Adjustment Date – is the same day as Closing Date / Completion Date; it is the date that the costs directly related to the Property like Property Taxes, Town Utilities, Condo Fees and Homeowners Association Fees are adjusted between the Buyer and Seller. For instance, assume a Contract has an Adjustment Date / Closing Date of May 15 and the Property Taxes for Calendar Year (January to December) have not yet been paid in full. This means the Seller is responsible for the Property Taxes from January 1 to and including May 14. However, Property Taxes are generally not due until the middle of the year (depending on the Municipality), so the taxes are adjusted on the Statement of Adjustments by giving the Buyer a Credit for the Seller’s share of the Property Taxes. The Buyer then has to make sure these taxes are paid to the Municipality when they become due. It is similar with Condo Fees: The Closing Date is May 15; the Seller pays the Condo Fees on May 1 for the entire month; then, on the Adjustment Date, the Seller receives a credit back for the Condo Fees prorated from May 15 to May 31.
Agreement – See Contract, Offer to Purchase.
Amendment – See Addendum.
Amortization – is the length of time it would take you to pay your Mortgage in full, down to $00.00, to the Lender if the Interest Rate stays the same and your Monthly Payments remain the same. Most Mortgages have an Amortization of 15 to 25 years. You can increase or decrease your Monthly Payments by increasing or decreasing the Amortization Period, and vice versa, however, you cannot extend longer than 25 years. By shortening your Amortization Period, you increase your monthly payments, but you then pay less interest to the bank and have your Mortgage paid off sooner.
Appraisal – see Appraiser
Appraiser – The Appraiser performs an independent evaluation of the Property to determine its current Market Value and then prepares a report of the results, an Appraisal. The Appraisal is used by the Lender to determine how much they will loan to the Buyer to purchase the Property. Generally a Lender will loan up to 75% (and possibly higher, up to 90% in certain instances) of the Market Value of the Property. An Appraisal should also be used to determine the Market Value at a point in time, if you are thinking of buying out a joint title holder.
Assumption of Mortgage – When a Buyer purchases Property and instead of obtaining their own Mortgage, they assume the mortgage of the Seller. The Buyer has to qualify with the Seller’s Lender before they can assume the Mortgage. There are many factors to consider before agreeing to an Assumption of Mortgage to take place.
Attached Good – see Chattels, Fixtures, Unattached Goods.
Attorney – An Attorney is a person you have granted the power to deal with your assets, either without restriction or on a specific, restricted basis, in a document called a Power of Attorney. Sometimes people think an Attorney means Lawyer. However, in Canada, we do not call Lawyers Attorneys, we call them Lawyers.
Balance of Cash to Close – see Cash Shortfall, Cash to Close
Bank – see Lender
Bareland Condominium – A Bareland Condominium is contains a plot of land for each unit. The owner is responsible for everything inside the unit’s land boundaries, including house, garage, trees, shrubs, etc. A Bareland Condominium requires a Real Property Report with a Compliance Certificate on sale. The Common Property and the responsibilities for its care and maintenance vary from one Condominium Corporation to another.
Bill of Sale – is a document used to transfer Chattels (also called Unattached Goods) from the Seller to the Buyer. Normally, a Bill of Sale is not used in a Real Estate Transaction. The Chattels that are purchased with the Property are listed in the Contract as either Attached or Unattached Goods. The Contract also contains a warranty from the Seller about the fitness of the Chattels. A Bill of Sale is required if you are buying a Mobile Home.
Buyer – is the person or persons who have agreed to purchase the Property from the Seller. The Buyer can be a single person, a couple, a group of people, a corporation or other legal entity. Also called the Purchaser.
Buyer’s Lawyer – is the lawyer retained by the Buyer to represent the Buyer and to complete the necessary tasks to ensure the terms of the Contract are properly completed and that the Title to the Property is registered in the name of the Buyer.
Buyer’s Mortgage – is the new mortgage financing obtained by the Buyer from a Lender to help the Buyer pay the Purchase Price and is prepared by the Buyer’s Lawyer and registered against the Title to the Property.
Buyer’s Real Estate Company – is the real estate company, sometimes referred to as a Real Estate Broker that the Buyer’s Realtor works for.
Buyer’s Realtor – is the realtor, acting for the Buyer to find a Property and advise the Buyer on the purchase of a Property and to prepare the Offer to Purchase.
CMHC – see Mortgage Insurance
Calendar Year – is the time period from January 1 to December 31 of each year. Most Municipalities deal with Property Taxes based on the Calendar Year.
Cash Shortfall – is the amount of cash needed by the Buyer to complete the purchase of the Property; it does not include the Deposit, as that is already taken into account in the calculation. The Cash Shortfall is paid by way of a Bank Draft to the Buyer’s Lawyer and calculated by subtracting from the Cash to Close (as per the Statement of Adjustments) the Mortgage Proceeds and Closing Costs.
