Glossary
Acceptance:
The time at which an offer to purchase is accepted. The fact that it was accepted must be relayed to the person that made an offer in order for all parties to be bound to the contract. The acceptance must be relayed in writing.
Amortization:
The actual number of years it will take to repay a mortgage loan in full. This may go beyond the term of the loan. For example, mortgages often have five-year terms but 25-year amortization periods.
Appraisal:
Process for estimating the market value of a property.
Appraiser:
A professional who carries out an appraisal.
Asking/Listing Price"
The price a seller is asking in order to sell their property. The price that a buyer offers to purchase the property and the final contract price may be less than, equal to, or even more than the asking/listing price.
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.
Broker (i.e. real estate broker):
A person duly licensed under the laws of their province to act as an agent for another, and negotiate the purchase, sale and lease of real property. A broker has full authority to run a real estate company, whereas a real estate salesperson must have their license held under the auspices of a broker.
Buyer:
A person who purchases real estate
Buyer’s Salesperson / Buyer’s Broker:
A real estate broker, or salesperson, who represents a buyer’s best interests. The commission paid to this buyer’s agent may come from either the seller or the buyer. Sometimes referred to as selling salesperson and or selling broker.
Builder:
A person or company that builds homes.
Certificate of status:
Also called an Estoppel certificate, it outlines a condominium corporation's financial and legal state. Fees may vary and may be capped by law.
Closing:
The transaction where title passes from seller to buyer and the seller is paid.
Closing costs:
Costs in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on closing day. They range from 1.5% to 4% of a home’s selling price.
Closing day:
Date on which the sale of the property becomes final and the new owner takes title to the home.
Common Areas:
The space that is shared among all property owners. In a condominium that may be the building corridors, elevators, parking areas, recreational facilities, etc. and in a planned unit development an example of this might be swimming pools or tennis courts.
Condominium:
Real estate ownership where several owners hold title to different individual units, or parts, of the building and have a shared interest in the common areas.
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 develops and sells mortgage loan insurance products.
CMHC insurance premiums:
When a home buyer takes out a mortgage loan with less than a 20% down payment, an insurance premium is paid to CMHC, and a mortgage loan insurance policy is issued to the lender. The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on a number of factors such as the purpose of the property (owner occupied or rental), the type of loan (i.e. purchase/construction or refinance loan), the ability of a self-employed borrower to supply income verification, and the size of your down payment (i.e. the higher the percentage of the total house price/value that you borrow, the higher percentage you will pay insurance premiums).
Commitment letter (or Mortgage Approval):
Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
Conditional offer:
An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
Condominium (or strata):
You own the unit you live in (eg: highrise or lowrise, or a townhouse) and share ownership rights for the common areas of the building along with the development’s other owners.
Conventional mortgage:
A mortgage loan up to a maximum of 80% of the lending value of the property. Typically, the lending value is the lesser of the purchase price and market value of the property. Mortgage insurance is usually not required for this type of mortgage.
Counteroffer:
If, for example, your original offer to the vendor is not accepted, the vendor may counteroffer. This means that the vendor has amended something from your original offer, such as the price or closing date. As this new offer varies the terms of the original offer, this rejects the original offer. If a counteroffer is presented, the individual has a specified amount of time to accept or reject.
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/notary until the sale is closed and then it is paid to the vendor.
Down payment:
The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.
Dual Agency:
An agent who represents both the seller and the buyer in a real estate transaction.
Due Diligence:
The act of best effort of ensuring that all statements about the real property are true.
Easement:
An interest in land owned by another person that benefits the person who has the easement, for a specific limited purpose (i.e. right of way permitting passage over a particular strip of land) such as with public utilities.
Estoppel certificate:
Also called a certificate of status, it is a certificate that outlines a condominium corporation's financial and legal state. Fees may vary and may be capped by law.
Exclusive Agency Listing:
A written agreement between a property owner and a real estate broker giving the broker the exclusive right to sell the property for a specified period and at a specified fee. Salespeople whose licenses are held by a broker may sign on their broker’s behalf.
Fiduciary:
A relationship which implies a position of trust or confidence. The obligations a fiduciary may owe to their beneficiary include duties of loyalty, obedience, full disclosure, the duty to use skill, care and diligence, and the duty to account for all finances.
Fixed mortgage interest rate:
A locked-in rate that will not increase for the term of the mortgage.
Freehold:
A freehold title is an interest in land that gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title is an interest in land that gives the holder the right to use and occupy the land and building for a defined period.
H Home Inspection:
An inspection made by a third party (not the buyer or seller) for a statement of condition on the property, i.e. structural and mechanical conditions. Many contracts to purchase are contingent on the buyer having a home inspection performed within a certain time period prior to closing.
Home inspector:
A person who visually inspects a home to tell you if something is not working properly, or is unsafe. He or she will also tell you if repairs are needed, and maybe even where there were problems in the past. Home inspectors are not currently regulated in Manitoba.
Homestead:
The Homesteads Act provides a non-owning spouse and (after June 30, 2004), a non-owning common-law partner, with specific rights with respect to homestead property. A non-owning spouse or common-law partner is the party whose name is not registered as a co-owner on the certificate of title for the property. If the property is co-owned by both parties, as joint tenants or tenants in common, as evidenced by both names appearing on the title, then The Homesteads Act does not apply.
