When was the last time you used the word "scalpel"? If you’re not a doctor, chances are almost never. Similarly, unless you’re a real estate professional, you probably don’t use terms like “status certificate” or “amortization” in everyday conversation. Yet, when you’re in the process of buying a home, these terms suddenly become essential. Understanding the language of real estate is crucial to making informed decisions and ensuring a smooth transaction. In this blog, we’ll decode the key real estate terms every home buyer should know across various categories, empowering you to navigate the process with clarity and confidence.

MORTGAGE-RELATED TERMS

Mortgage delinquency: It occurs when a borrower fails to make their mortgage payments on time.

Assumable mortgage: A type of mortgage that can be transferred from the original borrower to a new buyer without the lender needing to re-qualify the new borrower.

Rental yield: The annual income generated by a rental property, expressed as a percentage of the property's purchase price.

Distress sale: A sale of a property, often at a discounted price, due to financial hardship or other pressing circumstances.

Mortgage-Backed Securities (MBS): Investments that are backed by a pool of mortgages. Investors receive periodic payments from the interest and principal payments on the underlying mortgages.

Home Equity Line of Credit (HELOC): A revolving line of credit that allows homeowners to borrow against the equity in their home.

Private Mortgage Insurance (PMI): Insurance that protects lenders against losses if a borrower defaults on a mortgage.

Capital Gain tax: A tax levied on the profit made from the sale of an asset, including a home.

PROPERTY TAX AND INVESTMENT TERMS

Vacant Home Tax: A tax imposed on properties that are unoccupied for a certain period of time.

Real Estate Investment Trust (REIT): A company that owns income-producing real estate properties. REITs distribute most of their taxable income to shareholders as dividends.

Internal Rate of Return (IRR): A metric used to measure the profitability of an investment, taking into account the time value of money.

Foreign Buyer Tax: A tax imposed on foreign buyers purchasing real estate in certain jurisdictions.

Accelerated payment: A mortgage payment that is larger than the regular monthly payment.

Mortgage stress test: An assessment of a borrower's ability to handle potential increases in interest rates or other financial shocks.

Bridge financing: A short-term loan that helps a borrower cover the gap between the sale of one property and the purchase of another.

Amortization: The gradual reduction of a loan principal over time through regular payments.

Fractional Ownership: A type of ownership arrangement where multiple people share ownership of a property.

LEGAL TERMS

Property Lien Laws: Property lien laws allow someone to claim a legal right to another person's property as security for a debt or obligation. If you owe money to someone, they can place a lien on your property, meaning you can't sell or refinance it until the debt is paid.

Agreement of Purchase and Sale: This is a written contract between a buyer and seller outlining the terms of a property sale, including the price, closing date, and any conditions that must be met before the sale is final.

Deed in Lieu of Foreclosure: If you can’t pay your mortgage, this is an option where you voluntarily transfer ownership of your home to the lender to avoid foreclosure. It’s like giving the house back to the bank.

Title Insurance: This insurance protects you against potential problems with the title (ownership) of your property, like disputes over who legally owns it or if there are unpaid property taxes.

Certificate of Pending Litigation (CPL): This is a legal notice that someone has filed a lawsuit claiming an interest in a piece of property. It warns potential buyers that the property is involved in a legal dispute.

Gross Leasable Area (GLA): GLA refers to the total floor area that a tenant can rent in a commercial building, like a shopping mall or office space.

Sale-Leaseback Transaction: This is a financial arrangement where you sell your property and then lease it back from the new owner. It allows you to continue using the property while freeing up cash.

Land Use Bylaw: These are rules set by local governments to control how land can be used in different areas (e.g., residential, commercial, industrial). They dictate what can be built and where.

Force Majeure Clause: A force majeure clause in a contract frees both parties from obligations if an extraordinary event (like a natural disaster) prevents them from fulfilling the agreement.

Triple Net Lease: In this type of lease, the tenant is responsible for paying not only the rent but also property taxes, insurance, and maintenance costs for the building.

Natural Hazard Disclosure: This is a report given to buyers in certain areas, informing them if the property is located in a zone prone to natural hazards, like floods or earthquakes.

Conditional Offer: A conditional offer to purchase a property is when the buyer agrees to buy, but only if certain conditions are met first, like securing financing or passing a home inspection.