Cash Shortfall Date – is the date that the Buyer’s Lawyer needs the Cash Shortfall in order to ensure that the transaction completes on time. Generally, this is 1 -2 days before Closing Day. If you are Buying and Selling on the same day, or selling after the Closing Day of your Purchase, you may need Bridge Financing to complete your purchase.
Cash to Close – is the amount of money that must be delivered by the Buyer’s Lawyer to the Seller’s Lawyer to complete the purchase of the Property. See “Statement of Adjustments”. From the Cash to Close, the Seller’s Lawyer pays the Seller’s obligations, such as: the Mortgage registered on Title, the balance due to the Realtor for the Realtors Commission, Seller’s Lawyer’s legal fees and disbursements and the balance is paid to the Seller.
Cash Closing – Is when the Buyer is using all cash to purchase the Property and is not obtaining a Mortgage.
Cash to Mortgage – see Cash Shortfall.
Caveat – is an interest in the Property that is registered on title. The Law of Property Act sets out what can be registered as a Caveat or interest in the lands; only certain interests are allowed to be registered against the Title. The Buyer’s Lawyer will review the Title and order copies of the Caveats that will remain on Title and discuss them with the Buyer to determine whether they are an acceptable Charge or Encumbrance. See also Encumbrance.
Certified Certificate of Title (CCT) – See Title.
Charges– refers to all of the liens and encumbrances registered against the Title such as Caveats, Easements, Leases, Certificates of Lis Pendens and Mortgage(s).
Chattels – consists of items such as fridge, stove, dishwasher, shelving units, TV’s, desk or hot tub; these are referred to in legal terms as Personal Property (as opposed to Real Property, which is Land). Also called Unattached Goods, because they are not attached or fixed to the House, but can be picked up and moved. See also Attached Goods, Fixtures, Unattached Goods.
Clearance Certificate – is a certificate issued by the Federal Government of Canada indicating that the income tax obligations of a Non-resident Seller pertaining to the Property have been satisfied and that it is now appropriate to release the funds held (see Holdback) by the Sellers Lawyer to the Sellers. Generally 25% of the Purchase Price is withheld from the Seller until the Clearance Certificate is received.
Closing – is a term that refers to how a Real Estate Transaction is going to be completed. There are basically four kinds of Closings: a Standard Closing, a Cash Closing, a Title Insurance Closing or a Protocol Closing.
Closing Date – is the date when the transaction is supposed to complete by registration of the Transfer of Land at the Land Title Office and is, to most people, the date when the Buyer gets possession of the Property. See also Completion Date and Adjustment Date.
Closing Documents – See Transfer Documents.
Commission – the amount of money the Seller agrees to pay to the Selling Realtor, and is set out in the Listing Agreement. It becomes payable based upon a successful sale of the Property, and also in accordance with the terms of the Listing Agreement.
Completion Date – see Closing Date and Adjustment Date.
Compliance Certificate – is a certificate or stamp issued by the Municipality where the Property is located (i.e. Town of Black Diamond, Town of Okotoks, M.N. of Foothills, etc.) indicating that the Property and buildings are in compliance with the Municipal bylaws. The Compliance can be stamped on the Real Property Report, or it may be attached as a letter. It is the Seller’s obligation to give the Buyer an accurate Real Property Report with a Compliance Certificate ten (10) days prior to Closing Date.
Condition – see Subject To Clause
Conditional Offer – is an Offer to Purchase that has either Buyer’s or Seller’s Conditions (a Subject To Clause(s)) in it.
Condo Bylaws – are essentially the rules and regulations between the Condominium Corporation and the owners of the Condo which set out what a Condo owner can and can’t do and how the Condominium Corporation is financed, operated and governed. For instance, the Condo Bylaws may indicate that no pets are allowed, or that all occupants have to be over 50 years of age, etc.
Condo Documents – include a variety of documents a Buyer should read and understand before committing to a Firm Offer. The Condo Documents include such items as the Condo Bylaws, Board minutes, Reserve Fund and budget.
Condo Fees – are a monthly amount that each Condominium owner pays to the Condominium Corporation, generally based on the value of your unit. The fees are used by the Condominium Corporation for such things as snow clearing, building insurance, grounds maintenance and for the Reserve Fund.
Condominium (“Condo”) – is a type of home ownership where a number of separate dwelling units are generally contained in one building. The Buyer owns the interior of their Condo and share other property such as the driveways, hallways, common areas and landscaping communally with the other owners. There are two (2) types Condominiums: Conventional and Bareland. Also called a Condominium Unit.
Condominium Unit – See Condominium.
