Glossary of Terms

Disclaimer: These terms and definitions are provided for educational purposes only. Although they are believed to be accurate, HOMES Publishing Group is not responsible for any deficiencies, defects, errors, omissions, completeness, suitability, accuracy, currency, or applicability of contents contained herein.

A

Accelerated payments: A mortgage payment option whereby the monthly mortgage payment is either split in half or in quarters and is paid every two weeks (bi-weekly) or every week (weekly).

Accessibility: A building design concept that relates to individuals with disabilities. It refers to building features that facilitate entry or use by individuals with physical and/or sensory impairments.

Accredited mortgage professional: A national designation for mortgage professionals in Canada issued by Mortgage Professionals Canada.

Addendum: A document that is attached to, and made part of, an original contract as a result of making changes to elements that have already been agreed to.

Adjustable rate mortgage: A mortgage where the interest rate and payments are increased or decreased at predetermined intervals based on a lender’s rate market review. The interest rate charged on the mortgage may be linked to the lender’s prime rate or a pre-selected index rate.

Adjustments: The financial calculations made regarding the costs for the respective parties associated with a mortgage or real estate transaction at the time of closing (e.g. property taxes). Also see Closing and Closing costs.

Affidavit: A formal written statement of fact sworn to or affirmed by the author and witnessed as to the authenticity of the author’s signature before a person such as a notary or commissioner of oaths who is authorized to administer an oath.

Affordability: The ability of an individual to carry the cost of ownership of a property in relation to his or her available income.

Agency: A consensual relationship created by contract or bylaw where one party, the principal, grants authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party and where the agent accepts responsibility for representing the principal.

Agency law: The body of law applicable to consensual relationships in which one person (i.e. the agent) consents to act on behalf of another person (i.e. the principal), and thereby legally binds the principal in his or her connection with a third person.  Also see Agent and Principal (Agency).

Agent: An industry professional who is expressly or implicitly authorized to act or represent another party.

Agreement of purchase and sale: The document that is used to state the buyer’s desire to purchase the property, and to negotiate the terms of the sale. It is commonly referred to as an Offer. This document also allows the buyer a chance to outline in detail all of the conditions they wish to be placed in their Offer to buy the seller’s property. After the Offer is prepared and signed by the buyer, it is presented to the seller for acceptance. The seller, in turn, may want to make changes to the Offer for the buyer to consider. This process can continue back and forth several times in an effort to reach an agreement.

Agri-business: The businesses that are involved in the production, storage, processing and wholesale marketing of agricultural products.

Agricultural building: A building used for the production of food or other goods through endeavours such as farming, ranching or forestry.

Amendment: A document that records a correction, addition, deletion or other changes to any previously agreed-to terms in the original contract.

Amortization: The gradual retirement of a debt by means of installment payments which often includes principal and interest.

Amortization period: The length of time required to repay a mortgage by equal installments of periodic constant payments based on a set interest rate. The payments are typically a combination of principal and interest in blended amounts.

Amortization schedule: A table illustrating the amount of principal and interest that comprise each of the periodic installments and the outstanding principal balance of the loan after each level payment is made.

Annual General Meeting: A meeting at which the board of directors and all members of a condominium corporation gather to elect directors for the forthcoming year as well as discuss the finances, current issues and future plans for the condominium corporation. An annual general meeting must be scheduled within six months of fiscal year-end.

Annual percentage rate: The interest rate stated on a yearly basis that represents the cost of a mortgage.

Apartment condominium: A style of residential condominium involving units that are part of a building and attached to each other on one or more sides. This condominium style has a shared entrance, usually through the building lobby.

Applicant (mortgage): Refers to all borrowers, co-borrowers and guarantors on a mortgage loan application.

Appraisal: A formal, impartial estimate or opinion of value, usually written, of a specific and adequately described property, as of a specific date and supported by the presentation and analysis of relevant data pertinent to a property.

Appraisal assignment: An agreement between a real estate appraiser and a client to provide a valuation service on real estate.

Appraisal Institute of Canada: A national, member-based association that offers real estate appraiser designations in Canada.

Appraisal process: A systematic analysis of the factors that bear upon the value of real estate. It consists of an orderly process by which the problem is defined, the work necessary to solve the problem is planned, and the data involved are acquired, classified, analyzed, and interpreted into an estimate of value.

Appraisal report: A formal report detailing an opinion of value of a property based on the findings of a real estate appraiser. The report must state the purpose of the appraisal, the date of the appraisal and be signed by the appraiser.

Appraisal review: The act or process of re-examining an appraisal report as to its completeness and accuracy and to ensure compliance with the applicable appraisal standards.

Appraiser: An individual authorized to perform real estate appraisal services for a fee. A real estate appraiser is an accredited professional whose main service typically involves estimating the value of real property at a specified date in a manner that is independent, impartial and objective.

Area measurement: A type of measurement that represents the physical surface or spatial area that exists within rooms, buildings or to define a lot. This measurement represents the two-dimensional relationship created by multiplying the width of an item by its depth.

Arrears: Past due payments.

Asking price: The amount of money that a seller is asking or intends to ask for his or her property.

Assessed value: The value placed on real property by a municipality as a basis for determining property taxes.

Assessment: The process of determining the property value for taxation purposes. Assessment is used to determine the property owner’s proportionate share of municipal taxes on an annual basis.

Assigned parking stall: A parking stall that is part of the common property and is therefore owned collectively by the condominium corporation. When a parking stall is assigned, the board of directors is effectively granting a unit owner sole benefit of that parking stall. The board of directors can choose to reallocate the assignment whenever they wish.

Assigned storage area: A storage area that is part of the common property and is therefore owned collectively by the condominium corporation. When a storage area is assigned, the board of directors is effectively granting a unit owner sole benefit of that storage area. The board of directors can choose to reallocate the assignment whenever they wish.

Assignee: A person to which an assignment (transfer) of property, rights or interest is made.

Assignment: The act of transferring an interest in real property to another.

Assignment of mortgage: An agreement that consists of the transfer (i.e. selling) of an interest and all rights in the mortgage contract and the security in the property to a new lender or third party in return for payment of money.

Assignor: A person who makes a transfer under an assignment.

Association of Ontario Land Surveyors (AOLS): A self-governing association, responsible for the licensing and governance of professional land surveyors, in accordance with the Surveyors Act of Ontario.

Assumable mortgage: The process of an individual acquiring the title and access to a property that has an existing mortgage registered. Lenders typically require the individual to qualify under the terms and conditions of the existing mortgage before allowing the mortgage assumption to occur.

Assumption: The act of taking possession of mortgaged property whereby the buyer accepts liability for the debt and takes responsibility of seller’s existing mortgage at the interest rate and terms as laid out in the original mortgage documents. The seller remains liable to the mortgage lender unless the lender agrees to release the seller from the debt obligation.

Attached goods: An improvement or personal property item attached to the real property or building. Whether an item becomes a fixture depends largely on the circumstances, with emphasis placed on the method of how the item is affixed to the property. Also see Fixtures.

Attributed knowledge: A concept under the common law that presumes all real estate professionals registered with the brokerage share information and advice and have knowledge of confidential information concerning all the clients of the brokerage.

Auctioneer: A person who engages in the business of selling or offering for sale by public auction, goods, wares, merchandise or effects of any kind.

B

Backup offer: A backup offer is when a buyer submits an offer on a property that is already conditionally sold. If the seller accepts the backup offer, it would be next in line if the conditions are not satisfied on the conditional offer that is already in place.

Back-to-back townhouse: A row of homes that share back walls with each unit facing onto parallel streets.

Balance: The amount of unpaid mortgage remaining after a payment has been made.

Balanced market: A real estate market condition where demand from buyers is in equilibrium with the supply of properties.

Balloon payment: A final payment of the mortgage made on the maturity date to retire the debt in full. Such payments are most common in commercial mortgaging.

Basement: A type of foundation that consists of an enclosed space constructed in whole or in part below ground level. Due to the depth to which holes must be dug to construct basements, they can often be used as habitable space by a building’s occupants.

Basis point: A unit of measure equal to 1/100th of 1 per cent that is typically used in quoting changes in interest rates or yields in debt securities including mortgages.

Beacon score: A number that is generated by the Equifax Credit Bureau to rank the credit-worthiness of individuals.

Bilateral contract: A legally enforceable agreement where the parties are bound by their exchange of mutual promises.

Blanket mortgage: A single mortgage registered against two or more pieces of real property.

Blended payments: The periodic mortgage payments of principal and interest where the payments remain constant in amount, although the portions attributed to principal and interest will vary with each payment as the time elapses in the amortization period.

Board meeting: A meeting at which only the board of directors gather to address the affairs of the condominium corporation. However, if the board of directors relies on any advisors (e.g. professional condominium manager), they may be asked to attend. Board meetings occur at regularly scheduled intervals.

Board of directors: A group of individuals who are elected by unit owners to carry out the duties and responsibilities of the condominium corporation according to the rules and procedures set out in the bylaws and governing policies of the condominium.

Borrower: The party who obtains financing from a lender with the agreement that it will be repaid, with interest, within a defined timeframe.

Breach: A failure to fulfill an obligation under a contract.

Bridge loan: A loan of short duration (i.e. up to one year) with a higher interest rate intended to cover immediate cash requirements until permanent financing is secured.

Broker: The individual authorized by the Real Estate Council of Ontario to hold the classification of broker as defined in the Real Estate and Business Brokers Act. The broker is responsible for the operation of the brokerage and the supervision of all its employees. The broker must be registered with the brokerage that he or she manages in order to trade in real estate or deal in mortgages. There can only be one broker for each brokerage.

Brokerage: The company, partnership or sole proprietorship licensed by the Real Estate Council of Ontario as a real estate brokerage authorized to trade in real estate or mortgage brokerage authorized to deal in mortgages. A brokerage must have a broker responsible for its operation.

Building codes: Provincial standards for the design, construction and alteration of buildings to ensure the safety of future occupants and visitors to the premises. Ontario Building Code regulates the construction and safety of structures for both old and new buildings. Standards set by the codes include electrical wiring, fire alarm systems, fire extinguishers, emergency routes, occupancy limits, lighting and ventilation. These codes exist in addition to the requirements of the municipal land use bylaws.

Building infrastructure: A core component of a building that participates in making a safe, healthy and comfortable environment for occupants.

Building permit: The formal permission provided by a municipality for new construction or modification of an existing structure.

Building structure: A core component of a building that creates the overall framework of the building.

Building system: A core component of a building that either contributes to the creation of the overall framework or participates in making a comfortable indoor environment for occupants.

Business assessment: A value placed on a premise occupied for the purpose of, or in connection with, operating a business for taxation purposes.

Buyer: An individual who is in the process of purchasing real estate and enters into a purchase contract to that effect.

Buyers’ market: A real estate market condition where property supply is strong and buyer demand is weak.

Bylaws: A set of directives that govern the affairs and behaviour of a condominium corporation and individual unit owners. They work in conjunction with the Ontario Condominium Act and empower the condominium corporation to control, manage and administer the units and common property. Bylaws may only be created, amended or repealed through the passing of special resolutions by the condominium corporation.

C

Canada Mortgage and Housing Corporation (CMHC): A federal crown corporation mandated to promote the construction of new houses, the repair and modernization of existing houses and the improvement of housing and living conditions, including the establishment of mortgage default insurance for lenders.

Canadian National Association of Real Estate Appraisers: A national, member-based association that offers real estate appraiser designations in Canada.

Canadian Residential Appraiser: A designation granted by the Appraisal Institute of Canada.

Canadian Uniform Standards of Professional Appraisal Practice: A generally accepted and recognized standard of appraisal practice for real property valuation adopted in Canada and by certain Canadian appraisal associations and organizations.

