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Real Estate Glossary of Terms and Definitions


You will find some common and not so common terms used in real estate in Ontario, Canada and in the United States.  I hope you find this useful.  If you have any questions or require further information, please email me. Maybe you are interested in a glossary of commercial real estate terms

 

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Real Estate in Mississauga
    

APR (Annual Percentage Rate)
The yearly interest percentage of a mortgage as expressed by the actual rate of interest paid given the term, rate, amount and cost of arrangement.
ARM (Adjustable Rate Mortgage)
A mortgage for which the interest rate is adjusted periodically according to movements in a pre-selected index.
ABSTRACT OF TITLE
A written history of the title to a parcel of real estate as recorded in a Land Registry Office.
ACCELERATION CLAUSE
A clause in the mortgage document which accelerates the maturity date and states that upon default, the principal sum of the mortgage and accrued interest falls due.
ACCRUED INTEREST
Interest which has accumulated unpaid since last payment date.
ADVERSE POSSESSION
When an individual, not the owner, takes actual possession of the property, hostile to, and without the consent of, the owner.
ADD-ON INTEREST
An interest amount added to the principal of a debt and made payable as part of the debt , usually in equal periodic instalments (also called Pre-calculated intrest).
AFFIDAVIT
A statement of declaration in writing and sworn or affirmed before an authorized individual, such as a notary public.
AGENCY
A relationship which arises out of a contract, where an agent is authorized by a principal to engage in certain acts, usually in dealing with one or more third party(s).
AGREEMENT OF PURCHASE AND SALE
A written contract to buy property in which the purchaser and vendor agree to sell upon terms and conditions as set forth in the agreement.
ALIENATION CLAUSE
This is a clause that enables the mortgagee to demand payment of the outstanding balance including interest upon sale or transfer of title. (also known as a "due on sale" clause)
AMORTIZATION
The gradual retirement of a debt by means of partial payments of the principal at regular intervals.
AMORTIZATION OF A MORTGAGE
The arrangement for paying off a mortgage by instalments, over a period of time.
AMORTIZATION PERIOD
The time period required to completely retire a debt through scheduled payments of principal.
ANNIVERSARY DATE
The occasion of one year from an event pertaining to a mortgage. (Eg. Registration date)
APPRAISED VALUE
An estimate of property value written by a qualified individual (AACI). Appraisals performed for mortgage lending purposes, may not reflect the market value of the property, or the purchase price.
APPURTENANCE
Something which is outside the property itself, but belongs to the land and is joined thereto; eg. a road over another's land providing an access (right-of-way) is an appurtenance.
ARREARS
To be "in arrears" is to be behind in the payments called for under a mortgage agreement.
ASSESSED VALUE
An amount assigned to taxable property, for the purpose of equalizing the burden of taxation.
ASSIGNEE
One who takes the rights or title of another by assignment.
ASSIGNMENT OF MORTGAGE
The assigning of a mortgagee's interest in the mortgage to a new mortgagee. The legal sale of the mortgage with or without an agreement to repurchase.
ASSIGNMENT OF RENTALS
The enforcable diversion of income from mortgaged property to the Mortgagee.
ASSIGNOR
One who transfers or assigns the rights or title to another.
ASSUMPTION AGREEMENT
A document which binds someone other than the mortgagor, to perform mortgage obligations.
ASSUMPTION OF MORTGAGE
The action of a purchaser taking responsibility for a mortgage debt by way of a legal agreement. The original covenantor(s) responsibility pursuant to the mortgage obligation remains intact in such arrangement, so long as the existing documentation remains registered.
ATTORNMENT OF RENT
The redirection of rental income to a Mortgagee, usually in the event of default.
AUTHORITY
The legal right given by a principal to an agent to act on the principal's behalf in performing specific acts or negotiations.

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BALANCE DUE ON COMPLETION
The amount of money a purchaser will be required to pay to the vendor to complete the purchase, after all adjustments have been made.
BALLOON PAYMENT
This is a final mortgage payment at the end of the term which pays off the outstanding loan in full. The amount of money (principal) required to discharge a mortgage at maturity.
BLANKET MORTGAGE
A single registered document which encumbers more than one property.
BLENDED PAYMENT
Equal payments consisting of both principal and interest, paid regularly during the term of the mortgage.
BREACH OF CONTRACT
Failure to fulfil an obligation under a contract. Breach confers a right of action on the offended party.
BUILDING CODES
Regulations established by government providing for structural requirements.
BUYDOWN
A payment to the lender from the seller, buyer or third party causing the lender to reduce the interest rate during the term of the mortgage.