Interest:
The cost of borrowing money. Interest is usually paid to the lender in regular payments along with repayment of the principal (loan amount).
Interest rate:
The price paid for the use of money borrowed from a lender.
Lease:
A contract between a landlord and a tenant that transfers the right to exclusive possession and use of the landlord’s real property to the tenant for a specified period of time for a stated consideration.
Lien:
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.
Limited Joint Representation:
the buyer specifically requests an agency relationship with the listing broker and consents to the joint representation. Also, even though the seller has consented to such a possibility when he/she signed the listing contract, he/she must still be informed if the joint representation is to occur and be asked to sign an Acknowledgement of Limited Joint Representation form. Remember that it is possible for a listing brokerage to be the agent for the seller and have a buyer, who is not represented by the listing brokerage or any other cooperating brokerage, purchase that property.
Listing Salesperson:
A real estate salesperson that represents the seller of the property.
Maturity date:
The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement renewed.
Mortgage:
A mortgage is a security interest given in the property you are purchasing which secures repayment of the loan related to the property.
Mortgage approval:
Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
Mortgage broker:
A person or company specializing in finding mortgages for those wishing to buy property.
Mortgage lender:
A mortgage lender is an institution (bank, trust company, credit union, etc.) that lends money for a mortgage.
Mortgage loan insurance:
Mortgage loan insurance is required for residential mortgage loans with a loan-to-value ratio of more than 80%, and is available from CMHC or a private company. Because mortgage loan insurance protects the lender against losses in the event that a borrower fails to pay his or her mortgage, it enables more Canadians to purchase their home earlier, at competitive interest rates and benefit from the growth in home equity sooner.
Mortgage payment:
A regular payment to the lender that includes both the interest and the principal.
Mortgage term:
Length of time that the mortgage contract conditions, including interest rate, is fixed.
MLS:
Multiple Listing Service: A multiple listing service that contains descriptions of most of the homes that are for sale. This computer-based service is used to keep up with properties that are listed for sale.
Net Asset Value:
Net asset value is the price set on a fund's units by deducting liabilities from assets and dividing by outstanding units.
New Home Warranty Program:
Coverage in the event that an item under the warranty needs to be repaired within the specific warranty period. The repair will be made by the organization that provided the warranty.
Offer to purchase:
A written contract setting out the terms under which the buyer agrees to buy the home. If the Offer to Purchase is accepted by the seller, it forms a legally binding contract that binds the people who signed to certain terms and conditions.
Open-house:
A period of time during which a house or apartment for sale or rent is held open for public viewing.
Operating Costs:
The expenses that a homeowner has each month to operate a home. These include property taxes, property insurance, utilities, telephone and communications charges, maintenance and repairs.
P.I.T.H.:
Principal, interest, taxes and heating - costs used in both the Gross Debt Service ratio (GDS) and Total Debt Service ratio (TDS) calculations.
Property Disclosure Statement:
is a disclosure of what a Seller knows about their property. There are several versions of the document which has a series of questions for Sellers to give a potential Buyer a guideline of what the Seller knows about the condition of the property.
Property taxes:
Taxes charged by the municipality where the home is located, usually based on the value of the home. In some cases the lender will collect a monthly amount as part of the mortgage payment to cover your property taxes, which is then paid by the lender to the municipality on your behalf.
Principal:
The amount that you borrow for a loan (not including interest).
Real estate:
Property consisting of buildings and land.
Real Estate Broker:
An individual, company, or partnership who is entitled to engage in real estate trades and transactions on behalf a third party.
Real Estate Salesperson:
A person who acts as an intermediary between the seller and the buyer of a property.
Reserve fund:
A fund required to be set up by the condominium corporation for major repair and replacement of common elements and assets of a corporation. This amount is set aside by the homeowner on a regular basis so that funds are available for emergency or major repairs.
Strata (or condominium):
You own the unit you live in (e.g. a highrise or lowrise, or a townhouse) and share ownership rights for the common areas of the building along with the development’s other owners.
Survey or Certificate of location:
A document that shows property boundaries and measurements specifies the location of buildings, fences, and other improvements on the property and states easements or encroachments, at a specific point in time.
Tenancy in Common:
A type of ownership in which two or more people have an undivided interest in property, without the right of survivorship. Upon death of one of the owners, his or her interest passes, not to the co-owner(s) but to whomever they have chosen as their heir.
Term:
Mortgage term is the length of time that the mortgage contract conditions, including interest rate, are fixed.
Title:
A freehold title is an interest in land that gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title is an interest in land that gives the holder the right to use and occupy the land and building for a defined period.
Title Insurance:
Insurance against loss or damage arising from a matter affecting the title to real property (e.g.: by a defect in the title or by the existence of a lien, encumbrance or servitude).
Total Debt Service Ratio (TDS):
The percentage of gross income that will be used for payments of principal, interest, taxes and heat (P.I.T.H.) and other debt obligations, such as car payments or payments of other loans.
Transfer Tax:
A tax that is collected at closing for the transfer of ownership of real property. For additional information on this tax, contact your lawyer.