Case law: The body of legal decisions where the court has interpreted legislation when applying it to a specific set of facts. Court decisions can be made at various levels within the judicial system (e.g. Provincial Court, Court of Queen’s Bench, and Court of Appeals provincially and the Supreme Court of Canada federally). The decisions of a higher court may alter decisions made by lower courts, and the prior decisions of courts will influence future court decisions. Therefore, case law is based on judicial precedent rather than statutory law.

Cash back: A mortgage feature whereby the lender refunds a sum of money either as a percentage of the mortgage principal or as a lump sum.

Caveat: A legal notice registered against the title of a property warning that a claim or an interest has been made against the property by a third party. Caveat in Latin means “let him beware” and must be in writing. The registration of a caveat is only notice of a claim and does not relate to the validity of the claim being made.

Caveat emptor: A doctrine of the common law that translates into “let the buyer beware.”

Certificate of title: A document that records the information about the land, such as the legal land description, municipal jurisdiction, ownership and registered interests.

Certified Appraisal Reviewer: A designation granted by the Canadian National Association of Real Estate Appraisers.

Certified Mortgage Appraisal Reviewer: A designation granted by the Canadian National Association of Real Estate Appraisers.

Charge: The name given a mortgage when registered under the Land Titles Act.

Chattel mortgage: An agreement that charges the borrower’s personal property identified in the agreement as security for a loan. A lender may take security on personal property in order to enhance the extent of their security for a loan. This may be the case when borrower’s real property is insufficient for a lender to proceed with the loan.

Chattels: The movable items not securely affixed to the land or buildings, as furnishings and appliances that are not considered part of the real property. They may be referred to as personal property.

Claimant: A person who applies or has applied for payment of benefits or financial compensation.

Client: The party in a real estate transaction that is represented by a real estate professional. As per the rules, a client is a person who has entered into a service agreement with an industry member whether or not that service agreement is in writing.

Closed mortgage: The restriction or denial of repayment rights until maturity of the mortgage.

Closing: Finalizing a real estate transaction, which includes signing of the title documents, calculations of adjustments and disbursements of funds.

Closing costs: The total costs for the respective parties associated with a real estate or mortgage transaction. Closing costs are typically due on the closing date, which is the date at which the real estate or mortgage transaction is finalized.

Closing date: The date when the financial adjustments are made for each party in a real estate or mortgage transaction. In real estate, it is the date when the title to the property transfers to the new owner, after which, the new owner assumes financial responsibility for the property.

Collateral: A borrower’s pledge of specific property to a lender to secure the repayment of the loan by the borrower.

Commercial building: A building intended for business use.

Commercial condominium: A condominium that consists of units within an office tower, lowrise/single-level business centre or single-purpose facility, such as medical, dental or professional offices.

Commercial lease: A type of contract granting temporary use or occupation of a commercial property for a specified period in exchange for a specified amount of rent.

Commercial property: The real property used to conduct retail or service businesses with the prime objective of making a profit.

Commission: The remuneration paid for services as an agreed fee or percentage of sale price or property lease.

Common area: The physical space that is not considered to be part of a unit within a condominium and that is owned by a condominium corporation. Also see Exclusive use common area.

Common law: The accumulated legislation that is enacted by the courts. The courts create laws based on decisions (i.e. precedents) that were made previously by the same or different courts.

Common property: The physical space that is not considered to be part of a unit within a condominium and that is owned by a condominium corporation. Also see Exclusive use common area.

Common property expenses: The expenses associated with the maintenance, repair and replacement of the common property of the condominium corporation.

Comparative market analysis: A method of property valuation used by real estate professionals for estimating the value of residential properties.

Compensation: Payment for performance of service.

Competing interests: When the interests of clients represented by the same brokerage compete with each other in regards to a real estate transaction or potential transaction.

Complainant: A person who files a formal written complaint to the Real Estate Council of Ontario.

Complaint: A formal written statement made by a person concerning an industry professional’s alleged failure to follow the standards of business practice as set out by the Real Estate Council of Ontario.

Compound interest: Interest that is calculated on the initial principal amount and the accumulated interest of prior periods.

Condition: An aspect of a contract that serves as an impediment to an enforceable contract, until such time as it has been satisfied or waived. Conditions are typically placed in a contract by a party to that contract in order to protect its interest(s) and include a specific period of time after which the condition(s) will expire. Each condition may have the same or a different expiry. Real estate purchase contracts may include conditions added for the benefit of the seller, buyer or lender.

Conditional offer: A conditional offer sets out the terms of the sale such as the purchase price, the date of closing, the names of the parties, and the amount of any required deposit, but it also includes conditions that must be met within a specified period of time in order for the contract to be binding on the parties. These conditions could include a satisfactory home inspection or financing acceptable to the buyer.

Conditional sale: Is a real estate transaction where the seller has accepted the buyer’s conditional offer.

Condominium fees: The monthly fee set by the board of directors and paid by a unit owner to the condominium corporation. These are expenses associated with the maintenance, repair and replacement of the common property of the condominium corporation

Condominium: A form of property ownership that includes both the individual ownership of a unit and the shared ownership of common property with other unit owners.

Condominium bylaws: Rules that govern the affairs and behaviour of a condominium corporation and individual unit owners. They work in conjunction with the Condominium Act and empower the condominium corporation to control, manage and administer the units and common property. Bylaws may only be created, amended or repealed through the passing of special resolutions by the condominium corporation.

Condominium corporation: A legal entity that consists of all unit owners within a condominium.

Condominium documents: The package of documents (Status Certificate) that relate to the structure, finances and management of a condominium. The wide range of documents provides important information to industry professionals and to the sellers, buyers, borrowers and lenders with whom they work. Various documents related to the condominium may be obtained from the seller, member(s) of the board or the property manager, as the case may be.

Condominium insurance: The corporation is responsible for acquiring and renewing insurance for the common property. Insurance coverage typically includes the common perils to property (e.g. fire), general liability and liability for the board of directors of the condominium corporation.

Condominium manager: An individual or company that carries out some or all of the duties of a board of director and condominium corporation. They must hold a Registered Condominium Manager certification.

Condominium unit: The separate parts of the overall condominium plan that are designated for private ownership and exclusive use of the owner. The unit boundaries and the unit factor for each unit are defined by the Condominium Plan.

Confidential information: Any information concerning a client, such as his or her financial information, personal situation, or the details of a real estate, mortgage brokerage or real estate appraisal transaction.

Conflict of interest: A situation that undermines the impartiality of a person. A conflict of interest arises when there is a real or apparent incompatibility between an industry member’s interests and the interests of a client or potential client.

Conservation easement: A voluntary agreement between a landowner and a government agency or conservation charity that limits the amount and type of development which can occur on the landowner’s property in order to preserve the ecological and/or natural portions of his or her land.

Contingent fee: A form of compensation for services provided that is dependent on the result of the service.

Contract: A binding agreement, enforceable by the courts, made between two or more persons, competent at law to enter into such agreement, for consideration or value, to do or refrain from doing some lawful and genuinely intended act. A contract can contain any number of promises or terms to be performed by either party. The underlying intention of any contract is that it shall be binding on the parties.

Conventional mortgage: A mortgage where the loan amount does not exceed 80 per cent of the appraised value or purchase price of the property.

Conversion condominium: A condominium that involves the creation of units and common areas in an existing building. Conversion condominiums typically involve buildings which previously offered rental accommodation or leased space, such as apartment buildings, offices, hotels, warehouses or storage facilities.

Conveyance: The transfer of an interest in property from one person to another through written documentation to affect such a transfer.

Co-operative housing: A corporation of shareholders with a common interest or purpose. In a housing co-operative, individuals own shares in the corporation but do not own the units. The occupancy right to the space is provided under a tenancy agreement with the corporation.

Cost of credit: The difference between the value received by a borrower and the value given by the borrower to the credit grantor in connection with a credit agreement.

Court order: A legally binding decision issued by a court that requires a party to do or refrain from doing a specified act.

Covenant: A written agreement or promise usually under seal between two or more parties for the performance of an action. In mortgage brokerage, it refers to the clauses in a mortgage agreement that establishes the rights and obligations agreed to by the borrower and the lender.

Crawl space: A type of foundation that is typically shorter in height than a basement. Crawl spaces are not tall enough to provide habitable space for use by building occupants but they can accommodate some components of the building infrastructure.

Credit bureau: An agency that collects, records, stores and distributes credit and personal date files to authorized lenders (creditors) for a fee.

Credit report: A record detailing an applicant’s past borrowing and repayment history.

Credit score: A numerical expression based on a statistical analysis of a person’s credit files which represents the creditworthiness of that person.

Current Real Property Report: A legal document produced by a land surveyor that clearly illustrates the boundaries of a property and the location of improvements to the land relative to the boundaries. It also illustrates other issues impacting the property, such as rights-of-way, easements, encroachments, etc. In addition, it may contain a surveyor’s opinion or concerns regarding these items. A current real property report (RPR) illustrates the up to date improvements on the land and their relationship to the property boundaries whereas an existing RPR may not illustrate the current state of a property if any improvements were made to the land since the date of the RPR.

D

Damages: Monetary compensation that is awarded by a court in a civil action to an individual who has been injured through the wrongful conduct of another party.

Dealing: Describes the activities relating to the provision of services for soliciting, negotiating and collecting funds related to mortgage transactions.

Debt: The financial amount that is owed as a result of borrowing funds.

Debt ratio: A comparison of the total monthly payments of a borrower’s debt to his or her income. It is used to determine whether the borrower can afford the debt obligation.

Debtor: A person who has the obligation of owing money to another party.

Default: The failure to fulfill contractual obligations such as the failure to make mortgage payments.

Default charge: A charge imposed on a borrower who fails to make a payment as it comes due under a credit agreement or who fails to comply with any other obligation under a credit agreement, but does not include interest on an overdue payment.

Defendant: A person or organization against whom legal action is brought against in a court of law.

Demand clause: An option protecting and benefitting the lender that provides for the lender to demand immediate repayment of a loan in full.

Demand letter: A formal letter usually drafted by the lender’s lawyer, under a mortgage foreclosure, stating a legal claim and demanding immediate payment of the debt. The letter also outlines the specific terms and time period to perform the obligation without being taken to court.

Deposit (condominium): A sum of money given by an owner to the condominium corporation to maintain, repair or replace common property that may be damaged, destroyed, lost or removed by a tenant of the owner.

Detached house: A single-standing residential house that sits alone on its own lot.

Detached condominium: A style of residential condominium that has stand-alone, separate units.

Developer (condominium): A person who, alone or in conjunction with other persons, sells or offers for sale to the public units or proposed units in a condominium that have not previously been sold to the public by means of an arm’s length transaction.

Development permit: A permit, issued in advance by the municipality, indicating approval for the overall use and planned construction for a particular parcel of land.

Direct market comparison: A frequently used appraisal method for residential properties that compares and analyzes the sale of similar properties with the subject property. The sale price of the comparable properties is adjusted to account for the similarities and differences in the characteristics of the subject property.

Discharge: To release a person from an obligation.

Discharge of mortgage: The repayment of a mortgage and the legal document which confirms that the borrower is under no further liability to the lender in respect of the loan.

Disclosure: The act of revealing knowledge and making information known. An industry professional is responsible to disclose openly and honestly all matters which are relevant or could result in a conflict of interest.

Disposable income: The amount of after-tax income households have available for spending and saving. It is one of the economic indicators used to gauge the overall state of a nation’s economy.

Disposition: The act of distributing or transferring property or any right, interest or estate in land to another party.

Dissolution: The termination of a contract or other legal relationship such as a business or marriage.

Down payment: The part of the purchase price of real property the buyer pays in cash and does not finance with a mortgage.