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CAP
Refers to a maximum interest rate increase for a mortgage.
CAPITALIZED VALUE
The value of a property based on the net income.
CAPITALIZATION RATE
The rate of return anticipated by an investor in property.
CAVEAT EMPTOR
"Let the buyer beware". A buyer must examine fully before the purchase is made.
CERTIFICATE OF CHARGE
A mortgage document in the Land Titles System.
CESSATION OF CHARGE
A discharge of a mortgage in the Land Titles System.
CHAIN OF TITLE
The sequence of conveyances and encumbrances affecting a title to land from the time that the original patent was granted or as far back as records are available.
CHARGE
The name given to a mortgage document when title is registered under the Land Titles Act.
CHATTELS
Moveable possessions and personal property that may be removed without damage to the property, (eg. appliances).
CHATTEL MORTGAGE
An encumbrance against moveable possessions, or personal property that may be removed without damage to the property, (e.g. appliances).
CLOSED MORTGAGE
A referance to the absence of the privilege to accellerate repayment during the term of a mortgage either by bulk payment(s) or increase to scheduled remittances.
CLOSING
See "Date of Completion"
CLOUD ON TITLE
Any encumbrance or claim that affects title to property.
CMHC
The Canada Mortgage and Housing Corporation a Canadian Crown Corporation which administers the National Housing Act. CMHC services include the insuring of high ratio mortgage loans for lenders.
COLLATERAL MORTGAGE
A mortgage which secures a loan given by way of a promissory note.
COLLATERAL SECURITY
An additional form of security, pledged to reduce the risk of a mortgagee.
COMMITMENT
A written notice from a lender who advises of approval to advance a specified amount of funds under certain conditions.
COMMON LAW
That part of the law formulated, developed and administered by the old common law courts, based originally on unwritten common customs.
COMPLETION LOAN
A mortgage loan dispursed following the satisfactory completion of construction.
COMPOUND INTEREST
Interest on both the principal and on interest that has accrued.
COMPONENT FINANCING
A device by which lending is split into separate parts and treated individually.
CONDITION PRECEDENT
An event or action necessary before an agreement becomes binding.
CONDITION SUBSEQUENT
A condition referring to a future event upon the happening of which the contract becomes no longer binding on the parties.
CONDOMINIUM
The ownership of a separate amount of space in a multiple dwelling or other multiple-ownership of common elements used jointly with other owners.
CONSIDERATION
Something of value given to make a promise of repayment enforceable.
CONSTANT ANNUAL PERCENT
The percentage required to pay the principal and interest to amortize the loan.
CONSTANT PAYMENT MORTGAGE
A mortgage which is paid by equal periodic amounts consisting of principal and interest payments. It may be self-liquidating, which means the mortgage is entirely paid off at maturity (fully amortized), partially amortized, at the end of which there remains a principal balance due at maturity (also known as balloon mortgage).
CONTRACT
An agreement between two or more parties given receipt of lawful consideration to do or refrain from doing some act.
CONSTRUCTION ADVANCE
Moneys advanced to the borrower under a construction loan.
CONSTRUCTION LIEN
A claim against property pursuant to labour, services, or materials supplied.
CONSTRUCTION LOAN
A short term loan made to a builder for construction of buildings, usually to be paid out by another mortgage upon final completion. Also, a description used in reference to a mortgage which is advanced in pre-determined stages, according to the amount of work completed.
CONSTRUCTION LOAN AGREEMENT
An agreement between a lender and a builder setting out terms of an agreement - loan amount, rate, method of drawing funds, conditions for advancing.
CONVENTIONAL MORTGAGE
A mortgage loan which does not exceed 75% of the lending value of the property. Mortgages that exceed this limit must be insured by CMHC (or similar insurance provider).
CONVEYANCE
The transfer of property ownership. Also, the written instrument whereby such transfer is effected. Conveyance includes a mortgage, charge, and lease, etc.
CO-OPERATIVE
The ownership of a separate amount of space in a multiple dwelling or multiple-occupancy building with proportioned tenancy in common ownership of common elements. Used jointly with other owners, however, the owner does not have clear title to a specific unit, but becomes a shareholder of the corporation which owns all the property and occupies by way of a tenancy agreement subject to shareholders agreement administered by an elected board of directors.
COVENANT
An agreement contained in an instrument creating an obligation. It may be positive, stipulating the performance of some act. It may be negative or restrictive, forbidding the commission of some act.
CROSS-COLLATERALIZATION
A reference to security involving various liens held in support of one or more advances made by a lender to a borrower.

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DAMAGES
Compensation or indemnity for loss owing to breach of contract.
DATE OF COMPLETION
The date specified by an agreement of purchase and sale, when the purchaser is to deliver the balance of money due and the vendor to deliver a duly executed deed.
DEBT SERVICE
The amount of principal and interest payments made under a mortgage.
DEED
A document signed by the seller and purchaser transferring ownership. This document is then registered against the property
DEED RESTRICTION
A restriction in a deed to limit or govern the use of the land.
DEFAULT
Failure to fulfil an obligation
DEFERRED INCOME
An accounting method of dealing with income that is received but not included in a statement of earnings as normal earnings.
DEFICIENCY
An insufficient payment, often relating to an amount recovered under a power of sale or foreclosure action.
DELAYED PARTICIPATION LOAN
Where a lender disposes of a loan to several other participants putting up their respective shares later.
DEMAND NOTE
Payment is made on demand, usually within a few days notice to the borrower.
DEPOSIT
Payment of money or other valuable consideration as pledge for fulfilment of contract.
DEPRECIATION
A loss in value due to any cause.
DEPRECIATED REPRODUCTION COST
Appraisal method by which the cost of replacing a structure, minus depreciation, gives the depreciation reproduction costs.
DISCHARGE OF MORTGAGE
A document executed by the mortgagee, and given to the mortgagor when a mortgage loan has been repaid in full before, at, or after the maturity date.
DISCLOSURE STATEMENT
A statement contained in a consumer credit transaction in order to disclose complete credit terms and interest rates.
DISCOUNT
Reduction in product price or cost of a service. A discount if the difference between the nominal face value of a loan and actual cash received by the borrower because interest is paid at the beginning of a loan based on the sum to be repaid at maturity.
DISCOUNTED CASHFLOW ANALYSIS
This is a method of analysis that calculates the true value of an investment in terms of the present value, i.e. what the investment ifs worth now, although it is spread over a number of years. To compensate for future earnings a discount factor is added in so that a real comparison can be made between an investment with quick return and one that is placed over a number of years.
DISCOUNTED LOAN
The face value of the loan minus the interest or discount charged by the lender is the amount actually advanced to a borrower.
DOMINANT TENEMENT
The estate which derives benefit from an easement over a subservient estate, as in a Right-of-Way.
DOWER INTEREST
A wife's interest in the lands of her husband accruing to her by virtue of the marriage.
DOWNSIDE LEVERAGE
Occurs where the debt service on a mortgage exceeds the yield on an investors' property, thereby reducing cash flow.
DRAWEE
The person, bank, or corporation on whom a bill, note or cheque is drawn from and from whom payment is expected by the payee or his assignee.
DRAWER
The person or corporation who writes a cheque or note for payment to a third party. In the case of a bill of exchange, the drawer is the creditor and is usually te payee.