Status Certificate: In condominium purchases, this document provides important details about the financial health and rules of the condo building, helping buyers make an informed decision.

Rent-to-Own Agreement: In a rent-to-own agreement, you rent a property with the option to buy it later. Part of the rent you pay may go towards the purchase price.

Inheritance Property Protocol: These are the legal steps and procedures that must be followed when inheriting property, including taxes, transferring ownership, and handling any debts tied to the property.

Judicial Foreclosure: This is a legal process where a lender takes a borrower to court to foreclose (seize) their property because they haven’t paid their mortgage.

Subdivision Control: Subdivision control laws regulate the division of a large piece of land into smaller plots. These rules ensure the land is divided fairly and meets local zoning requirements.

Tenancy in Common (TIC): TIC is a way to own property with others where each person owns a specific share of the property. If one owner dies, their share goes to their heirs, not automatically to the other owners.

Interim Occupancy: This is a period when a buyer can move into a new property before the sale is officially completed. During this time, the buyer typically pays an occupancy fee instead of a mortgage.

PROPERTY TYPES TERMS

Cul-de-sac Lots: A cul-de-sac is a dead-end street with a rounded end. Houses on a cul-de-sac lot are located on this type of street, which usually means less traffic and more privacy for homeowners.

Infill Development: Infill development involves building new homes or other buildings on vacant or underused lots within an already developed area. It's a way to make better 

use of space in cities and towns without expanding into undeveloped land.

Laneway Housing: Laneway housing refers to small homes built on the back portion of a residential lot, typically accessed via a back lane or alley. These are often used as rental units or extra living space.

Passive House: A Passive House is an energy-efficient home designed to use very little energy for heating and cooling. It’s built with special materials and techniques to keep the inside comfortable year-round with minimal energy use.

Strata Properties: Strata properties are a type of ownership where you own your individual unit (like a condo) and share ownership of common areas (like hallways or gardens) with other unit owners. This is common for condos and townhouses.

Zero Lot Line: A zero lot line property is one where the house is built right up to the edge of the property line, leaving little to no space between the house and the property boundary. This is often used in densely populated areas.

Heritage Property: A heritage property is a building or site that has historical, cultural, or architectural significance. These properties are often protected by law to preserve their character.

Zoning Laws: Zoning laws are rules set by local governments that control how land can be used. They determine what kind of buildings can be constructed in different areas, such as residential, commercial, or industrial zones.

Walk Score: A Walk Score measures how walkable a neighborhood is, based on the distance to nearby amenities like grocery stores, schools, and parks. A high Walk Score means it's easier to get around without a car.

Lion Symbol: In Canadian real estate, the lion symbol is often used by Royal LePage, a major real estate company. It's part of their logo and represents strength and tradition.

Street vs Avenue: In many cities, a street runs in one direction (like east-west), while an avenue runs perpendicular (like north-south). However, this can vary depending on the city's layout.

Mixed-Use Condominium: A mixed-use condominium is a building that combines residential units (like condos) with commercial spaces (like shops or offices) in the same structure.

Sustainable House: A sustainable house is designed to be environmentally friendly and energy-efficient. This might include features like solar panels, rainwater harvesting, and eco-friendly building materials.

Linked Basement: A linked basement is a basement that is connected to another unit or home, often seen in semi-detached or townhouses where the basements share a wall.

POTL (Parcel of Tied Land): A Parcel of Tied Land (POTL) is a type of ownership where a piece of land is tied to a condominium unit, giving the owner rights to the land along with their unit.

Chattels and Fixtures: Chattels are movable items in a home, like furniture or appliances, that aren't attached to the property. Fixtures are items that are attached, like light fixtures or built-in cabinets, and are usually included in the sale.

Navigating the complex world of real estate requires a solid understanding of its unique terminology. By familiarizing yourself with the key terms and concepts outlined in my blog today, you'll be better equipped to make informed decisions throughout the home-buying process. 

From mortgage-related terms to property tax and investment concepts, legal jargon, and property types, this comprehensive guide serves as a valuable resource for any prospective homebuyer.

Remember, knowledge is power. With a strong grasp of real estate lingo, you'll be able to confidently communicate with professionals, negotiate effectively, and ensure a smooth and successful transaction.

 

If you have any questions about today’s blog topic, or anything else real estate- related, please give me a call, 905-683-7800.  You can also reach me at brian@briankondo.com.





 

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Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com

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