Contract – is the written agreement between the Buyer and Seller respecting the terms and conditions of the sale of the Property. The AREA (Alberta Real Estate Association and CREB, Calgary Real Estate Board) have established standardized Contracts and forms to use in all transactions. The Contract is said to be “Conditional” if there are still conditions which either the Buyer or Seller need to complete and is said to be “Firm” when all of the conditions of the Contract are satisfied.
Conventional Condominium – This is the most common form of Condominium. A Condominium Unit is located inside a building. The boundaries are defined by the floors, walls and ceilings.
Conveyance – is a term to describe all the steps through which a Property is transferred from a Seller to the Buyer.
Counter Offer – is a rejection of the current Offer and the making of a new offer by either the Seller or the Buyer with respect to the terms in an Offer to Purchase Contract.
Credit Union – see Lender
Deposit – Money that the Buyer deposits with the Listing Real Estate Company when the Buyer submits a Conditional Offer to the Seller, It is the Buyer’s consideration for the transaction and shows good faith and intent to proceed. Deposit amounts vary.
Dower Act – The Dower Act sets out that a person has certain rights in and to the Real property owned by their spouse. Essentially, a person cannot deal with, sell, pledge, mortgage, etc. Real Property without the written consent of their spouse.
Disclosure Statement – see Property Disclosure Statement.
Easement – is a charge on the Lot which allows a third party rights on, over or under the Property. For instance, if there is a waterline easement along the front of the Lot, this would allow the water company access to your Lot, the right to dig up, repair and replace the water line and for it to remain on your Lot. The terms of the easement, the obligations of the easement holder to you and vice versa are set out in the easement document and must be reviewed.
Encumbrances – see Charges.
Financing – is a term used to refer to how the Buyer is paying the Purchase Price.
Firm or Firm Offer or Firm Contract – Is an Offer to Purchase Contract that either has no Conditions, or all Conditions have been satisfied or waived by both the Seller and the Buyer. See Unconditional Offer.
First Loss Payable – is a Property Insurance term used when the Buyer has granted a Mortgage to a Lender. Any insurance proceeds that may become payable by the insurance company to the Buyer these funds must first be paid to the Lender to cover the Mortgage that is registered on title.
Fixture – is any item or thing that is affixed to the House or Condo that can no longer be considered to be a Chattel, or Unattached Good and is now characterized as a permanent part of the House or Condo.
GST – is an abbreviation for Goods and Services Tax, which is a tax imposed by the Federal Government of Canada, and is currently 5% of the Purchase Price. The GST is normally not applicable to the purchase of used Residential Property. GST generally does apply the purchase of new Property, commercial property and agricultural property. The GST is collected by the Buyer’s Lawyer from the Buyer and remitted to the Seller’s Lawyer who pays the GST to the Seller. The Seller has an obligation to forward the GST to the Federal Government of Canada.
Home Inspection Report – see Home Inspector
Home Inspector – is a person who inspects the House to determine if it is structurally sound, if everything is in working order and what, if any, repairs are needed, or may be needed soon. The Home Inspector prepares a Home Inspection Report which is used by the Buyer, and sometimes by the Lender. It is not uncommon to have a Condition in the Contract that the Offer is “Subject To” a “Home Inspection satisfactory to the Buyer”.
House – is the physical building located on the Lot.
Insurance – see Property Insurance
Insurance Agent – is the person who arranges Property Insurance for the Buyer for the Property.
Insurance Company – is a business which sells Property Insurance to a Buyer to protect the Buyer’s investment in the Property if an event happens that the Property is damaged or destroyed. If the Buyer has a Mortgage, all Mortgages require that the Buyer has Insurance which protects the Lender’s interest in the Property (i.e. their mortgage funds).
Interest Adjustment Date – is the date in the Mortgage upon which interest will commence to be owed by the Buyer and earned by the Lender. Interest will also be owed by the Buyer to the Lender for the period of time from when the Mortgage Funds are advanced to the Interest Adjustment Date. This interest is generally deducted from the Buyer’s bank account. Normally Mortgage Payments are due on the first day of the month (however, different Lenders give you different options for payment dates). If the Lender advances the Mortgage Funds on the 16th day of the month, then the Lender will need to collect its interest for the period between the 16th of the month and the first of the next month, in this case for 14 days.
Interest – is the cost to you to borrow the Principal Amount from the Lender.
Interest on Cash to Close – is interest payable by the Buyer to the Seller because the Cash to Close was not paid or was not released to the Seller on the Closing Date and the Buyer took possession of the Property. The amount of interest payable is based on the number of days between Possession Date and when the Cash to Close is released to the Seller. The interest rate payable on the Cash to Close depends upon factors such as who caused the delay, i.e. the Buyer or the Seller and can be at either Prime Rate plus 3.00% or mortgage rate x mortgage amount. Also called Late Interest. Mortgage Amount-Mortgage Rate.