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EASEMENT
The right acquired for access over another person's land for a specific purpose, such as for a driveway or public utilities.
ECONOMIC DEPRECIATION
Loss in value of property due to eternal influences related to the property or not controlled by the owner.
EFFECTIVE GROSS INCOME
The estimated gross income less allowances for vacancies and rent losses.
EFFECTIVE INTEREST RATE
The actual interest rate on investment where a debt or loan was bought at discount or at a premium.
ENCROACHMENT
A fixture, such as a wall or fence, which illegally intrudes into or invades on public or private property diminishing the size and value of the invaded property.
ENCUMBRANCE
Outstanding claim or lien recorded against property, or any legal right to the use of the property by another person who is not the owner
.
END LOAN
The mortgage loan to the final customer, such as a purchaser of a condominium unit.
EQUITY
The value of real estate over and above the mortgage(s) against it.
EQUITABLE MORTGAGE
The transfer of equity in property as security for a debt. Any mortgage registered after the first mortgage.
EQUITY OF REDEMPTION
The right of the mortgagor to reclaim clear title to the real property upon full repayment of the debt.
ESCROW ACCOUNT
An account held by an agent on behalf of his principal for the payment of money due to a third party on the event of specified incidents, e.g. a vendor's solicitor will hold funds on his behalf until title dees to property have been delivered and property registered and the keys delivered to the purchaser; or an account maintained by a mortgagee for the payment of property taxes or life insurance premiums.
ESCHEAT
The reversion of property to the state in event the owner thereof dies leaving no will and having no legally qualified heir to whom the property may pass by lawful descent.
ESTATE
The degree, quantity, nature and extent of interest which a person has in real property.
ESTOPPEL CERTIFICATE - now called a STATUS CERTIFICATE
A written statement or certificate which states certain facts upon which the receiver of the statement or a third party may rely, eg. Lender's estoppel statement as to a purchaser or property. The lender cannot later deny the truth of these statements because a third party has relied and acted upon them.
EXACT DAY INTEREST
Interest calculated on the basis of 365 days per year or 366 days in a leap year.
EXCULPATORY CLAUSE
A clause which excuses one party from personal liability in the event of a default.
EXPROPRIATION
The act of forcefully taking private property for public use.
EXTENSION AGREEMENT
The lengthening of a term on a contract to extent the maturity date; or to permit more time for the performance of an obligation or condition; or the extension of the coverage of a lien to include more property.

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FEASIBILITY ANALYSIS
An analysis to determine the feasibility of a project. Details of construction costs, projected income from the project plus location and economic factors affecting the project will be required. Similar to a feasibility study by a developer conducted to decide whether to proceed with plans and required by the lender to decide whether to provide funds.
FEE SIMPLE
The highest estate or absolute right in real property.
FINAL ORDER OF CLOSURE
Judgement taken against a mortgagor, extinguishing the equity of redemption.
FINANCING STATEMENT
A statement filed by a creditor in a public records office identifying the parties, giving their addresses, and describing the collateral.
FIRST MORTGAGE
The mortgage agreement which has first claim on the property in the event of default.
FIRST MORTGAGE BOND
Bonds issued by a corporation secured upon the property and earnings of the issuing corporation.
FIXED RATE MORTGAGE
This is the usual form of mortgage where interest rate remains the same during the entire life of the loan.
FIXTURES
Permanent improvements to property that may not be removed at the expiration of the term of lease or tenure.
FLAT PAYMENT
An all inclusive monthly payment that is calculated to include principal interest and taxes. Under this system there is no specific breakdown as t the amounts of the principal, interest and taxes.
FLOATING RATE OF INTEREST
Rate of interest which fluctuates according to prime lending rates, eg. 2% above prime rate usually chargeable on short term loans such as construction loans. As of April 24, 2009 the Bank Prime Rate was 2.25%
FLOOR TO CEILING LOAN
A permanent loan or advance made in two stages, (a) on completion of construction according to agreed upon terms and conditions, and (b) the balance advanced upon occupancy or upon cash flow requirements.
FORECLOSURE
Remedial court action taken by a mortgagee when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor.
FORWARD COMMITMENT
Lender's commitment to make or assume a future loan.
FREEHOLD
The ownership of a tract of land on which the building(s) are located. The oldest and most common typed of ownership of real estate.
FULLY AMORTIZED LOAN
A mortgage loan wherein the stipulated repayments repay the loan in full by its maturity date.
FURTHER CHARGE
A second or subsequent loan of money to a mortgagor by a mortgagee, either on the same or on an additional security.