Drug laboratory: Any property that has been leased or bought by persons in order to use it to manufacture, process, cook, dispose of, or store illegal drugs.

Due-on-sale clause: A provision in a mortgage contract that requires the mortgage be repaid in full to the lender upon a sale or conveyance of interest in the property that secures the mortgage.

Duty of care: The duties owed to one party by another which include, honesty, reasonable care and skill and performance of the agreed upon functions.

Dwelling unit: A unit in a residential condominium.

E

Easement: A right acquired by one party to use the land of another. Once registered on title, an easement is a binding interest in the land that runs with the land regardless of any change in ownership.

Effective age: Age indicated by the condition and utility of the structure. Used to describe a building whose condition suggests an age different than its chronological age.

Effective date: The date upon which an agreement such as a contract is considered to take effect.

Effective interest rate: The actual interest rate on investment where a debt or loan was bought at a discount or at a premium. Also known as true cost.

Electronic records: Accounts, books, returns, statements, reports, financial documents or other memoranda of financial or non-financial information that are created, recorded, transmitted or stored in digital form or in any other tangible form by electronic, magnetic or optical means or by any other means that have similar capabilities for creation, recording, transmission or storage.

Eligibility: The process of determining an applicant’s qualifications required for authorization as an industry professional.

Empirica score: A number that is generated by TransUnion Credit Bureau to rank the creditworthiness of individuals.

Encroachment: A structure that is placed, erected, or built on an adjoining property. It also applies to soffits and eaves that overhang the adjoining land.

Encroachment agreement: An agreement between the property owner and an adjacent property owner to condone a building or structure built on the adjacent property, be it private property or municipal property. The agreement sets out the terms and conditions for the intruding structure to remain and grants an easement to allow that owner to enter onto the adjoining property to maintain or repair the structure. The agreement is registered on the title of all properties it affects.

Encumbrance: The registered interests on the title of land that affect or encumber the title.

Environmental hazard: A substance, object or condition with the potential to impair a property and/or the health and/or safety of its occupants.

Environmental risk: A situation in which a property and/or its occupants are exposed to danger.

Environmental site assessment: A process that determines whether or not a property is contaminated and if so, to what extent and how to best remediate it.

Equitable mortgage: Any mortgage subsequent to the first mortgage in priority (e.g. second mortgage, third mortgage). After the first mortgage, subsequent mortgages rely on the remaining equity in the property as security for the loan.

Equity (financial): The money left over if an individual or organization paid all of its liabilities, collected all that was owed it and sold all its assets.

Equity (mortgage financing): The difference between the market value of the property, less the outstanding balance of the mortgage, less any other financial obligation registered against the property.

Equity mortgage: A loan that is obtained against the equity in a property and registered as a mortgage on the title of the property.

Errors and Omissions Insurance: A form of business liability insurance intended to cover damages resulting from errors, omissions and negligence by professionals that occurred in the course of providing their business services.

Escrow: A deed, bond, money or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition.

Estoppel: A person (the principal) acts in such a way as to lead a third party to believe that another party (the agent) has the authority to act on behalf of another. Note: this term should not be confused with an Estoppel Certificate.

Estoppel Certificate: A signed statement from the condominium corporation that confirms the financial information it provides regarding a unit is correct as of the date on the statement and can be relied on by a third party. Upon issuing the Estoppel Certificate, the condominium corporation is barred from changing any of the statements it has certified as correct.

Exclusive representation relationship: A real estate relationship between a brokerage and a client that gives the brokerage the sole right to represent the client in a trade or potential trade in real estate.

Exclusive use common area: Common property owned by the condominium corporation that is permanently attached to individual unit. When an area of the condominium has been deemed to be for the exclusive use of a unit owner, only that owner is permitted the enjoyment that area provides.

Exclusive use parking stall: A parking stall that is part of the common property and therefore owned collectively by the condominium corporation. The use of this parking stall is leased to an individual owner. Responsibility and care for this parking stall is often delegated to the unit owner.

Exclusive use storage area: A storage area that is part of the common property and therefore owned collectively by the condominium corporation. The use of this storage area is leased to an individual owner. Responsibility and care for this storage area is often delegated to the unit owner.

Executed contract: A contract where all the obligations that were required to be performed by the parties have been fulfilled.

Existing Real Property Report: A legal document produced by a land surveyor that clearly illustrates the boundaries of a property and the location of improvements to the land relative to the boundaries. It also illustrates other issues impacting the property, such as rights-of-way, easements, encroachments, etc. In addition, it may contain a surveyor’s opinion or concerns regarding these items. A current real property report (RPR) illustrates the up-to-date improvements on the land and their relationship to the property boundaries whereas an existing RPR may not illustrate the current state of a property if any improvements were made to the land since the date of the RPR.

Express agreement: An oral or written agreement made between the parties involved.

Express authority: The instructions which describe orally or in writing what actions may be taken by an agent on behalf of a principal. Whenever possible, express authority should be provided in writing.

Express consent: When an organization presents an opportunity for an individual to communicate agreement to a stated purpose. Unless the individual takes action, the organization cannot assume consent has been given. Express consent may be given verbally or in writing.

Express contract: An oral or written contract made between the parties involved.

Extraordinary meeting: A meeting at which the board of directors and all members of the condominium corporation gather to address a specific issue that requires immediate attention and input from unit owners. Extraordinary meetings are held when urgent decisions need to be made.

F

Facilitation services: The services by which the interests of a client are met in an even-handed, objective and impartial manner without providing confidential advice, advocating on behalf of either client or using discretion or judgment that benefits one client of the other client.

Factory-built construction: A construction system in which a building is created wholly or partially in a manufacturing facility and transported to a building site.

Fee for service: A financial model of compensation that charges the client based on services performed rather than a fixed amount.

Fee simple: The highest estate form of land/property ownership with the most rights with the fewest limitations. Although generally considered absolute ownership, it is still subject to the restrictions imposed by government.

Fiduciary: A person who is entrusted to represent another person and has the legal obligation to act for the benefit of, and solely in the best interests of that person being represented.

Fiduciary duty: A legal duty requiring a real estate professional to act at all times in the client’s best interests.

Fiduciary relationship: The relationship between a principal (e.g. client) and an agent whereby the agent is entrusted with acting for the benefit of the principal.

First mortgage: A first charge on property that ranks ahead of any other mortgage, based on the date and time of its registration on title.

Fixed rate mortgage: A mortgage for which the interest rate has been fixed for a certain period of time (generally the length of the mortgage term).

Fixtures: An improvement or personal property item attached to the real property or building. Whether an item becomes a fixture depends largely on the circumstances, with emphasis placed on the method of how the item is affixed to the property.

Floating rate: An interest rate that bears a specified mathematical relationship to an index rate and includes an interest rate that is subject to a minimum and maximum or is determined at the beginning of a period for the whole period, regardless of changes in the index rate during the period.

For sale by owner: The process of selling a property that is for sale by the owner without the representation of a real estate industry professional.

Foreclosure: The legal process by which a lender takes possession and ownership of a property due to the borrower’s failure to comply with the terms and conditions of the mortgage agreement.

Foundation: A building system consisting of a base that a building rests upon.

Fractional ownership: A form of ownership whereby more than one individual possesses fee simple title to a property.

Freehold: A single owner of the building and the land it rests upon, “free from hold.”

Fraudulent misrepresentation: A statement is made that is untrue and the person making the statement does so knowingly to induce a party to enter a contract to his or her detriment.

Frustration: A basis to discharge or terminate a contract due to unforeseen circumstances which are beyond control of the parties and which makes the contract impossible to perform.

Functional utility: The sum of the attractiveness and usefulness of the property. It is the ability of the property to perform the function for which it intended, in terms of current market tastes and standards. Elements of functional utility in a residence include architecture, design and layout, traffic pattern, sizes and types of rooms, and performance standards.

G

General meeting: A meeting at which the board of directors asks all members of the condominium corporation to gather to receive information and make decisions regarding specific issues that require input from unit owners. General meetings are usually held at regularly scheduled intervals.

General obligations: The responsibilities that an agent owes to his or her principal when acting in a representation relationship.

Governing policies: A set of directives that regulate the affairs and behaviour of the condominium corporation and individual unit owners. The creation, modification and/or elimination of governing policies is at the discretion of the board of directors and input from unit owners may or may not be requested.

Grace period: A period in which interest accrues but will be forgiven if the borrower satisfies conditions specified in the credit agreement.

Gross debt service ratio: A measure used by lenders to assess a borrower’s ability to carry the debt load for a mortgage. It is calculated as the percentage of the individual’s gross annual income relative to his or her annual mortgage payments, property taxes, condo fees (if applicable) and allowance for heat.

Gross income: The sum of all sources of income over a specified period of time.

Grow operation: Any property that has been leased or bought by persons in the illegal drug trade which has been turned into an indoor growing environment for marijuana plants.

Guarantee: A promise made by a person to pay a debt or perform the obligations of another individual. Also see Guarantor.

Guaranteed sale agreement: A written agreement under which an industry member or another person on behalf of, or to the benefit of, an industry member undertakes to pay to the seller of real estate within a fixed or determinable period of time a fixed or determinable amount of money in respect of that seller’s real estate.

Guarantor: A person bound by a promise to pay a debt or perform the obligations of another individual.

H

High ratio mortgage: A mortgage loan that exceeds 80 per cent of the appraised property value or sale price whichever is less.

Highest and best use: The use of real property that will support the highest value and will produce the greatest net return over a period of time.

Highrise: A multi-unit residential building of more than 12 storeys

Historic title search: A review of all past property ownership and registered encumbrances relating to a specific parcel of land to determine the condition of title.

Home inspection: A visual examination of readily accessible interior and exterior aspects of a property in order to provide an opinion on the property’s condition as of the date of the inspection. The purpose of a property inspection is to look for signs that there may be problems with the property and to suggest any areas that should be looked at further by an expert.

Homeowners association: An association with mandatory membership based on residence in a specific area or community.

Homeowners association fee: A compulsory fee paid by property owners in the specific area under a Home Ownership Agreement. Fees are either paid on an annual or monthly basis. A registered caveat on each property title requires the owner to make these payments to the association.

Homestead: Under the Dominion Lands Act, refers to the permanent dwelling and all farm buildings surrounding the residence.

Honesty: The act of refusing to lie, steal or deceive. It also implies trustworthiness and incorruptibility (e.g. incapable of being false or breaching a position of trust).

Household: Refers to a person or group of persons who co-reside in, or occupy, the same dwelling.

Housing co-operative: A non-profit, legal entity incorporated and managed by its members through an elected board of directors. The cooperative owns the building and holds title to the land on which the structure is built. Its primary purpose is to provide housing and housing-related facilities to its members.

Housing starts: An economic indicator that measures the number of residential buildings or units for which construction has commenced in a given period.

HVAC: An acronym for the following three buildings systems: heating, ventilation and air conditioning.

I

Illegal use: The use of land or property that does not meet the requirements of the current municipal bylaw and, in the case of a property, has been built without the proper permits. The municipality can require the owner of the property to cease the illegal use upon notice.

Implied agreement: An agreement based on the conduct and actions of the parties involved.

Implied authority: Authority held by an agent that is typically not given expressly but rather by inferences and that arises by virtue of being reasonably necessary to carry out the agent’s express authority.

Implied contract: A contract that is formed based on the conduct and actions of the parties involved.

Improvement: An item that is permanently affixed to the land.

Incentive: Anything that is advertised, communicated or offered by a brokerage to the public or a person for the purpose of attracting business to the brokerage and includes a promise, good, service, game of chance, contest or anything else of value.

Income approach: An appraisal method for income-producing properties that converts the future income to be received from the property into an estimate of value.

Indefeasibility: An estate or right in land that cannot be defeated, revoked or made void.

