Buying or selling a home is something that people don't do very often. If it's been some time since your last move, or if you're a First-Time Buyer, you may come across some unfamiliar terms, and it's important to know what they are.
Here are some of the most common Real Estate terms you're certain to come across.
| Term | Definition |
|---|---|
| Adjustment Costs | Financial adjustments made at closing for items prepaid by the seller, like property taxes and utility bills. Adjustments ensure both the buyer and seller only pay for their respective days of ownership. |
| Amortization | The total length of time to repay a loan. A mortgage is typically amortized for 25 years, with intervals of terms (ie. 5 years). |
| Assessment | The value assigned to a property by a municipal or provincial taxation authority for the purposes of calculating property tax. |
| Bare Land Condo | A type of condominium in Alberta where the owner owns the land and the building but contributes to the maintenance of common areas through monthly fees. |
| Close and Closing Date | The final stage in the real estate transaction. Legal ownership is transferred from the seller to the buyer, and financial transactions are completed. Also known as Completion Date. |
| Closing Costs | Various expenses associated with finalizing a real estate transaction. This includes legal fees, title registration fees, land transfer tax (if applicable), Title Insurance (if applicable), disbursements, and adjustment costs. Adjustment costs are the per day calculations lawyers do to ensure that the buyers and sellers are paying for the respective days of ownership for the month of the sale (i.e., partial month's property taxes for the correct number of days the seller owned the home). |
| CMHC | Stands for Canadian Mortgage and Housing Corporation. It provides mortgage default insurance for homes with a down payment of less than 20%. |
| Completion Date | The date on which the sale of a property is finalized and the title is transferred from seller to buyer. Also known as Closing Date. |
| Condominium Documents | A set of documents and records that provide detailed information about the condominium corporation's legal, financial, and administrative aspects. This will include the bylaws, rules, financial statements, meeting minutes, and the Reserve Fund Study. This is critical information to review before purchasing any condo, and should be reviewed by a Condo Document Specialist. |
| Condominium Fees | Regular fees paid by a condo owner for the maintenance of common property areas. |
| Condition | Contingencies outlined in an offer that must be met for the contract to be binding. Common conditions include financing, home inspection, and for condos, a document review. |
| Conveyance | The legal process of transferring property from one owner to another. |
| Conventional Condo | Ownership of an individual unit within a building, along with a shared interest in common areas such as lobbies and amenities, with the condo corporation responsible for their maintenance. This differs from a Bare Land Condo, where the owner holds Title to the land and any structures on it, making them responsible for maintenance. |
| Deposit | A sum paid to demonstrate commitment when making an offer, later applied to the down payment. |
| Down Payment | An upfront payment made by the buyer, typically a percentage of the property’s purchase price. |
| Easement | A right that comes with a property to access or over someone else's land for specific purposes. |
| Encroachment Agreement | An agreement that addresses situations where a structure like a fence or a building extends onto another's property. |
| Equity | The value of the homeowner's interest in the property, calculated as the market value minus any outstanding mortgage balance. |
| Estoppel Certificate | A document used in the sale of a condominium showing the current financial health of the specific condo unit and the condo corporation. |
| Firm Sale | A property sale that becomes legally binding when all conditions of the offer are satisfied. |
| Fixed-Rate Mortgage | A loan with a set interest rate for a specified term of time. The interest and payment amount will not change during the set term, regardless of fluctuations with the Bank of Canada interest rate adjustments. |
| GST | Goods and Services Tax, a federal tax applied to the sale of new homes. Most often, the builders will include GST in the advertised listing price. |
| Home Inspection | A comprehensive examination of a property’s condition by a licensed inspector before the sale is finalized. |
| Joint Tenancy | A co-ownership arrangement where two or more parties hold equal shares of a property with the right of survivorship. For example, if two owners are listed on Title and one passes away, the remaining owner will now own 100% of the property. The opposite of Tenants-In-Common. |
| Lender | A bank, credit union, or other financial institution that provides the mortgage funds. |
| Lien | A legal claim against a property for outstanding debt, which must be paid when the property is sold. |
| Loan-to-Value Ratio | The ratio of the mortgage amount to the appraised property value, used by lenders to assess loan risk. |
| Mortgage | A loan agreement where the lender provides funds for the buyer to purchase property, with the property itself as collateral. |
| Mortgage Broker | A professional who helps buyers find the best mortgage rate and terms by shopping among various lenders. |
| Mortgage Default Insurance | Required for mortgages with less than a 20% down payment, to protect lenders in the event of default. |
| Offer to Purchase | A written proposal to buy a property at a specified price with specified terms. |
| Pending | The status of a property when an offer has been accepted with conditions to fulfill before the sale is finalized. Also known as Sold Conditionally |
| Possession Date | The date when the buyer is entitled to take possession of the property, which may differ from the closing date. |
| Pre-Approval | A lender’s initial evaluation of a potential borrower's creditworthiness and the amount they would be willing to lend. A credit check must be completed to ensure accuracy. |
| Principal | The actual borrowed amount on a mortgage, not including interest. |
| Real Property Report (RPR) | A legal document in Alberta showing the location of visible improvements relative to property boundaries. As per the standard Alberta Purchase Contract, a compliant RPR must be given to a Buyer from the Seller, unless otherwise agreed upon by both Parties. |
| Tenants In Common | A type of joint ownership of a property in which each joint tenant owns a specific share of the property and can dispose of their share independently. If two people own a property, and one passes away, the shares of the person who passed will go to a named beneficiary in a Will, and not the surviving owner. The opposite of Joint Tenancy, where the right of survivorship exists. |
| Term (Mortgage) | The time period agreed upon between the lender and borrower for the interest rate during a set period of time. Typically 1-10 years. After the term ends, the mortgage is up for renewal, and a new interest rate and term (time) needs to be agreed upon. |
| Title | The official document that records the ownership of a property. When you purchase a property, the title is transferred to your name to establish your ownership rights. |
| Title Insurance | Insurance that protects property owners and lenders against any property loss or damage they might experience because of liens, encumbrances, or defects in the title to the property. |
| Variable-Rate Mortgage | A mortgage with an interest rate that can change during the term of the loan in accordance with changes in market interest rates. |
| Waiver or Non-Waiver | A document signed during a conditional offer process. If a buyer is satisfied with fulfilling the conditions, they sign a waiver to proceed with the sale. If the buyer is not satisfied and cannot proceed, they sign a non-waiver, and the contract is nullified. |
| Zoning Regulations | Municipal or provincial laws that govern how a property can be used, including the types of buildings that are allowed, their uses, and where they can be located on the property. |
I hope you found this helpful. I live in Cochrane, Alberta and help Buyers and Sellers in Cochrane, Calgary, Airdrie, Chestermere and anywhere in Rocky View County. If you have any questions about the market or are ready to get started on your real estate journey, call, text or email me anytime.
For free access to the most up-to-date database of available homes in Alberta, follow this link!