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G/E CAPITOL
The General Electric Capitol Corporation insures high ratio mortgages for lenders.
GALE DATE
The dates on which interest is charged or compounded on the mortgage loan.
GAP FINANCING
A loan required by a builder to obtain funds during the period between a permanent take out commitment and a construction loan. The construction lender will usually require permanent mortgage commitment to the full amount of the construction loan plus a hold back provision that only the "floor" amount will be funded at the completion of construction.
GRADUATED AMORTIZATION MORTGAGE
A special method of repayment on a mortgage whereby repayments in the initial period are low and are gradually later stepped up at a higher rate. Graduated payments mortgages were devised to enable lower income families to become home owners.
GRANT
A technical term used in deeds of conveyance to indicate a transfer of an interest or estate in land.
GRANTEE
The party to whom an interest in real property is conveyed (the buyer).
GRANTOR
The person who conveys an interest in real estate by deed (the seller).
GROSS RENT MULTIPLIER
Method of appraising the fair market value of property by multiplying the gross rents by a factor which varies according to the type of property, and the location o the property.
GUARANTEED INCOME MORTGAGE
A guarantee included in a purchase money mortgage by a seller-mortgagee that there will be a minimum cash-flow or net operating income to the purchaser mortgagee. The guarantee is limited to a short period and may be combined with a management contract whereby the seller as manager will operate the property.
GROSS DEBT SERVICE (GDS)
The percentage of gross annual income required to cover payments associated with housing.
GROSS DEBT SERVICE RATIO
Allowable ration of payments for principal, interest and taxes to gross income.
GROSS INCOME
The scheduled income from the operation of the business of the management of the property, customarily stated on an annual basis.
GUARANTOR
A third party without interest in the property who agrees to assume responsibility for a debt in the event of default by the mortgagor.

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HIGH RATIO MORTGAGE
A mortgage loan which exceeds 75% of the lending value of the property, and must be insured against default of payment.
HOLD BACK
An amount of money retained by a construction lender or owner until satisfactory completion of the work performed by a contractor.

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IMMEDIATE PARTICIPATION LOAN
A loan in which all of the partners contribute their share immediately.
INCOME BOND
Bonds which pay a fixed rate of interest contingent upon earnings. These bonds may originate from a reorganization because of a default on mortgage bonds.
INCOME/EXPENSE RATIO
Ratio of operation expenses to gross income and expressed as a percentage (also known as operating ratio).
INCOME PROPERTY LOAN
A loan which is secured on property which already has a source of income, eg. Rents which will cover the debt service payments on the loan.
INDENTURE
A document of deed, usually in duplicate, expressing certain objects between the parties.
INJUNCTION
A judicial process or order requiring the person to whom it is directed to do or refrain from doing a particular thing.
INSTRUMENT
A form of written legal document.
INSURABLE VALUE
The term is used conventionally to designate the amount of insurance which may be carried on destructible portions of a property to indemnify the owner in the event of loss.
INTEREST (Rate)
The profit of a loan as expressed on a percentage basis.
INTEREST ADJUSTMENT
A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin, as interest payable is due from the date your mortgage is advanced.
INTEREST ESCALATION
Rate of interest on a loan is raised periodically during the term of the loan so as to encourage early repayment.
INTEREST ONLY LOAN
Borrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.
INTERIM FINANCING
Interim loans are used to bridge the gap between the construction loan and the permanent loan (hence "bridge" loans) lasting form one to three years.
INTERMEDIATE TERM LOAN
A short-term loan from 3 to 5 years with no or partial amortization (balloon loan).
INTESTATE
A person who dies without a will, or leaves one which is defective in form, in which case the estate descends by operation of law to the next of kin.
IRREVOCABLE
Incapable of being recalled or revoked; unchangeable, unalterable.

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JOINT AND SEVERAL NOTE
Promissory note on which there are two or more promisors who are jointly and severally liable.
JOINT TENANCY
Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.
JUNIOR FINANCING
This is a subordinate mortgage or loan very often given by a seller of property, second in priority to an existing loan.

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KICKER
An extra bonus or additional payment over and above the fixed interest already paid to an investor eg. A percentage of gross profits or cash flow.

