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Abstract book: A large, binder-like book found in the Land Registry/Land titles Office that holds the pages on which are found the title information for a series of different properties – a single book often contains the pages for all the lots on a single plan.

Abstract index/Register: The page of pages containing the abstracted records for particular piece of property.

Abstract of Title: a written history of the title to a parcel of real estate as recorded in a Land Registry Office.

Acceleration Clause: A clause in the mortgage document that accelerates the maturity date and state that upon default, the principal sum of the mortgage and accrued interest falls due.

Acre: An area of land equaling 160 square rods; 4,480 square yards; 43,560 square feet; or .4 hectares

Accretion: An addition to land resulting from natural causes – such as receding water.

Accrued Interest: Interest accumulated to date.

Addendum: Something added to a contract. All parties concerned should initial it.

Add-on interest: An interest amount added to the principle of a debt and made payable as part of the debt, usually in equal periodic installments (also called pre-calculated-interest).

Adjustment date: The data regarded as the official beginning of a mortgage.

Adjustable Rate Mortgage: Any real-estate loan in which the interest rate varies over time according to a prescribed formula.

Adverse Possessions: When an individual who is not the owner takes actual possession of a property; without the consent of and hostile to the owner.

Affidavit: A written statement confirmed by oath or affirmation, for use as evidence in court.

Agency: A relationship that arises out of a contract, where an agent is authorized by a principal to engage in certain acts, usually in dealing with one or more third parties.

Agreement of purchase and sale: A written contract to buy property in which the purchaser and vendor agree to sell upon terms and conditions as set forth in the agreement.

Alienation clause: This is a clause that enables the mortgagee to demand payment of the outstanding balance including interest upon sale or transfer (also known as “due-upon-sale” clause)

Amortization: the gradual retirement of a debt by means of partial payments of the principal at regular intervals.

Amortization of a mortgage: The arrangement for paying off a mortgage by installments over a period of time.

Amortization period: The time period required to completely retire a debt through schedule payments of principal.

Annexation: Joining one property to another property.

Anniversary date: the occasion of one year from an event pertaining t a mortgage, e.g., the registration date.

Annual budget: now required by the Condominium Property Act, this budget is the basis upon which contributions are levied and funds collected.

Annual general meeting (AGM): Once per year. Within 15 months of the last one, a condominium board is required to convene an Annual General Meeting of unit owners.

Annual percentage rate (APR): The yearly interest percentage of a mortgage as expressed by the actual rate of interest paid, given the term, rate, amount and cost of arrangement.

Annuity: A sum of money usually paid annually but sometimes paid at other agreed intervals.

Appraisal: A written estimate of the market value of a piece of property, generally made by a qualified expert.

Appraised Value: An estimate of property value written by a qualified individual (AACI). Appraisals performed for mortgage lending purposes may not reflect the market value of the property, or the purchase price.

Appreciation: An increase in the value of a piece of real estate.

Approved Lender: Lending institution authorized by the government of Canada through the Canada Mortgage and Housing Corporation (CMHC) to make loans under the terms of the National Housing Act; only approved lenders can negotiate mortgages that require mortgage loan insurance.

Appurtenance: Something outside of the property itself but which belongs to the land. It is of a positive nature: an example of an appurtenance is a right-of-way.

Arrears: A debt that is due but not yet paid. Payments (e.g. rent, taxes or interest payments) that have not been made at the appointed time, i.e. on the due date. A sum of money that is in the arrears remains in arrears until there is a proper payment.

As is: A term used in a contract to confirm that the buyer is buying what he/she sees as he/she sees it. There is no guarantee of quality or pledge or repair even if actually necessary.

Assessed tenants in occupation of the land: Assessed tenants in occupation of the land are those persons whose names appear on the last returned assessment roll, or those appearing in the records of the land registry office as assessed tenants.

Assessed Value: This is the value of a piece of property set by a municipality for taxation purposes.

Assignee: One who takes the rights or title by another assignment

Assignment: The method by which a purchase and sale contract is transferred between two parties (for a consideration or fee)

Assignment of Mortgage: The assignment of a mortgagee’s interest in the mortgage to a new mortgagee. The legal sale of the mortgage with or without an agreement to repurchase.

Assignment of Rentals: The enforceable diversion of income from a mortgaged property to the mortgage.

Assignor: One who transfers or assigns the rights of title to another:

Assumability:  A feature of a mortgage that allowed the buyer to take over the sellers mortgage on the property.

Assumption Agreement: A document that binds someone other than the mortgagor to perform mortgage obligations.

Assumption of Mortgage: The action of a purchaser taking responsibility for a mortgage debt by way of a legal agreement. The original covenanter(s)’ responsibility pursuant to the mortgage obligation remains intact in such arrangement, so long as the existing documentation remains registered.

Attornment of Rent: The redirection of rental income to a mortgagee, usually in the event of default.

Auction: Auction may be defined as a public sale of an item to the highest bidder. Auction selling is a competitive bidding method where all prospective and interested buyers can bid and have equal access to the supply of the commodity being offered for sale. In auctions where many buyers participate, this method provides the best chance that the commodity being offered for sale receives the highest possible price under the existing market conditions.

Authority: The legal right given by a principal to an agent to act on the principal’s behalf in performing specific acts or negotiations.

Averaging: Sometimes called “leveling.” This is the calculation make to determine the interest when a second mortgage is taken out; averaging determines the average interest rate of the two mortgages.

Abandonment of Property

  1. The act of giving up or proscribing completely. Yielding, ceding or giving up totally, especially ceding permanent control to another.
  2. The voluntary relinquishment or surrender of property, or an interest in property, without any intention of resuming enjoyment or possession, or of vesting it in anyone else. The disclaiming of a right, expressly or by implication, without leaving any evidence of an intention to reclaim that right. Thus, abandonment requires two elements, an intention to relinquish a right or property and the act by which the intention is carried into effect (Roebuck v. Mecosta County Road Comm’n, 59 Mich App 128, 229 NW.2d 343, 345-6 (1975)).

Abstract of Judgment
When a judgment is made in a lawsuit, a court document is drafted that states how much the person who lost the lawsuit owes. This document can create a lien or a claim on property when it is filed with the country recorder where the property is owned.

Abstract of Title
Registry System: A condensed history of the title to a parcel of land consisting of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of recording.
Land Titles System: A chronological listing of every recorded instrument currently affecting the title to that land.

Acceleration Clause
A clause in a mortgage which provides that where default has occurred in making any payment of moneys due under a mortgage or in the observance of any covenant in a mortgage and under the terms of the mortgage, by reason of such default, all moneys secured thereby become due and payable.

The offeree’s consent to enter into a contract and to be bound by the terms of the offer.

Account Agreement
An account agreement is a set of conditions that outline both your rights and responsibilities and those of the bank concerning your bank account. This agreement must be read, agreed upon, and signed before your account is activated.

Accounting Method
Accounting method refers to how individuals or businesses keep their financial records. A common accounting method for both individuals and small businesses is the cash method, even though businesses with inventory are required to use the accrual method. See also “Accrual Method” or “Cash Method.”

Accounts Payable
Money owed by a business for goods and services provided without pre-payment.

Accounts Receivable
Money owed to a business by purchasers who are not required to make a payment prior to receiving goods and/or services.

Accredited Mortgage Professional
The Accredited Mortgage Professional (AMP) is Canada’s national designation for mortgage professionals. Launched in 2004, the AMP was developed by CIMBL as part of an ongoing commitment to increasing the level of professionalism in Canada’s mortgage industry through the development of educational and ethical standards. Consumers should know that the AMP designation sets a single national proficiency standard for Canada’s mortgage professionals.

Accrual Method
In business accounting, the accrual method refers to reporting income in the year it was earned along with any expenses incurred, rather than reporting the income and expenses when payment is received or made. For example, if you renovated a basement and billed the customer in December 2004, the amount you charged is reported in 2004 as income even if the customer did not pay until the following year. Also, if you own a business that keeps an inventory, you are also required to use this method of business accounting.

To gather together an amount often over a period of time.

Accrued Interest
The interest charged for the period of time that has elapsed since interest was last deducted.

Action for Possession
A legal remedy available to a mortgagee when a mortgage is in default.

Action on the Covenant for Payment
A legal remedy available to a mortgagee when a mortgage is in default.

Acquiring Financial Institution
To receive credit for credit card transactions, merchants must have and maintain an account with an acquiring financial institution so that daily credit card totals can be deposited into the merchant’s account minus any fees owed to the acquiring financial institution.

Acquisition Fee
Some leasing companies charge a fee for initiating the original loan. This is similar to mortgage lenders who charge additional percentage points as an origination fee. This fee is often not specified in a contract, but is included in the cost when calculating monthly payments.

A plot of land 180 by 242 feet is equal to one acre or 43,560 square feet.

Acre Foot
An acre foot is equivalent to 325,851 gallons of material (water or other) that is needed to cover an acre of land one foot deep.

Act of God
This term is generally used in insurance policies and refers an event caused by natural forces that results in damage to property. Natural forces can include hail, rain, tornados, lightning, floods, and earthquakes.

Active Income
Active income refers to wages, tips, and profits from your business or employment that you partake in. It also includes portfolio income such as interest and dividends, but you cannot usually offset active income with passive losses. See also “Non-passive Income.”

Actual Age
The actual age (usually in years) of a structure since building was complete.This differs from effective age.

Actual Cash Value
The monetary amount that a broker or dealer has invested in a used vehicle. This cash value is used for the purchase and repair of the vehicle.

Add-on Interest
Interest that is calculated at the beginning of the loan and added to the principal amount owing. This means that the added interest must also be repaid, even if the loan is paid off early.

A change, revision, or update made to a contract.

Additional Principal Payment
You can pay extra money in addition to your required loan payment to help pay off the principal loan amount faster. By making the extra payment, you also reduce the amount of interest paid.

Additional Property
A property that is owned by the person that is not being financed.

Adjustable Rate Mortgage (ARM)
An “Adjustable Rate Mortgage” or ARM refers to the type of mortgage loan where the interest rate and monthly payments can be adjusted to rise and fall with market conditions. The interest rate and payments can be adjusted as frequently as once a month or you can adjust the principal loan balance or the loan term to reflect the rate change.

Adjusted Balance
Some credit card companies use the “adjusted balance” method for applying finance charges. This means the credit card company will subtract all of the payments made during the month and then add the finance charges to the remaining balance.

Adjusted Basis
“Adjusted Basis” refers to the amount used to determine profit or loss from a sale or property trade. To calculate this amount for an asset, take the original amount paid, add improvement and assessment costs, and then subtract deductions. Deductions can include down grading, depreciation, or depletion.

Adjusted Cost Basis
To calculate the “Adjusted Cost Basis,” take the amount paid for the item, plus the amount paid for improvements, and then subtract the losses and depreciation. The profit or loss is determined when the owner sells the item, and determines the difference between the sale price and the adjusted cost basis.

Adjustment on Sale
A pro-rated division and distribution of prepaid or accrued taxes, prepaid insurance premiums, prepaid rents and other income and expenses. Apportionment usually occurs when a property is sold, and is the manner of determining the amounts due to and from the parties.

Adjustment Period
The period of time between interest rate changes in an adjustable-rate mortgage.

Adverse Possession
The right by which someone occupying a piece of land might acquire title against the real owner, if the occupant’s possession has been actual, continuous, hostile, visible, and distinct for a statutory period. Adverse possession is not possible under Land Titles or when Crown property is involved.

Adverse Use
Using someone’s property without their verbal or formal written permission.

A statement or declaration in writing and sworn to or affirmed before some officer who is authorized to administer an oath or affirmation, such as a notary public, or commissioner of oaths.

Affinity Card
A type of credit card (usually Visa or MasterCard) that has an endorsement or sponsorship agreement with an organization, charity, or non-profit group in which a percentage of the sales transactions made using the card go to that organization. The logo or organization name is generally displayed on the credit card.

An agency is created when one person, called the principal, authorizes another person, called the agent, to act on behalf of and subject to the control of the principal.

Agency Closing
The use of a title company or agency to supervise the closing meeting where the property is transferred and mortgage is finalized.

A person who acts on behalf of another person (or client) when dealing with a third party transaction. In real estate, an agent is a person who conducts property transactions on behalf of sellers and buyers. The agent usually works on commission or for a pre-determined fee.

Agreed Boundary
In the event of a dispute between neighbouring property owners, property lines or an agreed boundary can be drawn to settle the dispute.

Agreement of Purchase and Sale
A written agreement between vendor and purchaser in which the purchaser agrees to buy certain real property and the vendor agrees to sell upon terms and conditions as set forth in that agreement.

Agreement of Sale / Balance of Sale
A method of financing a sale, but different from a mortgage. The buyer does not receive a deed nor does title pass to him or her immediately; rather he or she receives a contractual interest on a time basis. Payments are made directly to the seller who in turn is still responsible for any outstanding mortgage on the property. The seller who still holds title may mortgage their remaining equity.

Air Miles
Air Miles is a popular and recognized reward program that works with airline-affiliated co-branded cards. This means that the cardholder earns Air Miles (points) each time he or she uses the card. The earnings are then transferred on a monthly basis to the cardholder’s account and can be redeemed for flights, travel discounts, or other merchandise.

Alienation Clause
A type of acceleration clause that demands payment of the entire debt upon sale or other transfer of the title.

Amending Agreement
An agreement between the lender and borrower which may or may not be registered on title by the lender in which the terms of the registered mortgage are changed.

Alimony is a monthly payment made to an ex-spouse usually as determined by the courts. If you are receiving alimony, payments must be received continuously for one year to qualify as income for a loan, mortgage or otherwise.

Money set aside by builders for amenities or services such as driveways, landscaping, carpeting, and fixtures. These amenities are usually standard, but they can have optional designs.

Alternative Minimum Tax
This tax primarily affects high-income taxpayers who shelter some of their income from taxation through certain tax preference items or deductions. It is often referred to as AMT. If your income meets the limit, then you have to recalculate your tax amount that is due based on the separate alternative minimum tax rates and tables.

