The Montreal Real Estate Blog

Selling Expenses
Additional expenses to be paid when selling an immovable, including mortgage loan balance, real estate broker compensation, notary, tax adjustments, etc.

Sale-leaseback
A type of real estate transaction where the seller transfers the title to the buyer upon purchase, but then rents the property from the new owner. This practice is not common in Canada.

Sales Contract
A legal written document that details the agreed upon conditions between a seller and a buyer regarding the sale of a specific property. Also called an “Agreement of Sale.”

Sales tax
Provincial and federal taxes applied to the purchase of a property. Residential resale properties are usually exempt from federal GST but newly constructed properties are not. Read more »»

Rate
The percentage paid by a borrower for the use of money which is generally expressed as an annual percentage.

Rate Hold
The length of time, typically between 60 and 120 days, that a lender will guarantee a loan’s interest rate once you are locked in.

Rate Lock-in
A written agreement or contract in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set time period.

Real Estate Agent
An individual who is licensed to represent a buyer or a seller of real estate in a sales transaction. Real estate agents typically work on commission. Read more »»

Qualifying Ratios
As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the gross debt service or GDS is up to and including a maximum of 32% of the combined gross family income. The second qualifying ratio is the Total debt service or TDS is up to and including 40% of gross income.

Quit Claim Deed
A general release of all claims or rights to a parcel of land.

Payment Adjustment Period
The time period where payments on an adjustable-rate mortgage (ARM) may fluctuate.

Payment Cap
A contractual limitation on the amount of the monthly payment of an adjustable-rate mortgage or other variable rate loan.

Penalty
In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential. Read more »»

One-year Adjustable
A mortgage where the annual rate changes from year to year. The rate is based on movements of a published index plus a specified margin, selected by the lender.

Open-end Lease
A type of lease that offers lowers payments, but more risk to the lessee because he or she must pay the difference between the residual value of the automobile as stated in the lease and the fair market value, if lower, at the end of the lease. The lessor pays for the appraisal that determines the automobile’s the value. If the lessee does not agree with the value, he or she can pay for an independent appraisal by an impartial third party. All parties must agree to the selected appraiser. Also know as a finance lease. Read more »»

Net Cash Flow
Incremental after-tax income plus depreciation expense resulting from investment.

Net Income
The difference between effective gross income and a person’s expenses. The term is qualified as net income before depreciation and debt.

Net proceeds from the sale
Residual amount deriving from the sale of an immovable once all selling expenses have been deducted, i.e. mortgage loan balance, broker compensation, legal fees, tax adjustments, etc. Read more »»

Maintenance Fee
A periodic assessment or charge that residents pay to their homeowner’s or condo association to pay for the maintenance and repairs of common areas.

Market Conditions
Factors that can affect the sale of homes in a certain area. Such factors include interest rates, the unemployment rate, home appreciation, weather, time of year, etc.

Market Value
The highest price in terms of money, which the property will bring to a willing seller if exposed for sale on the open market allowing a reasonable time to find a willing purchaser, buying with the knowledge of all the uses to which it is adapted and for which it is legally capable of being used, and with neither party acting under necessity, compulsion or peculiar and special circumstances. Read more »»

Land Contract
A legal contract or agreement for the sale of property where the buyer takes possession while making payments, but the seller holds the title until full payment is received.

Land Title
The legal document conveying title to a property.

Land Titles System
A system used for the registration of land. Under this system, the registrar or master of titles passes on the validity of the instrument and determines its legal effect with the Government’s guarantee of the title.

Land transfer tax
A provincial tax payable on any property that changes hands. First time buyers may be eligible for a rebate.

Latent Defect
A deficiency or fault within a property that is not easy to see or visibly detectable, such as termite damage or traces of radon above safe levels. Read more »»

Key Lot
A property that must be acquired because it is essential to the development of land, either because of its strategic location or the timing of the acquisition.

Kicker
Any benefit to a lender above ordinary fixed-interest payments such as an equity position in a property or a percentage participation in the income stream.

Joint Credit
Credit that is issued to two people based their credit reports and their combined assets and incomes. The repayment of joint credit is the responsibility of both parties.

Joint Liability
When two or more people are responsible for repaying a single debt.

Joint Tenancy
When two people (typically spouses) both own an undivided interest in a property. If one joint tenant passes away, the other receives the title to the entire property. Read more »»

Illegal View (Quebec)
Any exterior opening or opening in a structure or building that creates an illegal view of adjoining lands.

Income Approach - Evaluation
A step in the valuation process of an income property. The value is reached by estimating the annual income minus an allowance for vacancies and bad debts and then subtracting annual operating expenses, real estate taxes, and insurance premiums to obtain the net operating income. This is then converted by capitalization into a capital value.

Income Property
A property that is developed or improved for the purpose of generating income. Also referred to as “non-owner occupied property” or “rental property.”

Income-splitting
A financial strategy used for tax purposes to reduce the overall tax burden on a family. Income is shifted from one family member to another who is in a lower tax bracket, so the income is taxed at the lower rate to save the family money. Read more »»

Hectare
An area equal to 100 meters by 100 meters

High-Ratio Mortgage
A mortgage loan higher than 80% of the lending value of the property. Such types of mortgages may need to be insured.

Holdback
The amount of money withheld by the lender during construction of a property to ensure that construction at every state is satisfactory. Read more »»

Gable
A triangular wall enclosed by the sloping ends of a ridged roof or a triangular decorative feature

Gable roof
A ridged roof that forms a triangle at each end

General contractor
The person who hires all of the subcontractors and suppliers for a project.

GDS Ratio
Gross Debt Service Ratio. Lender’s allowable ratio of gross monthly payment to gross monthly income of mortgage applicant.

Read more »»

Financing
Means used by a buyer to acquire an immovable. Financial resource, often in the form of a mortgage loan provided to the buyer by a financial institution for the purchase of an immovable (see Mortgage loan).

Fonds d’indemnisation du courtage immobilier
Body created under the Real Estate Brokerage Act, to which all real estate brokers and agents in Québec contribute to indemnify consumers who are victims of fraud, dishonest transaction or misappropriation of funds or other goods by a real estate broker or agent, which, under the Real Estate Brokerage Act, must be deposited in a trust account.

Easement
Restriction of the right of ownership for reasons of private interest, general interest or public use. Right of access or use of land by others, for a defined purpose (passage, parking, public utilities, etc.).

Equity
The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the mortgage is reduced through regular payments. Market values and improvements to the property may also affect equity.

Evaluation
Process which consists in estimating the market value of an immovable based on the general condition of its components and its specific features. The evaluation is often the result of a comparison with similar immovables up for sale or having recently been sold in the same area.