Indemnification: The act of reimbursing or repaying a real estate professional for any liabilities he or she incurs on behalf of a client.

Indemnify: The act of securing someone or something against the possibility of future loss, damage or liability, as the case may be.

Indemnity: The assurance of one party to another to make compensation or repair for any loss or damage that has been incurred or may be incurred.

Index rate: The rate used by a lender to measure the difference between the current interest rate charged on an adjustable rate mortgage and that earned by another type of debt instrument.

Inducement: Anything offered by a brokerage to a specific person who is a party to a specific real estate trade (or potential trade), and is intended to assist, persuade or cause that person to enter into such a transaction.

Industrial building: A building used for processing raw materials and manufacturing goods, as well as their storage.

Industrial condominium: A condominium which consists of units within a manufacturing or distribution-oriented building, such as a workshop, warehouse or storage facility.

Industry member: Any person who is authorized to trade in real estate, deal in mortgages or provide real estate appraisal services.

Industry professional: The term used to refer to any person authorized in the various classes of licences in real estate, mortgage brokerage and real estate appraisal. Industry professionals possess the required education, knowledge and experience of current practices for their respective class of licence in order to provide competent services to members of the public.

Information barriers: Refers to policies, procedures and enforcement mechanisms that are created to keep client information confidential by safeguarding it from inadvertent exposure or sharing, or purposeful intrusion by individuals who have not been granted the permission to access it.

Informed consent: The decision of a party (e.g. buyer, seller, borrower) to provide agreement or select an option among available options based on full information and disclosure of any conflicts of interest by the other party (e.g. real estate, mortgage brokerage, real estate appraisal professional). In addition, it requires that the party asked to make the decision understands the nature of what is being proposed, be fully informed of the choices, be aware of the consequences of any of the options, and be able to freely exercise his or her free will in the absence of duress.

Innocent misrepresentation: A statement made to a party that is untrue, but the person making the statement had reasonable grounds to believe that the statement was true.

Installment loan: A loan that is repaid over time with a set number of scheduled payments. The term of the loan may be as little as a few months and as long as 30 years. For example, a mortgage may be considered an installment loan.

Institutional building: A building with a specialized use aimed as serving the public or private clientele.

Instrument: A written, legal document used to register an encumbrance on a property title (e.g. agreement, restriction, mortgage). Each instrument has a unique registration number.

Insurable value: The value of a commodity in terms of insurance policies or claims.

Insurance: A promise of compensation for possible damage or loss from one entity to another in exchange for compensation. Typically, the damages and losses covered in insurance policies are unexpected, unintentional or accidental in nature.

Insured: The person, group, or organization who has, or is covered by, an insurance policy.

Insurer: A person or company that undertakes to indemnify another in the event of a loss.

Integrity: The quality of being honest and having strong moral principles.

Intentional misrepresentation: A false or misleading statement made by a person who knew that the statement was untruthful and a third party relies on the misrepresentation to his or her potential or actual detriment.

Interest: A charge for a debt that is owed, usually calculated as a percentage of the amount that was loaned.

Interest-only mortgage: A mortgage in which the borrower pays only the interest portion, with the principal balance unchanged. The principal is repaid in full at the end of the mortgage term.

Interest rate: The amount charged by a lender to a borrower for the use of borrowed funds and is calculated as a percentage of the principal

Interest rate differential: The compensation due a lender for early prepayment of a mortgage outside of its normal prepayment terms. It is usually calculated as the difference between the mortgage rate and market rate multiplied by the principal outstanding and the balance of the term.

Interim financing: A loan of short duration (i.e. up to one year) with higher interest intended to cover immediate cash requirements until permanent financing is secured or until such time as the permanent financing comes into effect.

Intermediary: An even-handed, objective and impartial relationship formed when a mortgage broker brings together a borrower and a lender with the goal of originating a mortgage loan. In this relationship, the mortgage broker is not representing (not agent for) either the borrower or the lender.

International valuation standards: Refers to the global standards for valuation especially those that will be relied upon by investors and third party stakeholders.

Intestate: A person owning property who dies without a will.

Investigation: The formal process undertakes to gather evidence to help determine if an industry professional’s conduct is deserving of sanction.

Investor: An individual or entity that acquires an ownership position in an investment, assuming risk of loss in exchange for anticipated returns.

 J

Joint tenancy: A form of land/property ownership that involves two or more owners, with each owner having the right of survivorship. Therefore, each owner’s interest in the land/property will automatically pass to the surviving owner(s) and cannot be willed to another party.

K

L

Land survey: The legal written and/or mapped description of the location and dimensions of land.

Land surveyor: A licensed professional involved in the gathering, storing, processing and delivering of geographic information involved in the determination of property boundaries or assembly and analysis of land related information.

Land Titles Act: Legislation that outlines the land titles system of administration including land title transactions and interests in land.

Land Titles Assurance Fund: An assurance to the public that owners do not suffer damage or loss from errors in title. Registered properties are protected by indefeasibility of title, which means that they are not liable to be annulled, voided or undone.

Land titles office: The official location for processing land title documents.

Land transferee: The person to whom an interest in land is conveyed (i.e. transferred to).

Land transferor: The person who conveys (i.e. transfers) an interest in land to another.

Land use bylaw: General rules applicable to all land use classifications in a municipality (e.g. residential, commercial, industrial and special district classifications).

Landlord: A person or company who leases rights of real estate use to a tenant.

Latent defect: A physical deficiency or construction fault in a property that is not visible or discoverable through a reasonable inspection.

Lease agreement: A written agreement between an owner (landlord) and a tenant under which the owner allows the tenant the right of exclusive use of the property for a specified time, rent and terms.

Leasehold improvements: An addition or improvement made by a tenant to the leased premises. Leasehold improvements are more commonly associated with interior finishing and mechanical systems made by a commercial tenant pursuant to a lease agreement.

Leasehold interest: The interest in real property by a tenant which is created through an agreement (i.e. lease) between a landlord and a tenant.

Legal description: The official description of land used for legal purposes. Municipalities use Plan, Block and Lot for legal land descriptions. Legal Subdivisions are used for the legal description of rural properties and Condominium Plan Numbers are used for the legal description of condominiums. A legal address is not the same as a municipal address.

Legal mortgage: The first mortgage registered on title as a charge against that property.

Legal subdivision: A way in which to reference subdivided land.

Legal use: The use of land/property that meets the requirements of the current municipal Land Use Bylaw and, in the case of property, has been built with the proper permits as required by the municipality.

Lender: An individual or institution responsible for underwriting, funding and administering a mortgage loan and to whom real estate is pledged as security for the loan. This may include institutional lenders, non-institutional lenders, government lenders and private lenders.

Lender documentation: The application and all supporting documentation provided by the mortgage brokerage industry member to the lender. Wherever possible, all supporting documentation should be provided to the lender in one package.

Lender product sheet: A lender product sheet describes the particulars of a specific mortgage product, including term, amortization, repayment privileges, loan to value maximum, debt servicing maximum ratios, mortgage size restrictions, underwriting criteria, applicant income, equity sources, acceptable credit history (e.g. minimum credit score, bankruptcy history) and any other details relevant to the specific lender product or program. A lender product generally targets a particular borrower type or meets a specific borrowing need in the marketplace. If a product sheet is used for a specific mortgage, it should be retained by the industry member as part of the transaction record.

Lender rate sheet: A lender rate sheet shows the rates and fees for its product line. The rates are generally based on term, amortization, prepayment features, loan size, quickness of advance and other relevant details related to the lender’s mortgage products. If a rate sheet is used for a specific mortgage deal, it should be retained by the industry member as part of the transaction record.

Lessee: A person who leases property from another. May also be referred to as a tenant.

Lessor: A person or company that leases rights of use for real estate to a tenant. A lessor may also be referred to as a landlord.

Leverage: The use of borrowed funds to supplement investment.

Liability: A debt owed by an individual or organization to another individual or organization.

Liability insurance: A type of insurance to protect against claims alleging that a person’s negligence or inappropriate action resulted in injury or damage to another person or property.

Licence: The authorization issued by RECO to new and existing industry professionals to trade in real estate, deal in mortgages or provide real estate appraisal services in Ontario.

Licence reciprocity: Refers to jurisdictions that have entered into mutual recognition agreements between them to allow currently authorized real estate professionals in one jurisdiction to apply for the comparable class of licence in the other’s jurisdiction.

Licence renewal: The activities undertaken by industry professionals on an annual basis to remain authorized to trade in real estate, deal in mortgages or provide real estate appraisal services.

Licensing: Involves the process of issuing a licence to a person.

Lien: A financial claim permitted by statute to be registered against the title of a property for the payment of a debt.

Listing: A property for which the seller has entered into a written service agreement with a real estate brokerage to market his or her property for sale.

Listing price: The amount of money that a property that is under contract with a brokerage may be advertised to the public and marketed through various listing databases by the brokerage.

Loan broker: A person who for compensation directly assists a person in obtaining credit or a loan of money for business or personal use, including credit or a loan made from the loan broker’s own funds.

Loan file: The file retained by the mortgage brokerage industry member containing the application and all supporting documentation. It is generally understood that Canada Revenue Agency requires retention of all files for a minimum of seven years.

Loan to value: A percentage calculation that expresses the amount of the mortgage relative to the appraised value or sale price of the property, whichever is lower.

Local improvement: An infrastructure improvement that benefits a specific group of property owners, resulting in a local improvement levy on those properties to pay for the improvement. Both local municipalities and property owners can initiate local improvements.

Low-flow fixtures: Plumbing fixtures (e.g. toilets, showerheads, aerators) that use less water than conventional fixtures.

Lowrise: A ground-related home, including single-detached, semi-detached, townhouse, rowhouse and laneway unit.

 M

Maintenance fees: The expenses associated with the maintenance, repair and replacement of the common property of the condominium corporation.

Management agreement: A contract in which the roles, duties and expectations of the parties regarding the administration of a property are clarified and agreed to.

Marijuana grow operation: Any property that has been leased or bought by persons in the illegal drug trade which has been turned into an indoor growing environment for marijuana plants.

Market bubble: A temporary situation in the economy characterized by prices for a product becoming grossly inflated beyond its realistic value due primarily to excessive consumer confidence.

Market disequilibrium: Refers to a market condition in economics when the forces of demand and supply do not balance and there is an inherent tendency for change. Disequilibrium is indicated by the existence of either a market surplus or market shortage.

Market equilibrium: Refers to a market condition in economics where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services supplied by sellers.

Market price: The amount actually paid for a property in a particular real estate transaction.

Market rent: The rental income that a property would probably command on the open market, as indicated by current rents being paid for comparable space as of the effective date of the analysis.

Market shortage: A condition in the market in which the quantity demanded for a product or service exceeds the quantity supplied at the current price.

Market surplus: A condition in the market in which the quantity supplied for a product or service exceeds the quantity demanded at the current price.

Market value: The expected value of a property assuming that it has been exposed to an open real estate market for a reasonable period of time and the resulting real estate trade involves informed and willing buyers and sellers.

Mass appraisal: The process of determining the assessed values of properties by collecting relevant sales data over a specific time period for the same type of property and a similar municipal area. The data is aggregated and analyzed to set an assessed value for each property for that type of property and municipal area.

Material latent defect: A physical deficiency that is not visible and renders a property dangerous or potentially dangerous, unfit for habitation or unfit for the purpose for which it is acquired. It may also include defects that would involve great expense to remedy, notices from local authorities that prejudicially affect the property or a lack of appropriate permits.

Material misstatement: False, misleading or inaccurate data that could influence the decisions of those individual who review the information.

Maturity: The end of a term, or period of time, for a mortgage loan at which time the borrower mat have the option to pay off the mortgage, renew it with the existing lender or transfer it to another lender.