Alternative Mortgage
When a home loan is not a standard fixed-rate mortgage, it is considered an alternative mortgage.

Amenities are features such as green space, playgrounds, community centers, shopping malls, or swimming pools that make a neighborhood or community more desirable for living.

Term used to describe the time over which the mortgage is to be paid, assuming equal payments. The life of a loan, e.g. a mortgage with a 25-year amortization period means that if all regular payments were made on time and the terms (payment, interest rate) remained the same, it would take 25 years to reduce the balance to 0.

Amortization Schedule
A table showing the amounts of principal and interest comprising each level payment due at regular intervals and the outstanding principal balance of the loan after each level payment is made.

Amortized Mortgage
A mortgage requiring regular payments which include both principal and interest sufficient to fully repay the loan by maturity.

Amortization Table
A mathematical formula used to calculate monthly mortgage payments based on the borrowed loan amount, the interest rate, and the loan term.
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Amortization Term
The period of time that is required and agreed upon to repay (amortize) an entire mortgage loan.

Amortized Loan
An amoritized loan is a loan where the interest and principal are both paid off in their entirety through a series of scheduled payments over a specified amount of time.

Amount Due at Lease Signing
When leasing a vehicle there are generally costs associated with the transaction and payment is due before the customer can take possession of the vehicle. Such costs can include a security deposit, title fee, capitalized cost reduction, monthly payments paid at signing, and registration fees.

Amount Financed
The amount financed refers to the principal amount that is borrowed. This amount can include the entire purchase cost along with any other items incorporated into the payments.

Those private individuals with capital to invest in business enterprises are often called angels.

Anniversary Date
The same date in each calendar year during the term of the mortgage with the first anniversary date taking place one year from the date interest is finally adjusted.

Annual Fee
Banks and credit lenders generally charge an annual fee for the use of a credit card levied each year. Annual fees can range from $15 to $300, and are billed directly to the customer’s monthly statement. Many credit cards are now offering incentives to customers by getting rid of annual fees to make the cards more appealing.

Annual Mortgagor Statement
An annual report or statement sent to the borrower which details the remaining principal amount owing on the loan and the amount paid in taxes and interest for the previous year.

Annual Percentage Rate (APR)
A yearly interest rate that includes fees and costs paid to obtain the loan. Lenders are required by law to disclose this interest rate. The rate is calculated in a standard way, taking the average compound interest rate over the loan term, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.

Annual Percentage Yield (APY)
The percentage disclosed on interest-bearing deposit accounts that reflect the total interest to be earned based on an institution’s compounding method, assuming funds remain in the account for a 365-day year. This disclosure is required by Truth in Savings regulations.

A periodic payment made to a policy holder by an insurance company for a certain length of time.

Anticipatory Breach
In a contract, when one party reneges on the agreement, the other party is notified and is no longer responsible for fulfilling their end of the agreement.

A document or form that is filled out by a prospective borrower to qualify for a loan. The application requires the borrower to provide detailed information about his or her financial situation.

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Application Fee
Lenders charge a fee to process the application or document as filled out by a prospective borrower to qualify for a loan. The application generally details the financial situation of the borrower and must be reviewed before a loan decision can be made.

Appointment of a Receiver
A legal remedy available to a mortgagee when a mortgage is in default.

A market value estimate for a parcel of real estate that is made by a competent professional who is knowledgeable about local real estate prices and market trends.

Appraisal Fee
A cost charged by professionals who are hired to offer educated opinions about the monetary worth or value of a property.

Appraisal Report
An independent assessment of the property by a qualified individual. A statement giving an opinion of value of an adequately described property, as at a specific date and supported by pertinent data.

Appraised Value
An educated opinion or estimate regarding the value (monetary worth) of a property.

An appraiser determines the market value of a house based on its condition and the selling price of comparable houses recently sold in the area.

Appreciation refers to the increase in the value of a property or item over time.

An assessment or judgement made by a lender regarding the ability of a borrower to repay a mortgage loan. Being approved also helps the borrower when home shopping because the lender will confirm the amount the borrower can obtain to purchase a home.

A right used with the land for its benefit.

Arm’s Length Transaction
A transaction between unrelated parties. A transaction freely arrived at in the open market unaffected by abnormal pressures as might be true in the case of a transaction between related parties.

The determination of a dispute by a disinterested third party.

A method used to resolve disputes that requires an impartial third party to make a reasonable and fair decision for all parties involved. The impartial third party must be agreed upon by all sides involved in the dispute before a decision can be made.

A person who designs structures and buildings.

Architectural Fees
Fees paid to a person who designs structures or buildings

An area equal to approximately 0.845 acres. This measurement was traditionally used in France, Quebec, and Louisiana. Today, hectares and acres are more commonly used to measure area.

As is Where is
The buyer makes the purchase at his or her own risk.

A fire-resistant element that once was commonly used for insulation in buildings, but was discovered to cause health issues in the lungs. This material is no longer used and is typically removed from buildings when it is discovered.

Asking Price
The amount of money the seller requests for the property or item. This is not the same as the appraised value.

Assessment (assessed Value)
A value placed upon property (land and buildings) for taxation purposes.

Assessment Roll
An annual list of the assessed values of all properties in a municipality, which includes the name of the property owner or tenant and their address. Assessment rolls are usually delivered to a municipality before the end of the year. The term “roll” comes from ancient times and refers to the way information used to be stored – on paper or parchment, rolled up into cylinders.

Any item or possesion of monetary value that is legally owned by a person. Assets can include real or personal property, and enforceable claims against others including bank accounts, stocks, mutual funds, etc.

Asset Case
A bankruptcy proceeding where there are non-exempt assets that might be accessible to pay creditor’s claims.

Assignment refers to the transfer of a mortgage from one person to another person.

One who takes the rights or title of another by assignment.

Assignment of Lease
The absolute or conditional transfer of the rights of either party to a lease.

Assignment of Mortgage
The transfer of ownership of a mortgage from one party to another.

Assignment of Rentals
A contract whereby the mortgagor grants the mortgagee the right to collect future rents on a given occurrence, normally default. Normally taken as additional security on rental loans.

One who transfers or assigns the rights or title to another.

The ability of a mortgage to be taken over from the original borrower by a new borrower.

A loan or obligation that can be taken over from the original borrower by a new borrower.

Assumption of Mortgage
The act of assuming liability for an existing mortgage on a property by the purchaser of that property. With builders’ loans, the assumption is usually evidenced by written agreement.

Assumption Clause
A provision in a mortgage contract that enables the buyer to assume or take responsibility for the existing mortgage loan from the seller.

Assumption Fee
Lenders will charge a fee to update mortgage records when a buyer assumes an existing mortgage from the seller.

ATM Access Fee
A fee charged for an account holder to access the ATM system and conduct banking activities such as cash withdrawls. This fee is charged in addition to any individual account fees already paid by the account holder to their financial institution. See also “Automated Teller Machine.”

ATM Alliance
An alliance between banks and/or credit unions that is designed to avoid or minimize surcharges for non-bank customers at ATM machines. Customers from one bank that belongs to the alliance can use surcharge-free ATMs at all alliance banks. See also “Automated Teller Machine.”

ATM Card Fee
This is not a debit card fee. It can be an annual or monthly fee charged on top of individual account fees to obtain an ATM card. The fee may also be charged per card or per account. For example, if an account is held jointly, the bank may charge for the second person to hold a card or it may charge one fee for all the cards on an account. See also “Automated Teller Machine.”

ATM Surcharge
A fee charged to someone using a bank-owned ATM because he or she does not hold an account with that bank. It is a good idea to review what your bank charges you to use another bank’s ATM system to avoid paying additional surcharges to your bank. See also “Automated Teller Machine.”

The seizure of property by court order.

Attornment of Rents
The agreement of a tenant to pay rent to a new landlord, especially a mortgagee who has commenced a legal action.

An examination of a taxpayer’s income tax return or other transactions bearing tax consequences. Audits range from a simple letter from the agency to a detailed review of individual or business tax filings and records.

Authorized User
An authorized user is a person with permission to use a credit card account belonging to someone else. The card bearer is the one who must grant the permission for use.

Automated Valuation Model (AVM)
AVM stands for Automated Valuation Model. The AVM Product is a highly sophisticated valuation model and methodology that MPAC has developed to render a monthly “real-time” estimate of market value for essentially all residential properties in the province of Ontario.

Automated Banking Machine (ABM)
See “Automated Teller Machine (ATM).”

Automated Teller Machine (ATM)
An interactive terminal that allows customers with valid accounts from either a banking or other financial institution to conduct various transactions including money withdrawals, deposits, bill payments, and transfers. Customers require a magnetically encoded card and P.I.N. (personal identification number) to use the terminal and may be subject to a surcharge. These terminals are interconnected to allow customers access to their accounts from anywhere in the world.

Automatic Payment
An agreement giving authorization to various companys or lenders to make specified withdrawals from a person’s bank account to make payments towards bills or loans. For example, regular monthly payments such as car or mortgage payments can be set up to automatically be withdrawn from your account each month or as specified in your authorization agreement.

Average Annual Yield
The average yield per year over the life or term of the investment, assuming all principal and interest remain on deposit until maturity.

Average Daily Balance
The method used by most credit card companies to calculate your due payment. An average daily balance is determined by adding each day’s balance and then dividing that total by the number of days in a billing cycle. The average daily balance is then multiplied by a card’s monthly periodic rate, which is calculated by dividing the annual percentage rate by 12.

Average Tax Rate
The average tax rate is the real rate of taxes paid after taking federal tax brackets into account. There are different tax rates for different income levels; you pay lower rates on the first part of your income, more on the later earnings. As you pass each income level, the money above that level is taxed at the next higher rate. Therefore, your average tax rate is less than the top rate you pay on a portion of income.

Aviation Easement
An agreement granting the right to fly airplanes over property, even if doing so causes damage, inconvenience, or loss of property value to the property owner. This type of agreement usually restricts the property owner from building or growing anything over a defined height.

Back Title Letter
A letter or document from the title insurance company that specifies the condition of the title. The letter is generally given to the lawyer involved in the real estate transaction.

Backup Offer
Another offer or bid for a property to be considered by the property seller if the current offer falls through.

Bad Debts
Money that cannot be collected is considered bad debt. Businesses can deduct bad debts under certain circumstances. If a bad debt is personal, it can also be deducted in some instances as a short-term capital loss.

The amount of money in your account.

Balance Sheet
Also know as the Statement of Financial Position or Statement of Assets and Liabilities is a listing of the assets, liabilities, and owners’ equity of a business enterprise at a specific point in time. The assets must equal the liabilities plus the owners’ equity.

Balance Transfer
Transferring or moving an unpaid credit card debt from one credit card company to another. Credit card companies will sometimes offer lower interest rates to encourage balance transfers to their company, but they will also charge transfer fees to discourage their customers from leaving.

Balance Transfer Fee
A fee charged to customers when transferring outstanding balances from one credit card to another credit card. Customers generally transfer outstanding balances to obtain better interest rates.

Balloon Loan
This type of loan is not designed to be repaid in full through periodic payments at the end of the loan term. When the term ends, a balloon payments is due. This means that one larger payment is made to pay off the remaining principal.

Balloon Mortgage
This type of loan requires the borrower to make regular monthly payments which amortize over a specified term, but at the end of that term a final payment or large lump sum (balloon payment) must be made to pay off the remaining principal. The typical term for a balloon loan is 10 year.

Balloon Payment
The payment of the principal balance of a mortgage loan outstanding on maturity of the term. A balloon mortgage is one that does not fully amortize over its term to maturity.

Bank Rate
The rate at which the Bank of Canada charges loans to the chartered banks. This is the rate on which lending institutions base their prime lending rate.

Bank Holding Company
A company that owns or controls one or more banks or companies associated with banking activities. Holding companies can include leasing companies or credit companies and are often identified by having either Bancorp or Bancshares in the company name. All bank holding companies are regulated by the Federal Reserve Board of Governors.

Bank Spread
Bank spread refers to the difference between the interest rate in which a bank charges a borrower and the interest rate the bank pays a depositor.

Bank Wire
An electronic money transfer system used to move funds between banks.

The financial status of an individual or firm that has been legally judged either to have debts that exceed assets or to be unable to pay bills. The individual or firm can declare bankruptcy voluntarily or be pressed by creditors to do so. The debtor’s remaining property and assets are then administered for the creditors or distributed among them.

Bankruptcy Trustee
A private third party or company that is appointed to initiate bankruptcy proceedings for an individual or firm that is subject to a bankruptcy.

From the Latin barcaniare, ‘to change about’. An arrangement or undertaking negotiated between two or more parties by which the parties accept a mutual undertaking; the terms upon which parties propose to enter into contract. “A bargain is an agreement of two or more persons to exchange promises or to exchange a promise for a performance.” American Restatement of Contracts, § 4 (1932). A bargain lies at the foundation of the modern concept of a commercial contract; that is, that someone has entered into a bargain, not a mere expression of intent – “for the intent of man cannot be tried; for the Devil himself knows not the intent of man” Chief Justice Briar, Anon. (1478) Year Book 17 Edw. IV, 1. On the other hand, a bargain does not create a contract without consideration. ‘Bargain’ is used also to refer to a process of haggling; coming to an understanding; the giving of an assurance or pledge; or the purchase of something at a favorable price. A bargain, once reached, is not normally relinquished lightly, even though in reality it be not much more than a gentleman’s agreement: “I’ll give thrice so much land to any well-deserving friend; but in the way of a bargain mark ye me; I’ll cavil on the ninth part of a hair.” William Shakespeare, Henry IV Part II, Act III. See also agreement for sale, earnest money, subject to contract.

Bargain Sale
A bargain sale refers to purchasing a property or an item for less than the market value.

Base Price
The cost of a vehcile without any extra options such as power windows, air conditioning, etc. The base price simply includes standard equipment and the manufacturer’s warranty.