Interest Rate – is the annual cost of borrowing on the Principal Mortgage Amount expressed as a percentage. For instance, the Interest Rate of your Mortgage could be 3.2% or it could be described as a Variable Rate dependent on the Prime Interest Rate plus or minus a percentage, such as Prime Rate plus 2.0%
Interim Agreement – see Contract.
Joint Tenants or Joint Tenancy – is one way two or more people can register the Title to a Property into their names. If the Property is held as “Joint Tenants”, then when one of the Joint Tenants dies, his interest in the Property is automatically is transferred to the surviving Joint Tenant(s) (although you still have to file documents at Land Titles). This is a common means for a couple to own Property so that when one of them dies, the deceased’s interest in the Property goes to the remaining person. The alternative to Joint Tenancy is Tenants in Common.
Land Surveyor – is a person who goes to the property and accurately determines the dimensions of the Lot and the location of the House and any applicable garage, sheds, fencing or other permanent structures on the Lot. The Land Surveyor then prepares a Real Property Report (RPR). The RPR is then sent to the municipality for a Certificate of Compliance. The RPR is used by the Buyer and the Lender.
Land Title Office – is an Alberta Government agency where all titles and charges affecting land in Alberta are registered.
Late Interest – See Interest on Cash to Close.
Legal – is a short hand way to refer to the Legal Description.
Lease Contract – is a contract between the Registered Owner of the Property (Lessor or Landlord) and someone else (Lessee or Tenant) where the Lessor allows the Lessee to use the Property according to the terms of the Lease Contract. Also called Lease Agreement, Tenancy Agreement, Lease.
Legal Description – is the unique description of the Lot contained on the Title as assigned to the Lot by the Alberta Government. A typical Legal Description for a single detached home is PLAN: ******* BLOCK: ******** LOT: ******* and for a Condominium is CONDOMINIUM PLAN: ******** UNIT: *********.
Legal Fees (Real Estate) – is the amount of money paid by the Seller to the Seller’s Lawyer or paid by the Buyer to the Buyer’s Lawyer for the services performed in representing the Buyer or Seller in a Real Estate Transaction. Legal Fees are comprised of the fee, which is the amount the lawyer is charging you to act for you, the disbursements, which are expenses the lawyer has paid on your behalf to others such as search fees, courier charges and registration fees. In addition, GST is payable on the fee and certain disbursements. We will be pleased to give you an estimate for our services before being retained.
Lender – is anyone or any institute who provides money to the Buyer for the Purchase of a Property. Generally it is a bank, credit union or secondary lender, but it can also be a private individual or company.
List – refers to a Seller entering into a Listing Agreement with the Listing Broker.
Listing Agreement – is the contract between the Seller and the Seller’s Real Estate Company setting out what the Seller’s Realtor will do with respect to selling the Property. It covers the length of the Agreement, the Commission due upon a successful sale and other items that both the Seller and the Realtor have to follow.
Listing Broker – is the real estate company or agency which is hired by the Sellers to list the Property for sale. The Listing Broker is the real estate company that the Seller’s Realtor works for.
Listing Realtor – see Seller’s Realtor
Lot – is the plot of land that is being purchased, and generally has the House or Condo located on it. The dimensions are set out in a Real Property Report. In law, a Lot is known as Real Property, as opposed to Personal Property. The majority of Lots do not own the Mineral Rights underneath the surface (although some still do, check your Title), nor do they own the airspace above the Lot.
Market Value – is the value of the Property as determined by an Appraisal at a certain point in time. It is also determined by the value of the Property agreed to by a willing Seller and Buyer operating at arms-lengths.
Maturity Date – is the date in the Mortgage that the Term ends. On this date, the Lender has the right to ask for the balance of Principal Amount and Interest outstanding on the Mortgage. However, this is very rare. Lenders are in the business of loaning money, so if the Lender has had a good experience with you, they will grant you a Renewal Term.
Mortgage – is the debt, or the financial obligation, of the Registered Owner and is registered on the Title. It is a contract whereby the Lender agrees to loan to the Buyer or Registered Owner the Principal Amount upon certain terms. See also Seller’s Mortgage and Buyer’s Mortgage.
Mortgage Amount-Mortgage Rate – is interest payable by the Buyer to the Seller if the Seller did not receive the full Cash to Close on the Closing Date. The amount of interest payable is based on the number of days interest is required multiplied by the Mortgage Amount and the Mortgage Interest Rate.
