A Adjustment Date: The date on which all adjustments of prepaid expenses, taxes, utilities, rents, interest, and similar items will be calculated. Adjustments: Those items of a financial nature which are to be settled between the parties as of the Adjustment Date. The usual items for adjustment are annual property taxes, water rates, local utilities, garbage removal, Strata Fees, Interest on assumed mortgages, and rents, but can also include fuel in a tank, prepaid cable services, insurance, and any other item for which one or the other of the parties should be compensated before the transaction is fully completed. Amortization: The length of time over which a loan will be retired in full, generally by way of monthy or weekly payments of principal and interest. Amortization Schedule: A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made. Amortization Term: The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months. Annual Mortgagor Statement: A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year. Annual Property Taxes: A tax levied on a property based on the result of multiplying the assessed value time the "Mil Rate" or rate of tax per $1000 of Property value. Annuity: An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis. Appraisal: A determination of the market value of a piece of property done by a qualified professional trained in appraisal techniques and familiar with the local market. The ususal phrase used is... "The value at which a given property will sell, between a willing seller and a willing purchaser, given a reasonable period of time for exposure to the market. Appraiser: A person qualified by education, training, and experience to estimate the value of real property and personal property. Appreciation: An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation. Assessed Value: The value placed on a property for the purposes of determining annual property taxes. Assessed Value multiplied by the "Mil Rate" equals the tax levy for the year. Asset: Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on). Assumption of Mortgage: An agreement allowing the buyer to assume responsibility for the seller's existing mortgage loan instead of getting a new loan in his or her own name. B Base rate (Prime Rate): Generally the lowest interest rate charged by a lender to its most prefered customers. Some loans are expressed as being "X" percentage points above Prime Rate. The Base or Prime Rate plus the percentage agreed upon is used to determine the amount of interest due on a variable rate mortgage loan. Blended Payment Mortgage: A mortgage with blended payments of principal and interest. Generally resulting in the same monthly payment over the term of the loan. C CMHC - Canada Mortgage and Housing Corporation: A Crown Corporation that insures High Ratio (over 75% of the appraised value) mortgages against default. Typical CMHC insurance rates are 1% to 3% of the loan amount. Closing: The act of completing the registration of the Land Transfer to the Purchaser in the Land Title Office, obtaining mortgage funds, if any, and paying out the balance of sale proceeds to the Vendor. Closing Date: The date upon which the closing is to take place. Cost of Borrowing: The annual cost of credit over the life of a loan, including interest, service charges, brokerage, loan fees, CMHC or other mortgage insurance. Conventional Loan: A mortgage loan where the mortgage loan does not exceed 75% of the appraised value of the property and is therefore not required to be insured by a government agency such as CMHC. Convertibility: The ability to change a loan from a variable rate schedule to a fixed rate Covenants: Usually called Restrictive Covenants because they restrict the use of real property. Often required as part of the subdivision process by the approving authority, these are charges registered against the title, and binding upon all subsequent owners. These covenants govern how a property may be used. The most common are Covenants for in favour of the Ministries of Health, Environment or Highways. "Statutory Building Schemes" have the same effect but are declared by the developer as away of maintaining controls on the appearance of the homes in the subdivision and the uses of the properties. D Deed: A deed is the title to your property. Default: Breach of a conract. Failure to do or not to do something that you have agreed either to do or not to do. Density: The number of dwelling units per acre. Allowable densities are determined by the Zoning By-Laws of the local government. Deposit: A sum paid to secure the right to purchase a home or property at terms agreed upon by the buyer and seller. The Deposit should be sufficient to satisfy the Seller that the Purchaser would not willingly forfeit the deposit if he or she found another home more to their liking after the Interim Agreement was made but before Closing. Downpayment: The net difference between the purchase price and the mortgage amount. Due-on-ReSale Clause: A clause in a mortgage contract requiring the borrower to pay out the entire balance owing upon sale of the property. This is called a "Non Assumable Mortgage". Duplicate Certificate of Indefeasible Title: A duplicate copy of the original title which may be signed out of the Land Title Office if the property is free of financial encumbrances. The Duplicate must be returned to the Land Title Office before the owner can deal with his property in any way. As a result, the Duplicate title may be "Hypothecated" or given as security to a lender who will hold the title until the loan is repaid. E Easement: A right-of-way granted to a person or company allowing access to or use of the grantor's land. The most common are utility easements for the servicing of properties with utilities such as water, sewer, gas, and hydro electric power. There are also access easements for driveways and access lanes etc. Encumbrance: A lien or charge, whether financial or non financial, registered against the title to the property. An easement is a non Financial Charge, while a mortgage, Judgement or Claim of Builder's Lien would be a financial charge. Equity: The difference between the appraised value of a property and the debt that is owing against it. F Fee Simple: Ownership without conditions. The English Common Law provided for a number of ways of owning title to land. The word "Fee" meant ownership and additional words added described the style of ownership. "Fee Simple" was simple ownership, without any reservations or terms. An estate limited absolutely to a person and his or her heirs and assigns forever without limitation or condition. The name survives today Fire insurance, All Risk Broad Form Insurance Coverage: Insurance against loss by fire, wind, storm, or other common hazards that a homeowner can purchase. While optional if you own your property outright, it is mandatory if you have a mortgage as the Lender looks to the value of the house on the property for most of its security. In such case you will be required to