Basis Point
One one-hundredth of one percent. Used to describe the amount of change in yield in money debt instruments, including mortgages.

Basket Clause
A provision in a governing act which allows trust and loan corporations to make investments and loans not authorized, but not specifically prohibited, on up to usually about 7% of assets.

Bearing Wall
A wall or the side of a structure that supports a roof or offers integrity to other parts of the structure.

Bedroom Community
A suburb in which most residents live, but do not work. These people commute to the city to work.

Before-tax Income
A person’s income or earnings before income taxes are paid.

A durable post, block or other device established by surveyors to indicate a definite point from which elevations are set.

A person who is legally named to benefit from an insurance policy, will, deed, or trust.

An improvement, addition, or replacement to a property that increases the value.

Bidding War
A bidding war can occur when multiple buyers are interested in purchasing a single property. Competing offers will likely cause the price of the property to escalate resulting in larger profits for the seller.

Bilateral Contract
A legal agreement or contract where both parties involved agree to give each other something. For example, in a property purchase agreement the buyer pays money to the seller and the seller then transfers the property to the buyer. This is a bilateral contract.

Bill of Sale
Written proof in the form of a receipt or document that serves as confirmation for the transfer of title to personal property.

Bill Presentment
An online system that allows customers to receive and view bills electronically via computer. Customers can then pay the bills electronically by transfering funds from their accounts to the creditors seeking payment.

Billing Cycle
The amount of time between the last statement date and the current statement date.

Billing Statement
A monthly bill that is sent by a creditor to the customer that provides a summary of the activity on an account. This can include balances, purchases, payments, credits, and finance charges.

An agreement with the seller from a potential buyer to consider the purchase of a property. The agreement is secured and backed by a cash deposit as a declaration of good faith on the part of the buyer.

Biweekly Mortgage
A mortgage loan that requires payments every two weeks instead of one standard monthly payment. Each 26 biweekly payment is equal to one-half of the standard monthly payment. Making biweekly mortgage payments is advantageous to the buyer because it results in a substantial reduction in interest payments because the mortgage is paid off quicker.

Binder Insurance
A temporary agreement whereby one party agrees to insure another party pending receipt of, and final action upon, the application for insurance.

Blank Cheque
The account holder has filled out the cheque with all the required information (including a signature), except for a dollar amount.

Blanket Insurance
An insurance policy that covers common areas of a co-op, condominium, or neighborhood governed by a homeowner’s association. This type of policy does not cover the actual structures or their contents. The policy only covers areas that are owned in common by the individual owners.

Blanket Mortgage
A single mortgage registered against two or more individual parcels of real property.

Blighted Area
A neighborhood that is run-down and unestetically pleasing.

Blended Payments
Regular equal mortgage payments combining interest and principal components.

Blended Rate
A new interest rate on an increased mortgage loan which is derived from a formula which takes into account the interest rate and remaining term on the existing loan and the derived rate and term on the new funds being advanced.

Blue Book
This term refers to the Kelley Blue Book which is an industry guide used by dealers to estimate wholesale and retail vehicle prices. The books are issued by many organizations, and are commonly available on the Internet or in the reference sections of public libraries. It is important to note that the books are not always blue in color.

A contact print of a drawing or other image rendered as white lines on a blue background. A blueprint is generally a print of an architectural plan or technical drawing and is often used for construction purposes or obtaining permits.

Board Foot
A measurement of lumber that is equal to 1 inch thick, 1 foot long, and 1 foot wide.

The standard and routine jargon used in legal documents.

Bona Fide
In good faith, with valuable consideration and with absence of notice of any problems.

A certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date.

1. A sum paid by the mortgagor, or retained by the mortgagee from the advance of mortgage money, as part of the consideration for the making of the loan.
2. A sum paid by the mortgagor to the mortgagee as consideration for prepayment of all or part of the principle outstanding.

Book Value
The capital amount at which property is shown on the books of an account. Usually it is the original cost, less reserves for depreciation plus additions to capital.

A way to make an exchange of property equal. For example, if you trade in a work vehicle for a new model, the cash you pay on top of your trade in is called boot. Property or assets can also be considered boot because it does not always have to be cash to make an exchange equal.

Borrowing By-laws
A document evidencing that a corporation has the power to borrow under its company charter.

Borrow Pit
A hole from which topsoil, gravel, or other material is removed for use in a construction project.

Breach of Contract
Failure without legal reason to perform any promise that forms the whole or part of the agreed terms contained in the contract.

Bridge Financing
A loan provided to the borrower to provide financing for purchase, pending closing of the sale of their existing property.

Breach of Warranty
A certainty that a seller cannot pass clear title of property to a buyer.

Break-even Point
When a person’s expenses match their income or savings then they are said to have reached the break-even point. In home finance, the term can refer to the amount of time it takes to regain the costs of refinancing a loan or paying discount points.

Bridge Loan
A loan that “bridges” the gap between the purchase of a new home and the sale of a current or existing home. The current home is used as collateral and the bridge loan is used to pay closing on the new home before the current home is sold. Some bridge loans are structured to completely pay off the existing mortgage at the bridge loan’s closing, while other variations of the loan add the new debt to the old debt. Bridge loans usually come with six month terms.

A person or firm who acts on behalf of another. For example, a mortgage broker works on behalf of a client to find the best mortgage rate possible for the client.

Broom Clean
This term means that a property is ready to be cleaned and painted, but it does not mean immaculate or spotless.

A computer software application used for accessing and viewing Internet Web sites. There are many different types of browsers available and two of the most common include Microsoft Internet Explorer and Netscape Navigator.

Buffer Strip
This refers to a parcel or stretch of land that separates two pieces of property.

Builder’s Risk Insurance
Fire and extended coverage insurance for a building under construction. Coverage increases automatically as the construction progresses and terminates at completion.

Builder Upgrades
Refined features or materials that are offered by the builder for an extra charge. These features allow home buyers to upgrade materials or add personal touches to their home instead of using the base (economoical) materials and features chosen by the builder.

Building and Loan Association
A financial institution that is designed to help members finance property purchases and real-estate transactions.

Building Code
A set of minimum regulations respecting the safety of buildings with reference to public health, fire protection and structural sufficiency.

Building Inspector
A local civil servant who enforces the building code as determined by government standards. It is the building inspector’s responsibility to ensure that construction and renovations are up to code.

Building Moratorium
A temporary halt or permanent stop to construction.

Building Permit
A permit issued by a local government giving authorization to construct a building or repair an existing structure.

Building Restrictions
Local governments impose certain regulations and restrictions on the size and height, building materials, colours, uses, locations, placement, and other characteristics of commercial and residential buildings or structures.

Items that are permanently attached to a dwelling or building are considered “built-ins”. Such items can include appliances, cupboards, shelving, etc.

Bull and Bear Markets
When a market is thriving and stock prices are being driven up, this is called a bull market. When stock prices fall and the market turns poor for investors, then it is called a bear market

Bundle of Rights
Legal rights which real estate ownership embraces which include the right to use, sell, lease, enter, or to give away the property, plus the right to refuse to take any of these actions.

Burden of Proof
To win a lawsuit, those involved must provide enough evidence to make their case. This is a legal requirement. In civil cases, such as tax court, the burden of proof is decided by the the most evidence. Except in cases of tax fraud, the burden of proof in a tax case generally is on the taxpayer.

Business Bankruptcy
This type of bankruptcy occurs when business related debts cannot be paid and the business or individual defaults or files for bankruptcy. The debtor can be a business or an individual involved in a business.

Business Interest Expense
Interest acquired in business operations can be deducted as a business expense

Buy Down
A lump sum payment as consideration for the reduction in the interest charged on a loan from that which would normally be charged.

Buyer Broker
An individual who is paid a commission from a buyer to find a property and to assist with the negotiations involved with closing the real estate transaction.

Laws or rules that govern the internal affairs of an organization or a city. Bylaws are often considered to be secondary laws.

Balance Due on Completion: The amount of money a purchaser will be required to pay to the vendor to complete the purchase after all adjustments have been made.

Balloon Payment: This is a final mortgage payment at the end of the term that pays off the outstanding loan in full. This amount of money (principal) required to discharge a mortgage at maturity.

Bareland Condominium: In traditional condominiums, both the master lot and the walls and roofs of the buildings are common property. In bareland condominiums, only the land is condominiumized, and the structures are the responsibility of the owners.

Base Rent: The fixed rent paid by a tenant. This is separate from any rent paid as a result of extra charges or percentage rents.

Bird Dog: A person who looks for properties that fir your guidelines and brings them to you for a fee

Blanket Mortgage: A mortgage that is placed on numerous properties in order to secure a specific debt.

Blended Payments: Equal payments consisting of both a principal and an interest component, paid each month during the term of the mortgage. The principal portion increases each month, while the interest portion decreases, but the total monthly payment does not change.

Blighted Areas: An area of declining property values due to natural or economic forces such as rapidly depreciating buildings, inharmonious property usages, or an influx or undesirable inhabitants.

Board of Directors: Every Condominium Corporation must have a board of directors, which is responsible for the proper administration of the condominium and the by-laws.

Breach of Contract: Failure to fulfill an obligation under a contract. Breach confers a right of action on the offended party.

Bridge of Interim Loans (Mortgages): Interim loans are used to bridge the gap between the initial construction and the first advances available under the terms of the construction mortgage. Interim loans can also be used for financing between phases of construction, until the construction is completed to a stage whereby the mortgage lender will advance funds to pay for the phase of the construction. Usually, when the mortgage is advanced, the proceeds of the mortgage are used to return the bridge or interim financing. Bridge financing is also used when a sale closes after a purchaser takes possession on a purchase.

Broker: A person licensed by the provincial or territorial government to take in real estate. Brokers may form companies of offices that appoint sales representatives to provide services to the seller or buyer, or they may provide the same services themselves; also referred to as agents.

Broken Lot: A Piece of property that is bound on one or more sides by a body of water, rendering that boundary irregular and subject to change as a result of natural forces.

Budget: An annual estimate of expenses and revenues needed to balance those budgets. There are operating budgets and capital budgets.

Building Codes: Regulation established by local governments which building requirements for particular areas and types of structures.

Building Permit: Certificate that must be obtained from the municipality by the property owner or contractor before a building can be erected or repaired; it must be posted in a conspicuous place until the job is completed and passed as satisfactory by a municipal building inspector.

Buydown: A payment to the lender from the seller, buyer or third party causing the lender to reduce the interest rate during the term on the mortgage.

Buyer Brokerage Agreement: Written agreement between the buyer and buyer’s agent, outlining the agent relationship between the two parties, and the manner in which the buyer’s agent will be compensated.

Buyer’s Agent: Person of firm representing the buyer; primary allegiance is to the buyer.

By-Laws: A set of rules and procedures adopted by a special resolution of unit-owners for the administration of the condominium corporation. Each condominium corporation has its own special by-laws.

Call Option
A mortgage clause that provides the lender with rights to request the remaining balance of a mortgage at any time.

Canada Deposit Insurance Corporation (CDIC)
A crown corporation that provides deposit insurance for protection against the loss of deposits made with other member financial institutions.
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Canada Education Savings Grant
A federally introduced program in which the Government will invest, in the form of grants, with parents who save for their children’s education through Registered Education Savings Plans (RESPs). The government will add to contributions made by parents to an RESP by 20% up to a yearly maximum of $400 per beneficiary.

Canada Savings Bonds (CSBs)
A bond issued by the Canadian Government as a safe method for Canadians to aquire savings. The bonds, which are a form of debt, can be cashed with proper identification at any time through most Canadian financial institutions.

Canadian Bankers Association (CBA)
A professional industry association that provides information, research, advocacy, education and operational support services primarily to the banking industry.

Canadian Depository for Securities Limited (CDS)
An agency responsible for the automatic processing and clearing of all securities transactions in Canada.

Canada Housing Trust
A special purpose vehicle (SPV) created to issue Canada Mortgage Bonds (CMB) and utilize the proceeds to purchase mortgages packaged in newly issued NHA Mortgage Backed Securities.

Canada Mortgage Bonds
A bullet pay type of bond investment. Issued by Canada Housing Trust and guaranteed as to full and timely payment by CMHC, these bonds feature semi-annual interest payments and principal at maturity.

Canadian Payments Association (CPA)
An association that operates a national clearing system for financial institution payments. This association is comprised of several financial institutions in conjuntion with the Bank of Canada.

Cancellation Clause
A precaution or provision in a lease or contract that details the conditions under which the parties involved can terminate the agreement.

The upper most limit on the amount the interest rate can increase during a single time period of an adjustable-rate mortgage. Every ARM has two caps: a periodic cap, which limits the periodic changes to the interest allowed in the loan agreement, and a lifetime cap, which governs the total increase that can be imposed during the life of the loan.

Wealth in the form of money or property that is used to make money or that is accumulated in a business by a person, partnership, or corporation.

Capital Adequacy Ratio
A ratio of total capital divided by risk-weighted assets and risk-weighted off-balance sheet items. A bank is expected to meet a minimum capital ratio of 8.0% unless a higher ratio is specifically prescribed by the Superintendent of Financial Institutions.

Capital Asset
An item that is owned for investment or personal reasons. Such items can include stocks, bonds, collector cards, or even stamp collections. When you sell a capital asset, depending on the price, you earn a capital gain or a capital loss. Capital gains are taxed at a special rate, and losses can be used in many cases to reduce the amount that is taxed. See also “Capital Gain” or “Capital Loss.”

Capital Cost Allowance
A deduction from rental income of such part of the capital cost of property as is allowed by regulation under the Income Tax Act

Capital Expenditure
The cost of making an improvement or renovation to a property.

Capital Gain Distribution
When the fund sells some of its assets, you receive capital gain distributions or a portion from the sale. This distribution is regarded as a capital gain, not as ordinary dividends such as the interest gained from a bank account. It is important to separate capital gain distributions from ordinary dividends because capital gains are taxed more favourably. See also “Ordinary Dividends.”