Mortgage Broker – is a person who acts for Buyers and helps them to arrange Financing to purchase the Property. A Mortgage Broker may work for one Lender or may have access to many Lenders and will approach several of them to obtain the necessary financing. There is generally not a fee to the Buyer for this service. See Mortgage Brokers.
Mortgage Documents – are documents required by a Lender, drafted by the Buyer’s Lawyer and signed by the Buyer. The documents generally include: the Mortgage, Mortgage Terms, Statement of Disclosure, Conflict Letter, Mortgage Insurance Acknowledgement, Statutory Declarations, etc.
Mortgage Funds Advance Date – is the date when the Mortgage Proceeds are advanced to the Buyer’s Lawyer by the Lender and is usually the same date as the Closing Date / Possession date. If this date is before the Interest Adjustment Date, then the Buyer will owe some additional interest to the Lender for the period from the Mortgage Funds Advance Date to the Interest Adjustment Date.
Mortgage Insurance – is an insurance fee paid by the Buyer to an Insurance Company like Canada Mortgage and Housing (CMHC) to protect the Lender in circumstances where the Buyer defaults on its Mortgage payments and/or obligations. The Fee is usually added into the Mortgage. if the Buyer is in default on the mortgage and the Property is sold by the Lender, if the Lender still does not have enough funds to pay-out the entire Mortgage, the Lender has recourse against the Buyer’s named on the Mortgage Documents.
Mortgage Payment – is the amount of each mortgage payment comprised of Interest and Principal as set out in the Mortgage. Unlike rent, which is paid in advance, Monthly Mortgage Payments are paid, in arrears, meaning at the end of the month. If you chose a monthly payment, your first mortgage payment will be one month after the Interest Adjustment Date. If you chose bi-weekly payments, then your first payment will be two (2) weeks after the Interest Adjustment Date.
Mortgage Payment Frequency – is the time period between each mortgage payment. For instance, most mortgage payments are made monthly on the first day of the month (12 payments a year), however payments can also be made, weekly (52 payments in a year), bi-weekly (26 payments in a year), semi-monthly (24 payments in a year). One consideration for choosing a Mortgage Payment Frequency is in relation to your payday.
Mortgage Proceeds – is the net amount of funds received by the Buyer’s Lawyer from the Lender. For Example: if a Buyer arranges a mortgage of $250,000.00 but has less than a 20% downpayment. The Lender will require Mortgage Insurance be obtained and, say, that costs $5,500.00. The $5,500.00 fee will be deducted from the $250,000.00 Mortgage which means the Buyer’s Lawyer will only receive Mortgage Proceeds of $244,500.00 to apply towards the Purchase Price.
Mortgagee – is the Lender who loans the money to the Buyer.
Mortgagor – is the Buyer who borrows from the Lender and is the person who grants a Mortgage to the Lender. A way to remember who the Mortgagor is and who the Mortgagee is to remember that the “or” does the act. In other words, a grantor does something and the grantee receives it; a donor gives something and a donee receives it.
Municipality – refers to the geographic area set by boundaries and also the local government that the Property is located in. For example, Okotoks is a Municipality called the Town of Okotoks and is responsible for the governance of the land contained within its boundaries; the Municipal District of Foothills No. 31 (M.D. of the Foothills) is a rural municipality that encompasses all the land within its boundaries.
Non-Resident Certificate – is a document obtained by the Buyer’s Lawyer, which is executed by the Seller, confirming the residency status of the Seller.
Non-Resident Seller – if a Seller is a non-resident for income tax purposes in Canada, then the Buyer has an obligation to withhold 25% of the Purchase Price from the Seller until the Seller provides the Buyer with a Clearance Certificate issued by the Federal Government of Canada. The Buyer’s Lawyer looks after this issue on behalf of the Buyer. A Non-Resident Seller may be subjected to taxes on the Property, even if it is Residential Property, therefore the 25% holdback is necessary to protect the Buyer.
Normal / Standard Closing – is used when there is sufficient time to complete and register a Transfer of Land and Mortgage by the Completion Date. This depends on how fast Land Titles is processing request for registration. The Seller’s Lawyer has to send to the Buyer’s Lawyer the Closing Documents. The Buyer’s Lawyer then has to forward the necessary documents to the Land Title Office, where they are registered. Once registered, the Buyer is given Possession of the Property, the Cash to Close is delivered to the Seller’s Lawyer.
Offer – see Offer to Purchase
Offer to Purchase – is an offer to purchase a Property, prepared by the Buyer’s Realtor and presented to the Seller’s Realtor for acceptance, rejection or Counter Offer by the Seller.
PAP – is short for Pre Authorized Payment and is a means where by a property owner makes a monthly payment respecting Property Taxes to the municipality. See TIPP, Tax Installment Payment Plan.
Plan – a diagram that shows the dimensions and locations of the Lot boundaries as filed by the surveyor with the Land Title Office.