Measurement standard: An accepted method of quantifying the area of a property. Each sector of real estate practice tends to have a generally accepted method for measuring the applicable properties.

Mediation: A form of dispute resolution that involves a trained mediator attempting to assist disputing parties arrive at a mutually acceptable solution.

Meeting: A gathering of individuals at which the affairs of the condominium corporation are addressed. Meetings provide a forum in which interested parties can identify problems, share ideas, allocate tasks, receive updates and make plans for the future. The Board of Directors is responsible for organizing, facilitating and concluding all meetings according to the bylaws of the condominium.

Meeting minutes: The official, written record of what transpires during the meetings of the condominium corporation and Board of Directors. They are a technical account of what was discussed.

Mere posting: A listing on a Real Estate Board’s MLS System where the real estate professional has chosen or agreed not to provide services to the seller other than to submit the listing for posting.

Merger: The acquisition by one or more persons, whether by purchase, lease of shares or assets, of any control over or interest in the whole or part of a business of a competitor, supplier, customer or other person.

Midrise: A multi-unit residential building of less than 12 storeys

Mill rate: The amount per thousand dollars of assessed value of a property (or one-thousandth of a dollar). Therefore, a mill rate of 1 means an owner will pay $1 tax per $1,000 of assessed value.

Mineral rights: The natural resources beneath the top layer of land. Unless specified otherwise, most land titles exclude rights to the minerals.

Misrepresentation: A false or misleading statement or representation made by one party to another or others. It may also occur with non-disclosure or concealment of material facts.

Mixed-use condominium: A condominium which consists of units with multiple uses (e.g. retail, commercial, residential).

Mobile home: A portable dwelling other than a holiday trailer or recreational vehicle that is used as a residence, is mounted on its own chassis and running gear, is capable of being transported and is situated in a site intended for residential purposes.

Mobile home site: Refers to the land that is rented for the purpose of being occupied by a mobile home to be used for residential purposes and where the owner of the mobile home is not the same individual who owns the site on which the mobile home is located.

Modular construction: A type of factory-built construction that involves manufacturing three-dimensional units that are combined together to create a cohesive building. In general, modular units are approximately 85 per cent complete when they leave the factory.

Monthly contribution: The monthly fee set by the Board of Directors and paid by a unit owner to the condominium corporation.

Mortgage: A legal agreement specifying the pledging of real property to a lender as security for a debt.

Mortgage assumption: The act of taking possession of mortgaged property whereby the buyer accepts liability for the debt and takes responsibility of seller’s existing mortgage at the interest rate and terms as laid out in the original mortgage documents. The seller remains liable to the mortgage lender unless the lender agrees to release the seller from the debt obligation.

Mortgage-backed securities: A type of investment that represents an ownership interest in a bundle of amortized residential mortgages insured by Canada Mortgage and Housing Corporation (CMHC) under the National Housing Act or the government-backed private mortgage insurers.

Mortgage default: A borrower’s failure to fulfill his or her obligations contained in a mortgage agreement.

Mortgage fraud: A material misstatement, misrepresentation or omission relied upon by a lender or insurer to underwrite, approve, fund or insure a mortgage loan. It is any scheme designed to obtain mortgage financing under false pretences.

Mortgage fraud for housing: Occurs when a borrower (i.e. buyer) attempts to obtain a larger mortgage then he or she would otherwise be able to arrange and falsifies the information to the lender in order to qualify for the mortgage.

Mortgage fraud for profit: Typically perpetrated by organized crime or by individuals seeking financial gain through property manipulations.

Mortgage fraud red flags: Potential indicators or warning signs that a real estate, mortgage brokerage or real estate appraisal transaction may be fraudulent. When two or three red flags appear in the same transaction, it can be an indication of the presence of mortgage fraud.

Mortgage insurance: A credit risk management tool protecting the lender from losses due to default on the mortgage by the borrower.

Mortgage insurer: A provider of mortgage loan (default) insurance to lenders.

Mortgage investment corporation: A private investment and lending company that pools its funds from many investors for the purpose of loaning money to borrowers. Each loan is secured with a mortgage registered on the title of the respective property.

Mortgage origination: The process through which a lender creates a mortgage secured by the borrower’s (i.e. mortgagor’s) real property.

Mortgage plus improvements: A feature that allows the borrower to add the cost of improvements or renovations to a property into a mortgage loan.

Mortgage pre-approval: An approval for a mortgage based on a borrower’s qualifications made in advance of a real estate purchase. A written pre-approval protects the borrower by specifying the mortgage term, interest rate and maximum amount of the loan. If mortgage rates rise, the borrower receives the pre-approved rate. If rates drop, the borrower receives the lower rate. However, the borrower must take possession of a property before the pre-approval expires. They typically are 60 or 90 days, but may be as long as 120 days for new construction. Once a property has been purchased, the pre-approval is subject to the borrower submitting any final supporting documentation, providing his or her financial position has not changed. It is also subject to the property meeting the lender’s underwriting requirements.

Mortgage pre-qualification: The tentative approval for a mortgage based on the borrower’s qualifications made in advance of a real estate purchase. It is for a specified period of time and subject to the borrower submitting his or her supporting documentation to the lender, providing his or her financial position has not changed. Once a property has been purchased, the property must also meet the lender’s underwriting requirements.

Mortgage Professionals Canada: Canada’s national mortgage industry association.

Mortgage refinance: The process by which a borrower seeks to discharge an existing mortgage in order to establish a new one. The new mortgage may be with the same lender or a different lender. The process typically involves the borrower paying out the existing mortgage, along with any legal claims against the property and any applicable payout penalties as a result of the early discharge. Some reasons that a borrower may consider refinancing a mortgage include obtaining a better rate, benefitting from different mortgage privileges, or experiencing better service or greater convenience.

Mortgage renewal: The process by which a borrower agrees to another mortgage term with the current lender to replace the term that has matured. At the end of the prior mortgage term, and with a balance of funds still owing, the borrower may choose to continue with the same lender for another term. However, the details of the mortgage document may change at the time of the mortgage renewal to reflect the current mortgage market. The new term leaves the existing registered mortgage in place and is therefore not considered a new mortgage. The renewed term is secured by the old mortgage document and its provisions are amended to fit the new term.

Mortgage statement: A statement received from the lender that includes details of the mortgage such as property address, outstanding principal balance, monthly payment, interest rate and mortgage term.

Mortgage stress test: As of January 2018, homebuyers will need to qualify their mortgage at either the current posted rate plus 2 per cent, or the Bank of Canada five-year benchmark rate plus 2 percent (whichever is higher).

Mortgage switch: Occurs when a borrower moves his or her current mortgage balance and remaining amortization period to a new lender. An agreement effectively transferring the interest in the mortgage to the new lender is signed by the parties and registered with the Land Titles Office. The previous mortgage terms and conditions are replaced by those of the new lender.

Mortgage term: The period of time for which the lender loans funds to the borrower, as specified in the mortgage agreement. At the end of the mortgage term, the principal and unpaid interest becomes due and payable by the borrower to the lender. At that time the borrower may renew or refinance the mortgage.

Mortgage transferee: The lender to whom a mortgage has been conveyed (transferred).

Mortgage transferor: The lender who conveys (transfers) a mortgage to another lender.

Mortgaged premises: The security for the loan in the mortgage document, which typically includes the physical land and everything that is part of that land, or becomes part of that land. A mortgage of land automatically extends to everything that is securely attached to that land.

Mortgagee: An individual or organization that lends money secured by real property for which they may receive specified payments according to the mortgage agreement.

Mortgagee in possession: A lender that takes possession and responsibility (e.g. insurance, taxes, security and tenant relations, if applicable) of a mortgaged property.

Mortgagor: A person that borrows funds secured by real property for which they may make specified payments according to the mortgage agreement.

Mould: A group of microscopic living organisms also known as fungi. Extensive mould could make a property unfit to live in.

Multiple offers: A situation when multiple buyers submit an Offer to Purchase on the same property, at the same time.

Municipal address: The address of a property, which has been provided by the municipality and typically is the city, street and number of the property on the street. It may often be used as the mailing address as well. However, it is not the legal address of the property.

Municipal development plan: The basis for the municipal Land Use Bylaw and determines how property may be used and development may be carried out within its jurisdiction.

Municipal land use bylaws: General rules applicable to all land use classifications in a municipality (e.g. residential, commercial, industrial and special district classifications).

Mutual agreement: An agreement created by an offer, the acceptance of the offer, and communication of the acceptance back to the offerer. It is one of several essential elements of a contract and is the basis for a meeting of the minds between the contracting parties.

N

Negligent misrepresentation: A false or misleading statement made by a person believed to be true and where the person carrying out the misrepresentation took reasonable steps to assure himself or herself of the accuracy of the statement. A third party may rely on the misrepresentation to his or her potential or actual detriment.

Negotiation: A form of dispute resolution that attempts to seek a satisfactory solution for all parties to a dispute that is based on the interest of each party as opposed to their specific position on the matter. Negotiations only involve those parties to the dispute.

Net income: The revenue after deducting expenses from gross income. If the revenue exceeds expenses, net income is positive (profit). If expenses exceed revenue, net income is negative (loss).

Net operating income: The revenue remaining after operating expenses have been deducted from the gross operating income, but before income taxes and interest are deducted.

New condominium: A condominium that involves the creation of units and common areas that never existed before in brand new structures. The units within a new condominium have never previously been offered for sale. Generally, the completion of a new condominium is scheduled for a single date after which all the construction work is to be completed.

Nominal interest rate: The “face rate” shown on the mortgage document.

Non-conforming use: The use of a property that met municipal requirements at one time, but does not meet the current bylaw requirements. The non-conforming status may be lost if the building is renovated, damaged or destroyed. If the non-conforming use has ceased, any future use must conform to the current bylaw requirements.

Non-disclosure: The failure or refusal to declare or reveal information that is required by one or more parties.

Non-profit housing cooperative: A form of residential housing whereby members obtain the right to occupy a unit under a tenancy agreement. The cooperative owns the real property, the building and the land on which the structure is built and holds title to the property.

Non-profit homeownership cooperative: A form of residential land tenure where members own their individual unit with the cooperative owning the land and the common property.

Non-representation relationship: A type of real estate relationship in which a real estate professional works with a party to a trade in real estate but does not act on behalf of that party.

Notice of Assessment: An individual summary sent to each taxpayer by Canada Revenue Agency after processing his or her tax return. It may also indicate any corrections to the return, such as taxes owing or refunds to be paid.

O

Occupancy rate: Refers to the number of units or space occupied in a building to the total number of units or space available.

Offer to Purchase: An Offer to Purchase is the contract a property buyer will write for submission to a property seller. It contains the date of the offer, the description of the property being offered on, the amount of the deposit, the purchase price being offered, down payment and financing details, as well as the buyer’s name and address, and the name and address of the seller, subject-to clauses, conditions, closing dates and any special requirements you want to impose on sellers (for example, you want the kitchen appliances).

Officer of the condominium corporation: An individual serving on the Board of Directors for a condominium corporation who has specific duties and responsibilities as outlined under the Condominium Act.

Off-site condominium manager: A condominium manager whose office and/or residence are located away from the condominium he or she is working with.

On-site condominium manager: A condominium manager who has a dedicated space to hold office hours and/or possesses a residence in the condominium.

Ontario Building Code: Provincial legislation that states the technical specifications required for new building construction and building materials in Ontario.

Ontario Securities Commission: The regulatory agency responsible for administering the province’s securities laws and ensuring that persons who sell securities in are registered and conduct themselves according to applicable laws and professional standards.

Open mortgage: A mortgage that can be paid off early without any penalties or fees attached.