Capital Gain or Loss
The difference between the price paid for an investment and the price at which it is sold. In simple terms, it is either a profit or loss on the investment. Equity and growth funds are two types of investments that earn capital gains or losses.

Capital Gains
The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary. See also “Capital Asset.”

Capital Gains Tax
A tax on the profits from the sale of real estate or investments.

Capital Improvement
Any permanent structure or asset that is added to a property in order to increase the property value.

Capital Investments
Funds that are used to buy permanent fixed assets for a business. This might include machinery, land, or buildings as opposed to those expenses incurred on a day-to-day basis.

Capital Loss
When an asset is sold for less than what you paid, or less than its adjusted basis, it is a capital loss. However, when it comes to taxes a capital loss is not always bad because you can use it to reduce the amount of income being taxed by the amount of the loss, up to $3,000 per year. If your loss is more significant, the excess (or capital loss carryover) can be carried forward indefinitely until the total loss is used.


  1. In the appraisal process, the conversion of earnings anticipated from the typical operation of a property into a sum of present worth (capital value).
  2. In mortgaging, the addition of interest owed and/or other charges onto a principal balance and the subsequent amortization of that sum with interest.

Capitalization Rate
An estimated percentage rate of return that a property will produce on the owner’s investment.

Capitalized (CAP) cost
A leasing term that refers to the price of the vehicle. This cost is negotiable and can be reduced by a cash down payment, trade-in, or a manufacturer’s rebate. The lower the capitalized cost, the lower the monthly lease payment. This cost can also be increased by the loan acquisition fee or any costs that remain from a previous lease.

Captive Finance Company
A finance company that is connected to a certain dealer or manufacturer.

A caravan is when a group of real-estate agents go out together to look at properties recently listed for sale.

Card Holder Agreement
A written agreement or contract between a credit card holder and the credit issuer that details the terms and conditions of a credit card account. This agreement must include the Annual Percentage Rate, the monthly minimum payment formula, the annual fee if applicable, and the cardholder’s rights in billing disputes. Changes to the agreement can be made at any time by the issuer with prior written notice.

An open-sided shelter used for vehicles, usually formed by a roof projecting from the side of a building.

Cash Advance Fee
A fee charged by the bank for using credit cards to withdraw money generally from an ATM or banking machine. This fee can be a flat fee per transaction or a percentage of the amount being advanced. For example, the fee may be set as: “2% / $10”. This means the cash advance fee will be the greater of 2% of the cash advance amount or $10. Banks often limit the fee to a certain dollar amount.

Cash Cards
Cash cards contain a pre-set dollar amount that can then be used to purchase goods and services at participating retailers who have special cash card readers. The cash card reader extracts the value of the purchase from the card and adjusts the remaining balance for future use. For example, many retailers offer gift certificates in the form of cash cards to be used at their establishment. It is important to remember that these cards are like cash with no built-in security, so anyone can use them.

Cash Collateral
Cash or cash equivalents, such as securities or documents of title, as specified in the Bankruptcy Code in which both the estate and another party have a vested interest.

Cash Flow
The amount of money (after expenses are subtracted) that is generated by an investment or a business during a specific time period. One measure of cash flow is earnings before interest, taxes, depreciation, and amortization. Cash flow is often considered to be a company’s most important financial statistic because money drives business.

Cash Flow Forecast
An estimate of time and the amount of money that will be received and paid out of a business. The cash flow forecast typically records cash flow on a month-by-month basis for a two year period.

Cash Method
The form of accounting used by most individuals where income is reported in the year it is received, but expenses are deducted in the year that you pay taxes. For example, if you remodel a kitchen and bill the client in December 2004, but do not receive payment until January 2005, the funds are counted as income in 2005 and not when the work was done in 2004.

Cash-out Refinance
This type of refinance is when a borrower takes out a new loan on their existing property, but the new loan amount is greater than the amount of the original mortgage. The difference is then taken out in cash.

Casualty and Theft Loss
A loss of property or life caused by a sudden, unexpected, or uncommon event. Hurricanes, earthquakes, fires, floods, or thefts are just a few examples of events that can cause casualty and theft losses. A portion of these losses can be used as an itemized deduction.

A notice registered on title by a person claiming to have a proprietary interest (i.e. a right to call for or receive a transfer of charge) in land or in a charge of which he or she is not the registered owner to protect their interest. The registered owner of the land or charge cannot deal with the land or charge without consent of the cautioner.

A charge or instrument placed on land title. A caveat is also a formal notice filed with a court or officer to suspend a proceeding until the person who filed the caveat is given a hearing.

Caveat Emptor
“Let the buyer beware”. The buyer must examine the goods or property he or she is buying and he or she, therefore, buys at their own risk.

Central Bank
A body established by a national government to regulate currency and monetary policy on a national / international level. In Canada, it is the Bank of Canada; in the United States, the Federal Reserve Board; in the U.K., the Bank of England.

Certificate of Charge
A mortgage document in the Land Titles System.

Certificate of Occupancy (Permit)
A certificate provided by the municipality that a property has been constructed under the authority of the issued building permit and may be occupied.

Certificate of Sale
After legal confirmation, an affidavit is issued at a judicial or tax sale to the buyer of a property. The buyer is then entitled to the deed of the property.

Certificate of Title
A written document which validates the title to a property. This means the property is legally vested in the present owner.

Cessation of Charge
A discharge of a mortgage registered under the Land Titles Act.

Chain of Title
Chain of title is uncovered through the lawyer’s search, revealing any factors affecting ownership of land.

Change Frequency
The scheduled time period in which an adjustable-rate mortgage changes.

Change Order
A written formal document that details any alterations made to construction plans.

Chartered Banks
Financial institutions that are regulated under the Bank Act. Chartered banks are designated as Schedule I or Schedule II depending on their ownership.

The name given to a mortgage document when title is registered under the Land Titles System.

Movable possessions, personal property (generally items that may be removed without injury to the freehold estate).

Chattel Mortgage
A mortgage given on chattels. Usually given as collateral security to a mortgage on real estate. As an example, a chattel mortgage on refrigerators and stoves in an apartment building.

Cheque Book
A book containing blank forms known as cheques. Cheque books are generally issued to individuals who hold chequing accounts.

Cheque or Check (U.S.)
A blank form that is used as a written order directing a bank or banker to pay money as therein stated. Cheques can be personalized or non-personalized.

Cheque Clearing
When you write a cheque to a person or a company, the cheque is typically cashed when deposited into a bank account. Your chequing account is then debited for the amount of the cheque and the cheque is said to have “cleared.”

Cheque Hold
The length of time that a financial institution can legally hold a cheque before crediting a customer’s account balance and allowing the customer to use the funds.

Cheque Register
A book or log where you can record the details of every transaction made in your chequing account.

Cheques Returned with Statement
Cheques that are cancelled are returned to the account holder in a monthly statement.

Child Support
Child support is paid on a monthly basis by one parent to another to assist with the care of a child or children. Child support is usually paid as a result of divorce or separation. Such payments must be received continuously for one year to be considered as income to qualify for a loan.

Child Tax Credit
A tax break for those who claim eligible dependent children on their tax returns.

Circuit Breaker
1. An electrical device used to turn power off and on in sectors of a building and to limit the flow of electricity through a circuit for safety purposes. 2. In taxes, a circuit breaker is a tax credit that reduces property taxes for the elderly and permanently disabled. The credit is dependent on the amount of income earned which means the more you make, the lower the credit.

A creditor’s demand for something due usually a payment from a debtor or the debtor’s property. A claim can also be a demand for payment in accordance with an insurance policy or other formal arrangement.

Classic Card
A brand name for the standard card that is issued by VISA.

Classified Property Tax
A municipal government’s levy on real estate that varies depending on the use of the property. Commercial property is typically taxed more heavily than residential property where a classified property tax exists.

Clear Title
A title that is not burdened by liens or legal questions is considered to be clear.

Clearing and Settlement
A process within the banking system that allows banks to collect or pay out for items drawn on or paid into accounts within their institution. This process enables banks to accept cheques and bank drafts from other financial institutions for deposit. The Canadian Payments Association operates Canada’s clearing system.

Bank clients can use a money management software application on their personal computers to access their bank accounts using a modem and a phone line. Clients are then able to conduct bank transactions from the comfort of their own homes.

Closing Date
The date on which the sale becomes final, the new owner takes possession of the property, and funds are transferred from the purchaser to the vendor.

Closed-account Fee
The bank may charge customers a fee for closing accounts, especially if the account is closed before a pre-determined length of time.

Closed-end Lease
The most common type of car lease. The lessee may return the car at the end of the lease term, pay any end-of-lease costs, such as the disposition fee, and the lease agreement is over. In a closed-end lease, the lender assumes the risk of predicting the value of the vehicle (its residual value) at the end of the lease’s term. Closed-end lease payments are somewhat higher than open-end lease payments.

Closed Mortgage
A mortgage product that has a strict repayment schedule. Payment amounts are pre-set with optional limited lump sum payments and payment increases as detailed in the loan agreement.

Closely Held
Schedule II banks may be closely held meaning that one party or owner can hold more than 10% of the outstanding shares. Schedule I banks are prohibited from this type of ownership.

In real estate, the closing refers to the completion of the real estate transaction. Before closing can occur, there are a number of things that must happen. For example, the deed must be delivered to the buyer, the money must be transfered for the purchase price, the notes must be signed, and the closing costs must be paid in full.

Closing Costs
The various costs or expenses associated with closing a real estate transaction. Such costs can include paying for title insurance or appraisal fees. It is important to remember that these costs are over and above the purchase price of the property.

Cloud on Title
Any encumbrance or claim that affects title to real property.

A person applying with another for a loan.

Cluster Development
A declaration made by a local government which stipulates the population density of a planned development. The developer is allowed to use discretion and make some areas of the development more densely populated than other areas.

CMHC is an acronym for the Canadian Mortgage and Housing Corporation. This Federally run institution provides banks and lenders with mortgage insurance (which is not the same as life or property insurance). If a borrower defaults on their mortage loan or there is a foreclosure on the property, CMHC assumes responsibility and reimburses the bank or lender the entire mortgage amount. This insurance is typically required when a borrower has less than 25% equity or down payment and it must be paid in advance (or it can be added to the mortgage). See also “G.E. Capital.”

Co-branded Card
The most common type of co-branded credit cards are those issued by banks in partnership with other retail companies. For example, General Motors, Shopper’s Drug Mart, and Starbucks all offer co-branded credit cards where their names appear on the card with the name of the issuing bank. Retailers often form these partnerships to attract clients by offering special shopping incentives if you use the card. Many of these cards, especially those affiliated with airlines, charge high annual fees because of their popularity among consumers.

An agreement within a residential building where each unit has access to a shared or common space. The common space typically includes kitchen facilities, a dining area, laundry facilities, and even recreation space. This type of living arrangement is also refered to as cohousing, cooperative housing, or community housing.

An individual who co-signs a promissory note. In doing so, the co-maker is responsible for the loan if any of the other co-signers back out or renege on their promise to repay the loan.

An individual who signs a promissory note in conjunction with one or more additional parties. All parties are responsible for the debt repayment once the papers are signed. This means that any one party could be responsible for repaying the entire debt if any of the other parties back out or renege on the repayment.

A sharing of risk between insurer and insured which depends on the relationship of the amount of the insurance carried versus the amount of insurance required at the time of the loss.

Collateral Mortgage
The mortgage registered to document collateral security.

Collateral Security
In mortgaging, security given in addition to the direct security and subordinate to it.

The efforts used to bring an overdue mortgage, or other debt current, and the filing of necessary notices to proceed with foreclosure when necessary.

A private and fraudulent agreement made by two or more parties to purposely defraud others.

Combination Account
An account that offers the benefits of both savings and chequing accounts. You can write cheques and be paid interest if you have sufficient money in the account.

Combined Loan-to-value (CLTV)
The connection between the unpaid principal balances of all the mortgages on a property (first and second usually) and the property’s appraised value (or sales price, if it is lower).

Commercial Bank
A financial institution that provides a wide range of services to its customers. Such services can include chequing and savings accounts, business loans, and credit cards.

Commercial Banking
Commercial banking centres serve small to medium-sized businesses such as franchising, leasing and cash management services.

Commercial Paper
Unsecured notes issued by companies that mature within nine months. Generally, commercial paper is issued only by the larger and more credit worthy companies.

Commercial Property
A parcel of land in a district that is zoned strictly for business.

Lumping together money from different sources so the sources cannot be distinguished

A letter / document issued by a lender reciting the basic terms of a loan which when accepted by the borrower forms a binding contract.

Common Area Assessment
A levy against individual unit owners in a condominium or planned unit development to pay for upkeep, repairs, and improvements to the property’s common areas, such as hallways, elevators, parkades, swimming pools, and gym facilities.

Common Areas
Areas of a building or land and the amenities owned (or managed) by a planned unit development, or condominium project’s homeowners’ association, or a cooperative project’s cooperative corporation that are used by all of the unit owners who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common hallways of buildings, parkades, means of ingress and egress, etc.

Common-interest Development
A housing area where the owners belong to a homeowner’s association that owns and maintains all common areas.

Common Law
A system of jurisprudence based on judicial precedents rather than statutory laws. Common law originated in the unwritten laws of England.

Community Bank
A bank that is locally owned and operated, but is not part of a bank holding company. Also referred to as an independent bank.

Community Property
Possessions, real estate, and profits that spouses (husband and wife) acquire during marriage, excluding gifts and inheritances, are considered community property. In the event of divorce, community property is divided equally between spouses.

Comparables or Comps
Refers to “comparable properties,” that are used for comparative purposes in the appraisal process. Comps are recently sold properties that are similar in size, location, and amenities to the property being sold. Comps help an appraiser determine the fair market value of a property.

Comparative Market Analysis
An approach for estimating the value of a property by comparing the sales prices of similar properties that have recently sold.