Possession – See Possession Date.
Possession Date – is the date in the Contract that the Seller has agreed to give physical possession of the Property to the Buyer and is generally at 12:00 noon on Closing Date / Completion Date.
Possession Day – See Possession Date
Power of Attorney – is a document prepared by a lawyer which authorizes another person (referred to as the “attorney”) to sign documents on behalf of the person who made the Power of Attorney. This is useful when a party to a Real Estate Transaction knows they will not be available to sign documents and therefore authorizes someone else to sign on their behalf. The Power of Attorney can be limited in its application or unlimited.
Principal Amount – is the amount of money borrowed by the Buyer from the Lender and is usually the amount registered against title. Although, some Lenders register a higher amount to better protect themselves.
Property – consists of the Real Property, the Land as well as the Improvements on the Land such as the House, Garage, etc. and also the Unattached Goods, such as washer, dryer, fridge, stove, etc. that are included in the Contract.
Property Disclosure Statement – is a statement prepared by the Seller answering various questions respecting the Property and usually becomes part of the Contract.
Property Insurance – is insurance obtained by the Buyer from an Insurance Company to protect the Buyer from damage or destruction to the House or Condo as well as actions for injury to persons on the Property. This is mandatory for a Buyer who is borrowing from a Lender and granting a Mortgage on the Property. And it should be used by everyone to protect their investment, even on a Cash Closing. The Seller has to keep Property Insurance on the Property until the Closing Date, even if the Closing Date is changed.
Property Taxes – are a charge on the Property levied by and payable to the Municipality. It is tied to the Market Value of the Property and a rate that the Municipality applies to every Property. This is billed annually, usually around May or June, but it is for the Calendar Year. Property Taxes are generally payable in early July meaning that you pay one-half of your Property Taxes in arrears and one-half in advance. You can also pay your Property Taxes monthly, see TIPP.
Protocol – See Western Conveyancing Protocol
Protocol Closing – is a process using the Western Conveyancing Protocol that allows the Buyer to have Possession of the Property, the Seller to receive the Sale Proceeds and the Realtors to receive their Commission before Title is registered in the name of the Buyer and before the Mortgage is registered against the Title.
Protocol Lender – is a lender who has agreed to be bound by the Western Conveyancing Protocol. See Protocol Lenders for a current list.
Purchase and Sale Agreement – see Contract.
Purchase Price – is the total amount the Buyer is paying the Seller for the Property set out in the Contract excluding GST, if applicable. The Buyer will be faced with additional costs above the Purchase Price to acquire the Property. See Total Purchase Price
Real Estate – is a general term that applies to all forms of real estate like a House, Condo, apartment block, commercial building, farm, vacant lot or time share; it is all real estate.
Real Estate Commission – see Commission.
Real Estate Transaction – refers to the entire process from the moment a Seller enters a Real Estate Office until the Seller has received the Sale Proceeds and the Buyer is the Registered Owner of the Property; and, all reporting has been done by the Buyer’s Lawyer and Seller’s Lawyer and all Commissions paid.
Real Property Report – is a report prepared by a Land Surveyor which determines the boundaries of the Lot being purchased and the location of the House and other structures and fences within the Lot. If there are problems, the Seller will have to remedy them. It is generally the Seller’s obligation to provide the Buyer with an accurate Real Property Report that has a Certificate of Compliance.
Registered Owner – see Seller
Registration Date – is the date that the Title to the Property is registered into the name of the Buyer. In most instances, this occurs after the Closing Date.
Renewal Term(s) – is the agreed upon extension of the Mortgage whereby the Buyer and Lender agree to a new Term and Interest Rate for the Buyer’s use of the Lender’s money.
RPR – see Real Property Report
Sale Price – is the price the Seller has agreed to sell the Property to the Buyer for, also Purchase Price.
Sale Proceeds – is the net amount of funds that are ultimately paid to the Seller after all of the Seller’s costs of the sale have been paid. Typical deductions from the Purchase Price are Realtor Commissions, Mortgage Payouts and Legal Fees.
Seller – is the person(s) or company shown on the Title as the legal owners of the Lot. The Seller’s Realtor will obtain a copy of the Title when contacted by a Seller to ensure the person they are dealing with has the authority to List the Property and to ensure they have the correct Legal.
Seller’s Lawyer – is the lawyer, retained by the Seller to act for the Seller See What Does a Seller’s Lawyer Do?
Seller’s Mortgage – is the financing that the Seller has on the Property and is a debt owed by the Seller to the Seller’s Lender as registered against Title. The Seller’s Mortgage/Line of Credit must be discharged from Title (unless the Buyer has agreed to assume the Seller’s Mortgage, see Assumption of Mortgage). These terms are taken care of by Trust Conditions and Undertakings exchanged between the Seller’s Lawyer and Buyer’s lawyer. The protection that both the Seller and Buyer have through their Lawyer’s Trust Conditions and Undertakings is a key part of having a Lawyer retrained for your Real Estate Transaction.
