Montreal Realty Team - Real Estate Glossary

Advocacy agency: Serving both landlords and tenants, these agencies represent the concerns of renters and property owners to governments and serve as places to go for help or mediators in the case of disputes.

Amenities: Conveniences such as stores, malls, transit, parking, restaurants, theaters, service outlets, needed from day to day.

Amortization: The period of time, most often 15, 20 or 25 years, required to reduce a debt to zero when payments are made regularly.

Appraisal: A process for estimating the market value of a particular property. It can help the purchaser determine what price to offer. It can also be used by the lender for mortgage purposes. The appraised value seldom matches the actual purchase price exactly as other factors influence price.

Approved Lender: A lending institution authorized by the Government of Canada through CMHC to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate mortgages which require mortgage loan insurance.

Arbitrator: a person chosen to settle the issue between parties engaged in a dispute.

Arrears: as a noun, an unpaid, overdue debt or an unfulfilled obligation. As a verb, the state of being behind in fulfilling obligations.

Assign: to transfer the tenant responsible for a rental unit, which will occur when one tenant leaves before a lease expires and the lease is assumed by the incoming tenant. See sublet.

Assumption Agreement: A legal document signed by a home buyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the original owner.

Beacon score: a credit rating, also referred to as a credit score, used by banks and other lenders, indicating a person's credit worthiness (poor, fair, good, excellent, etc.) in comparison to others.

Blended Payment: A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.

Breach: A violation of a law, contract, or obligation.

Building Permit: A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or repaired. It must be posted in a conspicuous place until the job is completed and passed as satisfactory by a municipal building inspector.

Closing Costs: Costs, in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing date. Closing costs typically range from 1.5%-4% of a home`s selling price.

Closing Date: The date on which the sale of a property becomes final and the new owner takes possession.

CMHC: Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also creates and sells mortgage loan insurance products.

Coerce: To compel or force someone to act or think in a certain way by the use of intimidation, threats or pressure.

Collateral Mortgage: A mortgage which secures a loan by way of a promissory note. The money which is borrowed can be used to buy a property or for another purpose such as home renovation or for a vacation.

Commitment Letter / Mortgage Approval: Written notification from the mort-gage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

Conditional Offer/ Conditions of Sale: An Offer to Purchase that is subject to specified conditions, for example, the arranging of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.

Conventional Mortgage Loan: A mortgage loan up to a maximum of 75% of the lending value of the property. Mortgage loan insurance is not required for this type of mortgage. Covenant A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation. For example, a covenant can impose the obligation on a borrower to make mortgage payments in certain amounts on certain dates. A mortgage document consists of covenants agreed to by the borrower and the lender.

Credit bureau: An agency that maintains individual credit files on consumers. There are three credit bureaus in canada.

Credit check: A process where a person has his or her credit history reviewed before credit is extended.

Credit file: A detailed history of money you have borrowed, credit you have used and whether you make bill and debt repayments on time. A credit file may list employment history and present/past residences.

Credit rating: A numerical score calculated using the information in your credit file. The credit rating is often used to determine an individual's credit worthiness and is sometimes referred to as a credit score.

Deed: A legal document which is signed by both the vendor and purchaser, transferring ownership. This document is registered as evidence of ownership.

Default: Failure to abide by the terms of a mortgage loan agreement. A failure to make mortgage payments (defaulting on the loan) may give cause to the mortgage holder to take legal action to possess (foreclose) the mortgaged property.

Deposit: Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer until the sale is closed, and then paid to the vendor.

Discharge of Mortgage: A document signed by the lender and given to the borrower when a mortgage loan has been repaid in full.

Down Payment: The portion of the house price the buyer must pay up front from personal resources, before securing a mortgage. It generally ranges from 5%-25% of the purchase price.

Easement: A right acquired for access to or over, or for use of, another personâ€™s land for a specific purpose, such as a driveway or public utilities.

Empirica score: A credit rating, also referred to as a credit score, used by banks and other lenders, indicating a person's credit worthiness (poor, fair, good, excellent, etc.) in comparison to others.

Encumbrance: A registered claim for debt against a property, such as a mortgage.

Equity: The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the outstanding principal of the mortgage is reduced through regular payments. Market values and improvements to the property also affect equity.

Eviction: To put out or force out a tenant using the proper legal process. This process is different for each province and territory.

FICOÂ® score: A credit rating, also referred to as a credit score, provided directly by Equifax to individuals. The rating provided is a three digit number indicating a person's credit worthiness (poor, fair, good, excellent, etc.) in comparison to others.

Foreclosure: A legal procedure in which the lender gets ownership of the property if the borrower defaults on the mortgage loan.

Freehold: Ownership of land or ownership of land and a building or house.

Gross debt service ratio (GDS): The percentage of the borrowerâ€™s gross monthly income that will be used for monthly payments of principal, interest, taxes, heating costs and half of any condominium maintenance fees.

Guarantor: Someone who guarantees to pay the debt of an individual should that person find himself/herself unable to pay his/her own debt.

