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Real Estate Article (Real
Estate Terms)
Appraisal
A process for estimating the market value of a particular
property. 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.
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 Date
The date on which the sale of a property becomes final
and the new owner takes possession.
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.
Deed
A legal document which is signed by both the seller and buyer,
transferring ownership. This document is registered as evidence
of ownership usually signed around closing time.
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 buyer when an Offer to
Purchase is made. The sum is held by the real estate's brokerage
or lawyer until the sale is closed, and then paid to the vendor.
Easement
A right acquired for access to or over, or for use of,
another person’s land for a specific purpose, such as a
driveway or public utilities.
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.
Foreclosure
A legal procedure in which the lender gets ownership of the
property if the borrower defaults on the mortgage loan.
Gross Debt Service Ratio (GDS)
The percentage of the borrower’s gross monthly income
that will be used for monthly payments of principal, interest,
taxes, heating costs and half of any condominium maintenance
fees.
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.
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.
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.
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.
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.
Zoning Bylaws
Municipal or regional laws that specify or restrict
land.
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