A B C D E F G H I J K L M N O P Q R S T U V W Y Z

ABANDONMENT

When the condition of ownership for a property becomes a burden or is troublesome to the owner, he or she may choose to become a nonpayer and abandon the property. In the event of "abandonment," creditors can seek to recover their money as the property is no longer part of the estate.

ACCELERATED BI-WEEKLY MORTGAGE PAYMENTS

Mortgage payments that are made every two weeks (the date of which won't always fall on the first day of a month). If you choose accelerated bi-weekly payments, you will make 26 payments a year.

ACCREDITED MORTGAGE PROFESSIONAL (AMP)

Accredited Mortgage Professional (or AMP) is a professional designation created the by Canadian Association of Accredited Mortgage Professionals. It is essentially a designation that demonstrates commitment to ongoing education and ethical behaviour in the mortgage industry.

APR (Annual Percentage Rate)

The yearly interest percentage of a mortgage as expressed by the actual rate of interest paid given the term, rate, amount and cost of arrangement.

ARM (Adjustable Rate Mortgage)

A mortgage for which the payments change as the interest rate is adjusted periodically according to movements in a pre-selected index.

ABSTRACT OF TITLE

A written history of the title to a parcel of real estate as recorded in a Land Registry Office.

ACCELERATION CLAUSE

A clause in the mortgage document which accelerates the maturity date and states that upon default, the principal sum of the mortgage and accrued interest falls due.

ACCRUED INTEREST

Interest which has accumulated and unpaid since last payment date.

ADJUSTMENT DATE

Date regarded as the official beginning of a mortgage.

ADVERSE POSSESSION

When an individual, not the owner, takes actual possession of the property, hostile to, and without the consent of, the owner.

ADD-ON INTEREST

An interest amount added to the principal of a debt and made payable as part of the debt , usually in equal periodic installments (also called Pre-calculated interest).

AFFIDAVIT

A statement of declaration in writing and sworn or affirmed before an authorized individual, such as a notary public.

AGENCY

A relationship which arises out of a contract, where an agent is authorized by a principal to engage in certain acts, usually in dealing with one or more third party(s).

AGREEMENT OF PURCHASE AND SALE

A written contract to buy property in which the purchaser and vendor agree to sell upon terms and conditions as set forth in the agreement.

ALIENATION CLAUSE

This is a clause that enables the mortgagee to demand payment of the outstanding balance including interest upon sale or transfer of title. (also known as a "due on sale" clause)

AMORTIZATION

The gradual retirement of a debt by means of partial payments of the principal at regular intervals.

AMORTIZATION OF A MORTGAGE

The arrangement for paying off a mortgage by instalments, over a period of time.

AMORTIZATION PERIOD

The time period required to completely retire a debt through scheduled payments of principal.

ANNIVERSARY DATE

The occasion of one year from an event pertaining to a mortgage. (E.g. Registration date)

APPRAISAL

A report prepared by a real estate appraiser that estimates the value of a home and states features/properties of the home. Lenders generally require appraisals to verify that the buyer has purchased the home for a fair market price, to determine what the market rents are for the home, to ensure that the home meets the lender's standards, to determine how much equity the home owner has in the home, etc.

APPRAISED VALUE

An estimate of property value written by a qualified individual (AACI). Appraisals performed for mortgage lending purposes, may not reflect the market value of the property, or the purchase price.

APPROVED LENDER

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.

APPURTENANCE

Something which is outside the property itself, but belongs to the land and is joined thereto; eg. a road over another's land providing an access (right-of-way) is an appurtenance.

ARREARS

To be "in arrears" is to be behind in the payments called for under a mortgage agreement.

ARTICLES OF INCORPORATION

A document filed with the Government of Alberta by a corporation's founders describing the purpose, place of business, and other details of the corporation (such as its name). These will frequently include a certificate of incorporation as well.

ASSESSED VALUE

An amount assigned to taxable property, for the purpose of equalizing the burden of taxation.

ASSET

Something that you own that has value or use. Example: RRSPs, vehicle, savings, home, etc.

ASSIGNEE

One who takes the rights or title of another by assignment.

ASSIGNMENT OF MORTGAGE

The assigning of a mortgagee's interest in the mortgage to a new mortgagee. The legal sale of the mortgage with or without an agreement to repurchase.

ASSIGNMENT OF RENTALS

The enforceable diversion of income from mortgaged property to the mortgagee.

ASSIGNOR

One who transfers or assigns the rights or title to another.

ASSUMABILITY

Allows the buyer to take over the seller's mortgage on the property.

ASSUMPTION AGREEMENT

A document which binds someone other than the mortgagor, to perform mortgage obligations; A legal document signed by a home buyer which requires the buyer to assume responsibility for the obligations of a mortgage made by a former owner.

ASSUMPTION OF MORTGAGE

The action of a purchaser taking responsibility for a mortgage debt by way of a legal agreement. The original covenanter(s) responsibility pursuant to the mortgage obligation remains intact in such arrangement, so long as the existing documentation remains registered.

ATTORNMENT OF RENT

The redirection of rental income to a mortgagee, usually in the event of default.

AUTHORITY

The legal right given by a principal to an agent to act on the principal's behalf in performing specific acts or negotiations.

AVERAGING

Sometimes called 'levelling,' this is the calculation made to determine the interest when a second mortgage is taken out; averaging determines the average interest rate of the two mortgages.

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BALANCE DUE ON COMPLETION

The amount of money a purchaser will be required to pay to the vendor to complete the purchase, after all adjustments have been made.

BALLOON PAYMENT

This is a final mortgage payment at the end of the term which pays off the outstanding loan in full. The amount of money (principal) required to discharge a mortgage at maturity.

BLANKET MORTGAGE

A single registered document which encumbers more than one property.

BLENDED PAYMENT

Equal payments consisting of both principal and interest, paid regularly during the term of the mortgage. The principal portion increases each month, while the interest portion decreases, but the total monthly payment does not change.

BREACH OF CONTRACT

Failure to fulfill an obligation under a contract. Breach confers a right of action on the offended party.

BRIDGE OR INTERIM LOANS (MORTGAGES)

Interim loans are used to bridge the gap between the initial construction and the first advances available under the terms of the construction mortgage. Interim loans can also be used for financing between phases of construction, until the construction is completed to a stage whereby the mortgagee lender will advance funds to pay for the phase of the construction. Usually, when the mortgage is advanced, the proceeds of the mortgage are used to return the bridge or interim financing. Bridge financing is also used when a sale closes after a purchaser takes possession on a purchase.

BROKER

Person licensed by the provincial or territorial government to trade in real estate; may form companies of offices which appoint sales representatives to provide services to the seller or buyer, or they may provide the same services themselves; also referred to as agents.

BUILDING CODES

Regulations established by government providing for structural requirements.

BUILDING PERMIT

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.

BUYDOWN

A payment to the lender from the seller, buyer or third party causing the lender to reduce the interest rate during the term of the mortgage.

