Ontario Canada Real Estate Lawyer

This home buyers guide to real estate terms was prepared by Ontario Law Society’s title insurer Title Plus.  The following definitions are not legal definitions, they are provided to enhance your understanding of what may be involved in your home purchase.

Agreement of Purchase and Sale (APS)
The APS is a legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached) or conditional (certain conditions must be fulfilled before the deal can be closed).

Amortization
The number of years it takes to repay the entire amount of a mortgage.

Appraisal
An estimate of a property’s market value.

Appreciation
The increase of a property’s value over time.

Assessment
The value of a property, set by the local municipality, for the purposes of calculating property tax.

Assumable Mortgage
A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments.

Blended Mortgage
A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates.

Bridge Financing
Money borrowed against a homeowner’s equity in a property, usually for a short term, to help finance the purchase of another property or make improvements to a property being sold.

Builder
The company responsible for construction of the houses in any particular subdivision. The builder buys the lots from the developer and then builds the dwelling.

Chattels
Usually, chattels are personal effects, which you take with you when you move. Examples are: furniture, art work, etc.

Closing Date
The date on which the sale of a property becomes final and the new owner takes possession. (It is the real estate transaction’s completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.)

Condominium
A residential structure in which apartments or townhouses (units) are individually owned as pieces of real estate while the land and common facilities are jointly owned.

Condominium Corporation
Operates the condominium and the land.

Common Areas
Those areas in a condominium development that are enjoyed by all residents.

Conventional Mortgage
A first mortgage issued for up to 75% of the property’s appraised value or purchase price, whichever is lower.

Counteroffer
One party’s written response to the other party’s offer during purchase negotiations between buyer and seller.

Debt Service Ratio
The percentage of a borrower’s gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, where applicable).

Deed
A legal document that conveys (transfers) ownership of a property to the buyer.

Developer
The company responsible for taking raw land, subdividing it into lots, bringing in the services (such as sewers and roads) etc., and then selling the lots to the builder.

Easement
A legal right to use or cross (right-of-way) another person’s land for limited purposes. This right belongs to someone other than the landowner. A common example is a utility company’s right to run wires or lay pipe across a property.

Encroachment
An intrusion onto an adjoining property — such as a neighbour’s fence, storage shed or overhanging roof line that partially (or even fully) intrudes onto your property.

Equity
The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner’s financial “stake” in the property.

Foreclosure
A legal process by which the lender takes possession and ownership of a property when the borrower defaults on the mortgage obligation.

High Ratio Mortgage
A mortgage for more than 75% of a property’s appraised value or purchase price.

Land Transfer Tax
Payment to the provincial government for transferring property from the seller to the buyer.

Lien
Any legal claim against a property, filed to ensure payment of a debt.

Mortgagee
The lender.

Mortgage Insurance
Government-backed or private-backed insurance protecting the lender against the borrower’s default on high ratio (or other types) of mortgages.

Mortgagor
The borrower.

Multiple Listing Service
A system for relaying information to Realtors about properties for sale.

Ontario New Home Warranty Program
See Tarion Warranty Corporation

Prepayment Privilege
A mortgage feature that allows the borrower to repay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times.

P.I.T.
Principal, interest and taxes. Together these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments.

Principal
The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.

Status Certificate
A written statement of a condominium unit’s current financial and legal status.

Subdivision
One large piece of land under one ownership being subdivided into several lots to be sold to many purchasers.

Tarion Warranty Corporation
A private corporation set up by the provincial government to administer the Ontario New Home Warranties Plan Act. The act is designed to protect consumers buying new homes by ensuring that they get a quality home. All builders in Ontario must enroll every home in the program.

Variable-rate Mortgage
A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.

Vendor-take-back Mortgage
When sellers use the equity in a property to provide some or all of the mortgage financing in order to sell the property.

Zoning Regulations
Strict guidelines set by municipal governments regulating how a property may or may not be used.