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Glossary : Canadians Get the Word

Written by Posted On Tuesday, 05 September 2000 00:00

Do you understand real estate terminology well enough to consider yourself an informed consumer or investor? How can you ensure you get a good deal when buying a house or arranging a mortgage if you don't understand the language used by housing and financial professionals. Don't let jargon get the better of you!

This glossary includes Canadian terminology used in this column.

For our American readers, a "loonie" is our one dollar coin, so nicknamed for the loon ( a diving bird whose call symbolizes the Canadian north) depicted on the coin and our stubborn insistence in calling it a dollar. "Tooney" (spelling varies) refers to the Canadian two dollar coin and fits in with the "loonie tooney" attitude that government has towards money. Debate rages on what the anticipated five dollar coin will be called.

Agent or Broker - a corporation or individual licenced by the government to trade in real estate. An individual with a broker designation may either work as a broker by establishing a sole proprietor practice or may set up a corporation, often called a brokerage. In the latter case, the corporation becomes the agent or broker and the individual is considered a registered real estate salesperson employed by the corporation. When you list your property or sign a buyer agency agreement, you are entering into a contract with the brokerage, not the salesperson.

Agency law - defines the underlying working relationship in real estate and other professions such as the law. This is not a piece of legislation or statute but common law or case law based on accumulated judgements from court cases.

Amortization period - the length of time, commonly 25 years, that it takes to completely pay off a mortgage through repayment of the original debt or principal and the accumulated interest. Assumption of a mortgage - the buyer of a property agrees to take over repayment of the current owner's mortgage as part of an agreement to purchase the property, usually to save the current owner discharge costs or because the existing interest rate and term are attractive. See mortgage and discharge.

Buyer agent or Agency - the real estate agent that represents the buyer-client.See Agent or Broker above. Closed mortgage - a mortgage contract that does not allow the borrower to prepay the mortgage debt in midterm. Also see prepayment privilege and term.

Compound interest - interest charged on interest and on the mortgage debt. The amount of interest charged for a period, for instance over six months, is added to the balance to create a new amount on which to calculate interest.

Condominium - a form of property ownership created by provincial law (e.g., Condominium Act of Ontario) in which each owner owns a unit and a proportional share of the common elements or remaining property. Condominium refers to the type of ownership not the style of structure, which can take any form from a detached house or a townhome to a high-rise apartment or an industrial warehouse. In common usage, this word is used to describe one unit in a condominium complex, usually with no reference to the common element.

Contract - A contract is a legally-binding agreement between two or more parties to do or to deliver something on mutually agreed terms and conditions. Canadian federal law requires that contracts for the sale of real estate or the payment of commission to real estate professionals be in writing to be legally binding, hence, the "get everything in writing" dictum in real estate.

Conventional mortgage- a mortgage for less than 75 percent of the appraised value of a property. Default of mortgage - failure to meet obligations in a mortgage contract, usually by failure to make the repayments agreed to in the mortgage contract. Mortgage default may also be caused by failure to pay property taxes, insure the property adequately, keep the property in good repair or to pay condominium maintenance fees, if appropriate. Discharge of a mortgage - a release from the mortgage lender for the borrower when the mortgage debt is completely repaid. Dual agent or agency - an agent that serves both seller-clients and buyer-clients concurrently. Client confidentiality may not be possible since what each client reveals must be shared with the other client. Conflict of interest issues may arise for the dual agent. Continued in the next column... Click Here

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