BUYER BROKERAGE AGREEMENT

Written agreement between the buyer and the buyer's agent, outlining the agency relationship between the two parties, and the manner in which the buyer's agent will be compensated.

BUYER'S AGENT

Person or firm representing the buyer; primary allegiance is to the buyer.

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CAP

Refers to a maximum interest rate increase for a mortgage.

CAPITALIZED VALUE

The value of a property based on the net income.

CAPITALIZATION RATE

The rate of return anticipated by an investor in property.

CAVEAT EMPTOR

"Let the buyer beware". A buyer must examine fully before the purchase is made.

CERTIFICATE OF CHARGE

A mortgage document in the Land Titles System.

CESSATION OF CHARGE

A discharge of a mortgage in the Land Titles System.

CHAIN OF TITLE

The sequence of conveyances and encumbrances affecting a title to land from the time that the original patent was granted or as far back as records are available.

CHARGE

The name given to a mortgage document when title is registered under the Land Titles Act.

CHATTELS

Moveable possessions and personal property that may be removed without damage to the property, (eg. appliances).

CHATTEL MORTGAGE

An encumbrance against moveable possessions, or personal property that may be removed without damage to the property, (e.g. appliances).

CLIENT

The person represented by the agent.

CLOSED MORTGAGE

A reference to the absence of the privilege to accelerate repayment during the term of a mortgage either by bulk payment(s) or increase to scheduled remittances. A penalty applies if you repay the loan in full before the end of a closed term.

CLOSING

See "Date of Completion;" the day the legal title to the property changes hands.

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; typically range from 1.5% to 4% of a home's selling price.

CLOUD ON TITLE

Any encumbrance or claim that affects title to property.

CMHC

The Canada Mortgage and Housing Corporation a Canadian Crown Corporation which administers the National Housing Act. CMHC services include the insuring of high ratio mortgage loans for lenders.

COLLATERAL

A security or guarantee pledged for the repayment of a loan if an individual does not have enough funds to repay. In respect to mortgage loans, the collateral is the property being mortgaged.

COLLATERAL MORTGAGE

A mortgage which secures a loan given 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.

COLLATERAL SECURITY

An additional form of security, pledged to reduce the risk of a mortgagee.

COMMISSION

Amount agreed to by the seller and the real estate broker/agent and stated in the listing agreement; payable to the broker/agent on closing.

COMMITMENT

A written notice from a lender who advises of approval to advance a specified amount of funds under certain conditions.

COMMON LAW

That part of the law formulated, developed and administered by the old common law courts, based originally on unwritten common customs.

COMPLETION LOAN

A mortgage loan disbursed following the satisfactory completion of construction.

COMPOUND INTEREST

Interest on both the principal and on interest that has accrued.

COMPOUND PERIOD

The number of times per year that the interest rate is compounded. In Canada, mortgage interest rates are compounded semi-annually, or twice per year.

COMPONENT FINANCING

A device by which lending is split into separate parts and treated individually.

CONDITION PRECEDENT

An event or action necessary before an agreement becomes binding.

CONDITION SUBSEQUENT

A condition referring to a future event upon the happening of which the contract becomes no longer binding on the parties.

CONDITIONAL OFFER

Offer to purchase that is subject to specified conditions; usually a stipulated time limit within which the specified conditions must be met.

CONDOMINIUM

The ownership of a separate amount of space in a multiple dwelling or other multiple-ownership of common elements used jointly with other owners.

CONDOMINIUM FEE

A monthly common payment among owners which is allocated to pay expenses in maintaining common areas and any other maintenance costs involved with the property.

CONSIDERATION

Something of value given to make a promise of repayment enforceable.

CONSTANT ANNUAL PERCENT

The percentage required to pay the principal and interest to amortize the loan.

CONSTANT PAYMENT MORTGAGE

A mortgage which is paid by equal periodic amounts consisting of principal and interest payments. It may be self-liquidating, which means the mortgage is entirely paid off at maturity (fully amortized), partially amortized, at the end of which there remains a principal balance due at maturity (also known as balloon mortgage).

CONTRACT

An agreement between two or more parties given receipt of lawful consideration to do or refrain from doing some act.

CONSTRUCTION ADVANCE

Moneys advanced to the borrower under a construction loan.

CONSTRUCTION LIEN

A claim against property pursuant to labour, services, or materials supplied.

CONSTRUCTION LOAN

A short term loan made to a builder for construction of buildings, usually to be paid out by another mortgage upon final completion. Also, a description used in reference to a mortgage which is advanced in pre-determined stages, according to the amount of work completed.

CONSTRUCTION LOAN AGREEMENT

An agreement between a lender and a builder setting out terms of an agreement - loan amount, rate, method of drawing funds, conditions for advancing.

CONVENTIONAL MORTGAGE

A mortgage loan which does not exceed 80% of the lending value (the lesser of the appraised value or purchase price) of the property. Mortgages that exceed this limit must be insured by CMHC (or similar insurance provider).

CONVEYANCE

The transfer of property ownership. Also, the written instrument whereby such transfer is affected. Conveyance includes a mortgage, charge, and lease, etc.

CO-OPERATIVE

The ownership of a separate amount of space in a multiple dwelling or multiple-occupancy building with proportioned tenancy in common ownership of common elements. Used jointly with other owners, however, the owner does not have clear title to a specific unit, but becomes a shareholder of the corporation which owns all the property and occupies by way of a tenancy agreement subject to shareholders agreement administered by an elected board of directors.

COVENANT

An agreement contained in an instrument creating an obligation. It may be positive, stipulating the performance of some act. It may be negative or restrictive, forbidding the commission of some act. 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

A credit reporting agency that gathers credit information and compiles it into a credit report. The two credit bureaus in Canada are Equifax Canada and Trans Union of Canada.

CREDIT REPORT

A credit report is a report/history of an individual's credit.

CROSS-COLLATERALIZATION

A reference to security involving various liens held in support of one or more advances made by a lender to a borrower.

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DAMAGES

Compensation or indemnity for loss owing to breach of contract.

DATE OF COMPLETION

The date specified by an agreement of purchase and sale, when the purchaser is to deliver the balance of money due and the vendor to deliver a duly executed deed.

DEBT SERVICE

The amount of principal and interest payments made under a mortgage.

DEBT-SERVICE RATIO

Measurement of debt payments to gross household income; The percentage of the borrower's gross income that will be used for monthly payments of principal, interest, taxes, space heating costs and condominium fees.

DEED

A document signed by the seller and purchaser transferring ownership. This document is then registered against the property

DEED RESTRICTION

A restriction in a deed to limit or govern the use of the land.

DEFAULT

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

DEFERRED INCOME

An accounting method of dealing with income that is received but not included in a statement of earnings as normal earnings.

DEFICIENCY

An insufficient payment, often relating to an amount recovered under a power of sale or foreclosure action.

DEFLATION

A decline in the general level of prices; or, an increase in the value of money; or an increase in the amount of money in circulation.

DELAYED PARTICIPATION LOAN

Where a lender disposes of a loan to several other participants putting up their respective shares later.