Seller’s Real Estate Company – is the real estate company the Seller’s Realtor works for and with whom the Seller signs a Listing Agreement respecting the Property.
Seller’s Realtor – is the realtor, hired by the Seller to market the Property and provide advice to the Seller respecting the sale of the Property.
Selling Realtor – is the realtor who found the Buyer for the Property and is responsible for preparing the initial Offer to Purchase.
Statement of Adjustments – is the statement prepared by the Seller’s Lawyer setting out the various credits that exist between the Buyer and Seller (such as Taxes, Condo Fees, Residential Association Fees, etc.). This statement will indicate the Cash to Close due from the Buyer to the Seller on Closing Date. Please see the sample Statement of Adjustments.
Subject To Clause – is a term that indicates that the Offer to Purchase is not Firm and that there are conditions which must be satisfied, either by the Seller, but generally by the Buyer before the Offer to Purchase becomes binding on both the Buyer and Seller. Typical “Subject To” clauses are Subject to Financing, Subject to a Home Inspection, Subject to an Appraisal or Subject to my Lawyer reviewing and approving the Condo Documents or my Lawyer reviewing and approving this Contract.
Subject To a Home Inspection – is typically used when purchasing an older House and the Buyer has some concerns with the condition of the House. Typically in the Contract, the Condition is written to allow the Buyer to either back out of the Contract if the property has too many problems or too expensive to repair, or allows the Buyer a reduction in Purchase Price. As an example, if the problem(s) are less than $1,000.00 to fix, the Buyer has to complete the Contract; if the problem(s) are more than $1,000.00, the Buyer can either back out of the Contract or negotiate a different Purchase Price. The dollar amount you choose is up to the Buyer and Seller to negotiate and agree to. The Buyer must be satisfied with the Home Inspection Report and remove this Condition for the Contract to become a Firm Contract.
Subject To an Appraisal – is used by a Buyer, who is not getting a Mortgage, to satisfy themselves that what they are offering for the Property is indeed below or at the Market Value and is used by a Buyer, who is getting a Mortgage, to satisfy the Lender that the amount of money the Buyer wishes to borrow is appropriate to the value of the Property. The Buyer must be satisfied with the Appraisal and remove this Condition.
Subject To Financing – is the most common “Subject To” clause and means that a Lender must approve financing and provide a commitment letter for the Buyer to purchase the Property. The Buyer must be satisfied with the Financing terms and remove this Condition.
Subject To my Lawyer Reviewing and Approving the Condo Documents – indicates that the Buyer of a Condo would like the Buyer’s Lawyer to review the relevant Condo Documents and then provide his opinion to the Buyer as to whether they are reasonable. Assuming they are, the Buyer’s Lawyer will generally provide a written opinion to the Buyer’s Real Estate Company that the Condo Docs are reasonable and advise the Buyer that it is appropriate to remove this condition. Depending on what is involved, the Buyer’s Lawyer may charge an additional fee for this service. The Buyer must be satisfied with the Condo Docs and remove this Condition.
Subject to my Lawyer Reviewing and Approving the Contract – indicates that the Buyer would like the Buyer’s Lawyer to review the Contact and then provide his opinion to the Buyer as to whether the Contract is acceptable. Assuming it is, the Buyer’s Lawyer will generally provide a written opinion to the Buyer’s Real Estate Company and advise the Buyer that it is appropriate to remove this condition. Depending on what is involved, the Buyer’s Lawyer may charge an additional fee for this service. The Buyer must be satisfied with the Contract and remove this Condition.
Subject to my Lawyer Reviewing and Approving the Encumbrances Registered on Title – indicates that the Buyer would like the Buyer’s Lawyer to review all registrations on Title and then provide his opinion to the Buyer as to whether the Contract is acceptable. Assuming it is, the Buyer’s Lawyer will generally provide a written opinion to the Buyer’s Real Estate Company and advise the Buyer that it is appropriate to remove this condition. Depending on what is involved, the Buyer’s Lawyer may charge an additional fee for this service. The Buyer must be satisfied with the Contract and remove this Condition.
Subject to the Sale of my Current Property – indicates that the Buyer would like to have a Frim Contract on the sale of their existing property, in order for the Buyer to be able to complete this Purchase. The Buyer must be satisfied with the Sale terms of their existing Property and remove this Condition.
Tax Installment Payment Plan (TIPP) – See Property Taxes.
