Montreal Real Estate Blog » Definitions

Real Estate Glossary from A to Z

Deya Bautista — Fri, 08 Jan 2010 11:00:53 +0000

After almost 2 years of regularly posting the Real Estate Glossary for each individual letter, we finally have completed the alphabet. The definitions where taken from different public sources, both printed and online. Some of its content might need reviewing, as the real estate terminology may change, but for the most part I believe it to be pretty accurate.

Click on the correspondent letter to view the definitions:

A . B . C . D . E . F . G . H . I . J . K . L . M . N . O . P . Q . R . S . T . U . V . W . Y . Z

Ps: Even though we called it the Real Estate Glossary, it also contains a lot of Financial & Mortgage Terms.
Just so you know.

Feel free to use it as a reference, when you need it.

Posted By: Deya Bautista - Real Estate Broker working as part of the McGill Immobilier team. Specializing in high end condos in downtown and Old Montreal. For buying or selling contact Deya at: 514.917.7889 http://montrealrealestateblog.com/

Describing Homes: what’s a 3 1/2 and all those numbers means.

Deya Bautista — Wed, 25 Feb 2009 15:46:41 +0000

If you are new to Montreal, you’ve probably seen the descriptions for the living space, apartments or homes, signs with 2 ½, or 5 ½ as opposed to “one bedroom condo/home” or “3 bedroom apartment” sort of thing. If you haven’t figured it out yet, here is a quick (and hopefully clear) explanation.

Understanding the way we describe apartments in Montreal can be quite simple once you keep these tips in mind.

First and foremost, remember that the “1/2″ half part, always refers to a bathroom.
After that, every room is counted.

For example:

One (closed) bedroom apartment with a separate kitchen is considered often as a 3 ½. Here is the count:
1 room for living/dining space.
1 room for the kitchen,
1 room for the bedroom.
½ the “half” – which is the bathroom.

Smaller units are quite simple:
1 ½ is often a studio. One large room with a separate bathroom.
2 ½ could be either a closed bedroom with open concept kitchen/living/dining room or could also mean a studio with a closed kitchen. In this case the bedroom and living/dining spaces are all open.

For the 4 ½ , is often referred to a 2 bedroom unit but it can also mean: a one bedroom, separate kitchen, living room, dining room and a bathroom (total 4 rooms and ½). It’s always good to ask how many closed bedrooms it has.

5 ½, same thing. 5 divided rooms and a bathroom.
Variations: 3 bedrooms, living/dining room (in one space), separate kitchen and bathroom.

There are many variations to the larger units, from 5 ½ and up. To know what kind of apartment you’re about to see, it will only take one question: How many closed bedrooms? Then you can do your own math from there.

Keep in mind that sometimes an apartment (or house) can be described as a 2 or 3 bedroom unit BUT if one of those closed room do not have its own window should not be considered a bedroom.

Opinions and amplifications are encouraged in the comments!

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Real Estate Glossary: Y

Deya Bautista — Tue, 07 Oct 2008 13:00:17 +0000

Year-End Statement
A mortgage summary or report that is sent to the borrower at the end of each year. The statement shows the amount of taxes and interest paid on the mortgage during the year, as well as the remaining loan balance.

Year-To-Year Tenancy
A periodic tenancy in which the rent is reserved from year to year.

Yield to Maturity (YTM)
The internal rate of return on an investment. The YTM generally considers all investment returns and the timing of each return.

Real Estate Glossary: W

Deya Bautista — Tue, 30 Sep 2008 16:00:13 +0000

Waiver
The deliberate and voluntary relinquishment or surrender of a claim, right, or privilege.

Walk-through
The buyer’s final inspection of a property which is being purchased is called a walk-through. This final inspectiongenerally takes place on the day of closing or one day prior to ensure all the conditions of the sale have been met.

Warranty
In real estate, warranty refers a document certifying clear title a property.

Witness
An individual who signs his or her name to a document for the purpose of attesting to its authenticity. For example, a witness is usually required to sign a deed, will or other legal document.

Workout
A type of mortgage where basic terms such as interest rate, term, and monthly payment are altered to prevent foreclosure. This is not a typical practice in Canada.