DELINQUENCY

When the borrower fails to make their mortgage payments on time, this normally leads to a forced sale on the borrower's home.

DEMAND NOTE

Payment is made on demand, usually within a few days notice to the borrower.

DEPOSIT

Payment of money or other valuable consideration as pledge for fulfillment of contract. Money places 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, then paid to the vendor.

DEPRECIATION

A loss in value due to any cause.

DEPRECIATED REPRODUCTION COST

Appraisal method by which the cost of replacing a structure, minus depreciation, gives the depreciation reproduction costs.

DISCHARGE OF MORTGAGE

A document executed by the mortgagee, and given to the mortgagor when a mortgage loan has been repaid in full before, at, or after the maturity date; The removal of all mortgages on a property.

DISCLOSURE STATEMENT

A statement contained in a consumer credit transaction in order to disclose complete credit terms and interest rates.

DISCOUNT

Reduction in product price or cost of a service. A discount if the difference between the nominal face value of a loan and actual cash received by the borrower because interest is paid at the beginning of a loan based on the sum to be repaid at maturity.

DISCOUNTED CASHFLOW ANALYSIS

This is a method of analysis that calculates the true value of an investment in terms of the present value, i.e. what the investment is worth now, although it is spread over a number of years. To compensate for future earnings a discount factor is added in so that a real comparison can be made between an investment with quick return and one that is placed over a number of years.

DISCOUNTED LOAN

The face value of the loan minus the interest or discount charged by the lender is the amount actually advanced to a borrower.

DOMINANT TENEMENT

The estate which derives benefit from an easement over a subservient estate, as in a Right-of-Way.

DOWER INTEREST

A wife's interest in the lands of her husband accruing to her by virtue of the marriage.

DOWN PAYMENT

The portion of the house price the buyer must pay up front from personal resources, before securing a mortgage; it usually ranges from 5-25% of the purchase price.

DOWNSIDE LEVERAGE

Occurs where the debt service on a mortgage exceeds the yield on an investors' property, thereby reducing cash flow.

DRAWEE

The person, bank, or corporation on whom a bill, note or cheque is drawn from and from whom payment is expected by the payee or his assignee.

DRAWER

The person or corporation who writes a cheque or note for payment to a third party. In the case of a bill of exchange, the drawer is the creditor and is usually the payee.

DUAL AGENT

A real estate broker/agent who acts as agent for both buyer and seller in the same transaction.

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EASEMENT

The right acquired for access over another person's land for a specific purpose, such as for a driveway or public utilities.

ECONOMIC DEPRECIATION

Loss in value of property due to external influences related to the property or not controlled by the owner.

EFFECTIVE GROSS INCOME

The estimated gross income less allowances for vacancies and rent losses.

EFFECTIVE INTEREST RATE

The actual interest rate on investment where a debt or loan was bought at discount or at a premium.

ENCROACHMENT

A fixture, such as a wall or fence, which illegally intrudes into or invades on public or private property diminishing the size and value of the invaded property.

ENCUMBRANCE

Outstanding claim or lien recorded against property, or any legal right to the use of the property by another person who is not the owner. E.g. a mortgage

END LOAN

The mortgage loan to the final customer, such as a purchaser of a condominium unit.

EQUITY

The value of real estate over and above the mortgage(s) against it.

EQUITABLE MORTGAGE

The transfer of equity in property as security for a debt. Any mortgage registered after the first mortgage.

EQUITY OF REDEMPTION

The right of the mortgagor to reclaim clear title to the real property upon full repayment of the debt.

ESCROW ACCOUNT

An account held by an agent on behalf of his principal for the payment of money due to a third party on the event of specified incidents, e.g. a vendor's solicitor will hold funds on his behalf until title deeds to property have been delivered and property registered and the keys delivered to the purchaser; or an account maintained by a mortgagee for the payment of property taxes or life insurance premiums.

ESCHEAT

The reversion of property to the state in event the owner thereof dies leaving no will and having no legally qualified heir to whom the property may pass by lawful descent.

ESTATE

The degree, quantity, nature and extent of interest which a person has in real property.

ESTOPPEL CERTIFICATE - now called a STATUS CERTIFICATE

A written statement or certificate which states certain facts upon which the receiver of the statement or a third party may rely, e.g. Lender's estoppel statement as to a purchaser or property. The lender cannot later deny the truth of these statements because a third party has relied and acted upon them.

EXACT DAY INTEREST

Interest calculated on the basis of 365 days per year or 366 days in a leap year.

EXCULPATORY CLAUSE

A clause which excuses one party from personal liability in the event of a default.

EXPROPRIATION

The act of forcefully taking private property for public use.

EXTENSION AGREEMENT

The lengthening of a term on a contract to extent the maturity date; or to permit more time for the performance of an obligation or condition; or the extension of the coverage of a lien to include more property.

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FEASIBILITY ANALYSIS

An analysis to determine the feasibility of a project. Details of construction costs, projected income from the project plus location and economic factors affecting the project will be required. Similar to a feasibility study by a developer conducted to decide whether to proceed with plans and required by the lender to decide whether to provide funds.

FEE SIMPLE

The highest estate or absolute right in real property. In common law, the most common way real estate is owned. The most complete ownership interest one can have in real property.

FINAL ORDER OF CLOSURE

Judgment taken against a mortgagor, extinguishing the equity of redemption.

FINANCIAL INSTITUTIONS

Banks, Credit Unions, Insurance and Trust Companies.

FINANCING STATEMENT

A statement filed by a creditor in a public records office identifying the parties, giving their addresses, and describing the collateral.

FIRST MORTGAGE

The mortgage agreement which has first claim on the property in the event of default.

FIRST MORTGAGE BOND

Bonds issued by a corporation secured upon the property and earnings of the issuing corporation.

FIXED RATE MORTGAGE

This is the usual form of mortgage where interest rate remains the same during the entire life of the loan.

FIXTURES

Permanent improvements to property that may not be removed at the expiration of the term of lease or tenure.

FLAT PAYMENT

An all inclusive monthly payment that is calculated to include principal interest and taxes. Under this system there is no specific breakdown as t the amounts of the principal, interest and taxes.

FLOATING RATE OF INTEREST

Rate of interest which fluctuates according to prime lending rates, eg. 2% above prime rate usually chargeable on short term loans such as construction loans.

FLOOR TO CEILING LOAN

A permanent loan or advance made in two stages, (a) on completion of construction according to agreed upon terms and conditions, and (b) the balance advanced upon occupancy or upon cash flow requirements.

FORECLOSURE

Remedial court action taken by a mortgagee when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor; A legal procedure whereby the lender obtains ownership of the property following default by the borrower.

FORWARD COMMITMENT

Lenders commitment to make or assume a future loan.

FREEHOLD

The ownership of a tract of land on which the building(s) are located. The oldest and most common type of ownership of real estate.

FULLY AMORTIZED LOAN

A mortgage loan wherein the stipulated repayments repay the loan in full by its maturity date.

FURTHER CHARGE

A second or subsequent loan of money to a mortgagor by a mortgagee, either on the same or on an additional security.

