Legal Terms Glossary
Abatement | A reduction or decrease in amount or worth. |
Amortization period | The number of years it will take to pay back your mortgage. |
Anniversary | Many mortgage products allow you to make payments against the principal on the anniversary of the mortgage. |
Appraisal | The process of determining the value of a property. |
Assumability | Allows the buyer to take over the seller’s mortgage on the property. |
Closed mortgage | A set payment schedule to repay a mortgage |
Closing cost | Costs in addition to the purchase price of a property and which are payable on the closing date. Examples include legal fees, land transfer taxes, and disbursements. |
Closing date | The date on which the buyer takes possession of the property |
Common Areas | Land or improvements designated for the use and benefit of all residents, property owners and tenants |
Conditional offer | An offer to buy property subject to conditions such as loan approval. |
Condominium fee | A fee paid by the condo owner to help pay building expenses. Examples of that would be snow removal or lawn care |
Convertible mortgage | A mortgage that you can change from short-term to long-term |
Conveyance | The transfer of title to real property by means of a written instrument such as a deed or an assignment of lease |
Conveyance Tax | A tax imposed on the transfer of property (land transfer tax) |
Deed | A legal document, signed by both parties, that transfers the ownership of property |
Deposit | Money offered by a prospective buyer as an indication of good faith in entering into a contract to purchase; earnest money; security for the buyer’s performance of a contract. |
Default | Failing to abide by the terms of a loan |
Down payment | The buyer’s cash payment toward the property; the difference between the purchase price and the mortgage loan. |
Easement | Certain rights that a property owner might have over someone else’s property |
Encroachment | The unauthorized extention of the boundaries of land |
Equity | The difference between your home’s value and the money you owe. |
High-ratio mortgage | A mortgage that exceeds 75% of the home’s appraised value |
Income Property | Property purchased primarily for the purpose of earning income. Income property can be commercial, industrial or residential |
Inspection | Having a home inspected by a third party get a better idea of the condition of the property |
Interest rate |
The percentage which is charged for the use of borrowed money |
Joint tenancy | A form of property ownership by two or more persons in which the joint tenants have one and the same interest, arising by one and the same conveyance |
Land transfer tax | A fee paid to the municipal and/or provincial government for the transferring of property from seller to buyer. |
Legal fees and disbursements |
Legal costs associated with the sale or purchase of a property. |
Lien | Money owed to a creditor, supplier or contractor. |
Maturity date | The date at which you are done repaying your loan and may have the option of renewing it |
Mortgage | A loan that is taken out in order to buy property |
Mortgage broker | A company that offers mortgages from several different financial institutions |
Mortgage insurance | Protects the lender against any losses if the borrower is unable to repay the mortgage |
Mortgage life insurance | Pays off the mortgage in the even that the borrower should die. |
Mortgage rate | The percentage interest that you pay on top of the loan principal |
Mortgagee | The lender. (Usually a bank) |
Mortgagor | The borrower. (Usually the home owner) |
Open mortgage |
Allows payments to be made at any time to repay the money owed |
Power of sale | The right of a mortgagee to force sale of the property without judicial proceedings should default occur |
Principal | The dollar amount borrowed or owing on a loan. |
Property survey | A legal description of your property and its location and dimensions (usually required by your mortgage lender). |
Purchase Agreement | A legally binding agreement that defines the price, closing date and items that are included with the purchase of the house |
Renewal | Renegotiation of a mortgage loan at the end of a term for a new term. |
Right-of-way | The right or privilege to pass over a designated portion of the property of another |
Sales taxes | Taxes applied to the purchase cost of a property. Some properties are exempt from sales tax and some are not. For instance, residential resale properties are usually GST exempt, while new properties require GST |
Service charges | Extra costs incurred such as hydro, gas, phone, etc. |
Survey | A document that shows the boundaries of the property and specifies encroachments, easements, and the placement of buildings on the property |
Title | Legal ownership in a property |
Title Search | An examination of public records to determine and confirm a property’s legal ownership, and find out what claims are on the property |