Adjustments
Apportionments of charges or credits made on the closing date to reflect the fair allocation of costs between the seller and the buyer so that each gets what is due to him. Adjustments are calculated based upon the number of days in the year or billing period, and typically include property taxes, water or sewerage charges, fuel adjustments where a full tank of furnace oil has been supplied, etc.
Agent – Real estate
A person in the employ of a single firm who sells or lets land or houses on behalf of the owner.
Agent – Insurance
A person in the employ of a single firm who sells policies for insurance coverage on various items ranging from property to life and health.
Agreement of Purchase and Sale
The contract that sets out the terms of the sale and purchase such as the names of the seller and buyer, price, closing date, items remaining with the property etc. An Agreement of Purchase and Sale becomes legally binding when it is signed by both parties and the buyer pays a deposit to the seller.
Appraiser – Home
A person who judges the quality and/or market value of a home.
Broker – Mortgage, Insurance
A person who sells products e.g. mortgage products or insurance policies on behalf of a range of different businesses.
Condition Fulfillment
A legal declaration that the condition has been fulfilled or completed satisfactorily.
Condition Removal
A legal declaration that the conditions of purchase and sale have either been fulfilled or waived, and the agreement has become binding upon the parties.
Condition Waiver
A legal declaration that the condition may not necessarily have been fulfilled, but the party responsible for requiring the condition of sale or purchase is nonetheless willing to forego the fulfillment of that condition.
Conflict of Interest
When the duty to one client has the potential to adversely affect the interest of another client. For example, a conflict could arise if the lawyer becomes aware of information that is required to be reported to the mortgage lender, but the buyer/borrower instructs the lawyer not to disclose anything. In these circumstances the lawyer would refuse to act for one or both parties.
Covenants
Obligations or legally binding promises between the original land owner, developer or landlord and the owner of the property that are either protective in nature e.g. the requirement to maintain a fence or negative in nature e.g. a restriction against erecting an outside clothes line.
Closing Day
The Big Day! The official date on which money and keys change hands / you have to surrender vacant possession of your old home / you receive vacant possession of your new home. 12 noon is typically the standard time for closing details to be concluded for both seller and buyer.
Deed (Title)
The single document that evidences legal ownership of the property. All pertinent information on the deed is also maintained in the provincial land registration system database.
Deed (Transfer)
The document which actually transfers the ownership of the property from seller to buyer. Once the matter has been completed the signed transfer is sent to the Land Registry to enable them to update the registers so that title to the property is changed from the seller to the buyer.
Deposit
The payment made by the buyer to the seller (or to the seller's agent) to legally secure the terms of the agreement of purchase and sale. The deposit amount is either a lump sum amount or a fixed percentage of the price, and the amount paid is a financial deterrent to stop the buyer from pulling out of the deal, or else the deposit is generally forfeited.
Developer
A person or firm who develops a tract of land for residential or industrial purposes.
Disbursements
The necessary costs incurred to change property ownership registration, and include obtaining clearance certificates, filing fees for registering deeds with the provincial land registry, mortgage registration or discharge fees, courier and photocopying charges etc. Disbursements must be paid in certified funds to the lawyer no later than closing day.
Freehold
Complete and absolute ownership of the land and all buildings on it. The freehold owner has the right to do as they please with their home and land, subject to legal and planning constraints. (see also Joint Tenants and Tenants in Common)
Home Inspector
A person or firm who conducts a limited examination of and makes a written report regarding the condition of a home.
Insurance (Property)
An insurance policy issued by a general insurance company that, among other things, covers your home and belongings against loss or damage by various perils, namely fire, theft, vandalism etc. Mortgage lenders often require costly additional coverage against loss or damage by earthquake, flood, hurricane or other additional perils depending upon the natural risks that are prone to the location of your home.