Tenants in Common – is one way for two or more people to be registered on the Title to a Property in their names. If the Property is held as “Tenants in Common”, then when one of the owners dies, his interest in the Property passes according to his Will (or on Intestacy if there is no Will, but really, you need a Will, why don’t you have a Will? Please contact me so we can get a Will prepared for you, this will save your loved ones and/or beneficiaries a lot of time and expense). Whether Tenancy in Common or Joint Tenancy is best, depends on your particular circumstances. You should discuss with your Lawyer which is best for you.
Term – is the length of time the Lender has agreed to finance the purchase of the Property and loan the Principal Amount for. A term is typically from 1 to 5 years.
TIPP – See Property Taxes.
Title – refers to the document obtained from the Land Title Office respecting the Lot which sets out the Registered Owner, Legal Description and Charges registered against the Lot. Also called a Certified Certificate of Title (CCT).
Title Insurance – is insurance which the Buyer obtains to protect both the Buyer and his Lender, or it can be purchased to only protect the Lender or it can be purchased to protect the Lender only or the Buyer only. Some Lenders require Title Insurance, so it can be mandatory. Generally, Title Insurance is purchased to protect the Lender and for an additional cost, can protect the Buyer. If there is a problem with the Lot or some title defect, the Title Insurance Company will remedy the defect. A typical example would be where a garage encroaches into the adjoining property and is not fully contained within the Lot. The Title Insurance Company would remedy this. Title Insurance costs approximately $150 to protect the Lender and $200 to protect both the Lender and the Buyer.
Title Insurance Closing – is a process using Title Insurance that allows the Buyer to have Possession of the Property, the Seller to receive the Sale Proceeds and the Realtors to receive their Commission before Title is registered in the name of the Buyer or the Mortgage is registered against the Title.
Total Cost of the Purchase – is the total cost to the Buyer to acquire the Property and includes the Purchase Price, Buyer’s Legal Fees and if applicable: an Appraisal, a Home Inspection Report and Title Insurance as well as any Adjustments. The Buyer may also have to pay GST.
Transfer – see Transfer of Land
Transfer Documents – are the documents typically used in a Real Estate Transaction and include the Transfer of Land, Statement of Adjustments, etc. Also see Closing Documents.
Transfer of Land – is the document, prepared by the Sellers Lawyer which is executed by the Seller and which is filed at the Land Title Office to effectively transfer the Property from the Seller to the Buyer.
Trust Cheque – is a Lawyer’s cheque usually prepared by the Buyer’s Lawyer made payable to the Seller’s Lawyer for the Cash to Close and is generally delivered to the Seller’s Lawyer or directly deposited to the Seller’s Lawyer’s trust account.
Trust Conditions – Are conditions imposed by the Seller’s Lawyer on the Buyer’s Lawyer to ensure that the Seller’s interest in the Property is protected until the Seller has been paid the Purchase Price in full. A lawyer cannot breach a Trust Condition that is imposed on him and he accepts it.
Turnaround Time – is the number of business days the Land Title Office needs to register a Transfer of Land from the time it arrives at the Land Title Office until it is registered. It could vary from a few days to 3 weeks, or so.
Unattached Goods – See Attached Goods, Chattels.
Unconditional Offer – is a term used by Realtors to indicate an offer has been made for the Property and there are no “Subject To” conditions contained in it. If it is accepted by the Seller, then there will be a Firm Contract.
Undertakings – refers to the promises made between the Seller’s Lawyer and Buyer’s Lawyer. A lawyer cannot breach an undertaking that he gives. They are the foundation that: allows a Seller to sign a Transfer of Land without having received the Sale Proceeds, a Lender to advance the Mortgage Proceeds to the Buyer’s Lawyer without the Mortgage being registered on Title in the name of the Buyer and allow the Buyer to give the Balance to Close to the Buyer’s Lawyer.
Utilities – refers to the Municipal charges for services they provide to the Property such as water, sewer and garbage collection, which are adjusted on Closing Date. Utilities can also refer to the services you connect for gas, hydro and cable-internet. These items are not adjusted and are left to the Seller to cancel these services and for the Buyer to sign up for them.
Waiver of Conditions – is generally a document prepared by the Buyer’s Realtor waiving one or all of the Subject To Clauses. When all of the Subject To Clauses are waived, you have a Firm Contract.
Walk Through – is what happens on that happy day when the Buyer obtains possession of the Property. The Buyer and the Buyer’s Realtor take a “walk through” of the Property to ensure it meets the terms of the Contract.
Western Conveyancing Protocol – is an arrangement between the law societies of western Canada that stands in place of Title Insurance and allows Buyer’s Lawyers and Seller’s Lawyers, who agree to be bound by the Western Conveyancing Protocol to proceed with completing a sale without the Transfer of Land being registered.
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