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L.T.V. (LOAN-TO-VALUE RATIO)
The ratio of the loan to the lending value of a property, expressed as a percentage.
LAND ACQUISITION LOAN
Loan advanced to acquire land as opposed to improving land or buildings.
LAND CONTRACT
A contract drawn between a buyer and seller for the sale of property.
LAND DEVELOPMENT LOAN
Loan advanced for the purpose of developing raw land for residential and related uses.
LEASEHOLD
A type of interest in a property that is certain only for a specified period of tie granted by contract.
LEASEHOLD APPRAISAL
A method of estimating the value of leasehold property.
LEASEHOLD MORTGAGE
A mortgage given by a lessee on the security of the leasehold interest in the land.
LEGAL DESCRIPTION
A written description by which property can be definitely located, and which is acceptable for registration in a land registry system.
LEGAL MORTGAGE
A transfer of a legal estate or interest in property for the purpose of securing the repayment of a debt.
LENDING VALUE
An independent appraiser's value interpreted by the lender as to the worth of a property in the current market given a reasonable time period to sell the property.
LESSEE
Tenant under a lease.
LESSEE 'S INTEREST
The market value of property less the value of the lessor's interest. The present worth o the annual advantage, if any, accruing to the lessee by reason of the contract rent being less than the economic rent.
LESSOR
The person who grants us of the property under lease to a tenant.
LETTER OF COMMITMENT
Letter written by the lender containing the amount of the loan, specified interest rate, term of loan, and specific conditions.
LETTER OF CREDIT
Letter issued by a bank or other lending institution promising payment to a third party in accordance with the terms of the agreement. Letters of credit may be used in situations where a deposit is required or a security, eg. Where a builder is about to sign a contract and has to put up security that the job will be finished; or a security deposit under a long term lease.
LEVERAGE
Upside leverage in real estate occurs when the yield or net return on property exceeds debt service for a loan. Downside or reverse leverage occurs when the debt service is greater than he net return on investment.
LIEN
A legal claim against a property for money owed.
LIEN HOLD BACK
A percentage of the contract price or estimated cost of work to be done which is held back from the mortgage advance.
LINE OF CREDIT
A maximum credit limit allowed by a bank to a borrower, as long as the borrower maintains an acceptable balance on account or has a good credit rating. The credit line will vary from time to time according to the changing circumstances of the borrower or the bank.
LIS PENDENS
A legal document giving notice that an action or proceeding is pending in the courts which affects the title to the designated property.
LOAN COVERAGE
The ratio of net operating income to debt service - in general loan coverage of 1.3 to considered adequate for a loan to value ratio of 75%.
LOAN FEE
A charge for making a loan in addition to the interest charged to the borrower.
LOAN LOSS RESERVE
A reserve shown on a balance sheet of a real estate company as provision for any future losses in assets.
LOAN ORIGINATION
Analysis of loan applications from prospective purchasers to determine if they meet with requirements and if so, the lender will issue a commitment letter.
LOAN PORTFOLIO TURNOVER
The average length of time required for the turnover of mortgage loans, ie. until maturity.
LOAN PROCESSING
Upon application and approval of a loan, the lender has to go through a fairly standard procedure to finalize and disburse the loan such as the setting up of files, ordering of credit reports, verification of employment, bank accounts, etc.
LOAN RATIO
The ratio of the principal amount of the loan to the lending value of the property.
LOCK-IN CLAUSE
A clause which restricts prepayment of a loan during a specified period of the whole term of the mortgage. This ensures that the lender receives a stipulated return on his investment and discourages "shopping around" for another loan.

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MARGIN OF SAFETY
A measure of the extent to which a loan is protected by property values of operating income. In the case of a mortgage, the margin of safety is the excess of equity (at fair market value) above the outstanding amount of the loan.
MARKETABLE TITLE
A title which a court of equity considers to be so free from defect that it will enforce acceptance by a purchaser.
MATRIMONIAL HOME
Any property in which a person has an interest and that is or has been occupied by the person and his or her spouse as their family residence. Condominiums, co-operatives, and leasehold interests can be matrimonial homes.
MATURITY DATE
The last day of the term of the mortgage agreement. A mortgage loan must then be paid in full or the agreement renewed.
MECHANICS LIEN
A claim against the state or interest of the owner in a property for labour, services, or materials supplied to it.
METES AND BOUNDS
A system of land description whereby all boundary lines are set forth by use of terminal points and angles -mete referring to a limit or limiting mark, and bounds referring to boundary lines.
MIXED USE DEVELOPMENT
A large scale real estate project which is developed for a number of uses. An example of mixed use development is a shopping centre complex.
MORATORIUM
Legislation enacted to assist debtors by postponing or suspending their contractual payments.
MORE OR LESS
Term often found in a property description intended to cover slight, unimportant or insubstantial inaccuracies to which both parties are willing to assume risk.
MORTGAGE
The legal pledge of real estate as security for a loan.
MORTGAGE BANKER
More prominent in the USA as principals of mortgage funds.
MORTGAGE BOND
A bond issued by corporations and secured by a mortgage on their property.
MORTGAGE BROKER
A person who originates real estate loans and allocates mortgage funds. These funds are placed on behalf of others, through negotiation of lenders and borrowers for the best possible arrangement and satisfaction of all concerned. Licensed in Ontario by the Ministry of Financial Institutions. Could also be known as an underwriter, correspondent or investment dealer in a mortgage transaction.
MORTGAGE COMMITMENT
A formal indication by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms.
MORTGAGE DEBENTURE
Synonymous with mortgage bond.
MORTGAGE LOAN
An agreement by which sum of money is borrowed and a promise to repay is given, wherein as a further security the borrower gives to the lender a conveyance or charge on property which he owns.
MORTGAGE NOTE
A promissory note executed in favour of the lender giving him an encumbrance or lien on the borrower's property. A mortgagor is usually personally liable on the note.
MORTGAGE PORTFOLIO
Several mortgages held by a mortgagee, lender or broker en bloc.
MORTGAGE POSTPONEMENT
The process whereby a mortgagee may permit the borrower to renew or replace an existing mortgage that falls due prior to the maturity date of the subject mortgage.
MORTGAGEE
The lender
MORTGAGEE IN POSSESSION
A mortgagee goes into possession by entering into actual occupation of, or by obtaining the receipt of the rents of the mortgaged premises.
MORTGAGING OUT
Term applied to a mortgage which exceeds the current value of the property on which it is secured. This type of mortgage may be obtained on improvable property where the security is based on future value and future earnings which are expected to exceed construction costs.
MORTGAGOR
The Borrower