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GENWORTH

The Genworth Financial Canada insures high ratio mortgages for lenders.

GALE DATE

The dates on which interest is charged or compounded on the mortgage loan.

GAP FINANCING

A loan required by a builder to obtain funds during the period between a permanent take out commitment and a construction loan. The construction lender will usually require permanent mortgage commitment to the full amount of the construction loan plus a hold back provision that only the "floor" amount will be funded at the completion of construction.

GENERAL CREDITOR

A creditor who has no security other than the promise of the debtor.

GIFT LETTER

This is a letter stating that the gift giver (an immediate family member) in making a gift of a certain amount to the gift receiver for the down payment of a home. It also states that the gift is genuine and that the gift receiver (or home buyer) is not required to pay back the gift at any time.

GRADUATED AMORTIZATION MORTGAGE

A special method of repayment on a mortgage whereby repayments in the initial period are low and are gradually later stepped up at a higher rate. Graduated payments mortgages were devised to enable lower income families to become home owners.

GRANT

A technical term used in deeds of conveyance to indicate a transfer of an interest or estate in land.

GRANTEE

The party to whom an interest in real property is conveyed (the buyer).

GRANTOR

The person who conveys an interest in real estate by deed (the seller).

GROSS RENT MULTIPLIER

Method of appraising the fair market value of property by multiplying the gross rents by a factor which varies according to the type of property, and the location of the property.

GUARANTEED INCOME MORTGAGE

A guarantee included in a purchase money mortgage by a seller-mortgagee that there will be a minimum cash-flow or net operating income to the purchaser mortgagee. The guarantee is limited to a short period and may be combined with a management contract whereby the seller, as manager, will operate the property.

GROSS DEBT SERVICE (GDS) RATIO

The percentage of gross annual income required to cover payments associated with housing (mortgage principal and interest, taxes and secondary financing). Most lenders prefer that the GDS be no more than 32%. If the dwelling unit is a condo, all or a portion of common fees are included, depending on what expenses are covered.

GROSS DEBT SERVICE RATIO

Allowable ratio of payments for principal, interest and taxes to gross income.

GROSS INCOME

The scheduled income from the operation of the business of the management of the property, customarily stated on an annual basis.

GUARANTOR

A third party without interest in the property who agrees to assume responsibility for a debt in the event of default by the mortgagor.

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HIGH RATIO MORTGAGE

A mortgage loan which exceeds 80% of the lending value of the property, and must be insured against default of payment.

HIGHEST AND BEST USE

This refers to the use of land that would most likely produce the greatest net return over a given time.

HOLD BACK

An amount of money retained by a construction lender or owner until satisfactory completion of the work performed by a contractor; a standard holdback is 10% of the cost of the building project.

HOME INSURANCE POLICY

A document that is proof that you have home insurance on the property being mortgaged. For a purchase, this is required when all final documentation is signed at the lawyer's. For a refinance or Smith Manoeuvre, this is documentation that is required to be provided to the brokerage before the mortgage is instructed.

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IMMEDIATE PARTICIPATION LOAN

A loan in which all of the partners contribute their share immediately.

INCOME BOND

Bonds which pay a fixed rate of interest contingent upon earnings. These bonds may originate from a reorganization because of a default on mortgage bonds.

INCOME/EXPENSE RATIO

Ratio of operation expenses to gross income and expressed as a percentage (also known as operating ratio).

INCOME PROPERTY LOAN

A loan which is secured on property which already has a source of income, e.g. Rents which will cover the debt service payments on the loan.

INDENTURE

A document of deed, usually in duplicate, expressing certain objects between the parties.

INFLATION

A general increase in consumer prices, most often expressed as an annual percentage rate.

INJUNCTION

A judicial process or order requiring the person to whom it is directed to do or refrain from doing a particular thing.

INSTRUMENT

A form of written legal document.

INSURABLE VALUE

The term is used conventionally to designate the amount of insurance which may be carried on destructible portions of a property to indemnify the owner in the event of loss.

INTEREST (Rate)

The cost of a loan as expressed as a percentage; The return the lender receives for loaning you the money for the mortgage.

INTEREST ADJUSTMENT

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, as interest payable is due from the date your mortgage is advanced.

INTEREST ESCALATION

Rate of interest on a loan is raised periodically during the term of the loan so as to encourage early repayment.

INTEREST ONLY LOAN

Borrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.

INTEREST RATE DIFFERENTIAL (IRD)

An IRD amount is a compensation charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that the lender can now charge when re-lending the funds for the remaining term of the mortgage.

INTERIM FINANCING

Interim loans are used to bridge the gap between the construction loan and the permanent loan (hence "bridge" loans) lasting from one to three years.

INTERMEDIATE TERM LOAN

A short-term loan from 3 to 5 years with no or partial amortization (balloon loan).

INTESTATE

A person who dies without a will, or leaves one which is defective in form, in which case the estate descends by operation of law to the next of kin.

IRREVOCABLE

Incapable of being recalled or revoked; unchangeable, unalterable.

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JOB LETTER

A letter from your employer stating your length of employment, guaranteed number of hours worked per week, and income amount.

JOINT AND SEVERAL NOTE

Promissory note on which there are two or more promisors who are jointly and severally liable.

JOINT TENANCY

Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.

JUNIOR FINANCING

This is a subordinate mortgage or loan very often given by a seller of property, second in priority to an existing loan.

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KICKER

An extra bonus or additional payment over and above the fixed interest already paid to an investor eg. A percentage of gross profits or cash flow.

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L.T.V. (LOAN-TO-VALUE RATIO)

The ratio of the loan to the lending value of a property, expressed as a percentage.

LAND ACQUISITION LOAN

Loan advanced to acquire land as opposed to improving land or buildings.

LAND CONTRACT

A contract drawn between a buyer and seller for the sale of property.

LAND DEVELOPMENT LOAN

Loan advanced for the purpose of developing raw land for residential and related uses.

LAND TRANSFER TAX

A fee paid to the government for the transferring of property from seller to buyer.

LEASEHOLD

A type of interest in a property that is certain only for a specified period of tie granted by contract.

LEASEHOLD APPRAISAL

A method of estimating the value of leasehold property.

LEASEHOLD MORTGAGE

A mortgage given by a lessee on the security of the leasehold interest in the land.

LEGAL DESCRIPTION

A written description by which property can be definitely located, and which is acceptable for registration in a land registry system.

LEGAL MORTGAGE

A transfer of a legal estate or interest in property for the purpose of securing the repayment of a debt.

LENDING VALUE

An independent appraisers value interpreted by the lender as to the worth of a property in the current market given a reasonable time period to sell the property.

LESSEE

Tenant under a lease.

LESSEE'S INTEREST

The market value of property less the value of the lessor's interest. The present worth o the annual advantage, if any, accruing to the lessee by reason of the contract rent being less than the economic rent.

LESSOR

The person who grants us of the property under lease to a tenant.

LETTER OF COMMITMENT

Letter written by the lender containing the amount of the loan, specified interest rate, term of loan, and specific conditions.