Operating fund: Cash and cash equivalents used to pay for the regular, recurring (i.e. weekly, monthly or annually) expenses of the condominium.

Opposing interests: When the interests of clients represented by the same brokerage oppose one another in the same real estate transaction or potential transaction.

Order: A decision made by a court or other decision-making entity that may or may not be the final outcome of the matter.

Order of possession: A court order that enables the applicant to occupy vacated premises. Typically, an order of possession is obtained by a mortgagee to take possession of the mortgages premises when in default or by an owner who seeks to have illegal occupants removed from the premises.

Ordinary resolution: A resolution for which a vote is conducted by a show of hands. A majority consists of more than 50 per cent of eligible voters.

Origination fee: A fee paid to a lender for processing a mortgage loan application.

Owner occupied: A property used as a self-contained domestic property occupied by the owner and used as the primary place of residence.

P

Patent defect: A physical deficiency in a property that is visible through the exercise of reasonable vigilance in the course of a property inspection.

Payout penalty: The future, currently unpaid, interest some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the original term is completed.

Permit: A document that gives an individual authorization to build a new structure or demolish, relocate, repair, alter or make additions to an existing building.

Person: From a legal perspective represents an individual, sole proprietorship, partnership, unincorporated or incorporated entity or organization with legal rights and existence.

Personal covenant: The legally binding promise made by the borrower to repay the mortgage amount including the interest. Failure to do so provides the lender the right to sue the borrower personally to obtain repayment of the principal amount in addition to foreclosing on or selling the property.

Personal information: Factual or subjective information about an individual that can be used to identify that individual.

Phased development: A form of new condominium in which the construction is finished in multiple stages and therefore has several completion dates.

Phased development disclosure statement: A document provided by a developer that contains the following details regarding a phased development: A statement indicating that the building or land is to be developed in phases; the maximum and minimum number of units in the entire project; a description of the units and common property in the initial phase and subsequent phases; the basis for allocating unit factors within the condominium corporation; the extent to which the developer will contribute to the common expenses during the development of each phase and the entire project; the effect on the owners’ monthly contributions for administrative expenses and the condominium corporation’s budget if future phases are not completed; details of the proposed appearance of each phase and its compatibility with other phases.

Plaintiff: A person or organization who brings legal action against another person or organization in a court of law.

Portability: The ability of the borrower to transfer an existing mortgage, including the rate and terms, from one property to another property. However, the lender may require the borrower to re-qualify for the same mortgage because the financial circumstances of the borrower may have changed and the property securing the mortgage has changed.

Postponement of mortgage: Process by which a lender agrees to maintain a position of subsequent priority in the event of rearrangement and registration of a prior mortgage.

Power of Attorney: A written, signed, dated and witnessed document that enables an individual to appoint another person to act on his or her behalf with respect to his or her financial and legal affairs including debts.

Pre-approval: An approval for a mortgage based on a borrower’s qualifications made in advance of a real estate purchase. A written pre-approval protects the borrower by specifying the mortgage term, interest rate and maximum amount of the loan. If mortgage rates rise, the borrower receives the pre-approved rate. If rates drop, the borrower receives the lower rate. However, the borrower must take possession of a property before the pre-approval expires. Once a property has been purchased, the pre-approval is subject to the borrower submitting any final supporting documentation, providing his or her financial position has not changed. It is also subject to the property meeting the lender’s underwriting requirements.

Pre-payment penalty: A fee charged by a lender when the borrower prepays all or a part of the mortgage in excess of the regular payments allowed as stipulated in the mortgage agreement.

Pre-qualification: The tentative approval for a mortgage based on the borrower’s qualifications made in advance of a real estate purchase. It is for a specified period of time and subject to the borrower submitting his or her supporting documentation to the lender, providing his or her financial position has not changed. Once a property has been purchased, the property must also meet the lender’s underwriting requirements.

Primary mortgage market: A mortgage market in which original loans are made by lenders.

Primary residence: The residential property which the borrower occupies as his or her main residence on a continual basis.

Prime rate: The interest rate charged by lenders to its most creditworthy borrowers.

Principal (agency): The individual (i.e. client) who authorizes the agent (e.g. real estate or mortgage brokerage professional) to act on his or her behalf in an agency relationship.

Principal (financial): A sum of money owed as a debt upon which interest is calculated.

Principal (mortgage): The amount of funds originally borrowed from the lender or the portion of a mortgage still owing upon which interest is calculated.

Principal and interest: A periodic mortgage payment calculation based on a combination of principal repayment and interest.

Principal, interest and tax: A periodic mortgage payment calculation based on a combination of principal repayment, interest and a portion of the property taxes.

Principles of value: Accepted principles that guide the work of appraisers and form the basis of their value-related decisions.

Priority: The order in which financial obligations registered on the title of a property would be addressed upon disposition of the property (e.g. sale of the property, foreclosure, settlement of an estate). With a few exceptions (e.g. property taxes, condominium fees), the order is determined by the date of registration of the financial encumbrance on the title of the property.

Privacy: Refers to an individual’s ability to retain control over his or her personal information.

Private lender: Any individual, group of individuals as in a syndicated mortgage or Mortgage Investment Corporation other than a financial institution that advances funds in return for a mortgage with agreed to repayment terms and conditions. Private lenders do not include chartered banks, treasury branches, credit unions, loan corporations, trust companies and insurance companies, any persons engaged in the business of making loans secured with mortgages or any persons that manage registered pension plans.

Private mortgage: A mortgage contract in which the lender is not a registered financial institution but rather a private corporation and/or an individual.

Privity of contract: A legal principle under the common law that, as a general rule, prevents any person from seeking enforcement of a contract or suing on its terms unless they are a party to the contract.

Product sheet: A lender product sheet describes the particulars of a specific mortgage product, including term, amortization, repayment privileges, loan to value maximum, debt servicing maximum ratios, mortgage size restrictions, underwriting criteria, applicant income, equity sources, acceptable credit history (e.g. minimum credit score, bankruptcy history) and any other details relevant to the specific lender product or program. A lender product generally targets a particular borrower type or meets a specific borrowing need in the marketplace. Product sheets are provided by lenders to mortgage brokerage industry members for their information. If a product sheet is used for a specific mortgage, it should be retained by the industry member as part of the transaction record.

Professional conduct review: The formal process undertaken to gather evidence to help determine if an industry professional’s conduct is deserving of sanction.

Professional courtesy: A form of mutual respect among individuals working in the same profession. Professional courtesy as it relates to the real estate industry would include a real estate professional observing or experiencing a minor breach of the Real Estate Act or rules or noting an error in property information and notifying the colleague who committed the breach, of the issue.

Professional liability insurance: A form of business liability insurance intended to cover damages resulting from errors, omissions and negligence by professionals that occurred in the course of providing their business services.

Property: The rights inherent in the ownership of a commodity.

Property assessment: The process of determining the property value for taxation purposes. Assessment is used to determine the property owner’s proportionate share of municipal taxes on an annual basis.

Property assessor: An individual who places a value on real estate for the purpose of taxation.

Property defect: A shortcoming or failing of a property.

Property inspection: A visual examination of readily accessible interior and exterior aspects of a property in order to provide an opinion on the property’s condition as of the date of the inspection. The purpose of a property inspection is to look for signs that there may be problems with the property and to suggest any areas that should be looked at further by an expert. Property inspections are performed by property inspectors.

Property inspection contract: A legally binding agreement entered into by a consumer and a property inspector that specifies the details for a property inspection to be performed on a particular property.

Property inspection report: Written communication describing property issues discovered from observations made and research conducted by a qualified property inspector. The report should include the following information: Convey the current condition of all inspected items; emphasize any inspected items that are unsafe or require major repairs and/or replacement; estimate when repairs and/or replacements of inspected items will need to occur; describe preventative measures that can be taken to remedy current issues or extend the life of the inspected items.

Property inspector: An individual who performs a property inspection.

Property insurance: A legal agreement which provides financial protection against most risks to property due to damage or destruction caused by specified perils such as fire, theft, vandalism.

Property management: The management of the administrative, operations and maintenance of real property according to the ownership objectives. Property management activities include any of the following: Leasing or offering to lease real estate or negotiating or approving, or offering to negotiate or approve, a lease or rental of real estate; holding money received in connection with the activity; collecting, or offering or attempting to collect, on behalf of the owner or other person in charge of real estate, money payable as rent for the use of the real estate; advertising, negotiating or carrying out any other activity, directly or indirectly, for the purpose of furthering an activity referred to in any subclause.

Property manager: An individual or business that performs administrative, operational and/or maintenance duties on behalf of the owner of a property for compensation.

Property taxes: The annual amount charged each property owner by the municipality where the property is located. The amount is based on the assessed value of the property in relation to the municipal tax rate for that classification of property, as determined annually by the municipality. Property taxes fund the operations and services of the municipality. In addition, portions of the property tax may also relate to the provision of education and the payment for a local improvement levy.

Purchase contract: A legally binding agreement entered into by a buyer of real estate and a seller of real estate that details the buyer’s intention to purchase a specific property from the seller of that property provided that certain terms and conditions, as described in the agreement, will be met.

Purchaser: The buyer of real estate.

Q

Qualifying: The process of determining a prospective borrower’s eligibility for mortgage financing related to a potential real estate purchase.

Quarter section: A geographic reference for a parcel of land measuring 64.7 hectares or 160 acres and usually identified as NE, SW, NW or SW.

Quorum: The minimum number of individuals entitled to vote that must be present or represented by proxy at a meeting in order for the business of the condominium corporation to be transacted.

R

Radon: An odourless, tasteless and colourless gas. It is a by-product of the decay of uranium, a radioactive element that exists naturally in soil and rock formations.

Rate sheet: A lender rate sheet shows the rates and fees for its product line. The rates are generally based on term, amortization, prepayment features, loan size, quickness of advance and other relevant details related to the lender’s mortgage products. The rate sheet is provided by lenders to mortgage brokerage industry members for their information. If a rate sheet is used for a specific mortgage deal, it should be retained by the industry member as part of the transaction record.

Ratification: The principal subsequently agrees to be bound by the actions of his or her agent, who has acted without authority or in excess of granted authority.

Real estate: Refers to the unimproved or raw land plus any improvements that are permanent or fixed to the land.

Real estate appraisal: A formal, impartial estimate or opinion of value, usually written, of a specific and adequately described property, as of a specific date and supported by the presentation and analysis of relevant data pertinent to a property.

Real estate appraiser: An authorized individual who performs real estate appraisal services for a fee. A real estate appraiser is an accredited professional whose main service typically involves estimating the value of real property at a specified date in a manner that is independent, impartial and objective.

Real estate professional: The term used to refer to an individual who is authorized to trade in real estate and/or manage properties. These individual must be engaged by or associated with a real estate brokerage.

Real property: Refers to the land any permanent improvements to the land and the property rights that go with the ownership of the land.

Real property report: A legal document produced by a land surveyor that clearly illustrates the boundaries of a property and the location of improvements to the land relative to the boundaries. It also illustrates other issues impacting the property, such as rights-of-way, easements, encroachments, etc. In addition, it may contain a surveyor’s opinion or concerns regarding these items. A current real property report illustrates the up-to-date improvements on the land and their relationship to the property boundaries whereas an existing RPR may not illustrate the current state of a property if any improvements were made to the land since the date of the RPR.

Realtor: A registered trademark of the Canadian Real Estate Association (CREA). An individual who is licensed as defined in the Real Estate and Business Brockers Act and as administered through the Real Estate Council of Ontario (RECO). A realtor must be registered with a licensed brokerage. A realtor holds the basic licensing level in the real estate or mortgage brokerage industry.

Reckless misrepresentation: A false or misleading statement made by a person who, while they had no intent to mislead anyone, failed to take the reasonable steps to confirm the statement’s truthfulness or accuracy. A third party may rely on the misrepresentation to his or her potential or actual detriment.