Guarantor's letter: The legal document indicating the guarantor's agreement to assume the debt of another person.

High-ratio Mortgage: A mortgage loan in excess of 75% of the lending value of the property. This type of mortgage must be insured - for example, by CMHC - against payment default.

Highrise: A multi-unit residential building that is six or more storeys high.

Holdback: An amount of money withheld by the lender during the progress of construction of a house to ensure that construction is satisfactory at every stage. A standard holdback amount is 10% of the total cost of the building project.

Human Rights Code: Laws defining the rights of Canadian citizens. In addition to the federal code, each province and territory has its own code. The various Codes are most commonly known for protecting citizen from discrimination based on race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, age, marital status, family status, handicap, or the being in the receipt of public assistance.

Infringe: To violate, transgress or exceed the limits. When renting in canada either party, the landlord or tenant are infringing on the rights of the other party if they violate the party's legal rights, human rights or an agreement between the parties.

Interest: The cost of borrowing money. Interest is usually paid to the lender in installments along with repayment of the principal loan amount.

Interest Adjustment Date (IAD): A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin. Interest due from the date your mortgage is advanced to the IAD is due on closing.

Judgement: The official decision of a court action or suit. When money or debts are owed, this information may be listed on a credit rating.

Jurisdiction: The area or limits an authority has to make laws and enforce them.

Key money: This phrase can have one of two meanings. In some areas it refers to money requested to get your name on a waiting list for an apartment. In other situations, often buildings with sophisticated security systems, it may refer to money requested to cut new keys. It can also be called "keyhole money".

Landlord: A person who rents or leases a premises he/she owns to another party. Landlords of residential premises typically own an apartment building, condominium, townhouse or house.

Lease: As a noun, a contract or agreement between a landlord and a tenant. As a verb, to rent a premises (apartment, house, etc.) For a specific period of time.

Legally binding: A legal agreement enforceable by an authority.

Legislation: Enacted law or group of laws.

Lending Value: The purchase price or market value of a property, whichever is less.

Lien (Mechanicâ€™s): A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials but has not been paid. A lien must be properly filed by a claimant. It has a limited life, prescribed by statute that varies from province to province. If the lienholder takes action within the prescribed time, the homeowner may be obliged to pay the amount claimed by the lien-holder. Alternatively, the lienholder may force a sale of the property to pay off the debt.

Loan-to-value Ratio: The ratio of the loan to the lending value of a property expressed as a percentage. For example, the loan-to- value ratio of a loan for $90,000 on a home which costs $100,000 is 90%.

Maturity Date: The last day of the term of the mortgage agreement. On this day the mortgage loan must be either paid in full or the agreement renewed.

Month-to-month: Refers to a periodic tenancy that is not bound to a specific lease period, such as a year, but renews each month. Notice periods to end this type of tenancy vary amongst the provinces and territories.

Mortgage: A mortgage is security for a loan on the property that you own. It is your personal guarantee to repay the loan as well as a pledge of the property as security for the loan.

Mortgage Life Insurance: This insurance guarantees that if you die your mortgage will be paid in full. This insurance can be conveniently purchased through your lender and the premium added to your mortgage payments. However, you may want to compare rates for equivalent products from an insurance broker.

Mortgage Loan Insurance: If you have a high-ratio mortgage (more than 75% of the purchase price), your lender will require mortgage loan insurance â€” available from CMHC or a private insurer. The insurance premium will cost between 0.5% and 3.75% of the amount of the mortgage (additional charges may apply).

Mortgage Payment: A regularly scheduled payment that is blended to include both principal and interest.

Mortgagee: The lender who provides the mortgage loan.

Mortgagor: The borrower who pledges the property as security for the loan.

Net Worth: Your total financial worth, calculated by subtracting your total liabilities from your total assets.

Normal wear and tear: Damage to an apartment or house resulting from normal use by the tenants. The landlord is responsible for normal wear and tear repairs.

Notice: Specific legal meaning varies for different provinces and territories. In general, it refers to a notification, in writing, given by one party (landlord or tenant) to the other. Check your local legislation.

NSF cheque: Often called a bounced cheque, when the bank does not transfer funds from the cheque issuer to the recipient because there are insufficient funds to cover the amount of the cheque. NSF stands for "not sufficient funds".

Offer To Purchase: A written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated in the document.

Option Agreement: A document stipulating that, in exchange for a deposit, a specified individual is to be given the first chance of buying a property at or within a specified period of time. An option holder who does not buy at or within the specified period loses the deposit and the agreement is cancelled.

P.I.T.: Principal, interest and taxes - payments due on a regular basis under the terms of the mortgage agreement. Generally, payments are made monthly and include one-twelfth of the estimated annual municipal and school taxes. Since these taxes change from year to year, this section of the mortgage will change accordingly.

P.I.T.H.: Principal, interest, taxes and heating - costs used to calculate the Gross Debt Service ratio (GDS).