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NATIONAL HOUSING ACT MORTGAGE
A first mortgage, originated by an approved lender, granted under the terms of, and insured under, the National Housing Act 1954.
NEGATIVE CASH-FLOW
Where operating costs exceed gross rental income or debts.
NET OPERATING INCOME (NOI)
The balance remaining after deduction of operating expenses from gross receipts and gross rental, but not including the deducting of debt service on mortgages. Free and clear return on property is calculated by the ratio of NOI to total investment including mortgages and equity. This gives a direct means of comparing the return on different properties.
NET RATE OF INTEREST
The interest rate received by a mortgage lender net of the servicing fee deducted by a loan correspondent, etc.
NOMINAL INTEREST RATE
Interest rate stated on the face on a loan document. However, if the loan amount is discounted or sold at premium, the effective rate of interest will either be higher or lower.
NON-RECOURSE LOAN
A clause in a loan which waives personal liability of the borrower on the loan.
NOTICE D.O.R.
Notice filed in court by mortgagor under foreclosure proceedings that s/he desires an opportunity to redeem.

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OBLATORY ADVANCE
An advance made according to terms of a pre-existing construction loan agreement or mortgage.
OFFER TO PURCHASE
A written proposal to purchase real estate that becomes binding upon acceptance of the vendor
OPEN OR CLOSED
The restriction or denial of repayment rights until the maturity of the mortgage is a "closed" mortgage. If specified on document as "open", then mortgagor can pay extra payments of principal sums at any time or at specified times, with or without repayment penalty.
OPEN END MORTGAGE
A mortgage under which the lender has the option of advancing more funds where, for example, the value of te property is anticipated to increase.
OPERATING EXPENSES
Generally speaking, all expenses, occurring periodically, which are necessary to produce net income before depreciation. Under some conditions these expenses are placed in two categories, namely, operating expenses and fixed charges.
OPTION
A right give by the owner of property to another (for valuable consideration) to buy certain property within a limited time at an agreed price.
OWNER
The lawful possessor of the title to real property.

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PACKAGE LOAN
Combination of two types of loan, eg., construction loan and permanent financing. The borrower benefits by only having to negotiate with a single lender and only having to pay a single set of closing costs.
PARTIAL DISCHARGE
A discharge of a definite portion of the mortgage lands usually given after the mortgagor has prepaid a specific portion of the mortgage debt.
PARTICIPATION LOAN
An agreement whereby two or more lenders share in advancing a portion of a loan made by the originating or "lead" bank. Terms of the agreement set out a method of apportionment and interest rates. The lead lender generally services the loan for which it receives a fee.
PARTNERSHIP
1) An arrangement whereby individuals join together to lose money and/or 2) An arrangement whereby in the beginning a general partner has the experience and the limited partners have the money and in the end, the general partner has the money and the limited partners have had the experience.

PERCENTAGE RENTAL AGAINST MINIMUM
A rental paid under a percentage lease whereby rent paid by a tenant varies according to volume of business, eg., a percentage of gross receipts, sales or revenue, and paid to the extent that it exceeds a minumum rental.
PERCENT PAID OFF
The percent of principal which is paid off at a given time under an amortization schedule, ie equity build up.
PERCENTAGE RENT PLUS MINIMUM
A percentage rental which must be paid in addition to the minmum, ie minimum rent is not credited against percentage rent payable.
PERMANENT FINANCING
A long-term mortgage usually intended to finance both land and improvements after completion of construction and used to pay off a construction loan.
PERSONAL LIABILITY
A person liable on a debt to the full extent of his entire assets, as opposed tolimited liability where a maximum or a ceiling is fixed on the amount of assets that can be drawn upon to satisfy a debt. Joint and several liability fixes the liability of each individual borrower for the total debt; joint liability binds all the borrowers together in one action; and several liability fixes the liability of each borrower to the extent of his share of the debt.
PERSONAL PROPERTY
All property except land and the improvements thereon.
POLARIS
The Province of Ontario Land Registration Improvement System's new simplified method of registration of transfer, charge, discharge, etc.
POSTPONEMENT CLAUSE
A junior mortgage may contain a postponement clause, by which the mortgagee permits the borrower to renew or relace an existing first mortgage that falls due prior to the maturity date of the junior mortgage.
POWER OF SALE
The right of a mortgagee to force sale of the property without judicial proceedings should default occur.
PREPAYMENT CLAUSE
A clause inserted in a mortgage, which gives the mortgagor the privilege of paying off all or part of the mortgage debt in advance of the maturity date.
PREPAYMENT PENALTY
The sum of money (the amount of extra interest as set out in the mortgage document) a mortgagee may require from a mortgagor to exercise the option in a mortgage to prepay any outstanding principal.
PRIME RATE
The rate charged by banks to their most credit-worthy borrowers. Sometimes also referred to as the rate of interest paid on government bonds.
PRIOR CHARGE
An encumbrance ranking in priority to the mortgage in question.
PRO FORMA (Statement)
A financial statement of the gross income, operating costs and net operating costs and net operating income for a specified financial period,eg one year, using specified assumptions.
PRE-QUALIFICATION
An interview with a client (usually) prior to the writing of an offer to purchase real estate in order to determine the applicants qualifications for mortgage purposes.
PRINCIPAL
The amount actually borrowed.
PRIOR ENCUMBRANCE
A claim on the property, ranking in priority to the mortgage in question.
PROGRESS ADVANCES
Loan advances made on a property under construction whereby the lender makes advances on the basis of the retention at all times of an amount of the loan which in his/her opinion will be sufficient to complete the building should the borrower fail to complete it.
PROJECTED INCOME
Estimated income from property.
PROMISSORY NOTE
A written document acknowledging a debt and promising payment.
PROPERTY
Refers to the rights which an individual enjoys by virtue of his/her ownership.
PURCHASE-MONEY MORTGAGE
A mortgage loan taken back by the vendor of property in lieu of purchase money in order to help finance the purchaser.