Legally qualified or fit to perform an act. Able to distinguish right from wrong and to manage one’s affairs.

Completion Loan
The single disbursement of the total loan following satisfactory completion of the property.

Compound Interest
Interest charged not only on the principal sum but also on interest amounts charged but not paid in preceding periods that accumulate as new principal.

Compounding Method (CM)
Used in Bank rate tables. These include: S–Simple interest. A–Compounded annually. H–Compounded semi-annually. Q–Compounded quarterly. M–Compounded monthly. D–Compounded daily.

1. Remuneration paid to an agent or broker for his services in conducting a specific duty, such as introducing a purchaser of a property, effecting a sale of a property to a third party, or obtaining a loan facility. The compensation or reward paid to an agent or broker for successfully transacting business for the principal, the amount of which is generally based on a percentage of the value of the transaction, or sometimes the profit resulting to the principal as a result of the agent’s or broker’s actions. Usually this remuneration is made payable only on the successful conclusion of the specified function, e.g. on completion of a sale; or the introduction of a person who is ‘ready, willing and able’ to purchase a particular property.

Conditional Sales Agreement
An agreement by which it is provided that the title to the goods being sold remain in the name of the seller until payment in full of the purchase price, possession being given forthwith and the price usually being payable in installments.

The act of condemning (as land forfeited for public use) or judging by a government to be unfit for use.

Conditional Commitment
A promise made by a lender to give a loan if the borrower meets the specified requirements.

Ownership of property whereby the owners hold negotiable title to their own unit and, at the same time, share with fellow owners the title and cost of operation of the balance of the property (common elements) constituting the condominium.

After approval is given, all of the debtors’ pre-petition debts are eliminated as provided by the plan.

Conforming Loan
A mortgage that is eligible for purchase or securitization by one of the government-sponsored enterprises such as Fannie Mae, Freddie Mac and Ginnie Mae. Requirements include size of the loan, type, and age.

Consent Judgment
The legally binding approval given by a judge that pertains to a written agreement by the parties of a lawsuit.

Consideration means “some right, benefit or profit accruing to the promissor or some forbearance, detriment, loss or responsibility suffered by the promissee.” In other words, the party trying to enforce the contract must have paid something in return for the promise.

Construction Loan
A claim against the estate or interest of the owner in a property for labour, services, or material supplied to it and not paid for and it must be registered on title to the property in question to be perfected.

Constructive Receipt
The idea in which a taxpayer does not actually have to take possession of money for it to be taxable. An example of this is when savings account interest is reinvested rather than sent to the account holder as a separate payment. In this case, the account holder constructively received the interest because the earnings were credited to his account and could have been taken out at the owner’s discretion. As such, the earnings are taxable.

Consumer Bankruptcy
A bankruptcy case that is filed to reduce or erase debts that are primarily consumer debts.

Consumer Credit
Loans for personal use as opposed to business or commercial lending. These loans are typically unsecured and not backed by collateral.

Consumer Credit Service
A service that offers counselling for creating a realistic budget and a debt repayment plan. The service also offers advice for working with creditors to ensure that debts are paid back over a certain time.

Consumer Debts
Debts incurred due to personal needs as opposed to business reasons.

Consumer Price Index
An index that measures movements in the average price of products and services typically consumed by Canadian families.

Contiguous Lots
Parcels or pieces of property that are located next to each other.

A condition that must be met before a property sale can be completed, such as a home inspection or mortgage approval.

A contract is a legally binding agreement between two or more capable persons for consideration or value, to do or not to do some lawful and genuinely intended act.

Contract for Deed
An agreement for the sale of property where the buyer takes possession while making payments, but the seller holds title until full payment is received. Also called a land contract.

Contract to Purchase
A document used by a property buyer and seller to approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract, or a sale contract.

An individual that agrees to furnish materials or perform services at a specified price, especially for construction work.

Contractual Lien
A legal claim against property as a result of a voluntary contract, such as a mortgage.

Controlled Growth
Restrictions set by a local government to control the amount, type, and density of new construction within a certain area.

Conventional Mortgage
A mortgage that is not insured or guaranteed by CMHC or GE Capital.

Conversion Clause
A provision that may be present in an adjustable-rate loan agreement which allows the loan to be changed to a fixed-interest rate loan, usually for an additional charge.

Convertible ARM
An adjustable rate mortgage (ARM) that can be converted to a fixed-rate mortgage under certain conditions.

Convertible Mortgage
An adjustable-rate mortgage where the borrower has the option at specified times to change into a fixed-rate mortgage

The transfer of an interest in property from one person to another.

Conveyance Tax
A tax placed on the transfer of property in a real estate transaction.

Cooperating Broker
A real-estate broker who finds a buyer for a property and initiates a negotiation for a share of the commission.

A form of multiple ownership of real estate in which a corporation or business trust entity holds title to a property. Individual unit holders have the exclusive right to occupy their unit by lease but their investment in the corporation is by way of shares.

The idea that an estate (present or future) can be simultaneously held by several persons. The most common types of co-ownership are joint tenancy and tenants-in-common.

Corporate Banking
Banking services for large corporations or firms. This type of banking is designed to deal with major financial transactions that do not generally take place at a personal banking level.

Corporate Relocation
When an employer transfers an employee to another city and pays moving expenses.

Corrective Work
Repairs (or maintenance) that are requested by a buyer that must be completed before closing the sale.

A company that originates, possesses, and administers mortgage loans or other real estate investments on a continuing basis for investors.

Cost Approach
A method or approach used to estimate the value of an improved property whereby the reinstatement cost of the buildings is assessed (after an appropriate allowance for depreciation), and the market value of the land is added based on comparable sales data. The land is assumed to be vacant and available for development for its existing use. This approach to the appraisal of a property is based on the presumption that a purchaser is prepared to pay the same sum for a property as he would pay to acquire a site and reproduce or build a similar alternative – the ‘principle of substitution’. However, this presumption has limited validity and the method should be used as a last resort, i.e. when no other approach is considered applicable. In this respect, it may be said, “a building is worth its cost of replacement provided it is new, represents the highest and best use of the site, and provided its construction is justified by the expected return which it will produce.”

Cost Basis
The original price paid for an investment which is also known as the basis or tax basis. The cost basis includes any commissions or fees paid when the investment was purchased.

Cost of Goods Sold
An expense shown on an income statement for a business that represents the cost of the inventory sold during the statement period.

Cost-plus Contract
An agreement or contract where a construction contractor receives a fee based on a percentage of all costs paid for labour and materials.

A step in the negotiation process where a seller rejects a purchase offer from a buyer, but then submits another offer with different terms (such as price or closing date) for the buyer to consider.

An agreement in writing (in Common Law must be under seal) contained in a deed and creating an obligation. It may be positive, stipulating the performance of some action. It may be negative or restrictive, forbidding the commission of some act.

Creative Financing
An innovative or unusual way of structuring a mortgage loan to allow the buyer to purchase the property.

Access to money or funds by a borrower on the condition of repayment to the lender over a certain period.

One to whom a debt is owing.

Credit Bureau
A company that collects and sells information about people’s credit histories. The company issues credit reports that show how individuals manage debts and make payments. The report also shows how much credit a person still has and whether or not the person has applied for a loan recently. The reports are made available to those who have a legitimate need for the information including the individual being reported upon.

Credit Card
A plastic card with a coded magnetic stripe that holds information and security measures for a revolving line of credit. The card holder is able to use the card to make purchases by signing a credit card slip at participating retailers or companies. Credit cards have credit limits and interest rates as determined by the card issuer. The card holder’s income and credit report will determine the allowable credit limit.

Credit History
A record of an individual’s or company’s past borrowing patterns and whether or not debts were repaid on time.

Credit Insurance
An insurance policy that pays off credit card debt if the borrower loses his or her job, dies or becomes disabled. The structure of protection for a revolving credit card debt is calculated each month to cover only the debt that existed at the last billing cycle.

Credit Life Insurance
A type of optional life insurance coverage that repays the loan if the borrower becomes disabled. The cost of the policy is often included in the principal amount of the loan.

Credit Limit
The maximum amount of charges a cardholder may apply to a credit card account as allowed by the credit lender.

Credit Line
The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.

Credit Rating
A judgment of a person’s ability to repay debts. The rating is often based on a person’s current and projected income and past debt payment history. Also called a credit score.

Credit Report
A report on past behavior regarding a borrower’s willingness and ability to repay debt in a timely manner. This report is provided to the bank by an outside agency.

Credit Reporting Agency
An agency that prepares credit history reports. These reports are used by lenders to determine a potential borrower’s financial worthiness. The agency obtains data for these reports from a credit repository as well as from other sources.

Credit Repository
Simply another term for a credit bureau.

Credit Risk
The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.

Credit Score
A number, roughly between 300 and 800, that reflects a person’s credit history. Lenders calculate this number using a computer systems as part of the process for assigning rates and terms to the loans they grant.

Credit Union
A non-profit, cooperative financial institution owned and controlled by the people who use its services, usually a group such as employees in the same company or industry. Credit unions historically have been able to offer lower rates and fees and still operate in the black. Credit unions rely on a financial reserve to absorb unexpected losses from loan defaults or other financial setbacks, and the majority of credit unions carry federal deposit insurance that protects individual accounts up to a specified amount in the event the credit union fails.

An individual or firm to whom or which money or its equivalent is owed.

Tax credits are used to reduce the amount of the tax owed. Tax credits are more valuable than deductions because they directly reduce the amount of tax owed, rather than reducing the amount of income that is taxed.

Cross Default Clause
Mutual clauses in two or more mortgages which state that a default under one mortgage constitutes a default under the other(s).

Current Value Assessment (CVA)
Refers to the amount of money a property would realize if sold at arm’s length by a willing seller to a willing buyer.

A dead-end street, often with a broad circle at the end.

Curable Defect
A problem with a property that can be fixed. Peeling paint is a curable defect whereas being located in a crime-ridden neighborhood is not.

Curb Appeal
The look or appeal of a house when viewed from the street or sidewalk.

Current Year Tax
Tax that is payable in the same or current year, such as property tax.

Custom Builder
A contractor that builds or remodels houses based on plans submitted by the home owners.

Custom Home
A house that is built according to the specifications and drawings of an architect generally hired by the home owner.

Canada Mortgage and Housing Corporation (CMHC): A Canadian Crown Corporation that administrators the National Housing Act. CMHC servies include the insuring of high-ratio mortgage loans for lenders.

Cancellation Price: This is an amount equal to all the tax arrears owing, plus all current real property taxes owing, penalties and interested, and all reasonable costs incurring by the municipality after the treasurer becomes entitled to register a tax arrears certificate. Included in the cost proceeding under the Act of legal fees and disbursements, the costs of a survey, the costs of preparing and registering an extension agreement and advertising expenses.

Cap: Refers to a maximum interest rate increase for a mortgage.

Capital Gain or Loss: The difference between the cost price (cost plus purchase expenses) and the sale price of a capital asset.

Capitalization Rate: The rate of return anticipated by an investor in a property.

Capitalized Value: The value of a property based on the net income.

Caveat Emptor: ‘Let the buyer beware’. A general principle of English common law that a buyer of goofs should make all reasonable enquiries before affecting a purchase. “Caveat emptor” in Latin or law does not mean that a buyer must take a chance; it means he must take care.

Certificate of Charge: A mortgage document in the Land Titles System.

Certificate of title: Acknowledgement by a government that the title deed has been registered in a Registry of Land Titles office.

Cessation of Charge: A discharge of a mortgage in the Land Titles System.

Chain of title: A history of the conveyances and encumbrances affecting a title from the time the original title was granted or as far back as records are available.

Charge: A document registered against a property, stating that someone has or believes he or she has a claim on the property.

Chattels Mortgage: An encumbrance against moveable possessions or personal property that may be removed without damage to the property, e.g. appliances.

Chattels: These are moveable possessions such as furniture, etc… A hot water tank before it is installed is a moveable possession. Once installed, it’s not.

Chief Administrative Officer: Is the senior staff member of a municipality. Many municipal councils have appointed such a person, usually called the ‘CAO’ or some variation such as ‘manager’, ‘clerk-administrator’ or ‘clerk-controller’. In smaller municipalities, this individual will often hold another staff position as well as being responsible for administration.

Clerk: Is the member of staff whose major duties are to record all resolutions, decisions, and other proceedings of the council, and to keep its books, records, accounts and other documents. Every council is required to appoint a clerk.

Closed Mortgage: A reference to the absence of the privilege to accelerate repayment during the term of a mortgage either by bulk payment(s) or increase to scheduled remittances. A penalty applies if you replay the loan in full before the end of a closed term.

Closing: The actual completion of the transaction acknowledging satisfaction of all legal and financial obligations between buyer and seller.

Closing Costs: The expenses over and above the purchase price of buying and selling real estate.

Closing Date: The date on which the same of a property becomes final and the new owner takes possession.

Cloud on title: Consists of outstanding claim which if proven to be accurate, would affect a current owner’s title.

Collateral Mortgage: A loan backed up by a promissory note and the security of a mortgage on a property. The money borrowed may be used for the purchase of a property or for another purpose, such as home renovations or a vacation.

Collateral Security: An additional form of security, pledged to reduce the risk of a mortgage.

Commercial Property: Property intended for commercial or business use – usually offices, retail stores, motels and hotels.

Commission: Amount agreed to by the seller and the real estate broker/agent and stated in the listing agreement and payable to the broker/agent on closing.

Commitment: A written notice from a lender who advises of approval to advance a specified amount of funds under certain conditions.

Common Law: The part of the law formulated, developed and administered by the old common law courts, based originally on unwritten common customs.

Common Property: Every part of the condominium plan that is not a unit is common property. The condominium corporation is responsible for the maintenance and service of the common property.

Completion Loan: A mortgage loan disbursed following the satisfactory completion of construction.

Compound Interest: Interest on both the principal and on interest that has accrued.

Component Financing: A device by which lending is split into separate parts and treated individually.