Party: In legal terms, persons named in a contract or agreement.

Periodic tenancy: A tenancy that is not bound to a lease with a fixed period, but follows another period such as a month-to-month tenancy or a week-to-week tenancy.

Post-dated cheque: A cheque made out with the date after the current date. The cheque cannot be cashed until on or after the date on the cheque. Many landlords and tenants find this to be a convenient way to collect and pay rent, provided they adhere to provincial requirements regarding the use of post-dated cheques.

Premises: Land and the buildings on it, or a building or part of a building. In the guide this term is often used as a broad term covering the various types of rental premises, from farms and houses to single condominium and apartment units.

Principal: The amount of money actually borrowed.

Realtor: A real estate representative who is a member of an organization of persons engaged in the business of buying and selling real estate, such as the Canadian Real Estate Association.

Refinance: To pay off a mortgage or other registered encumbrance and arrange for a new mortgage, sometimes with a different lender.

Renew: To enter into a new lease term for a rental property after the existing lease term has expired. Automatic renewal of leases without a new written agreement is common. Check the provincial and territorial fact sheets for exact terms relating to lease renewals.

Rent: As a verb, to obtain occupancy or use of another's property in return for regular payments. Or, as a noun, payment made by a tenant at specified intervals in return for the right to occupy or use the property of another.

Rent bank: Community-based organizations providing assistance to individuals and families who cannot afford to pay the rent. The type and range of assistance varies from organization to organization.

Rent control: Regulations defining how a landlord can increase the rent and restricting a landlord's ability to increase the rent.

Rent geared-to-income(RGI): Common in subsidized housing, where the amount of rent to be paid by the tenant(s) is based on the amount of income earned by the tenant(s), often as a percentage of the tenant's income.

Rental: Refers to any rented property.

Rental accommodations: Residential rooms or buildings available for rent.

Rental agreement: A legally binding agreement to rent a premises, either written or oral, between a landlord and tenant.

Rental application: Filled out by a prospective tenant and often including an authorization to conduct a credit check, a landlord uses the application to determine the suitably of renting a unit to the individual. Questions on the rental application cannot violate the applicant's rights.

Rental authority: The legal authority overseeing landlord tenant issues in a province or territory. In some areas the courts are the rental authority, while in other areas a rent tribunal is the authority.

Rental property: Referring to lands and/or buildings and/or units and/or rooms available for or being rented.

Roommate: Someone who lives in a rental property with other tenant(s), sharing rent, the cost of utilities and other expenses according to mutually agreed upon terms.

Second Mortgage: An additional mortgage on a property that already has a mortgage.

Security deposit: See deposit.

Seize: To take possession of by legal process.

Settlement services: Agencies and organisations who assist immigrants, helping these individuals to establish themselves in their new location.

Sublessee: One who sublets from a current tenant.

Sublet: To rent property you lease to another person while still maintaining your responsibility to your landlord under your rental agreement. You are responsible for the actions of your sublessee. This is not the same as assigning, where you transfer the responsibility of your agreement to the new tenant. See assign.

Tenancy: The occupation of lands, buildings, or other property by title, under a lease, or on payment of rent and can also refer to the duration of the occupation.

Tenant: A person who leases or rents a premises from a landlord. The premises rented is often an apartment, room or house.

Tenant insurance: Additional insurance purchased by the tenant to protect personal property contained in a rental unit from loss due to fire, theft, water damage and other circumstances. Specific terms of coverage are determined by the policy purchased from the insurer.

Tenure: The act, fact, or condition of holding something in one's possession, such as real estate.

Term: The length of time during which a mortgagor pays a specific interest rate on the mortgage loan. The entire mortgage principal is usually not paid off at the end of the term because the amortization period is normally longer than the term.

Title: A freehold title gives the holder full and exclusive ownership of land and buildings for an indefinite period of time. In condominium ownership, land and common elements of buildings are owned collectively by all unit owners, while the residential units belong exclusively to the individual owners. A leasehold title gives the holder a right to use and occupy land and buildings for a defined period of time.

Total Debt Service Ratio (TDS): The percentage of gross monthly income required to cover all monthly payments for housing and all other debts, such as car payments.

Unit: The premises rented under one tenancy agreement, usually an apartment within a complex with a group of units (apartment buildings, condominiums, townhouse complexes, etc.).

Utilities: Services such as heat, water and electricity that may or may not be included in the amount of rent paid. Cable and telephone services are usually not included.

Vendor Take Back Mortgage: Mortgage financing arranged between the seller of the property and the buyer. The title is trans-ferred to the buyer. Often this type of loan is a second mortgage which the seller is willing to arrange at below market rates to ensure the buyer can purchase the house. Most of these arrangements are not renewable or transferable to the next owner of the house.

Week-to-week: Refers to a periodic tenancy that is not bound to a specific lease period, such as a year, but renews each week. Notice periods to end this type of tenancy vary amongst the provinces and territories.

Zoning Bylaws: Municipal or regional laws that specify or restrict land use.