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QUANTUM MERUIT
The amount that should be paid as merited by the service performed.
QUIT CLAIM DEED
A general release of all claims or rights to a parcel of land.

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REALTOR
A real estate broker holding active membership in a local real estate board.
REDEMPTION
The buying back of a mortgage estate by payment of the sum due on the mortgage.
REDEMPTION PERIOD
A period of time allowed by law during which a mortgagor may redeem his property by paying off the entire debt in arrears.
REFINANCE
To pay off (discharge) a mortgage and other registered encumbrances and arrange a new mortgage.
REGISTRATION AND DISCHARGE DATES
Dates of registration by number and date in the local Registry Office and/or Land Titles, then given to the mortgagee. When the loan has been paid in full at or after maturity date, then the mortgagee executes the "discharge" or cessation of charge and registers same to liquidate the mortgage and allow the mortgagor to redeem the mortgage.
RELEASE OF COVENANT
A release given to the mortgagor of a property that has been sold to a new purchaser who is acceptable to the mortgagee. This release is usually given after the new mortgagor has signed an assumption agreement.
RENTAL HOLD BACK STANDBY LOAN
A hold back is an amount withheld from the borrower under permanent financing until a certain occupancy rate is achieved. As this deprives the construction lender of full takeout protection, the developer may obtain a standby loan commitment to supplement the hold back.
RENEWAL AGREEMENT
An agreement whereby the lender may agree to extend the loan, but possibly on revised terms as to principal repayments and interest rate.
RENTAL REQUIREMENTS
This is the "ceiling" portion of a permanent loan commitment that is advanced upon reaching a minimum rental or occupancy rate.
RENTAL VALUE
The monetary amount reasonably expectable for the right to the agreed use of real estate. It may be expressed as an amount per month or other period of time, or per room, per front foot, or other unit of property.
RENT CONTRACT
Rental received by the real estate owner under any lease contract.
RENT ECONOMIC
Is the income that real estate can command in the open market at any given time for its highest and best use.
REPRODUCTION COST
The cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.
RESTRICTION
A limitation placed upon the use of property contained in the deed or other written instrument in the chain of title.
RESTS
The periodical balancing of an account made for the purpose of converting interest into principal, and charging the party liable thereon with compound interest.
RETURN ON INVESTMENT
(a) Free and clear return is calculated as the percentage of net operating income to total investment in the property (b) Cash flow return is the ratio of cash flow to equity investment (also know as return on equity and cash-on-cash return) (c) Total return is cash flow including loan amortization as a percentage of the total invested.
REVERSION
The right to repossess and resume the full and sole use and proprietorship of real property which temporarily has been alienated by lease, easement o otherwise. According to the terms of the controlling instrument, the reversionary right becomes effective at a stated time or under certain conditions such as the termination of a leasehold, abandonment of a right-of-way, or at the end of the stimulated economic life of the improvements. The present or discounted value of something to be collected at some future date.
RIGHT
The interest one has in a piece of property. A claim or title enforceable by law.
RIGHT OF SURVIVORSHIP
The distinguishing feature of joint tenancies which provides that, where land is held in undivided portions by co-owners, upon the death of any joint owner, his/her interest in the land will pass to the surviving co-owner, rather than his/her estate.
RIGHT OF WAY
The right to pass over another's land, more or less frequently, according to the nature of an easement.
RIPARIAN RIGHTS
The rights of the owners of land on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his/her land, including the right to acquire decretions, wharf slips, and fish therefrom.
RUNNING WITH THE LAND
A covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent owners to either liability to perform it or the right to take advantage of it.