Comps (comparables): A listing of comparable properties used to value a similar property. Often used in appraisals.

Concession: A dividing line used in the original surveying of land.

Condition Offer: Offer to purchase that is subject to specified conditions; usually a stipulated time limit within which the specified conditions must be met.

Condition Precedent: A condition referring to a future event upon the happening of which the contract becomes no longer binding on the parties.

Condition Subsequent: A condition referring to future event upon the happening of which the contract becomes no longer binding on the parties.

Condominium: The ownership of a separate amount of space in a multiple dwelling or other multiple-ownership of common elements used jointly with other owners.

Condominium Fee: A monthly common payment among owners that is allocated to pay expenses.

Consideration: Something of value given to make a promise of repayment enforceable.

Constant Annual Percent: The percentage required to pay the principal and interest to amortize a loan.

Constant Payment Mortgage: A mortgage that is paid by equal periodic amounts consisting of principal and interest payments. It may be self-liquidating, which means the mortgage is entirely paid off at maturity (fully amortized), partially amortized, at the end of which there remains a principal balance due at maturity (also known as balloon mortgage).

Construction Advance: Moneys advanced to the borrower under a construction loan.

Construction Lien: A claim against property pursuant to labor, services or materials supplied.

Construction Loan: A short-term loan made to a builder for construction of buildings, usually to be paid out by another mortgage upon final completion. Also, a description used in reference to a mortgage that is advanced in ore-determined stages, according to the amount of work completed.

Construction Loan Agreement: An agreement between a lender and a builder setting out terms of an agreement – loan amount, rate, method of drawing funds and conditions for advancing.

Contract: An agreement between two or more parties given receipt of lawful consideration to do or refrain from doing some act.

Conventional Mortgage: A mortgage loan which does not exceed 75% of the purchase price or appraised value of the piece of real estate whichever is the lesser of the two. Mortgages over this amount must be insured.

Conversion: The act of improving a building for higher and better use.

Conveyance: The transfer of a land title from one party to another.

Co-operative: A type of ownership in which the owner buys a share in the co-operative that actually retains ownership of the property.

County: Is a municipality which is a federation of the towns, villages and townships within boundaries. Each of the participating local municipalities in the county has elected council and designated members of all of these councils combine to form the county council. The county is responsible for a limited number of functions, with major roads being the most important one. Local councils are responsible for majority of municipal functions. Cities and separated towns, even though geographically part of the county, do not participate in the county political system. The councils of these local municipalities are responsible for most municipal functions within their boundaries. County geographical boundaries are used for judicial and a number of administrative purposes.

Covenant: An agreement contained in an instrument creating an obligation. It may be positive, stipulating the performance of some act. It may be negative or restrictive, forbidding the commission of some act. A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation; for example, a covenant can impose the obligation on a borrower to make mortgage payments in certain amounts on certain dates; a mortgage document consists on covenants agreed to by the borrower and the lender.

Creative Financing: Any financing situation other than the conventional mortgage; includes vendor financing and wraparound mortgages.

Cross-Collateralization: A reference to security involving various liens held in support of the one or more advances made by a lender to a borrower.

Days on the Market
The period of time between listing a property and its sale or it being taken off the market.

The withdrawal of funds from your account. In accounting, a debit is an item of debt as recorded in an account.

Debit Bureau
A service used by banks that eventually tracks account opening and closing information, cheque order history, cheque writing history, any history of collection activity on unpaid accounts, frequency of debit and ATM card use and household demographics. Under the system, when a consumer gives a cheque to a participating retailer, the individual’s account is identified by punching a code into a computer or swiping a card containing a magnetic strip or microchip through an electronic reader, which tells the retailer whether to accept or reject the transaction.

Debit Card
A payment card that is linked directly to a customer’s bank account. Some cards require a personal identification number (PIN) while other cards require the customer’s signature. A PIN-based or direct debit card removes a purchase amount from a customer’s bank account almost immediately. A signature-based or deferred debit card has a Visa or MasterCard logo and removes the purchase amount from a customer’s bank account in two or three days.

An obligation or liability to pay or render something to another person or a firm.

Debt Consolidation
The act of replacing more than one loan with a single loan, often with a lower monthly payment and a longer repayment period. Also called a consolidation loan. CanEquity has access to Canada’s best debt consolidation products, for more info about debt consolidation see our debt consolidation page.

Debt/Equity Ratio
A comparison of debt and equity used to measure the livelihood of a business.

Debt Issues
The issuance of bonds or other forms of debt on the public markets.


  1. A person who has filed a petition for relief under the bankruptcy laws.
  2. Anyone who owes money to a creditor.

Debt Coverage Ratio
The percentage of the borrower’s income used for monthly payments of principal, interest, taxes, heating costs and condo fees (if applicable).

Declaration of Trust
An acknowledgement by one holding title to property (mortgage) that he or she holds it in trust for the benefit of someone else.

The granting of land by the owner for some public use and its acceptance for such use by authorized public officials.

Expenses the government allows you to subtract from your taxable income. If you have taxable income of $31,000 and deductions of $4,000, then you would figure how much tax you owe on the difference — $27,000.

A legal document in writing, duly executed and delivered, that conveys title or an interest in real property.

Failure to fulfill contractual obligations.

Deficiency Judgement
A court order to pay the balance owed on a loan or mortgage if the proceeds from the sale of the security are insufficient to pay off the loan.

An actual decline in the general level of prices in the economy.

Deficiency Settlement
A monetary settlement by a mortgage lender or insurer where the net proceeds under a Power of Sale or Judicial Sale is less than the mortgagee’s total claim.

A debt or other financial obligation on which payment is overdue, such as a failure to make mortgage payments when they are due.

Delinquent Mortgage
A mortgage loan where the borrower fails to make payments as specified in the loan agreement.

Demand Letter
A letter sent by the mortgagee to the mortgagor demanding immediate payment of all arrears, together with costs.

The characteristics of human populations and population segments that influence the consumption of products and services. They include age, sex, race, family size, education level, occupation, income, and location of residence.

A person, often a child or spouse, who relies on someone else for financial support. Dependents can be claimed as exemptions which reduces the amount of your income that is taxed.

Money that is put towards a given transaction, such as a property purchase, to prove the buyer is serious about making the transaction.

Deposit Insurance
The Canada Deposit Insurance Corporation insures depositors’ funds to a maximum of $60,000 per depositor, per institution, with some exceptions, in the event of the failure of a federal financial institution. Deposits in some provincial financial institutions are also covered.

A decrease or gradual loss in value because of age, natural wear, or market conditions.

1. In economics, a period of drastic decline in a national or international economy, characterized by decreasing business activity, falling prices, and unemployment. 2. An area that is sunk below its surroundings.


Financial contracts whose value is derived from the value of some underlying asset, rate or index. Derivatives are used as risk-management tools by governments and corporations to reduce exposure to risk, mainly related to fluctuations in foreign-exchange and interest rates. Derivative instruments include swaps, options, futures and forward contracts and are used by banks in two principal activities: sales/trading and asset/liability management.

Destination Charge
A fee charged for transporting a vehicle to the dealer from the manufacturer or port of entry. This charge is passed on to the buyer without any mark-up.

Dimension Plans
Diagrams showing the location of building outlines and other improvements on a lot. However, these diagrams are not as detailed as blueprints.

Direct Cheque Printers
Printing companies that offer cheque printing services at lower prices (than most banks) to customers who use chequing accounts. Many of these printers are also printing cheques for banks that use outside printers. Customers must supply these companies with a voided cheque or a reorder form from a current batch of cheques and a deposit slip. Names and addresses must match with information on file at the account holder’s bank.

Direct Debit
The authorization by an account holder which allows recurring payments, such as mortgage payments or insurance premiums, to be withdrawn from their account usually on a monthly basis.

Direct Deposit
The automatic deposit of funds, such as wages, benefits or tax refunds, to a person’s bank account.

Direct Deposit/Direct Fund Transfers (DFT)
A means of authorizing payment made by governments or companies to be deposited directly into a recipient’s bank account. It is used mainly for deposits of a recurring nature such as salary, pensions and interest payments.

Direct Financing
When a buyer obtains financing through an outside financial institution rather than through the dealer.

Direct Tax
Tax that is paid directly such as income or property tax, as opposed to indirect taxes. Indirect taxes include tariffs and business taxes. See also “Indirect Tax.”

Discharge of Mortgage / Charge
A legal document executed by the mortgagee, and given to the mortgagor when a mortgage loan has been repaid in full releasing him or her from all obligations and covenants contained in the mortgage.

Disclosure Statement
A written statement by lenders disclosing information about a specific loan as may be required under various consumer protection acts.

The sale of a mortgage for less than the principal balance thereby affecting an increase in the percentage of interest paid on the investment.

In appraising, the valuation of the present worth of an income stream at a specific interest rate.

A reduction in the inflation rate as a result of either government policy or a decline in economic activity.

Disposition Fee
A fee charged by some lessors at the end of a lease where the customer pays for the privilege of returning the vehicle.

The right of one party to sell real or personal property belonging to another party to pay unpaid or overdue debt.

Distressed Property
1. Property that is in poor physical condition. 2. Property owned by an individual who is in poor financial condition.

The distribution of earnings to shareholders. In credit unions, it is the money paid to members for deposits, similar to the interest banks pay to their customers for deposits.

Document Needs List
An inventory of documents that a lender needs to underwrite a loan, usually including pay-cheque stubs, bank statements, and tax returns.

Documentary Credit
Written undertaking by a bank on behalf of an importer authorizing an exporter to draw drafts on the bank up to a specified amount under specific terms and conditions. They are used to facilitate international trade. In the United States, these instruments are called commercial letters of credit.

Domestic Banks
Banks that are owned by Canadians. Canada has nine domestic banks, of which seven are Schedule I banks.

Démembrements de la propriété
Literally ‘dismemberments’ or fragmentation of property, i.e. dividing ownership of land or real property into separate or fragmented parts; partial ownership. “Property is subject to divided interests when, for the conveyance of full ownership, the concurrence of two or more persons, having rights or powers in the subject matter, would be necessary.

A person’s legal or permanent residence.

Dominant Tenement
The estate which derives benefit from an easement over a servient tenement, as in a Right-of-way.

Down Payment
A partial payment made at the time of purchase or when a loan originates with the balance to be paid later. First-time home buyers are allowed to put as little as 5% down when purchasing a property.

Draw Mortgage
A periodic payment made to a construction contractor or subcontractor as work progresses. A draw is part of a construction mortgage.

Draw Period
On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. After the draw period expires, the borrower can renew the credit line or may be required to pay the outstanding balance in full, or over time.

Dry Rot
A fungous disease that causes lumber to become brittle and crumble.

Panels of gypsum plaster wrapped in thin cardboard and attached to the house framing to create interior walls.

Dual Agency
When a real-estate agent or broker represents both parties in a transaction.

Due-on-sale Clause
A mortgage condition or clause that states the loan must be paid in full when the property is sold. Commonly used in reverse mortgage lending.

A building that is divided into two living units or residences, usually having separate entrances.

Damages: Compensation of indemnity for loss owing to breach of contract.

Date of Completion: The day which is specified by the agreement of purchase and sale, when the purchaser is to deliver the balance of money due, an in return, the vendor is to deliver the balance of money due, and in return, the vendor is to deliver a duly executed deed and vacant possession of the property, unless otherwise agreed.

Debt Service: The amount of principal and interest payments made under a mortgage.

Debt Service Ratio: Measurement of debt payments to gross household income.

Declaration: The legal document utilized in Ontario, Manitoba, Nova Scotia, New Brunswick, Newfoundland, the Yukon Territory and Nunavut.

Deed: A written, sealed instrument of bond, contract or transfer.

Deed Restriction: A restriction on the deed which would limit the use of the land. This might affect the size, type, value, or placement of improvements that might be placed on the property.

Default: Failure to abide by the terms of a mortgage loan agreement. Failure to make mortgage payments (defaulting) may give cause to the mortgagor to take legal action to possess (foreclose on) the mortgaged property.

Deferred Income: An accounting method of dealing with income that is received but not included in a statement of earnings as normal earnings.

Deficiency: An insufficient payment, often relating to an amount recovered under a power of sale foreclosure action.

Deflation: A decline in the general level of prices; or an increase in the value of money; or an increase in the amount of money in circulation.

Delayed Participation Loan: Where a lender disposes of a loan to several other participants putting up their respective shares later.

Delinquent loan or payment: A sum of money that is unpaid when due either under the terms of a contract (ex: rent or mortgage interest), or by law (ex. A tax). A payment that has fallen into arrears.

Demand Note: Payment is made on demand, usually within a few days’ notice to the borrower.

Deposit: Payment of money or other valuable consideration as a pledge for fulfillment of contract. Money placed in trust by the purchaser when an offer to purchase is made; the sum is held by the real estate representative or lawyer until sale is closed, then paid to the vendor.

Depreciated Reproduction Cost: Appraisal method by which the cost of replacing a structure, minus depreciation reproduction cost.

Depreciation: A loss in value to any cause.

Discharge of Mortgage: A document executed by the mortgagee, and given to the mortgagor when a mortgage loan has been repaid in full before, at or after the maturity date.

Disclosure Agreement: A statement contained in a consumer credit transaction in order to disclose complete credit terms and interest rates.

Discount: Reduction in product price or cost of service. A discount is the difference between the nominal face value of a loan and the actual cash received by the borrower, because the interest is paid at the begging of a loan based on the s um to be repaid at maturity.

Discounted Cash-Flow Analysis: This is a method of analysis that calculates the true value of an investment in terms of the present value, i.e., what the investment is worth now, although is spread over a number of years. To compensate for future earning a discount factor is added in so that a real comparison can be made between an investment with quick return and that us placed over a number of years.

Discounted Loan: This face value of a the loan minus the interest of discount charged tby the lender is the amount actually advanced to a borrower.

