The real estate business has a language onto itself and some of the terms that are in widespread usage can be difficult for a neophyte to properly interpret. This Real Estate Glossary features many of the most common terms which you may encounter in the course of a real estate transaction and their relevant meanings.

 

A

B

C

D

E

F

G

H

I

G

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z

A

 

Actual Value

The actual value of a property determined by an assessor. The amount of real estate property taxes payable equal this valuation multiplied by the prevailing tax rate.

 

Adjustment Date

A date specified in the contract for the adjustment or settlement of rent, interest, property taxes, and other financial payments.

 

Agreement For Sale

This is a contract whereby a vendor agrees to sell a parcel of land to a purchaser through a series of payments by instalments. The interest of the purchaser is registered as a charge against the certificate of title belonging to the vendor in the local Land Title Office.

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B

 

Bad Debt Allowance

The estimated total rent which may not be collectible from tenants, it is sometimes called a collection loss allowance.

 

Break Even Point

The rent amount for a number of units or amount of floor space which will exactly equal expenditures.

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C

 

Carbon Monoxide (CO)

A odorless and colorless dangerous gas which is generated as a product of combustion for heating or cooking. CO alarms should be placed in every residence, and regular CO testing is mandatory.

 

Caveat

A note placed on a title to land which specifies that a currently unsettled claim has been made against it.

 

Certificate Of Pending Litigation

The registration of a court action pending against a property's title in order to ensure that no dealings are undertaken with the property while it is in litigation.

 

Chattels

Assets which are not generally affixed to a property, such as electronics, furniture, etc.

 

Caveat

A note placed on a title to land which specifies that a currently unsettled claim has been made against it.

 

Co-Ownership Syndicate

A method of organization whereby any number of investors become the proprietors of an undivided interest in a property.

 

Comparative Method

A way to appraise real estate by basing it on the current pricing of similar nearby properties. It is also known as the Market Method.

 

Conveyance

The transfer of the ownership of a real estate property from one party to the other via a document of transfer. Conveyancing is applied in real estate title transfers, mortgages, leases, and assignments.

 

Counter-Offer

A rejection of an offer made by one party combined with a compromise offering back to the original party for a set of different terms and conditions.

 

Covenant

A promise which is contained in a contract for performance of an act, payment, or function. The party who makes the covenant is known as a covenantor and the party who receives the benefit from the covenant is known as the covenantee.

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D

 

Deed

A document utilized for the transfer of ownership in property from the vendor to the purchaser.

 

Demise

The legal terminology for the granting of a lease contract.

 

Distress

The legal terminology for the right of a landlord to seize the personal property of any tenant who is in arrears of rent and sell it to recover funds.

 

Divided Ownership Syndicate

A method of organization whereby investors become the proprietors of individual units in a condominium.

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E

 

Earnest Money

The funds deposited with a real estate agent by a buyer when making an offer. If the offer is accepted, these funds apply towards the down payment, but if the offer is rejected, the funds are returned to the buyer.

 

Easement

The limited use of another owner's land to benefit or access an individual's property, as in cases where the only way to access a property is through someone else's property. The land which benefits is known as the dominant tenement and the land which grants the benefit is known as the servient tenement.

 

Encroachment

A structure or fixture which violates the property line by intruding into another's property and causing a negative effect of valuation, access, or size.

 

Equity

The amount of difference between the purchase price or current market value of a property and the amount of debt outstanding against the property.

 

Escalator Clause

A specific term used in commercial leases which provides for the landlord to increase the rent amounts owing when specific operating expenses increase.

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F

Fee Simple

The legal terminology to indicate the total and thus maximum amount of ownership in a property available to an individual or entity. This status is essentially the equivalent of total and sole ownership.

 

Fiduciary

An individual who has been entrusted by another party to act exclusively in that party's benefit due to an obligation of a relationship based on trust.

 

Fixture

An item of chattel which is affixed to a property in such a manner that it is according to the law become an integral component of the property.

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G

 

Goodwill

The total amount over and above the purchase price of an ongoing business which is greater than the fair market value of its sum of net assets. Some of the reasons for this over-valuation of a business can include an established business name or brand, employee relations and union contracts, reputation for excellent service and customer relations, and any other business attributes which can be termed to be intangible but contribute to the overall value of the business on the part of the purchaser.

 

Gross Lease

A form of lease where the landlord is responsible for all of the operating expenditures and thus the tenant has only one single rent payment to make which covers all of the financial contribution towards the lease.

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H

 

Historic Cost

The amount of money, not adjusted for inflation, that was invested at the time that the particular improvements or structures were constructed, or assets were purchased.

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I

 

Injunction

An order from a court which acts to either require a party to perform an obligation, or restrains one from performing a specific act.

 

Insurable Value

The value estimate of a specific property for the purposes of securing insurance coverage.

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J

 

Joint Tenancy

An undivided and equal interest in a property from a number of individuals. When one of the parties dies, that share automatically becomes divided among the surviving member(s) of the property ownership group.

 

Joint Venture

A business arrangement where a number of business organizations form a collaborative grouping to undertake a specific task or service. In these forms of agreements, all taxes, profits and losses are shared in a proportionate manner by all participants.

 

Judgment

The award granted by a court of law to a successful party in a litigation procedure. This award could include a financial sum which the unsuccessful party must pay to the successful party, but can also be a transfer of assets or other services.

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K

 

L

 

Land Transfer Tax

A tax which some provinces levy on properties where the ownership is transferred.