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SALE AND LEASEBACK
A method of financing where a property is sold to a purchaser who simultaneously enters into a long-term lease of the property with the vendor. The vendor (now lessee) remains in possession for the specified term of the lease and covenants to pay the rental to this purchaser (now lessor) as well as all operation expenses. This enables the user to free his cash investment in the real property for some other use.
SALES HOLD BACK
A percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee.
SANDWICH LEASE
A lease in which the "sandwich party" is the lessee f one party and the lessor to another. Usually, the owner of the sandwich lease is neither the fee owner not the user of the property.
SEALED AND DELIVERED
A term indicating that a conveyor has received adequate consideration a evidenced by his/her voluntary delivery. The word "sealed" adds more strength, since under old conveyancing law an official seal was used as a substitute for consideration.
SECOND MORTGAGE
A mortgage loan granted, (and registered) when there is already a first mortgage registered against the property.
SERVIENT TENEMENT
An estate or land over which an easement or some other service exists in favour of the dominant tenement.
SET BACK
The distance from the curb or other established line within which no buildings may be erected.
SHORT FORM MORTGAGE
Mortgage document which follows the exact language of the long form prescribed by law but is abbreviated, using shortened terminology, at the same time having the identical legal effect.
SINGLE FAMILY DWELLING
A residential property designed for occupancy by one family and situated on land zoned specifically for that purpose.
SPECIFIC PERFORMANCE
A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.
SPECULATIVE BUILDER OR DEVELOPER
One who builds without having a commitment to buy or lease from a purchaser or tenant.
STANDBY COMMITMENT
A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.
STATUS CERTIFICATE  used to be called an ESTOPPEL CERTIFICATE
A written statement or certificate which states certain facts upon which the receiver of the statement or a third party may rely, eg. Lender's estoppel statement as to a purchaser or property. The lender cannot later deny the truth of these statements because a third party has relied and acted upon them.
STATUTE OF LIMITATIONS
That period of time specified by statute within which an action at law must be brought or else be forfeited.
STATEMENT OF ADJUSTMENTS
A statement prepared by lawyer setting out the details of a mortgage transaction.
STATUTE
A law established by an act of the legislature.
STATUTE OF FRAUDS
A law which provides that certain contracts must be in writing in order to be enforceable at law. It includes real estate contracts.
STEP DOWN LEASE
A lease providing for decreases in rental payment at specified dates.
STEP UP LEASE
Opposite to step-down lease.
SURVEY
A document that illustrates the property boundaries and measurements, the position of major structures on that property, any registered or viable easements.
SURVIVORSHIP
The right of a person t secure ownership by reason of his/her outliving someone with whom s/he shared undivided interest in the land.

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TAKEOUT MORTGAGE LOAN
A long term mortgage loan that is advanced to borrower on completion of construction or in compliance with any other conditions in the loan commitment. The funds are normally used to pay off or take out the construction lender.
TAX LIEN
A lien imposed by a taxing authority on real estate for failure to pay taxes within the time required by law.
TENANCY IN COMMON
Ownership of ad by two or more persons: unlike joint tenancy in that interest f deceased does not pass to the survivor, but is treated as an asset o the deceased's estate.
TENURE
A system of land holdings for a temporary time period.
TERM
The length of time which a mortgage agreement covers. Payments made may not repay the outstanding principal by the end of the term because of a longer amortization period.
TIME IS OF THE ESSENCE
Requires punctual performance of a contract on closing date and is indicated by so stating as in an Agreement of Purchase and Sale.
TITLE
The means of evidence by which the owner of land has lawful ownership thereof.
TITLE INSURANCE
A policy which insures the lender against loss due to a flaw in the title of property held as collateral for a mortgage.
TITLE SEARCH
An examination of the chain of title to real property as indicated in the public records in order to determine the ownership of the subject property and the existence of any encumbrances or defects.
TORRENS SYSTEM
System of title recordation provided by provincial law, it is a system for the registration of land title, indicating the state of the title, including ownership and encumbrances without the necessity of an additional search of the public records. Also known as the "Land Titles System".
TOTAL DEBT SERVICE (TDS)
The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations.
TRANSFER
To convey from one person to another.
TRANSFER OF CHARGE
Assignment of a mortgage under the Land Titles System.

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UMBRELLA MORTGAGE
Also referred to as a wraparound, a special arrangement whereby one document encompasses one or more already existing mortgages registered on the same property. The mortgagee is responsible for remission of payment(s), to lender(s), while the mortgagor makes one payment to the mortgagee.
UNDERWRITER (mortgage)
A person employed by a mortgage lender or mortgage broker who approves or turns down loan applications based upon the quality of the real property, credit-worthiness and ability to pay of the applicant and guidelines of the lender with regard to ratio of mortgage loan to value of property.

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VALID
Having force or binding force, legally sufficient ad authorized by law.
VALUABLE CONSIDERATION
The granting of some beneficial right, interest, profit, or suffering of some detrimental forbearance, loss or default by one party in exchange for the performance of another.
VARIABLE INTEREST MORTGAGE
A loan where the interest rate may vary during the term of the mortgage. The variance is usually tied to some specific factor such as prime bank rate or the guaranteed investment certificate rate for a designated lender.
VENDOR
A seller of real property.
VENDOR TAKE BACK MORTGAGE
A mortgage which a vendor of real property takes from the purchaser usually as part payment of the purchase price for that property.
VOID
Of no legal effect. A nullity.
VOIDABLE
Where one party to a contract is entitled rescind the contract at his/her option.

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WAIVER
An international relinquishment of some right or interest, the renunciation, abandonment, or surrender of some claim.
WITNESS
To subscribe one's name to a deed, will or other document for the purpose of attesting its authenticity and proving its execution by testifying, if required.
WITNESS
To subscribe one's name to a deed, will or other document for the purpose of attesting its authenticity and prevent its execution by testifying, if required.
WRAP-AROUND MORTGAGE
(Sometimes erroneously called a blanket mortgage)-a new mortgage, which is registered on title, which includes a prior existing mortgage ad the new mortgagee undertakes the responsibility as mortgagor under the original mortgage.

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YIELD
The return on an investment expressed as a percentage per annum of the amount invested.

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ZONING
The public regulation of the character and intensity f the use of real estate through the employment of the police power. This is accomplished by the establishment of districts in each of which uniform holding restrictions related to use, height, are, bulk, and density of population are imposed upon the private property.
 
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