LETTER OF CREDIT

Letter issued by a bank or other lending institution promising payment to a third party in accordance with the terms of the agreement. Letters of credit may be used in situations where a deposit is required or a security, e.g. Where a builder is about to sign a contract and has to put up security that the job will be finished; or a security deposit under a long term lease.

LEVERAGE

Upside leverage in real estate occurs when the yield or net return on property exceeds debt service for a loan. Downside or reverse leverage occurs when the debt service is greater than the net return on investment.

LIEN

A legal claim against a property for money owed; 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 property filed by a claimant; it has limited life, prescribed by statute that varies from province to province; if the lien holder takes action within the prescribed time, the owner may be obliged to pay the amount claimed by the lien holder; the lien holder may force the sale of a property to pay off debt.

LIEN HOLD BACK

A percentage of the contract price or estimated cost of work to be done which is held back from the mortgage advance.

LINE OF CREDIT

A maximum credit limit allowed by a bank to a borrower, as long as the borrower maintains an acceptable balance on account or has a good credit rating. The credit line will vary from time to time according to the changing circumstances of the borrower or the bank.

LIS PENDENS

A legal document giving notice that an action or proceeding is pending in the courts which affects the title to the designated property.

LISTING AGREEMENT

Legal agreement between the listing broker and the seller, setting out the services to be rendered, describing the property for sale and stating the terms of payment; a commission is generally payable to the broker upon closing.

LISTING (ASKING) PRICE

Price placed on the property for sale by the seller.

LOAN COVERAGE

The ratio of net operating income to debt service - in general loan coverage of 1.3 to considered adequate for a loan to value ratio of 75%.

LOAN FEE

A charge for making a loan in addition to the interest charged to the borrower.

LOAN LOSS RESERVE

A reserve shown on a balance sheet of a real estate company as provision for any future losses in assets.

LOAN ORIGINATION

Analysis of loan applications from prospective purchasers to determine if they meet with requirements and if so, the lender will issue a commitment letter.

LOAN PORTFOLIO TURNOVER

The average length of time required for the turnover of mortgage loans, ie. until maturity.

LOAN PROCESSING

Upon application and approval of a loan, the lender has to go through a fairly standard procedure to finalize and disburse the loan such as the setting up of files, ordering of credit reports, verification of employment, bank accounts, etc.

LOAN RATIO

The ratio of the principal amount of the loan to the lending value of the property.

LOAN-TO-VALUE RATIO

The ratio of the loan to the lending value of a property, expressed as a percentage.

LOCK-IN CLAUSE

A clause which restricts prepayment of a loan during a specified period of the whole term of the mortgage. This ensures that the lender receives a stipulated return on his investment and discourages "shopping around" for another loan.

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MARGIN OF SAFETY

A measure of the extent to which a loan is protected by property values or operating income. In the case of a mortgage, the margin of safety is the excess of equity (at fair market value) above the outstanding amount of the loan.

MARKET VALUE

The highest price estimated in terms of money which a property will bring if exposed for sale in the open market.

MARKETABLE TITLE

A title which a court of equity considers to be so free from defect that it will enforce acceptance by a purchaser.

MATRIMONIAL HOME

Any property in which a person has an interest and that is or has been occupied by the person and his or her spouse as their family residence. Condominiums, co-operatives, and leasehold interests can be matrimonial homes.

MATURITY DATE

The last day of the term of the mortgage agreement. A mortgage loan must then be paid in full or the agreement renewed.

MECHANICS LIEN

A claim against the state or interest of the owner in a property for labour, services, or materials supplied to it.

METES AND BOUNDS

A system of land description whereby all boundary lines are set forth by use of terminal points and angles - mete referring to a limit or limiting mark, and bounds referring to boundary lines.

MIXED USE DEVELOPMENT

A large scale real estate project which is developed for a number of uses. An example of mixed use development is a shopping centre complex.

MLS

Multiple Listing Service; trademarks owned by the Canadian Real Estate Association; used in conjunction with a real estate database service, operated by local real estate boards, under which properties may be listed, purchased and sold.

MORATORIUM

Legislation enacted to assist debtors by postponing or suspending their contractual payments.

MORE OR LESS

Term often found in a property description intended to cover slight, unimportant or insubstantial inaccuracies to which both parties are willing to assume risk.

MORTGAGE

The legal pledge of real estate as security for a loan. Lenders consider both the property (security) and the financial worth of the borrower (covenant) in deciding on a mortgage loan.

MORTGAGE BANKER

By legislation a chartered bank authorised under the Bank Act of Canada to take deposits from individuals for placement in mortgages, by pooling these deposits and funding mortgages. The security for the depositor is an interest in the mortgage through the bank. A mortgage broker cannot by law pool money from individual depositors and fund mortgages, unless licensed to do so under other legislation.

MORTGAGE BOND

A bond issued by corporations and secured by a mortgage on their property.

MORTGAGE BROKER

A person who originates real estate loans and allocates mortgage funds. These funds are placed on behalf of others, through negotiation of lenders and borrowers for the best possible arrangement and satisfaction of all concerned. Licensed in Ontario by the Ministry of Financial Institutions. Could also be known as an underwriter, correspondent or investment dealer in a mortgage transaction. The mortgagor pays the broker a fee for arranging the mortgage.

MORTGAGE COMMITMENT

A formal indication by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms.

MORTGAGE DEBENTURE

Synonymous with mortgage bond.

MORTGAGE INSURANCE

Applies to hi-ratio mortgage; the borrower arranges and pays for the insurance, which protects the lender against default, if the borrower is unable to repay the mortgage.

MORTGAGE INSURANCE PREMIUM

A premium which is added to the mortgage and paid by the borrower over the life of the mortgage. The mortgage insurance insures the lender against loss in case of default by the borrower.

MORTGAGE LIFE INSURANCE

Pays off the mortgage if the borrower dies; A form of reducing term insurance recommended for the borrower. In the event of the death of the owner or one of the owners, the insurance pays the balance owing on the mortgage. The intent is to protect survivors from losing their home.

MORTGAGE LOAN

An agreement by which sum of money is borrowed and a promise to repay is given, wherein as a further security the borrower gives to the lender a conveyance or charge on property which he owns.

MORTGAGE NOTE

A promissory note executed in favour of the lender giving him an encumbrance or lien on the borrower's property. A mortgagor is usually personally liable on the note.

MORTGAGE PORTFOLIO

Several mortgages held by a mortgagee, lender or broker en bloc.

MORTGAGE POSTPONEMENT

The process whereby a mortgagee may permit the borrower to renew or replace an existing mortgage that falls due prior to the maturity date of the subject mortgage.

MORTGAGEE

The lender

MORTGAGEE IN POSSESSION

A mortgagee goes into possession by entering into actual occupation of, or by obtaining the receipt of the rents of the mortgaged premises.

MORTGAGING OUT

Term applied to a mortgage which exceeds the current value of the property on which it is secured. This type of mortgage may be obtained on improvable property where the security is based on future value and future earnings which are expected to exceed construction costs.

