain when not in use.
Trust deed - A real property security device (also called a deed of trust) very similar to a mortgage, except that there are three parties, the trustor, the trustee, and the beneficiary (the lender).
Trust-ownership - Ownership in trust exists when the title is in the name of a registered owner who may, in fact, be holding title as a trustee for the real or beneficial owner.
Trust fund account - An account set up by a broker at a bank or other recognized depository, into which the broker deposits all funds entrusted to him by his principal or others.
Turnkey project - A development term meaning the complete construction package from the ground breaking to the completion of the building. All that is left undone is to turn over the keys to the buyer.
Unilateral contract - A contract in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party, such as an open listing contract, where the seller agrees to pay a commission to the first broker who brings in a ready, willing and able buyer.
Upset price - A minimum price set by a court in a judicial foreclosure, below which the property may not be sold by a court appointed commissioner at public auction; the minimum price which can be accepted for the property after the court has had the property appraised.
Urea formaldehyde foam insulation (UFFI) - Urea Formaldehyde is a colourless, chemical compound found in certain resins, glues and bonding agents. Its familiarity to real estate practitioners lies in its use for insulation. UFFI is a low density foam made from plastic resins, a foaming agent and compressed air. At the time of installation, UFFI has the appearance and consistency of shaving cream. While normally identified as a white or cream-coloured substance, at least one product contained blue dye. A controversy arose from the curing process when the product was injected into walls and other areas in residential property, and formaldehyde gas was released. A product ban appeared in 1980 because of potential health concerns. A general consensus now minimizes UFFI as a health concern.
Useful life - That period of time over which an asset, such as a building, is expected to remain economically feasible to the owner.
Usury - Charging a rate of interest in excess of that permitted by law.
Vacancy and bad debt losses - An allowance, often in the 5% range but varying in specific locales, for vacancies in rental units and uncollectible rents from tenants.
Vacancy factor - An allowance or discount for estimated vacancies (unrented units) in a rental project. The vacancy rate is the ratio between the number of vacant units and the total number of units in a specified project or area.
Valuable consideration - Valuable consideration is anything to which a value can be attached, given by the promisee to the promiser. It may be:
- An act in return for an act
- A promise in return for a promise
- An act in return for a promise
Value - The power of a good or service to command other goods in exchange for the present worth of future rights to income or amenities; the present worth to typical users and investors of future benefits arising out of ownership of a property.
Variable rate mortgage - Mortgage in which the interest rate fluctuates during the term and either payments or balance outstanding are adjusted accordingly.
Vendor take back mortgage - Seller retains an interest, by way of a mortgage from the buyer, for the balance of funds owing to the seller upon closing.
Variance - Permission obtained from governmental zoning authorities to build a structure or conduct a use which is expressly prohibited by the current zoning laws; an exception from the zoning laws.
Vendee - The purchaser of realty; the buyer. The buyer under an agreement of Purchase and Sale.
Vendor - The seller of realty. The seller under an agreement of sale.
Void - Having no legal force or binding effect; a nullity; not enforceable. A contract for an illegal purpose (i.e. gambling) is void.
Voidable - A contract which appears valid and enforceable on its face, but is subject to rescission by one of the parties who acted under a disability, such as being a minor or being under duress or undue influence; that which may be avoided or adjudged void but which is not, in itself, void.
Waiver - To voluntarily give up or surrender a right.
Waiver of condition - The relinquishment of some right as set out in a condition within an Agreement.
Walk-up - An apartment building of two or more floors where the only access to the upper floors is by means of stairways.
Warehouse - A building used to store merchandise and other materials or equipment.
Warranty - A guaranty by the seller, covering the title as well as the physical condition of the property.
Warranty deed - A deed in which the grantor fully warrants good clear title to the premises. Also called a general warranty deed.
Waste - An improper use or abuse of property by one in possession of land, who holds less than the fee ownership, such as a tenant, life tenant, mortgagor, or vendee.
Wear and tear - The gradual physical deterioration of property, resulting from use, passage of time and weather. Only property subject to wear and tear is depreciable.
Wood frame wall - Load-bearing walls that carry the weight of the roof and floors down to the foundations.
Working drawings - Detailed floor space plans that diagrammatically show all improvements to be made and are designed as instructions to the various contractors involved.
Wrap-around-mortgage - A method of refinancing in which the new mortgage is placed in a secondary or subordinate position. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount, without cashing out or distributing the existence of the first mortgage.
Zoning - The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, types of structure permitted, building heights, setbacks, and density (the ratio of land area to improvement area).
Zoning amendment - A change to an existing zoning By-Law to permit the development or use of a property that does not comply with the existing zoning By-Law.
Zoning By-Law - A By-Law passed by a municipality to regulate the use of the land and specifically limiting the use of land in certain areas for any purpose other than as set out in the By-Law, and defines exactly what can take place on a parcel of land.