Wraparound Mortgage- [Updated]
A form of secondary financing in which a seller extends to a purchaser a junior mortgage which wraps around and exists in addition to one or more superior mortgages. Under a wrap, a seller accepts a promissory notefrom the buyer for the amount due on the underlying mortgage plus an amount up to the remaining purchase money balance. {source: Wikipedia}

Real Estate Glossary: V

Deya Bautista — Tue, 26 Aug 2008 13:30:15 +0000

Valuation
The act or process of assessing value or price of a property through an appraisal.

Variable Interest Mortgage
A mortgage product where the interest rate can change or vary during the loan term. The variance in the interest rate usually depends on a specific factor such as prime bank rate or the guaranteed investment certificate rate for a designated lender.

Variable Interest Rate
Percentage paid by a borrower for the use of funds. This interest rate moves up or down periodically due to changes in other interest rates.

Variable Rate Mortgage
A mortgage product where the interest rate is adjusted periodically based on a standard financial index. Also called an “Adjustable-rate Mortgage.” CanEquity has access to the best Variable rate/below prime mortgages in Canada.

Vendor Take Back
In order to sell a property, the seller will provide all or some of the financing to ensure the transaction.

Verification of Employment
Confirmation from a place of employment that verifies a loan applicant is being truthful about where he or she works and about the salary he or she earns.

Void
Something that is void has no validity or effect under the law meaning it is null. For example, a contract can be rendered void.

Voidable
When an individual or party involved in a contract is entitled to renege or retract the contract at his or her discretion.

Real Estate Glossary: U

Deya Bautista — Tue, 05 Aug 2008 22:47:06 +0000

Umbrella Mortgage
A specific arrangement where 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. Also referred to as a wraparound.

Underwriting
To support or agree to (a decision, for example). In real estate, underwriting refers to the analysis of the risk involved for a lender to grant a mortgage loan and whether or not the risk is acceptable. Underwriting involves a property evaluation as outlined in the appraisal report, and an evaluation of the borrower’s ability and willingness to repay the loan.

Unearned Income
This type of income can include funds that are gained from interest, dividends, investments, or capital gains as opposed to income that is earned by working for a salary, hourly wage, or gratuity.

Unsecured Debt
Debt that is not guaranteed by collateral is considered unsecure because there is no assurance for repayment. Most credit cards are unsecured debt, which is why the interest rates are higher than other forms of lending, such as mortgages, which use property as collateral.

Unsecured Loan
A type of loan that is given to a borrower without collateral such as property that is acceptable as security for the loan.

Up-front Costs
Certain costs must be paid when signing a vehicle lease agreement before the dealership will release the vehicle to the buyer. These costs might include the first payment, a refundable security deposit, a down payment, taxes, registration, and other fees.

Upgrades
When buying a newly built property such as a house or condominium, the builder gives the buyer the option to select higher-quality floor coverings, cabinets, windows, fixtures, etc. at an additional cost to the buyer. If the buyer decides not to purchase upgrades, he or she can simply select the standard options offered by the builder.

Up-zoning
The practice of changing the zoning in an area typically from residential to increased commercial use. This is a controversial practice because upzoning allows for greater density and conjestion in the area which affects the current occupants. The term can also apply when changing the zoning to limit growth and density.

Useful Life
The number of years in which business property that will depreciate in value is expected to be productive and in use for the business.

Usurious Rate
An interest rate that is unnecessarily high or well above legal rates. For example, sometimes intangible property taxes are applied to income from usurious rates.

Usury
The act or practice of lending money and charging the borrower interest at an exorbitant or illegally excessive rate.

Real Estate Glossary: T

Deya Bautista — Tue, 29 Jul 2008 13:30:07 +0000

Takeout Mortgage Loan
A long term mortgage loan that is advanced to a borrower on the completion of construction or in compliance with any other conditions in the loan commitment. The funds are typically used to pay off or take out the construction lender.

Tangible Personal Property
Assets other than real estate that physically exist. Business equipment and vehicles are tangible personal property whereas stock certificates and franchises only represent value and are therefore intangible property.