Insurance (Title)
An insurance policy issued by a title insurance company that guarantees your interest in the title against hidden risks of undisclosed interests (including encroachments, easements, zoning non-compliance, etc.) or title defects that may not be uncovered by the investigative search process. It is common for mortgage lenders to require title insurance and this coverage is often used in place of a Surveyor's Location Certificate. (see also Surveyor's Location Certificate)
Joint Tenants
Means that upon the death of one of the owners, the property ownership will automatically transfer to the surviving owner(s). This will happen irrespective of whether the deceased has made a will. Neither of the owners can leave their share of the property to someone else. The sole survivor can deal with the property any way they want. (see also Tenants in Common)
Land Registry
The government information agency and system listing the register of title to freehold and leasehold land and properties in the province. The land registry contains all pertinent information listed on each property's (title) deed. While most provincial land registries now have the vast majority of properties listed electronically, there is often an additional expense to be paid to migrate from the old paper system to the new electronic system.
Lawyer
A person qualified to practice law by virtue of their admission to the provincial law society. (See also Notary)
Lease
A contract and a set of rules and regulations between a Landlord and a Tenant granting a right to possess property for a set period of time at a set rent.
Leasehold
The temporary ownership of the property but not the land on which it stands, for a set period of time (the lease term) on payment of rent. A leasehold differs from freehold property in that the title to the property reverts to the freeholder on the expiry of the lease.
Legal Fees
The fees payable at closing for the legal work performed in representing your interest in the transaction. They include preparing all documents, ordering all statements, preparing final adjustments and the lawyer's advice and assistance throughout the closing process.
Mortgage (deed)
The legal charge of the property to the mortgage lender until such time as the loan is paid. The Mortgage Deed is a legally binding document the buyer / borrower signs to show that he agrees to the mortgage lender's terms and conditions, and to the loan being secured on the title to the property (which means the mortgage lender can repossess the property should the loan payments fall into arrears).
Mortgage (loan)
A loan to assist in the purchase of a house. The mortgage is "attached" to the title deeds, and means that one cannot sell the property without paying off the mortgage loan at the same time.
Mortgage Renewal
The process of extending a mortgage loan for a further period of time upon substantially similar conditions as the original mortgage term. (see also Refinance)
Negative Equity (or underwater mortgage)
A situation that arises when the market value of a property is less than is owed on all loans and mortgages secured against it. Equity shortfalls almost always need to be met by the seller before property ownership can be transferred.
Notary
A public officer appointed to administer oaths and draw up certain legal documents. In Quebec notaries are authorized by law to conduct the business of real property law. (see also Lawyer)
Power of Attorney
An appointment given by a person to another person to legally allow the second person to act on the behalf of the first person who may be incapacitated due to unavailability or sickness or any other specified reason. A Power of Attorney is a document drawn up by a lawyer conferring either general or specific powers on the chosen person.
Property Condition Statement
A statement that represents the condition of the property as known by the seller and is made to the buyer.
Refinance
The process of replacing an existing debt obligation with another debt obligation under different terms. (see also Mortgage Renewal)
Sales Tax (incl. Goods & Services Tax (GST) and Harmonized Sales Tax (HST))
The combination of provincially and federally-levied taxes on the goods and services provided within the real property transaction. The largest component is HST charged on the value of new home construction (although there is also a New Home HST rebate that can be applied for); GST/HST is not charged on used homes. Sales tax is charged on all professional fees (including realty agent commissions) and taxable disbursements on the property transaction, but it is not charged on land transfer taxes or other government registry fees.
Surveyor's Location Certificate
A registered land surveyor's drawing and certification that the building(s) on the property is wholly within, or not wholly within the boundaries as outlined in the legal description on the deed. By contrast, a detailed boundary survey involves the surveyor doing a detailed study and report on the property along with the boundaries of the adjoining properties. By further contrast, your lawyer's search can only reveal whether or not there is good root of title to the property, that is, that there are no encumbrances against the property that are recorded in the provincial land registry system. (see also Insurance - Title)
Tenants in Common
A term describing people who own separate but usually equal shares in a property. (see also Joint Tenants)
Title
The right of ownership of a property and the documentary evidence of that ownership. (see also Deed)
Transfer Tax (also includes Land TT and Municipal Deed TT)
The tax that must be paid to the municipality and/or province in which the property is located. The transfer tax is payable before the deed can be registered in the name of the new owner. Transfer taxes are often the biggest expense associated with buying a property.
Vacant Possession
Means that the property, including any loft, shed or garage, has to be completely empty of possessions (apart from fixtures and fittings that are required to remain) and trash.