MORTGAGOR

The Borrower

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NATIONAL HOUSING ACT MORTGAGE

A first mortgage, originated by an approved lender, granted under the terms of, and insured under, the National Housing Act of 1954.

NHA

The National Housing ACT (1954) provides for insuring loans made by approved lenders and for direct mortgage lending under a variety of programs by Canada Mortgage and Housing Corporation to improve housing conditions in Canda.

NEGATIVE CASH-FLOW

Where operating costs exceed gross rental income or debts.

NET OPERATING INCOME (NOI)

The balance remaining after deduction of operating expenses from gross receipts and gross rental, but not including the deducting of debt service on mortgages. Free and clear return on property is calculated by the ratio of NOI to total investment including mortgages and equity. This gives a direct means of comparing the return on different properties.

NET RATE OF INTEREST

The interest rate received by a mortgage lender net of the servicing fee deducted by a loan correspondent.

NETWORTH

Your total financial worth, determined by subtracting your total liabilities from your total assets.

NOMINAL INTEREST RATE

Interest rate stated on the face on a loan document. However, if the loan amount is discounted or sold at premium, the effective rate of interest will either be higher or lower. Often referred to as 'effective rate.'

NON-RECOURSE LOAN

A clause in a loan which waives personal liability of the borrower on the loan.

NOTICE D.O.R.

Notice filed in court by mortgagor under foreclosure proceedings that he desires an opportunity to redeem.

NOTICE OF ASSESSMENT

This is also known as an NOA. It is the summary form that Revenue Canada sends you after your income tax has been filed. It specifies what you claimed on your taxes last year, as well as the amount of taxes you owe, or the amount of money that you will be received as a tax refund.

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OBLATORY ADVANCE

An advance made according to terms of a pre-existing construction loan agreement or mortgage.

OFFER TO PURCHASE

A written proposal to purchase real estate that becomes binding upon acceptance of the vendor

OPEN OR CLOSED

The restriction or denial of repayment rights until the maturity of the mortgage is a "closed" mortgage. If specified on document as "open," then mortgagor can pay extra payments of principal sums at any time or at specified times, with or without repayment penalty.

OPEN END MORTGAGE

A mortgage under which the lender has the option of advancing more funds where, for example, the value of the property is anticipated to increase.

OPEN MORTGAGE

A mortgage which can be prepaid at any time, without penalty.

OPERATING EXPENSES

Generally speaking, all expenses, occurring periodically, which are necessary to produce net income before depreciation. Under some conditions these expenses are placed in two categories, namely, operating expenses and fixed charges.

OPTION

A right given by the owner of property to another (for valuable consideration) to buy certain property within a limited time at an agreed price; an option holder who does not buy at or within the specified period loses the deposit and the agreement is cancelled.

ORIGINATION FEE

Fee that is charged by the lending institution and or broker in order to prepare and organize the loan for the client; Normally, a certain percentage of the loan amount is calculated and deducted from the gross proceeds.

OWNER

The lawful possessor of the title to real property.

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P.I. (Principal and Interest)

Principal and interest due on a mortgage.

P.I.T. (Principal, Interest and Taxes)

Principal, interest and taxes due on a mortgage.

P.I.T.H. (Principal, Interest, Taxes and Heat)

P.I.T.H. is also known and referred to as a monthly housing expense. This information is taken into consideration when calculating how much an individual can qualify for.

PACKAGE LOAN

Combination of two types of loan, eg., construction loan and permanent financing. The borrower benefits by only having to negotiate with a single lender and only having to pay a single set of closing costs.

PARTIAL DISCHARGE

A discharge of a definite portion of the mortgage lands usually given after the mortgagor has prepaid a specific portion of the mortgage debt.

PARTICIPATION LOAN

An agreement whereby two or more lenders share in advancing a portion of a loan made by the originating or "lead" bank. Terms of the agreement set out a method of apportionment and interest rates. The lead lender generally services the loan for which it receives a fee.

PARTNERSHIP

1) An arrangement whereby individuals join together to lose money and/or 2) An arrangement whereby in the beginning a general partner has the experience and the limited partners have the money and in the end, the general partner has the money and the limited partners have had the experience.

PAY STUB

Usually a document you receive from your employer on your pay day stating, for that pay period, your gross earnings, the amount of CPP payments deducted, the amount of EI payments deducted, the amount of income taxes deducted, net income, etc. Your pay stub should also state the year to date amounts of all the aforementioned income and payments.

PERCENTAGE RENTAL AGAINST MINIMUM

A rental paid under a percentage lease whereby rent paid by a tenant varies according to volume of business, eg., a percentage of gross receipts, sales or revenue, and paid to the extent that it exceeds a minimum rental.

PERCENT PAID OFF

The percent of principal which is paid off at a given time under an amortization schedule, i.e. equity build up.

PERCENTAGE RENT PLUS MINIMUM

A percentage rental which must be paid in addition to the minimum, i.e. minimum rent is not credited against percentage rent payable.

PERMANENT FINANCING

A long-term mortgage usually intended to finance both land and improvements after completion of construction and used to pay off a construction loan.

PERSONAL LIABILITY

A person liable on a debt to the full extent of his entire assets, as opposed to limited liability where a maximum or a ceiling is fixed on the amount of assets that can be drawn upon to satisfy a debt. Joint and several liability fixes the liability of each individual borrower for the total debt; joint liability binds all the borrowers together in one action; and several liability fixes the liability of each borrower to the extent of his share of the debt.

PERSONAL PROPERTY

All property except land and the improvements thereon.

POLARIS

The Province of Ontario Land Registration Improvement Systems new simplified method of registration of transfer, charge, discharge, etc.

PORTABILITY

A mortgage option that enables borrowers to take their mortgage with them to another property, without penalty. A transfer fee may apply.

POSTPONEMENT CLAUSE

A junior mortgage may contain a postponement clause, by which the mortgagee permits the borrower to renew or release an existing first mortgage that falls due prior to the maturity date of the junior mortgage.

POWER OF ATTORNEY (POA)

Legal document authorizing one person to act on behalf or represent another in a legal transaction.

POWER OF SALE

The right of a mortgagee to force sale of the property without judicial proceedings should default occur.

PRE-APPROVED MORTGAGE

A pre-approved mortgage qualifies you for a loan amount before you start looking for houses. It also acts as a rate hold, guaranteeing you today's interest rates until up to 120 days in the future.

PREPAYMENT CLAUSE

A clause inserted in a mortgage, which gives the mortgagor the privilege of paying off all or part of the mortgage debt in advance of the maturity date.

PREPAYMENT OPTION

The right to prepay specified amounts of the principal balance. Penalty interest may be incurred on prepayment options.

PREPAYMENT PENALTY

The sum of money (the amount of extra interest as set out in the mortgage document) a mortgagee may require from a mortgagor to exercise the option in a mortgage to prepay any outstanding principal; A sum of money paid to a lender for the privilege of prepaying a mortgage in part or in full.