Reconciliation: The process by which a real estate appraiser evaluates, chooses and selects from among two or more alternative conclusions or indications to reach a single answer (i.e. final value estimate).

Redemption: The act of performing the borrower’s obligations and consequential release of the mortgage on the property.

Referral: The act of recommending or directing a person for service, assistance, or business to another person or business.

Refinance: The process by which a borrower seeks to discharge an existing mortgage in order to establish a new one. The new mortgage maybe with the same lender or a different lender. The process typically involves the borrower paying out the existing mortgage, along with any legal claims against the property and any applicable payout penalties as a result of the early discharge. Some reasons that a borrower may consider refinancing a mortgage include obtaining a better rate, benefitting from different mortgage privileges, or experiencing better service or greater convenience.

Registered size: The floor space of a unit within a condominium. In addition to the above ground space contained in the unit, the registered size may include a variety of areas, such as a basement, garage, parking stall or storage area.

Registrant: An industry member who is employed by and associated with a licensed brokerage.

Rehabilitation: The restoration of a property to satisfy conditions without changing the plan, form or style of a structure. In urban renewal, the restoration to good condition of deteriorated structures, neighborhood and public facilities. Neighborhood rehabilitation may extend to street improvements and the provision of such amenities as parks and playgrounds.

Remediation: Measures to reduce contamination to a level that does not impair or damage the environment, human health or safety or property.

Remuneration: The compensation (e.g. commission, gifts, other benefits) received by the brokerage for services rendered to a party (e.g. customer, client).

Rent: The financial compensation paid to a landlord for the temporary use and/or occupation of real estate by a tenant.

Rental agreement: A written agreement between an owner (landlord) and a tenant under which the owner allows the tenant the right of exclusive use of the property for a specified time, rent and terms.

Rented parking stall: A parking stall owned by a unit owner or the condominium corporation that is used on a temporary or ongoing basis (e.g. month-to-month) by another unit owner in exchange for a fee.

Rented storage area: A storage area owned by a unit owner or the condominium corporation that is used on a temporary or ongoing basis (e.g. month-to-month) by another unit owner in exchange for a fee.

Representation relationship: A type of real estate relationship in which a real estate professional acts for one of the parties to a trade or potential trade in real estate on behalf of his or her brokerage.

Resale condominium: A condominium in which units are offered for sale for other than the first time. The structures in which units may be contained are not typically new and the units themselves have been previously owned and occupied.

Reseller: An individual or business that has previously purchased one or more units within a condominium and is now offering those units for sale.

Reserve fund: Cash and cash equivalents used to pay for major capital repairs and replacements of the condominium corporation’s common property that do not occur on an annual basis.

Reserve Fund Plan: A document prepared by the condominium corporation’s Board of Directors on the Reserve Fund Report that states how the Board of Directors will address the revenue and expenses required to meet the long-term capital needs of the condominium. The Reserve Fund Plan should include the following information: Provide for the establishment of a reserve fund, if one has not already been created; identify the capital expenses to be incurred by the condominium corporation; outline the timetable over which these expenses will be incurred; indicate the method of funding and the amount needed for maintaining the reserve fund.

Reserve Fund Report: A statement containing the results of the Reserve Fund Study that is prepared and submitted in writing to the Board of Directors of the condominium corporation. The Reserve Fund Report must include the following information: The qualifications of the person who carried out the Reserve Fund Study and prepared the Reserve Fund Report; whether or not the person who completed the study and prepared the report is an employee/agent or otherwise associated with the condominium corporation or any person who performs management or maintenance services for the condominium corporation; identify what property may need to be repaired or replaced within the next 25 years; assess the present condition of the common property and estimate when it will need to be repaired or replaced; estimate the current cost to repair or replace components of the common property; assess the potential for damage to the common property and possible costs if repair or replacement is delayed; identify the life expectancy of a component if it is repaired or replaced.

Reserve Fund Study: An analysis of the common property of a condominium corporation that includes the following: An inventory of all common property that may need repair or replacement within 25 years; the present condition of the common property and an estimate of when each component may need to be repaired or replaced; the estimated costs of repairing and replacing each component of the common property; the life expectancy of each repaired or replaced component of the common property; the current amount of the reserve fund and basis for its determination; the recommended amount of money that should be added to the reserve fund, if any, in order to ensure necessary repairs and replacements occur and the basis for its determination.

Residential building: A building used as a dwelling by one or more occupants.

Residential condominium: A condominium that consists of units in which owners and/or occupants live full-time.

Residential property: A type of property that a municipality has designated for use as single family detached homes, townhouses, apartments, condominiums, and cooperatives that is or was used as a residence.

Residential tenancy agreement: An agreement that outlines the terms and obligations between a landlord of a residential premise and a tenant and sets out any conditions that have been agreed to by the parties to the agreement.

Resolution: A decision agreed upon by the condominium corporation through the use of a vote.

Restrictive covenant: A written agreement registered on title that places a restriction or limitation on the use of the land or on the architectural detail of a property.

Retail building: A building used to promote commerce with consumers for goods and/or services.

Retail condominium: A condominium that consists of units in a retail facility (e.g. mall).

Revenue: Money an individual or organization receives in exchange for providing goods and/or services.

Reverse mortgage: A mortgage on a principal residence taken out by the owner who must be 55 years of age or older and that allows for a portion of the property’s equity to be converted into cash. No payments are made and the payments and interest accumulate against the equity in the property. The owner must continue to reside in the property for the reverse mortgage to stay in place. Repayment of the loan is typically triggered when the property is sold, is no longer the principal residence or on the death of the owner(s).

Revolving credit: A type of credit that does not have a fixed number of payments, in contrast to installment credit. Examples of revolving credits used by consumers include credit cards.

Right of redemption: The right of a borrower whose real property has been foreclosed upon to reclaim the title and possession of the property by paying off the full debt obligation.

Right of rescission: An individual’s ability to cancel a purchase contract under certain terms.

Risk: Exposure to circumstances or perils which may give rise to injury or loss for a person or organization.

Risk reduction: The activities proactively undertaken by a person or organization that are intended to minimize exposure to potential injury or loss and any associated liabilities.

 S

Safety and security system: A building system that assists in preserving the well-being of a building’s occupants and preventing damage to or loss of property.

Schedule: A supplementary form completed and included with the real estate purchase contract for the benefit of a buyer in a real estate transaction.

Schedule of unit factors and unit areas: A table that includes the legal number for each unit, the number of unit factors assigned to each unit and the approximate floor space of each unit within the condominium.

Scope of work: Refers to the type and extent of research and analyses performed in an appraisal assignment.

Second home: A condominium that consists of units that owners and/or occupants visit from time to time as a weekend or vacation destination.

Second mortgage: A mortgage registered against a property which is already encumbered with a first mortgage, that mortgage having been registered at a date and time that precedes the second mortgage.

Secondary mortgage market: The segment of the mortgage market where the buying and selling of existing mortgages occur. They are often pooled and traded as mortgage backed securities.

Secret profit: The receipt of any monetary or non-monetary benefit by an industry professional as a result of a referral which is not disclosed to the client.

Section: A geographic reference for a parcel of land measuring one square mile, containing 640 acres.

Securitization: The process of converting loans or other assets into financial securities which are sold in the capital markets, providing investors with an interest in the pool of loans or assets underlying the security.

Security: A property or properties that has or have been pledged as collateral for a loan.

Security agreement: An agreement that charges the borrower’s personal property identified in the agreement as security for a loan. A lender may take security on personal property in order to enhance the extent of their security for a loan. This may be the case when borrower’s real property is insufficient for a lender to proceed with the loan.

Self-employed borrower: A borrower who owns/operates his or her own business and must provide alternate forms of documentation (e.g. series of tax returns) to substantiate income levels and other required verifications in place of the traditional forms of income validation (e.g. pay stubs, employment letters).

Seller: The owner of real estate who is in the process of disposing of his or her property through a sale to a buyer. The property may be for sale through a real estate industry professional or for sale by the owner.

Sellers’ market: A real estate market condition where buyer demand is strong and property supply is weak.

Semi-attached condominium: A style of residential condominium consisting of two units placed side-by-side that share a common wall

Semi-detached house: A house built as one of a pair that shares a common wall, usually side-by-side.

Service fee: Compensation paid to, and disclosed by, an industry professional as a result of providing business services to a client.

Showing: A scheduled appointment for a real estate professional to view a property that is for sale to a prospective buyer.

Simple interest: A method of calculating the cost of borrowing by applying an interest rate to the principal amount. It does not include interest from previous periods.

Single-family condominium: A style of residential condominium that has stand-alone, separate units.

Site: A parcel of land which is improved to the extent that it is ready to be used for its intended purpose.

Site analysis: The identification and analysis of the characteristics that create, enhance or detract from the utility and marketability of a site.

Site-built construction: A construction system in which a building is created by cutting and joining together pieces of lumber on a building site. In site-built construction, all materials and labourers must be transported to the building site.

Skylight: A building system that is similar to a window but is installed in the roof of a building. Skylights may also be referred to as sun tunnels, sun tubes, solar day lighting devices and light tubes.

Slab-on-grade foundation: A type of foundation consisting of footings or grade beams and a poured concrete slab.

Sole ownership: A form of ownership of land/property where only one individual (or company) is registered. Although generally considered absolute ownership, it is still subject to the restrictions imposed by government. The rights of the sole owner may also be impacted by the rights of an untitled spouse.

Special assessment: A financial obligation in addition to a unit owner’s monthly contributions. The portion of the special assessment owed by each unit owner is calculated based on unit factors. Special assessments may be paid as a lump sum or in periodic installments, depending on the payment schedule established by the condominium corporation, by a specific date.

Special Power of Attorney: A Power of Attorney that grants specific or limited powers to the attorney to make decisions or act on behalf of the donor.

Specific authority: Limited power given to an agent by a principal to provide one specific service or limited range of specific services on the principal’s behalf.

Specific performance: The party in breach of the contract can be compelled by the court to carry out the promise, especially where damages for the breach are inadequate. It is a discretionary remedy, which the court may or may not grant depending upon the circumstances. However, the court would not grant specific performance where it would be unfair or unjust to do so.

Stacked townhouse: Multiple units in a row and also vertically, usually with a private entrance from the street.

Standard of care: A legal concept that establishes the attention and caution that a reasonable and prudent person would exercise under a particular set of circumstances.

Standards of practice: Refers to the minimum requirements for industry professionals’ conduct and include the responsibilities and prohibitions that they must comply with as established in the act.

Statement of claim: A printed or written statement by the plaintiff which commences the legal proceedings and shows the facts relied on to support any claim against the defendant and the remedy of relief sought.

Statement of defence: A brief, written statement by the defendant affirming or denying certain matters of fact in the statement of claim.

Status Certificate: The package of documents that relate to the structure, finances and management of a condominium. The wide range of documents provides important information to industry professionals and to the sellers, buyers, borrowers and lenders with whom they work. The information must be provided by a condominium corporation upon receiving a written request. In general, the statement may include the following information: A statement setting out the amount of the monthly contributions for the unit of interest; the particulars of any legal action commenced or served against the condominium corporation; the particulars of any unsatisfied court judgement or order for which the condominium corporation is liable; a statement setting out any structural deficiencies known to the condominium corporation for any buildings located on the property of the condominium; any special assessments that may have been levied by the condominium board; the management contract; insurance certificate; minutes of the last general meeting; copies of the condominium declaration, bylaws and rules; a current budget for the condominium corporation; a copy of the most recent reserve fund study.

Statute law: The accumulated legislation and regulations within a jurisdiction that are enacted by the various levels of government.