Tax Deduction
An allowable (by government) expense that can be subtracted from income before calculating income tax.

Tax Deferral
A method used to postpone current year taxes to a later year. This is typically done by recognizing income or a gain at a later time. It is important to remember that using tax deferral only delays tax liability, it does not eliminate it.

Tax Exempt
Income that is not subject to taxation. It is important to note that income exempt from federal taxation is not necessarily exempt from provincial taxation.

Tax Lien
A claim or obstacle that prevents the sale of a property due to unpaid taxes. The property title cannot be transferred until all liens are cleared.

Tax Sale
Property that is sold by the government to recover unpaid taxes.

Tax-sheltered
A savings or investment plan that offers significant tax savings.

Taxable Income
Income that is subject to taxation after accounting for adjustments, exemptions, and deductions.

Tear-down Condition
A property that is purchased for the sole purpose of tearing it down to build a newer house. These types of properties are generally located in desirable locations with spectacular views or amenities.

Teaser Rate
The the below-market interest rate that is offered by lenders or credit card companies to gain new business. Offering a below-market interest rate often encourages people to switch credit cards or lenders to save money. Also known as an introductory rate.

Tenancy by the Entirety
The ownership of a property by spouses where each spouse owns an undivided interest in the entire property. When one spouse passes away, the other holds title to the entire property.

Tenancy In Common
Ownership of a property by two or more persons. If one tenant passes away, his or interest does not pass to the survivor. It is treated as an asset of the deceased’s estate.

Tenants in Common
The ownership of a property by two or more individuals where each owns an undivided interest in the entire property and each has equal rights to use the property. If one tenant in common passes away, his or her interest may be sold, mortgaged, or given to an individual named in the will.

Tenure
The means, process, duration, or right of holding something such as the title of real property and conditions by which the property is held.

Term
1. A limited or set period of time.
2. When dealing with a mortgage, term refers to the length of time in which a borrower agrees to pay back the lender. The interest rate and payment schedule is also predetermined. The interest rate typically stays constant during the term unless otherwise specified in the loan agreement. For example, a five year fixed rate mortgage has a term of five years.

Term Deposit
An investment product where a fixed sum of money is deposited into an account for a set period of time with interest paid over the term.

Term Loan
A loan intended for medium or long term financing that provides cash to purchase fixed assets such as machinery, land or buildings, or to renovate business premises.

Timeshare
A form of property ownership where multiple owners take turns using the property at designated times throughout the year. Timeshares are typically vacation homes located in resort destinations.

Title
Evidence or written proof that shows a person’s right to possession or ownership of a property.

Title Defect
A legal claim made by an external party against the property or the right of another party to make demands upon the property owner.

Title Insurance
A policy that protects the lender against loss which can result from inconsistencies in a property title such as liens or claims against the property. This policy also protects the homeowner if he or she purchases an owner’s policy in addition to the title insurance.

Title Report
A report that reveals any competing claims, liens, or other problems relating to a property. A title report is required before title insurance will be issued. Also known as a “Preliminary Title Report” or “Prelim.”

Total Debt Service
The ratio of a borrower’s total monthly debt as compared to his or her monthly gross income. Lenders use this ratio to determine how much the loan applicant is allowed to borrow.

Total Expense Ratio
The percentage of monthly debt payments compared to total before-tax income.

Trade Equity
The exchange of property as part of a down payment when opting to buy another property. Other properties and vehicles are commonly used in trade equity as partial down payment.

Tax imposed by a municipality on any transfer of right of ownership on its territory.

Trans Union
One of the major Canadian credit bureau companies along with Equifax.

Trust
A trust is a fund that is set up similar to a will. The trust specifies how money or property will be disbursed, it lists the recipients or beneficiaries, and names one or more trustees to manage the assets. An irrevocable trust cannot be changed after the terms are finalized; a revocable trust has more room for how much can be transferred, but it is usually more expensive to maintain.

Trust Account
An account used by a law firm or real estate agent to control funds set aside for costs associated with a real estate transaction. This account also holds any other money put forth by the buyer and seller before the closing.

Trustee
An individual that manages assets or holds legal title to property in order to administer it for a beneficiary.