PRE-QUALIFICATION

An interview with a client (usually) prior to the writing of an offer to purchase real estate in order to determine the applicant's qualifications for mortgage purposes.

PRIME RATE

The rate charged by banks to their most credit-worthy borrowers. Sometimes also referred to as the rate of interest paid on government bonds.

PRINCIPAL

The amount actually borrowed or still owing on a mortgage. The amount you still owe the lender at any time. Interest is paid on the principal amount.

PRIOR CHARGE

An encumbrance ranking in priority to the mortgage in question.

PRO FORMA (Statement)

A financial statement of the gross income, operating costs and net operating costs and net operating income for a specified financial period, e.g. one year, using specified assumptions.

PRIOR ENCUMBRANCE

A claim on the property, ranking in priority to the mortgage in question.

PROGRESS ADVANCES

Loan advances made on a property under construction whereby the lender makes advances on the basis of the retention at all times of an amount of the loan which in his/her opinion will be sufficient to complete the building should the borrower fail to complete it.

PROJECTED INCOME

Estimated income from property.

PROMISSORY NOTE

A written document acknowledging a debt and promising payment.

PROPERTY

Refers to the rights which an individual enjoys by virtue of his/her ownership.

PROPERTY TAX ASSESSMENT

The document from the city you live in stating the amount of annual property taxes you owe.

PURCHASE-MONEY MORTGAGE

A mortgage loan taken back by the vendor of property in lieu of purchase money in order to help finance the purchaser.

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QUALIFYING

The process of qualifying the borrower and/or lender to ensure they respectfully have the financial ability and inclination to undertake the mortgage.

QUANTUM MERIT

The amount that should be paid as merited by the service performed.

QUIT CLAIM DEED

A general release of all claims or rights to a parcel of land.

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REAL ESTATE

Land, buildings, and other fixed improvements. It also includes items that are not moveable.

REAL ESTATE BOARD

Non-profit organization representing local real estate brokers/agents, salespeople, which provides services to its members and maintains and operates a MLS system in a community.

REALTOR

A real estate broker holding active membership in a local real estate board.

REDEMPTION

The buying back of a mortgage estate by payment of the sum due on the mortgage.

REDEMPTION PERIOD

A period of time allowed by law during which a mortgagor may redeem his property by paying off the entire debt in arrears.

REFINANCE

To pay off (discharge) a mortgage and other registered encumbrances and arrange a new mortgage.

REGISTRATION AND DISCHARGE DATES

Dates of registration by number and date in the local Registry Office and/or Land Titles, then given to the mortgagee. When the loan has been paid in full at or after maturity date, then the mortgagee executes the "discharge" or cessation of charge and registers same to liquidate the mortgage and allow the mortgagor to redeem the mortgage.

RELEASE OF COVENANT

A release given to the mortgagor of a property that has been sold to a new purchaser who is acceptable to the mortgagee. This release is usually given after the new mortgagor has signed an assumption agreement.

RENTAL HOLD BACK STANDBY LOAN

A hold back is an amount withheld from the borrower under permanent financing until a certain occupancy rate is achieved. As this deprives the construction lender of full takeout protection, the developer may obtain a standby loan commitment to supplement the hold back.

RENEWAL AGREEMENT

An agreement whereby the lender may agree to extend the loan, but possibly on revised terms as to principal repayments and interest rate.

RENTAL REQUIREMENTS

This is the "ceiling" portion of a permanent loan commitment that is advanced upon reaching a minimum rental or occupancy rate.

RENTAL VALUE

The monetary amount reasonably expectable for the right to the agreed use of real estate. It may be expressed as an amount per month or other period of time, or per room, per front foot, or other unit of property.

RENT CONTRACT

Rental received by the real estate owner under any lease contract.

RENT ECONOMIC

Is the income that real estate can command in the open market at any given time for its highest and best use.

REPRODUCTION COST

The cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.

RESTRICTION

A limitation placed upon the use of property contained in the deed or other written instrument in the chain of title.

RESTS

The periodical balancing of an account made for the purpose of converting interest into principal, and charging the party liable thereon with compound interest.

RETURN ON INVESTMENT

(a) Free and clear return is calculated as the percentage of net operating income to total investment in the property (b) Cash flow return is the ratio of cash flow to equity investment (also known as return on equity and cash-on-cash return) (c) Total return is cash flow including loan amortization as a percentage of the total invested.

REVERSION

The right to repossess and resume the full and sole use and proprietorship of real property which temporarily has been alienated by lease, easement or otherwise. According to the terms of the controlling instrument, the reversionary right becomes effective at a stated time or under certain conditions such as the termination of a leasehold, abandonment of a right-of-way, or at the end of the stimulated economic life of the improvements. The present or discounted value of something to be collected at some future date.

RIGHT

The interest one has in a piece of property. A claim or title enforceable by law.

RIGHT OF SURVIVORSHIP

The distinguishing feature of joint tenancies which provides that, where land is held in undivided portions by co-owners, upon the death of any joint owner, his/her interest in the land will pass to the surviving co-owner, rather than his/her estate.

RIGHT OF WAY

The right to pass over another's land, more or less frequently, according to the nature of an easement.

RIPARIAN RIGHTS

The rights of the owners of land on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his/her land, including the right to acquire wharf slips, and fish there from.

ROLL-OVER MORTGAGE

A mortgage loan where the interest rate is established for a specific term. At the end of this term the mortgage is said to "roll over" and the borrower and lender may agree to extend to loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

RUNNING WITH THE LAND

A covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent owners to either liability to perform it or the right to take advantage of it.

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SALE AND LEASEBACK

A method of financing where a property is sold to a purchaser who simultaneously enters into a long-term lease of the property with the vendor. The vendor (now lessee) remains in possession for the specified term of the lease and covenants to pay the rental to this purchaser (now lessor) as well as all operation expenses. This enables the user to free his cash investment in the real property for some other use.

SALES HOLD BACK

A percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee.

SANDWICH LEASE

A lease in which the "sandwich party" is the lessee f one party and the lessor to another. Usually, the owner of the sandwich lease is neither the fee owner nor the user of the property.

SEALED AND DELIVERED

A term indicating that a conveyor has received adequate consideration a evidenced by his/her voluntary delivery. The word "sealed" adds more strength, since under old conveyancing law an official seal was used as a substitute for consideration.

SECOND MORTGAGE

A mortgage loan granted, (and registered) when there is already a first mortgage registered against the property, usually with shorter terms and higher interest rate than the first mortgage; This represents the difference between the price of the house and first mortgage plus the down payment. This may be obtained from banks and finance companies or through lawyers or notaries.

SECURED CREDITOR

A creditor who has one or more forms of security, which gives a prior claim on the security in case of default.

SELLER'S AGENT

Represents the seller, as a listing agent under the listing agreement with the seller or by cooperating as a sub-agent, typically through the MLS system.

SEMI-MONTHLY MORTGAGE PAYMENTS

Mortgage payments that are made on the first and fifteenth of the month, amounting to 24 payments per year.

SERVIENT TENEMENT

An estate or land over which an easement or some other service exists in favour of the dominant tenement.