District town: Is the main location in a territorial district of the Province’s legal judicial systems, including facilities for the courts, Sheriff, Crown Attorney, personal property, and land registration, property assessment and related activities. “District town: is not a legal or municipal designation and is not a necessarily either a town or the largest urban centre in the district.
Dominant Tenement: The estate that derives benefit from an easement over a subservient estate, as in a right-of-way.

Dower Interest: A wife’s interest in the lands of her husband accruing to her by virtue of the marriage.

Down Payment: The initial amount of cash put down by the buyer. It usually consists of the difference between the price of purchase and the amount of the mortgage loan.

Downside Leverage: Occurs where the debt service on a mortgage exceeds the yield on an investor’s property, thereby reducing cash flow.

Drawee: The person, bank or corporation from whom a bill, note or cheque is drawn and from whom payment is expected by the payee or his assignee.

Drawer: The person or corporation who writes a cheque or note for payment to a third party. In the case of a bill of exchange, the drawer is the creditor and it’s usually the payee.

Dual Agent: A real estate broker/agent who acts as agent for both buyer and seller in the same transaction.

Due on Sale Clause: A mortgage clause that states that if the property is sold, the mortgage cannot be assumed by the new purchaser without qualification. The mortgage becomes immediately due and payable upon the sale of the property.

Duplex: a two-family dwelling.

E-cheque or E-check (U.S.)
An electronic version of a paper cheque. The account holder writes an e-cheque using a computer or other type of electronic device and transmits the e-cheque to the payee electronically. Like paper cheques, e-cheques are signed by the payer and endorsed by the payee. Rather than handwritten or machine-stamped signatures, however, e-cheques are affixed with digital signatures, using a combination of smart cards and digital certificates. The payee deposits the e-cheque, receives credit, and the payee’s bank clears the e-cheque to the paying bank. The paying bank validates the e-cheque and then charges the cheque writer’s account.

A way to handle business transactions such as buying or selling goods and services online or through a computer network.

Early Closing Cost Reimbursement
Some line-of-credit lenders waive underwriting costs when a credit line is opened in anticipation of future profits. If the credit line is closed early, fees are retroactively imposed by the lender.

Early Occupancy
When the buyer is granted permission from the seller to move into the property before closing.

Early Termination Charge
If a leasee turns in a leased vehicle before the lease term expires, a fee is charged to terminate the lease.

Early Withdrawal Penalty
A depositor forfeits interest or is charged a service fee for either withdrawing funds or closing a time deposit before the maturity date.

Earned and Unearned Income
Earned income comes from wages, salary, or business profits whereas unearned income comes from sources such as interest, dividends, rental income, and pension benefits.

Earned Income
Money earned through wages, salaries, tips, net earnings (if self-employed), and any other income received for work or personal services. Investment income, such as dividends and interest, is not counted as earned income. See also “Unearned Income.”

Earnest Money
Like a deposit, the buyer gives the seller money when making a formal offer to show he or she is serious about the transaction.

A right enjoyed by one landowner over the land of another. A limited right to use, or to prevent the use, of another’s land which accommodates or improves the beneficiary’s land, but grants no right to take possession of, or a profit from, the other’s land.

Economic Life
The estimated period over which it is anticipated that a property may profitably be utilized.

Economic Growth
The rate of change in output from the current year to the next year.

Economic Indicators
Statistics that help to determine the state of the economy. Such statistics can include the Consumer Price Index, housing starts, and unemployment rates.

Effective Age
An estimation of a building’s physical condition as determined by an appraiser. The actual age of a building may be more or less than the estimated effective age.

Effective Gross Income (Income Property)
The annual income from a property if fully leased, less an annual allowance for vacancies and bad debts.

Electronic funds transfer (EFT) at the point of sale (POS). A payment option that allows consumers to make purchases by transferring funds directly from their accounts to merchant accounts.

Going out (access to exit).

Electronic Cash
A method used to transfer funds over the Internet as payment for goods and services. Also commonly referred to as e-cash.

Electronic Commerce
A way to conduct business transactions such as buying or selling goods and services online or over a computer network.

Electronic Data Interchange (EDI)
EDI is a system used by corporations or organizations to transfer business information electronically. This system will virtually eliminate paperwork.

Electronic Filing
Income tax returns can be filed online using a personal computer with tax preparation software. The information is sent directly to Revenue Canada. If a tax payer is set up with direct deposit, refunds can be directly deposit into his or her bank account.

Electronic Funds Transfer
The transfer of money between accounts using consumer electronic systems such as automated teller machines (ATMs) or electronic bill payments.

Eminent Domain
The right reserved by government to take by expropriation private property for public benefit provided it pays just compensation.

Employment Equity Act
A federal statute that requires employers with 100 or more employees to eliminate any practices in the workplace discriminating against four designated groups of people who have historically been disadvantaged in the labour market: women; people who, by reason of race or colour, are members of visible minority groups; aboriginal peoples; and persons with disabilities.

Empty Nesters
Individuals with grown children that no longer live in the same residence. For real estate purposes, empty nesters tend to down-size and purchase smaller homes when children move out.

An improvement that intrudes illegally upon another’s property.

A method used to ensure the privacy and security of a customer’s personal and financial information when using banking services over the Internet. Encryption scrambles the data that is being sent, so only the intended receiver can read the information. To be effective, encryption must be used by both the sender and receiver. Consumers should ensure encryption is being used before sending sensitive information over the Internet. CanEquity uses a encrypted server for all of our online applications.

Outstanding claim or lien recorded against property or any legal right to the use of the property by another person who is not the owner.

End Loan/Mortgage
The final mortgage on a property, as opposed to a construction or other interim loan.

To write one’s signature on the back of a cheque in return for the cash or credit indicated on the front of the cheque.

A person who has the skills and initiative to establish their own business. This person also manages the business and assume the financial risks associated with the venture.

Environmental Impact Statement/Assessment
A mandatory (required by government) evaluation or assessment that must be conducted prior to construction. The assessment details the possible effects that the development could have on the environment surrounding the site.

A major credit bureau company in Canada along with Trans Union.

In mortgaging, the difference between lending value and indebtedness.

Equity Financing (Lending)
The investment in the equity in leveraged or unleveraged real estate by investors. These investors are usually institutional and may or may not have provided the mortgage financing.

Equity of Redemption
The right of the mortgagor to have title to their property restored to him or her when he or she has repaid the mortgage in full.

Equitable Mortgage
A mortgage which has a claim solely on the equity of redemption and not to the title of the property itself.

Errors and Omissions Insurance
Malpractice insurance that protects architects, home inspectors, and contractors from claims by clients for professional errors or faults resulting from defective judgment, deficient knowledge, or carelessness.

The reversion of property to the state in the event the owner thereof dies, leaving no will and having no legally qualified heir to whom the property may pass by lawful descent.

Escalation Clause
Lease provisions whereby the tenant pays for increases in certain expenses over a specified base. Usually these expenses are maintenance, insurance premiums and real estate taxes. The base is usually those expenses incurred by the landlord in a specified year.

Securities, instruments, money, or other property deposited by two or more persons with a third person, to be delivered on performance of a certain event.

Escrow Account
A bank account in which money for property taxes and insurance is held until paid. Money is added to the account every time a mortgage payment is made.

Escrow agent
A neutral third party who holds the documents and money in a real-estate transaction until all conditions of the property sale are met.

The ownership interest of an individual in real property. The total sum of all the real property and personal property owned by an individual at time of death.

Estoppel Certificate
Legal certificate usually issued by a condominium corporation indicating details of the project and given to the lender / purchaser or tenant. Delivery of the certificate prevents one from claiming a different set of facts at a later date.

To force or put out (a tenant, for example) by legal process when lease terms are violated.

Examination of Title
A review of public records and title abstracts to determine the chain of ownership of a property.

Excess Wear Charge
Most leases contain limits for wear and tear on the vehicle during the lease term. The lessee must pay charges for exceeding the limits when turning in the vehicle at the end of the lease.

To give something in return for something else (such as goods or services). Making exchanges for similar or like property is a popular tax-deferral strategy.

Exclusive Listing
A legal agreement giving one real-estate agent the right to sell a property for a specified period, but owners retain the right to sell their property themselves without paying the agent commission.

Government tax law allows individuals to expense certain business activities.

One of the Big Three credit bureaus, along with Equifax and Trans Union. Experian is not normally used in Canada.

Products and services produced in Canada to be sold in other countries.

Express Account
A low-fee or no-free chequing account, limited to ATM, telephone, and online transactions. Express account customers are charged fees when using bank teller services.

Taking private property for public use, with fair compensation to the owner, through the exercise of the right of eminent domain.

Extended Coverage Endorsement
An endorsement that may be attached to fire insurance policies. It generally includes coverage against the peril of windstorm, hail, explosion, riot, civil commotion, damage by aircraft or vehicles and smoke.

Extension Agreement
An agreement extending a loan past the original maturity date.

Exculpatory Clause
A clause in a contract holding one party harmless in the event of some default.

Extended Warranty
A service contract that covers certain vehicle repairs or problems after the manufacturer’s or dealer’s warranty expires. Extended warranties are sold by vehicle manufacturers, dealers, and independent companies. With a new vehicle, the extended warranty must be purchased by the end of the first year of ownership.

Easement: The right someone has to use property owned by another. An easement can be written into a deed or occur through long use.

Economic Depreciation: Loss in value of property due to external influences related to the property, i.e., not controlled by the owner.

Effective Age: The age given to a building during an appraisal, based on the physical condition of the property instead of its actual chronological age.

Effective Gross Income: The estimated gross income less allowances for vacancies and rent losses.

Effective Interest Rate: The actual interest rate on investment where a debt or loan was bought at a discount or at a premium.

Encroachment: Unlawful trespassing on another individual’s property often caused by a building or part of a building.

Encumbrance: This refers to any legal claim registered against a property. (ex. A mortgage)

End Loan: The mortgage loan to the final customer, such as a purchaser of a condominium unit.

Equitable Mortgage: The transfer of equity in property as security for a debt. Any mortgage registered after the first mortgage.

Equity: The total value of a property after allowing for creditors’ claims and encumbrances.

Equity of Redemption: The right of the mortgagor to reclaim clear title to real property upon full repayment of the debt.

Equity Sharing: A category of purchase in which two (or more) parties share in the equity and appreciation of a property.

Escape Clause: An escape clause is a clause in a contract which allows a party to break the contract without penalty under certain situations. Escape clauses are designed to prevent people from feeling like they are forced into complying with a contract when circumstances change.

Escrow Account (American term): An account held by an agent on behalf on his principal for the payment of money due to a third party on the event of specified incidents, e.g. a vendor’s solicitor will hold funds on his behalf until title deeds to a property have been delivered and the property has been registered and the keys delivered to the purchaser; or an account maintained by a mortgage for the payment of property taxes or life insurance premiums.

Estate: The degree, quantity, nature and extent of interest that a person has in real property.

Estoppels Certificate (renter confirmation): A written statement of certificate that states certain facts upon which the receiver or the statement or a third party may rely, e.g. a lender’s estoppels statement as to a purchaser or property. The lender cannot later deny the truth of these statements because a third party has relied and acted upon them.

Exact Date Interest: Interest calculated on the basis of 365 days per year and 366 days in a leap year.

Exculpatory Clause: A clause that excuses one party from personal liability in the event of a default.

Execution: A claim arising from a court judgment against a particular person that is registered against the person’s name with the Sheriff or the local municipality.

Expenses: Any documentable costs incurred by the municipality against the property during the tax recovery process.

Expropriation: The act of forcefully taking private property for public use.

Extension Agreement: The lengthening of a term on a contract to extend the maturity date; or to permit more time for the performance for an obligation or condition; or extension of the coverage of a lien to include more property.

Face Rate
The contractual interest rate stated in a mortgage document or other financial instrument.

Face Value
The face value of the loan is the amount of money the borrower promises to repay (at the contract rate of interest).

Fair Market Value
The highest price that a buyer would pay for a property and the lowest price a seller is willing to accept.

An acronym for frequently asked questions. Most Web sites have an FAQ page to provide their customer’s with answers to commonly asked questions.

An inheritable estate in land. The right of ownership of a property.

Fee Simple
The highest estate or absolute right in real property.

Fee Simple Defeasible
When a person has outright ownership of real estate (free of any liens or other claims against title), but the use of the property is restricted.

An individual or a trust institution charged with the duty of acting for the benefit of another party as to matters coming within the scope of the relationship between him or her. The relationship between a trustee and a beneficiary is an example of a fiduciary relationship.

Fiduciary Duty
A requirement that someone in a position of trust, such as a banker, real-estate agent, or title agent, must act in good faith and trust on behalf of a client.

Field Changes
Modifications that are made to a building or structure while on-site as opposed to planned changes that are incorporated into building plans.

Filing Extension
A filing extension gives an individual more time to file his or her tax return, but it does not give the person more time to pay taxes.

Final Order of Foreclosure
A judgement which extinguishes the mortgagor’s (defendant’s) equity of redemption and beneficial title goes over to the mortgagee. With an equitable mortgage, the equitable estate is forfeited and transferred to the mortgagee.

Finance Canada
A Federal Department that is responsible for Canada’s economic performance and the regulation of financial institutions.

Finance Charge
Charges that include all of the interest expected to be earned over the life of a loan, in addition to the service charges, mortgage insurance premiums, and other loan-related charges.

Finder’s Fee
A fee or commission paid by a lender to a mortgage professional for referring a mortgage loan.

Firm Commitment
A promise made by a lender to give a borrower a loan based on certain terms and conditions at a specific time.

First Lien
A primary claim made by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien.

First Mortgage
A mortgage registered before all others on title.

Fiscal Deficit
When the government spends more money than it receives in revenue over the course of one year.

Fiscal Policy
The policy pursued by the Federal Government to direct the economy through taxation and the level and allocation of public spending.

Fiscal Year
A corporation’s fiscal year. Some companies do not use the calendar year for their bookkeeping.

