Buying Real Estate - Glossary

Terms Used When Buying or Selling a Home:

• Adjustments:
  Property taxes, electricity, gas, fuel and mortgage interest already paid out for future service must be pro-rated. This can involve an expenditure of several hundred dollars payable when the sale is completed.
  
  
• Appraisal:
  The process of determining the value of the property, usually for lending purposes. This value may or may not match the purchase price of the home.
  
  
• Broker:
  An intermediary between the buyer and seller who is licensed to carry out such activities.
  
  
• Building Permit:
  A certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or renovated.
  
  
• Survey Certificate:
  A document specifying the exact location of the property and describing the type and size of house, including additions.
  
  
• Certificate of Search:
  A document verifying the transactions registered against the property -i.e. sales, mortgages, etc.
  
  
• Conditional Offer:
  An offer to purchase subject to specified conditions. These conditions could be the arranging of a mortgage or the sale of a present home. Usually a time limit in which the specified conditions must be met is stipulated.
  
  
• Deed:
  The final document prepared by a lawyer or notary to be signed by the seller and purchaser transferring ownership. This document is then registered against the property as evidence of ownership.
  
  
• Deposit:
  A sum of money deposited in trust by the purchaser on making an offer and held by the broker, lawyer or notary until the closing of the sale.
  
  
• Discharge:
  The removal of all mortgages and other financial encumbrances on a property.
  
  
• Easement:
  The right acquired for access to or over another person's land for a
  specific purpose, such as for a driveway or public utilities.
  
  
• Encumbrance:
  A registered claim for debt against a property, such as a mortgage.
  
  
• Equity:
  The interest of the owner in a property over and above all claims to the property. It is usually the difference between the Mortgage(s) and the market value of the property.
  
  
• Holdback:
  An amount of money withheld by the lender during the construction stage of a house to ensure that construction is satisfactory at every stage. The amount of holdback is generally equivalent to the estimated cost to complete construction.
  
  
• Insurance:
  Before the transaction can be closed, the purchaser MUST have fire insurance arranged and in effect. A certificate from the insurance company may be required at the closing.
  
  
• Mechanic's Lien:
  A claim against a property for money owing to a supplier, subcontractor or other person or company who has provided labour or materials.
  
  
• Offer to Purchase:
  A written contract setting forth the terms under which a buyer agrees to purchase a property. Upon acceptance by the seller, it forms a contract, which will form the basis for the final document to be prepared by a lawyer or notary. It includes the legal and/or municipal description (street address), purchase price, closing date, mortgage and terms of repayment and lists specific items included as part of the sale.
  
  
• Specification Form:
  A document stipulating the type, quantity and sometimes the quality of materials and workmanship required in the construction of a particular house.
  
  
• Title:
  Evidence of ownership.
  
  
• Zoning Laws:
  Municipal laws restricting the use of land for specific purposes