SET BACK

The distance from the curb or other established line within which no buildings may be erected.

SHORT FORM MORTGAGE

Mortgage document which follows the exact language of the long form prescribed by law but is abbreviated, using shortened terminology, at the same time having the identical legal effect.

SINGLE FAMILY DWELLING

A residential property designed for occupancy by one family and situated on land zoned specifically for that purpose.

SPECIFIC PERFORMANCE

A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.

SPECULATIVE BUILDER OR DEVELOPER

One who builds without having a commitment to buy or lease from a purchaser or tenant.

STANDBY COMMITMENT

A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.

STATUS CERTIFICATE (used to be called an ESTOPPEL CERTIFICATE)

A written statement or certificate which states certain facts upon which the receiver of the statement or a third party may rely, e.g. Lender's estoppels statement as to a purchaser or property. The lender cannot later deny the truth of these statements because a third party has relied and acted upon them.

STATUTE OF LIMITATIONS

That period of time specified by statute within which an action at law must be brought or else be forfeited.

STATEMENT OF ADJUSTMENTS

A balance statement prepared by lawyers setting out the details of a mortgage transaction; indicates credits to the vendor, such as the purchase price and any prepaid taxes, and credits to the buyer, such as the deposit and the balance due on closing.

STATUTE

A law established by an act of the legislature.

STATUTE OF FRAUDS

A law which provides that certain contracts must be in writing in order to be enforceable at law. It includes real estate contracts.

STEP DOWN LEASE

A lease providing for decreases in rental payment at specified dates.

STEP UP LEASE

Opposite to step-down lease.

SURVEY

A document that illustrates the property boundaries and measurements, the position of major structures on that property, any registered or viable easements.

SURVIVORSHIP

The right of a person t secure ownership by reason of his/her outliving someone with whom s/he shared undivided interest in the land.

SWEAT EQUITY

Equity created by a purchaser or homeowner by performing work on a property being purchased or refinanced.

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TAKEOUT MORTGAGE LOAN

A long term mortgage loan that is advanced to borrower on completion of construction or in compliance with any other conditions in the loan commitment. The funds are normally used to pay off or take out the construction lender.

TAX LIEN

A lien imposed by a taxing authority on real estate for failure to pay taxes within the time required by law.

TENANCY IN COMMON

Ownership of ad by two or more persons: unlike joint tenancy in that interest f deceased does not pass to the survivor, but is treated as an asset of the deceased's estate.

TENURE

A system of land holdings for a temporary time period.

TERM (of Loan)

The length of time which a mortgage agreement covers. Payments made may not repay the outstanding principal by the end of the term because of a longer amortization period. Also indicates when the principal balance becomes due and payable to the lender. "Term" is the actual length of time for which the money is loaned, at that particular rate of interest. After the term expires, you can either repay the balance of the principal then owing or renegotiate the mortgage at current rates and conditions.

TIME IS OF THE ESSENCE

Requires punctual performance of a contract on closing date and is indicated by so stating as in an Agreement of Purchase and Sale.

TITLE

The means of evidence by which the owner of land has lawful ownership thereof. 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.

TITLE INSURANCE

A policy which insures the lender against loss due to a flaw in the title of property held as collateral for a mortgage.

TITLE SEARCH

An examination of the chain of title to real property as indicated in the public records in order to determine the ownership of the subject property and the existence of any encumbrances or defects. It is done in order to confirm the legal ownership of the property. Prior to registering any mortgages, a title search is completed to insure that there are no unknown encumbrances secured against the home.

TORRENS SYSTEM

System of title recordation provided by provincial law, it is a system for the registration of land title, indicating the state of the title, including ownership and encumbrances without the necessity of an additional search of the public records. Also known as the "Land Titles System."

TOTAL DEBT SERVICE (TDS) RATIO

The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations; This is the percentage of annual gross income that is required to cover mortgage principal payments, mortgage interest payments, property taxes, and heat payments, plus monthly payments of any other debt the borrower holds. If the property is a condominium, condo fees will also be worked into this ratio.

TRANSFER

To convey from one person to another.

TRANSFER OF CHARGE

Assignment of a mortgage under the Land Titles System.

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UMBRELLA MORTGAGE

Also referred to as a wraparound, a special arrangement whereby one document encompasses one or more already existing mortgages registered on the same property. The mortgagee is responsible for remission of payment(s), to lender(s), while the mortgagor makes one payment to the mortgagee.

UNDERWRITER (mortgage)

A person employed by a mortgage lender or mortgage broker who approves or turns down loan applications based upon the quality of the real property, credit-worthiness and ability to pay of the applicant and guidelines of the lender with regard to ratio of mortgage loan to value of property.

UNDERWRITING

When a decision is made whether to pursue or provide a loan to a potential individual seeking financing. Standard underwriting considerations used to assess a file are credit, employment, and net worth. Based on the information provided, the appropriate rate, term and loan amount are provided as offers to the client.

UNDERWRITING FEES

A sum of money collected by some lenders to offset expenses incurred in the lending transaction.

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VALID

Having force or binding force, legally sufficient ad authorized by law.

VALUABLE CONSIDERATION

The granting of some beneficial right, interest, profit, or suffering of some detrimental forbearance, loss or default by one party in exchange for the performance of another.

VARIABLE INTEREST MORTGAGE (VRM)

A loan where the interest rate may vary during the term of the mortgage. A mortgage that has fixed payments, but whose principal portion of the payment fluctuates with interest rate changes. The variance is usually tied to some specific factor such as prime bank rate or the guaranteed investment certificate rate for a designated lender.

VENDOR

A seller of real property.

VENDOR FINANCING (BALANCE OF SALE)

The seller sometimes takes the mortgage at a rate lower than market rates. Most of these arrangements are neither renewable nor transferable to the next owner.

VENDOR TAKE BACK MORTGAGE

A mortgage which a vendor of real property takes from the purchaser usually as part payment of the purchase price for that property.

VOID

Of no legal effect; A nullity.

VOID CHEQUE

A personal, pre-printed cheque with "void" written across is. This is provided to the lender for the account your mortgage payments will be coming out of, as proof that the account is, indeed, yours.

VOIDABLE

Where one party to a contract is entitled to rescind the contract at his/her option.

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WAIVER

An international relinquishment of some right or interest; the renunciation, abandonment, or surrender of some claim.

WITNESS

To subscribe ones name to a deed, will or other document for the purpose of attesting its authenticity and proving its execution by testifying, if required.

WRAP-AROUND MORTGAGE

(Sometimes erroneously called a blanket mortgage)-a new mortgage, which is registered on title, which includes a prior existing mortgage and the new mortgagee undertakes the responsibility as mortgagor under the original mortgage.

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YIELD

The return on an investment expressed as a percentage per annum of the amount invested.

ZONING

The public regulation of the character and intensity of the use of real estate through the employment of the police power. This is accomplished by the establishment of districts in each of which uniform holding restrictions related to use, height, are, bulk, and density of population are imposed upon the private property.