 

Legal Disbursements

A portion of the legal expenditures incurred during a real estate transaction which the lawyer pays out to other providers of services on your behalf.

 

Lien Holdbacks

An amount of money held by a lawyer for a specific amount of time to allow for payments of any liens or charges that may be applied towards the title of the property because of lack of payment for labour, materials, or other construction disputes.

 

Limited Liability

A legal principle stating that a limited partner or shareholder is only liable for the amount that the individual or entity has invested into the company, and their other assets cannot be included in any debt collection action.

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M

 

Maintenance Fee

The fee charged to unit owners in a condominium or cooperative structure to represent that individual's share of the costs which maintain the common-use sections of the complex in proper condition.

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N

 

Net Lease

A type of lease where the tenant is responsible for all or a portion of the operating expenditures.

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O

 

Offer

A written proposal to perform or refrain from performing a particular action, which is generally followed by the expectation of acceptance of the offer, the rejection of the offer, the receipt of a counter-offer, or further negotiations. The entity which makes the offer is referred to as the offeror, while the entity which receives the offer is referred to as the offeree.

 

Open Listing

A property listing granted to a number of licensees with the understanding that the sole compensation will be paid to the single licensee who is first able to provide a buyer who purchases a specific property.

 

Option To Purchase

A contract specifying a right to either accept or reject a particular offer to purchase a property within a predetermined time span.

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P

 

Possession Date

The actual predetermined date on which it is provided for the buyer to take possession of a specific property.

 

Power Of Attorney

An agreement where one individual or entity entitle one specific individual to act on their behalf.

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Q

 

Quiet Enjoyment

The right of a property owner or tenant under the law to enjoy use of the property in an uninterrupted manner and free from interference.

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R

 

Radon

A naturally occurring, odorless and colorless dangerously radioactive gas which can collect in the attics, basements and other confined areas of buildings. Radon tests can determine if the gas is present and steps must be taken to vent it out.

 

Real Estate Syndicate

Any type of organization where a number of investors have a share in the ownership of a specific real estate property.

 

Restrictive Covenant

An agreement which restricts the specific use of a property of the covenantor (the servient tenement) for the benefit of a property which belongs to the covenantee (the dominant tenement). These types of covenants are put into place in specific situations where one property wants to preserve sight lines, quiet, preservation from erosion, and other effects.

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S

 

Sales Taxes

Federal, provincial, or territorial government levied taxes which apply to the purchase cost of some properties.

 

Servient Tenement

A property which has an easement or other similar right such as a restrictive covenant placed upon it.

 

Soft Costs

Significant expenditures which are over and above the fundamental costs of acquiring land and constructing structures.

 

Statutory Declaration

A statement of factual information similar to an affidavit made in writing and sworn to be accurate, generally in the presence of a notary public or lawyer.

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T

 

Tax Rate

The percentage rate of the amount in dollars per $1,000 of actual value that is payable in annual property taxes. Also called Mill Rate.

 

Title

A title conveys upon the holder the complete and total ownership of the property indefinitely. In the form of ownership found in condominium organizations, the common elements of structure(s) as well as the land are all owned in a collective fashion by the sum of the unit owners, in addition to the individual units being owned exclusively by each individual or entity.

 

Triple Net Lease

A type of lease where all of the regular operating expenses are borne by the tenant directly.

 

Trust Account

An account where funds are deposited by one party for the benefit of a second party with the understanding that the money is specified for a predetermined purpose and should not be utilized for anything else.

 

Trust Syndicate

A form of organization syndicate where investors band together in order to hold property in an indirect manner in the format of beneficiaries under a trust agreement. In some cases, this form of agreement is referred to as a Real Estate Investment Trust (REIT).

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U

 

Undue Influence

Any improper or wrongful constraint, manipulation, or persuasion whereby the will of a person is overpowered and he is induced to do or refrains from doing an act which he would not do or would do if left to act freely.

 

Unlimited Liability

An obligation for a business borrower to pay creditors from their own personal assets if the company which has incurred the debt cannot satisfy the demands.

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V

 

Variable Expenses

The expenditures which will generally vary due to the percentage of a property that is occupied. For example, if a floor in an office building is not occupied, the janitorial, common area lighting, and other expenses can be eliminated.

 

Voidable Contract

A contractual agreement which is in force until such time as a party which is empowered to do so terminates it, and renders the contract null and void.

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W

 

Warranty Of Authority

A guarantee or a promise from an agent to any third parties that the actions that they are performing are fully within the scope of the authority granted to them by the principal party. Any agent who violates this specific scope of authority is considered to be in breach of the warranty of authority.

 

Wrap-Around Mortgage

A subsequent, secondary mortgage duly registered on the property's title, which encompasses a mortgage that existed prior to its implementation. This mortgage may be equivalent to the original amount, or may be larger in order to provide the borrower for additional funds for the purposes of home improvement, business assistance or other reasons.

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X

 

 

Y

 

Yield

The appreciation of an investment's value and / or income as a ratio of the original purchase price of that particular investment. If a property was sold for $500,000 and the assessed valuation of that property is $575,000 one year later while it has generated a total rental income of $25,000 during that year, then the investor's yield is calculated as: $75,000 + $25,000 = $100,000: $100,000 ÷ $500,000 = .2 or 20%.

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Z

 

Zoning Bylaws

A regional or municipal statute which restricts, specifies, or otherwise conditions the use of land within that jurisdiction.

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