name your Mortgage lender as the party to be paid first in the case of a loss. Fixed Rate Mortgage: A mortgage with a fixed interest rate for the term of the loan. G Grantee: The Grantee is the buyer, the person who receives the transfer of title to the property from the seller. Grantor: The Grantor is seller, the person who transfers title to to the property to the buyer. H High Ratio Mortgage: A mortgage loan in which the amount borrowed exceeds 75% of the appraised value of the property. In such cases the loan must be insured against default by CMHC at a cost of approximately 2% of the loan. I Interest: The cost paid to a lender for borrowed money. Interim Agreement: The agreement entered into between Buyer and Seller which sets out the purchase price, the property to be transferred, the particulars as to date and terms, and the parties to the transaction. J Joint Tenancy: The form of ownership in which the registered owners of equal interests in the property declare that there shall be an automatic right of survivorship. If one dies, the other automatically becomes the owner of the entire property. The property does not form part of the deceased's estate and is deemed to pass to the surviving owner the moment before death. L Land Title Fees: The fees paid to the Land Title Office for the processing and recording of a transfer or mortgage document. Land Transfer Tax, also called LTT: A tax levied on the transfer of a real property by the Provincial Government. Certain exemptions exist for transfer between spouses or between certain related parties, and there are exemptions for people who have never owned real estate before. Lease: A contract entered into between a Landlord and a Tenant for the rental of a property for a specific period of time. M Mortgage Broker: A licensed professional who places mortgage loans on behalf of clients for a fee with various mortgage lenders, depending on the type of loan and the qualifications of the borrower. To compete with Mortgage Brokers, most banks now have in-house mortgage specialists who are mobile and will come to your home or office to arrange a mortgage loan with their bank. Mortgage Lender: A bank, credit union, trust company, life insurance company or private company that lends money on the security of land, houses, and real estate. Mortgagee: The lender who makes a mortgage loan. Mortgagor: The borrower who grants a mortgage against his property to the lender to secure a mortgage loan. Mortgage Loan: A loan agreement where the security is the borrower's real property. The mortgagor (borrower) agrees to repay the loan, and interest, and during the term of the mortgage to keep the home insured, to pay all taxes and to keep the property in good condition. Mortgage Application Fee: The fee charged by the mortgage lender for preparing a mortgage application, conducting credit checks, etc. O Occupancy Permit: The local building inspector's certification that the property has been fully completed in accordance with the building code and local regulations. P PIT: The standard components of a monthly residential mortgage payment: Principal, Interest, and Taxes. Some lenders do not include the tax component and allow the borrower to pay their own taxes annually. Possession Date: The date on which the prushaser is to take occupancy of the premises. Prepayment Privilege: The right to pay all or part of a mortgage loan in advance of the required payment date. While a standard mortgage does not permit any prepayment, most lenders will allow a borrower to prepay a portion, typically 10% or 15% of the principal, once in each year. They may also allow a similar increase in the monthly payment once in each year. Principal: The amount borrowed, excluding interest and other charges. Promissory Note: A legal document verifying the existence of a debt and an unsecured promise to repay it, setting out the terms of repayment and the interest rate to be paid. S Statement of Adjustments: A Statement prepared to include the purchase price, deposit, real estate commissions, legal fees, property purchase tax, property taxes and all adjustments that should be made between the parties. The net result of the transaction is clearly set out for the vendor or purchaser to see. Statutory Building Scheme: A Special form of Restrictive Covenant that is filed by the developer to establish special building and design guidelines and land use controls for the subdivision which are over and above those of the municipality. Surveyor's Certificate of Location: A survey to determine that the buildings or improvements located on a property are properly situated within the boundaries of the property and that the distance from the buildings to the property lines complies with local regulations. Note that a Surveyor's Certificate of Location does not establish property boundaries. T Tenancy in Common: The form of ownership in which the Registered Owners of interests in the property declare that there shall be no automatic right of survivorship. If one dies, his or her share is distributed in accordance with their Will or the Estate Administration Act, if Intestate. The property forms part of the deceased's estate and passes to the Personal Representative of the Deceased upon filing a Probate Order with the Land Title Office. Title: This is the proof of a person's ownership of a property. The original "Certificate of Title" cannot be removed from the Land Title Office and is in fact only an electronic record. A Duplicate of the "Certificate of Indefeasible Title" may be requested if there are no financial charges registered against the property. This Duplicate Title must be returned to the Land Title Office before the Owner can deal with his property. As such, the "Title" may be hypothecated or used as security for a loan, since the lender knows that the owner cannot dispose of the property without returning the Duplicate Title to the Land Title Office. Transfer: The written instrument, signed by the "Transferor" (seller), and delivered to the "Transfereee" (buyer), by which one person conveys a property to another. V Variable Rate Mortgage: A mortgage loan where the interest rate is adjusted according to movements in the Bank of Canada Discount Rate, or the Prime Rate offered by the lending institution. Most variable rate mortgages carry the option of converting to a Fixed Rate Mortgage at any time. W Walk-Through: A final inspection of the home before closing to inspect the premises for any damage that needs to be corrected by the vendor before closing. Warranty: A promise, either written or implied, that the material and workmanship of a product is defect-free or will meet a specific level of performance over a specified period of time. Written warranties on new homes are either backed by a provincial New Home Warranty Program or by the builders themselves. Z Zoning: Regulations established by local governments regarding the use of land and the location, size and height of any improvements built thereon within a specific area.