Statute of frauds: A common law concept requiring that certain contracts be in writing and be signed by all parties who will be bound by that contract.

Straw buyer: A person who is paid by a fraudster to act on behalf of the fraudster, and whose name and credit are used for processing mortgage applications and title transfers.

Subsidy: A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public.

Substantial completion: When a property has been developed to the point that is can be used for its intended purpose.

Substantial interest: Ownership interest in real estate of more than 25 per cent.

Supporting documents: The information and communications provided to the lender by the borrower, and/or other parties, concerning verification of the borrower’s identity, employment, equity and property details. Retained copies of the supporting documentation form part of the loan file. If legibility or authenticity is a concern, best efforts must be made to view original supporting documents.

Surface rights: The rights to the physical ground, the air space above the ground, and any materials from the top layer of land that can be excavated, as sand or gravel, but does not typically include rights to minerals beneath the land.

Survey plans: An illustrative plan used to layout most municipal land and some acreage subdivisions. The land is surveyed, subdivided and registered at Land Titles. The legal description of these lands changes to a legal land description that includes the plan, block and lot number.

Surveying: The technique and science of accurately determining and recording the measurements of boundaries and elevations of land or structures.

Syndicated mortgage: A mortgage in which two or more people participate, directly or indirectly, as lenders in a debt obligation that is secured by a mortgage.

T

Tarion Warranty Corporation: Created by the Ontario government in 1976 to administer the Ontario New Home Warranties Plan Act. Its primary purpose is to protect consumers of new homes by ensuring that builders abide the provincial legislation. The minimum required warranty coverage terms are: One-year warranty requires a home is constructed in a workman-like manner and free from defects in material; protects against unauthorized substitutions; requires the home to be fit for habitation; Protects against Ontario Building Code violations; and applies for one year, beginning on the home’s date of possession even if the home is sold. Two-year warranty protects against water penetration through the basement or foundation walls; protects against defects in materials that affect windows, doors and caulking and defects in work that results in water penetration into the building envelope; covers defects in work or materials in the electrical, plumbing and heating delivery and distribution systems; covers defects in work or materials that result in the detachment, displacement or deterioration of exterior cladding (such as brickwork, aluminum or vinyl siding); protects against violations of the Ontario Building Code that affect health and safety; and applies for two years, beginning on the home’s date of possession. Seven-year warranty covers major structural defects (MSD). A major structural defect is defined as any defect in work or materials in respect of a building, including a crack, distortion or displacement of a structural load-bearing element of the building, if it, (i) results in failure of a structural load-bearing element of the building, (ii) materially and adversely affects the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element, or (iii) materially and adversely affects the use of a significant portion of the building for usual and ordinary purposes of a residential dwelling and having regard to any specific use provisions set out in the purchase agreement for the home, The seven year MSD warranty includes significant damage due to soil movement, major cracks in basement walls, collapse or serious distortion of joints or roof structure and chemical failure of materials. In addition to the general exclusions, the seven-year MSD warranty specifically excludes dampness not arising from failure of a load-bearing portion of the building; damage to drains or services; and damage to finishes. Common Elements: For most condominium projects, warranty coverage also includes the shared areas of the building, referred to as common elements. Limits: The maximum statutory warranty coverage available for freehold homes and condominium units is $300,000. The maximum coverage for condominium common elements is $50,000 times the number of units, up to a maximum of $2.5 million. The maximum combined coverage for a condominium project (units and common elements) is $50 million. There is a maximum of $15,000 for warranted damage caused by environmentally harmful substances or hazards and a maximum of $25,000 for coverage of septic systems.

Tax credit: An amount of money that a taxpayer is able to subtract from the amount of tax that they owe to the government. The value of a tax credit depends on what the credit is being provided for, and certain types of tax credits are granted to individuals or businesses in specific locations, classifications or industries.

Tax deduction: A deduction from gross income that arises due to various types of expenses incurred by a taxpayer. Tax deductions are removed from taxable income and thus lower the individual’s overall tax liability.

Tax rate: A rate that represents the percentage of assessed value at which a property is taxed in a particular municipality. Also known as mill rate.

Tenancy agreement: A written agreement between an owner (landlord) and a tenant under which the owner allows the tenant the right of exclusive use of the property for a specified time, rent and terms.

Tenant: A person or organization that contracts with a landlord to occupy a specific space for a defined period of time according to the terms of a lease.

Tenants in common: A form of ownership of land/property that involves two or more land owners with no right of survivorship by any owner. Therefore, each owner may will his or her share of the land/property to another party.

Term: A contractual detail that represents points of agreement between the contracting parties (e.g. inclusions, exclusions, date contract takes effect, length of the contract).

Terms of trust: The written requirements that govern how money in a brokerage trust account is to be received, held and disbursed as agreed to by the parties to the transaction.

Third party: A party that is legally affected by a real estate or mortgage transaction but not directly involved in it.

Time share: A form of property ownership in which multiple parties hold similar rights and each party is allotted a time period during which they may have exclusive use of the property. These properties may be either purchased, whereby the use of the property lasts until the interest is sold, or leased, whereby the use of the property only lasts for a certain number of years.

Title: A document that records the information about the land, such as the legal land description, municipal jurisdiction, ownership and registered interests.

Title insurance: A contractual arrangement that indemnifies the insured against loss or damage resulting from title defects, some non-title issues relating to the ownership of real property, or the enforcement of liens that exist against it. Different title insurance policies exist for lenders and property owners. Title insurance is more common in residential real estate, although commercial policies are also available.

Title search: A review if all registered encumbrances relating to a specific parcel of land to determine the present condition of title.

Titled parking stall: A parking stall that has its own Certificate of Title and therefore is a unit onto itself. Titled parking stalls are held in fee simple ownership by the individual who is registered on the title.

Titled storage area: A storage area that has its own Certificate of Title and therefore is a unit onto itself. Titled storage areas are held in fee simple ownership by the individual who is registered on the title.

Torrens system: A system for recording land title transactions and interests in land. It includes three supporting principles: the current title accurately reflects the facts about the property (i.e. Mirror Principle); the current title has all the information about the property (i.e. Current Principle); and the provincial government guarantees the accuracy of the title (i.e. Insurance Principle).

Total debt service ratio: A measure used by lenders to assess a borrower’s ability to carry the debt load for a mortgage. The TDS ratio is calculated as a percentage of the borrower’s gross annual income relative to his or her total debt payments (GDS payments plus any other debts).

Townhouse condominium: A style of residential condominium consisting of multi-story units attached. Each unit typically has its own private entrance.

Trading: Describes the activities relating to the provision of services for buying, selling, leasing or managing real estate (including but not limited to advertising, solicitation and negotiation). In order to trade in real estate, individuals require an authorization.

Transaction brokerage: A means to resolve a conflict of interest that occurs in transactions when a brokerage agency under the common law or a real estate professional in designated agency represents clients with opposing interests in the same transaction.

Transaction facilitator: A real estate professional who has been engaged by the clients under a transaction brokerage agreement to provide facilitation services to clients in the same trade.

Transfer of land: The process of transferring an interest in land from one owner to another owner.

Transfer of mortgage: The process of transferring a mortgage from the current lender to another lender.

Trust account: An account separate and apart from one’s personal monies, as required by law.

Trust assurance and practice review: A review and examination of a brokerage’s system records and activities to ensure compliance with statutory obligations under the Real Estate Act and to recommend any needed changes in control, policy, and procedures.

Trust fund: Money held in an account by one individual or company on behalf of another individual or company.

Trustee: A person who has been appointed by way of a legal agreement to hold assets such as cash, investments or real property for the benefit of one or more persons.

U

Umbrella mortgage: A special arrangement by which one document encompasses one or more existing mortgages registered on the same property.

Unattached goods: The movable items not securely affixed to the land or buildings, such as furnishings and appliances that are not considered part of the real estate.

Unaudited financial statement: A financial statement that has not been reviewed by an auditor and does not possess any third-party assurances regarding the accuracy of the data it contains.

Underground storage tank: A tank used by a service station, car dealership, taxi company, bus line, research facility, farm or other organization to store various products including gasoline, diesel fuel, oil and other chemicals beneath the surface of the ground.

Underwrite: The analysis of risk undertaken by mortgage lenders and mortgage insurers to establish whether to grant the mortgage loan or issue the mortgage insurance.

Underwriter: An individual employed by a lender or insurer who is responsible for verifying the mortgage application information and supporting documentation, making a risk assessment of the applicant(s) and the property, and approving or declining the mortgage based on this assessment.

Unilateral contract: A contract where only one party makes an obligation to perform an act or promise without receiving in return any express promise for performance from the other party.

Unit: A physical space within a structure or parcel of land that is individually owned within a condominium.

Unit boundaries: The dimensions of a unit in a condominium that are stated in the condominium plan. If the unit boundaries are described in two dimensions (length and width), it is a bare land condominium. If the unit boundaries are described in three dimensions (height, length and width), it is either a conventional condominium or barely blended condominium.

Unit factor: The portion of financial responsibility assigned to each unit owner for their share of the common property.

Unit owner: An individual or corporation who owns a unit in a condominium.

Unit title: A document that records the information about the land, such as the legal land description, municipal jurisdiction, ownership and registered interests.

Utility: The utility of a property is its usefulness to a buyer and how efficient that land use is.

V

Vacancy rate: Represents the number of available units not occupied to the total number of units available in a building or the amount of rentable space to the total space available.

Valid: An agreement that contains all the essential elements of a contract that is legally binding and enforceable by the courts.

Valuation: The process whereby the value of property is estimated or determined through various means. This term is synonymous with evaluation.

Value: The quantity of one thing which can be obtained in exchange for another: the ratio of exchange of one commodity for another, e.g., one bushel of wheat in terms of a given number of bushels of corn, thus the value of one thing may be expressed in terms of another. Money is the common denominator by which real property value is usually measured. It is the power of acquiring commodities in exchange, generally with a comparison of the utility of the commodity (property) acquired in the exchange.

Variable rate mortgage: A mortgage where the interest rate is periodically adjusted based on the prime lending rate typically set by the lender. When an interest rate change occurs payments may be increased or decreased.

Vendor: The party who is selling real property (i.e. real estate) or personal property (i.e. chattels) that he or she owns.

Vendor take-back mortgage: A mortgage that a seller of a property takes back or carries for the buyer as part of the purchase price for that property.

Ventilation system: A building system that provides a supply of fresh, good quality air and controls moisture within a building.

Visitor parking stall: A parking stall that is part of the common property and therefore owned collectively by the condominium corporation. These stalls are used by individuals who do not reside in or operate from a unit in the condominium.

Void: A contract that is not valid or legally binding.

Voidable: A contract that may be treated as legally unenforceable at the option of one of the parties.

 W

Wall: A building system consisting of solid, vertical surfaces that enclose and/or divide a building.

Will: A written contract by which a person instructs how his or her estate should be distributed upon death.

Window: A building system consisting of an opening within an interior and/or exterior wall to allow for the passage or air, light, people and other matter. Windows are typically smaller in size than doors but this can vary depending on the building’s design and use.

Witness: Refers to a person who is present at the signing of a document and signs it to confirm the document’s authenticity and legality.

Wraparound mortgage: A special arrangement by which one document encompasses one or more existing mortgages registered on the same property.

Writ of execution: A written directive from the court issued against a property title when a claimant successfully sues a debtor resulting in a judgment in the claimant’s favour. The writ relates to the carrying out of this judgment.

Written service agreement: A contract in writing that establishes the relationship between the parties as to the services and obligations to be performed by an industry professional. Written service agreements are required in residential real estate when a real estate professional is working with a consumer as a client.

X

Y

Z

Zoning: General rules applicable to all land use classifications in a municipality (e.g. residential, commercial, industrial and special district classifications).