Fiscal Surplus
When the government receives more in revenue than it spends over the course of the year.

Fixed Assets
Fixed Assets are typically long term in nature. The value of fixed assets to a company lies in their use in producing goods and services, rather than in their sale value. Fixed assets wear out over time or otherwise lose their usefulness.

Fixed Expenses
Fixed business costs that do not change regardless of business volume, such as property rental, insurance payments, utilities, etc.

Fixed Installment
A set payment that is made towards the balance of a loan. Fixed installments are set amounts that do not change and are typically made once a month.

Fixed Rate Mortgage (FRM)
A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.

Fixed-Return Instruments or Vehicles
Instruments that pay a fixed rate of interest for an agreed-upon length of time such as term deposits, Treasury bills, and Guaranteed Investment Certificates.

Fixed Time
The dates during the year when a timeshare owner is scheduled to occupy the property being shared.

A house that is sold for less than market value or for a discounted price because it requires significant maintenance or repairs.

An article of personal property that has been so attached or wrought into land, or a building on land, that it becomes part and parcel of the land and may only e removed with the consent of the owner of the land. An article of personalty that has been so attached to real estate as to become a part thereof, even though it may retain its separate physical identity. Any chattel that has been so affixed to land that, in the view of the law, it has taken on a nature that makes it part of the land, loses its character as a chattel; it becomes a part of, and passes with, the ownership of land (thus, in the US, a fixture is referred to sometimes as a ‘chattel fixture’); “a fixture is a former chattel which, while retaining its separate physical identity, is so connected with the realty that a disinterested observer would consider it a part thereof.

Flat Fee
A dollar amount requested by a broker instead of being paid commission, which is usually a percentage of the sale.


  1. The amount of time banks take to clear or reject (bounce) cheques for payment.
  2. The amount of time at which funds are debited from the issuer’s account.

Flood Insurance
A policy that pays the homeowner for damage caused by flood waters. The policy does not cover damage from falling water, such as rain that may cause a roof to leak.

Flood Plain
Land that is prone to inundation (being covered by water).

Florida Room
An enclosed porch that is built on the back or side of a dwelling and is often air-conditioned.

For Sale By Owner
When a homeowner tries to sell his or her property without help from a realtor. Many homeowners attempt to sell on their own to avoid paying a high commission to a realtor.

The waiving of a covenant in a mortgage document.

A legal remedy available to a mortgagee where there is default under any of the covenants in the mortgage. It deprives the mortgagor of their equitable right to redeem.

Foreign Currency
The metal (coin) or paper medium of exchange that is used in other countries. For example, the US dollar is considered foreign currency to those living in Canada.

Foreign Currency Surcharge
A fee charged by a credit card company for purchases made in a foreign currency.

Foreign Exchange
Instruments (such as paper currency, notes, and cheques) used to make payments between individuals, organizations, or countries that use different currencies.

Foreign Exchange Rate
The value of one nation’s currency in comparision to another nation’s currency.

Something that is lost or surrendered as a penalty because of a fault, mistake, or failure to meet legal or contractual obligations.

Four Pillars
Refers to the main types of financial institutions: banking, trust, insurance, and securities.

An contract between a company and another party in which the company gives the other party the right to use the company’s name and to sell or rent its products. This right is usually purchased for cash in addition to a royalty fee or a percentage of all sales. Selling franchise rights is a popular method for expanding a business quickly with a minimum of capital.

Freehold Estate
An estate in land or real property of uncertain duration that is either of inheritance or for the life of the tenant. There are three (3) freehold estates: fee simple, fee tail and life estate.

Fresh Start
After a bankruptcy, the debtor is essentially given a clean slate or fresh start to rebuild his or her credit with little or no debt.

Fringe Benefit
Compensation that is given to employees in addition to wages, tips, or salaries. Such benefits can include health insurance, life insurance, and pension plans.

Front-end Money
Funds required to start a development and generally advanced by the developer or equity owner as a capital contribution to the project.

Full Income Verification
Refers to a requirement where a potential borrower must show complete and accurate proof of income when applying for a loan. These types of loans usually offer lower interest rates than no-income or “no-doc” verification loans.

Full Market Value
In reference to property taxes, refers to the tax rate that is applied to 100 percent of the property’s value. Also known as full cash value.

Contracts to buy something in the future at a price agreed upon in advance. Futures first developed in the agriculture commodity markets, but often involve foreign exchange, Eurodollar deposits, and government bonds.


Feasibility Analysis: An analysis to determine the feasibility of a project. Details of construction costs, projected income from the project plus location and economic factors affecting the project will be required. Similar to a feasibility study by a developer conducted to decide whether to proceed with plans and required by the lender to decide whether to provide funds.

Fee Simple: The highest estate or absolute right in real property. In common law, the most common way real estate is owned. The most complete ownership interest once can have in real property.

Final Order or Closure: Judgment taken against a mortgagor, extinguishing the equity of redemption.

Financing Statement: A statement filed by a creditor in a public records office identifying the parties, giving their addresses and describing the collateral.

First Mortgage: The mortgage agreement that has first claim on the property in the event of default.

First Mortgage Bond: Bonds issued by a corporation secured upon the property and earning of the issuing corporation.

Fixed-Rate Mortgage: This is the usual form of mortgage where the interest rate remains the same during the entire life of the term.

Fixtures: Permanent enhancements to property which may not be removed at the end of the term of lease or tenure.

Flat Payment: An all-inclusive monthly payment that is calculated to include principal, interest and taxes. Under this system there is no specific breakdown as to the amounts of the principal, interest and taxes.

Flipping: buying real estate in order to resell it rapidly for higher price.

Floating Rate of Interest: Rate of interest that fluctuates according to prime lending rates, e.g. 2 percent above prime rate is usually chargeable on short-term loans such as construction loans.

Floor to Ceiling Loan: A permanent loan or advance made in two stages, (a) on completion of construction according to agreed upon terms and conditions and (b) the balance advanced upon occupancy or upon cash flow requirements.

Foreclosure: The taking of legal action against the mortgagor and property owner for breach or mortgage covenants on the property. This usually results once substantial arrears have occurred in mortgage payments and is considered a step of last resort.

Forward Commitment: Lender’s commitment to make or assume a future loan.

Freehold: The ownership of a tract of land on which the building(s) are located. The oldest and most common type of ownership of real estate.

Fully Amortized Loan: A mortgage loan wherein the stipulated payments repay the loan in full by its maturity date.

Further Charge: A second or subsequent loan of money to a mortgagor by a mortgagee, either on the same or on an additional security.

Gale Date
In mortgaging, the date on which interest is charged or compounded on the loan.

Gap Insurance
A type of insurance offered to customers with leased vehicles. The policy pays the difference between what is owned and what the vehicle is worth if the car is stolen or destroyed.

The legal attachment by creditors of a debtor’s wages, cashflow or assets. The party served with notice must comply with the Garnishee Order and forward funds to the creditor(s) named.

GE Capital
GE Capital is the new CMHC alternative in the Canadian Mortgage Market place. GE Capital like CMHC provides banks/lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure, GE Capital assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also “CMHC.”

General Contractor
A business or person who contracts for and takes responsibility for completing a construction project. The general contractor also hires, supervises, and pays all subcontractors and suppliers.

Gift From a Family Member
A monetary gift given to a mortgage applicant from his or her relative by blood or marriage. The gift cannot be money that must be re-paid and in some cases a written statement may be required by the lender as proof the funds are not a loan, but in fact a gift.

Good Repair
The sort of condition in which a fair minded tenant would maintain a property; “such a state of repair as will satisfy a respectable occupant using [the premises] fairly; but not that state of repair which an owner or tenant might fancy.

Grace Period
Refers to the interest-free time that lenders allow between the transaction date and the billing date if card users do not carry a balance. The standard grace period is typically between 20 and 30 days. If there is no grace period, finance charges accrue immediately at the time of purchase. Those who carry a balance on their credit cards have no grace period.

Technical term used in deeds of conveyance to indicate a transfer of an interest or estate in land.

The party to whom an interest in real property is conveyed (the buyer).

The person who conveys an interest in real estate by deed (the seller).

Gross Area
The total floor area of a building, measured from the outside of the exterior walls.

Gross Debt Ratio
The ratio of the monthly housing payment in total (PIT — Principal, Interest and Taxes) divided by the gross monthly income. This ratio is sometimes referred to as GDS.

Gross Domestic Product
The total value of all the goods and services produced by the Canadian economy in a single year.

Gross Income (Single Family)
The total annual personal income before deductions used in the calculation of an applicant’s debt service ratios

Gross Lease
A lease that provides that all expenses attributable to the real estate are paid by the landlord. According to local terminology, leases may require some expense to be paid by the tenant.

Gross Leasable Area
The total floor area designed for tenant occupancy and exclusive use and that area on which tenants pay rent. As adopted by the shopping centre industry, it is measured from the centre line of joint partitions and from outside wall faces. This will not include common areas.

Gross National Product
The value of all goods and services accruing to Canadians in a given year. It equals Gross Domestic Product, plus income of Canadians from foreign production, less income from Canadian production earned by non-residents (such as interest and dividends paid to foreign lenders).

Gross Overtime
Overtime pay before taxes that is averaged over two years can be considered monthly income, but it must be over the two years or it does not count.

Gross Profit Margin
The difference between the sales generated by a business and the costs paid out for goods or services.

Ground Lease
Contract for the rental of land usually for a long term.

One who promises to pay a debt or perform an obligation contracted by another in the event the original obligor fails to pay or to perform as contracted.

1. A promise or assurance, typically in writing, that advocates the quality of a product or service. 2. A formal promise or collateral agreement made by an individual to answer for the debt of another in case he or she defaults.

Guaranteed Investment Certificate
An investment that pays a set rate of interest over a fixed period of time.

G/E Capital: The General Electric Capital Corporation insures high-ratio mortgages for lenders.

Gale Date: The dates on which interest is charged or compounded on the mortgage loan.

GAP Financing: A loan required by a builder to obtain funds during the period between a permanent take out commitment and a construction loan. The construction lender will usually require permanent mortgage commitment to full amount of the construction loan plus a hold back provision that only the “floor” amount will be funded at the completion of construction.

General Contractor: A Contractor who takes full responsibility for the construction of an entire building via a contract. He/she then hires subcontractors and specialized trades to perform the required work, supervising their performance.

General Creditor: A creditor who has no security other than the promise of the debtor.

Grace Period: A sensible amount of time allowed to meet a commitment after the specified deadline of that commitment. Most banks or other lending institutions allow a two-week grace period before inflicting a late fee.

Graduated Amortization Mortgage: A special method of repayment on a mortgage whereby repayments in the initial period are low and are gradually stepped up at a higher rate. Graduated payment mortgages were devised to enable lower income families to become home owners.

Graduated Payment Mortgage (GPM): A mortgage loan with payments that are initially lower than those of a conventional level-payment loan, but can increase over the years in accordance with increases

Grant: This is an instrument of conveyance which transfers property from one to another.

Grantee: The buyer

Grantor: The seller

Gross Rent Multiplier: Method of appraising the fair market value of property by multiplying the gross rents by a factor that varies according to the type and location of property.

Gross Debt Service (GDS): The percentage of gross annual income required to cover payments associated with housing. If the dwelling until is a condo, all of a portion of common fees are included, depending on what expenses are covered.

Gross Debt Ratio: Allowable ration of payments for principal, interest and taxes to gross income.

Gross Income: The scheduled income from the operation of the business of management of the property, customarily on an annual basis.

Guaranteed Income Mortgage: A guarantee included in a purchase money mortgage by a seller-mortgagee that there will be a minimum cash flow or net operation income to the purchaser-mortgagee. The guarantee is limited to a short period and may be combined with a management contract whereby the seller, as manager, will operate the property.

Guarantor: A third party without interest in the property who agrees to assume responsibility for a debt in the event of default by mortgagor.

A bathroom that does not contain a shower or a bathtub. The room simply contains a toilet and a sink.

Hazard Insurance
An insurance policy that provides coverage against physical damage to a property from natural disasters such as fire or other hazards. Depending on the location of a property, lenders may also require flood insurance or policies that cover windstorms (hurricanes) or earthquakes.

An area equal to 100 meters by 100 meters.

Historic Preservation
A process to protect buildings with historic value or significance from destruction or extensive renovation.

Historic Structure
A structure or building that is recognized by the Canadian Government and is registered as a historical structure.

The withholding of or non-advancement of a portion of a mortgage loan to maintain adequate security,

  1. pending achievement of a performance requirement, or
  2. as protection against liens.

Holding Period
Refers to the length of time a capital asset is owned. Assets held for one year (12 months) or less are short-term and those owned for more than a year are considered long-term properties.

Home Banking
A method used to access one’s bank accounts using a telephone to transfer funds, pay bills, and make account inquiries.

Home Equity
The portion of a property’s value that the mortgage borrower owns outright. Essentially, it is the difference between the fair market value (selling price) of the home and what is left owing on all mortgages.

Home Equity Debt
Debt secured by your home.

Home Equity Line of Credit
An open-ended loan, paid as revolving debt, that is backed by the equity in a property.

Home Equity Loan
A loan that can replace or be added to the first mortgage. This type of loan is generally used when a home owner wants to make renovations to the property.

Home Inspection
A visual inspection of the major components of a home, by a qualified individual, giving the homebuyer a true and unbiased picture of the home’s condition.

Home Office
A room or area within a home or other structure on a property that qualifies as a tax deduction because it is used for business purposes.

Home Warranty
A guarantee on the workmanship or construction of a home including the functionality of some appliances. The warranty also pays for some repairs within a specified period.

Homeowner’s Association
An elected group that governs a subdivision or planned community. The association collects fees from the home owners to maintain common areas and enforce covenants, conditions, and restrictions set by the developer and the association.

Homeowner’s Insurance
An insurance policy that includes hazard coverage, coverage for loss or damage to property, as well as coverage for personal liability and theft.

Homeowner’s Insurance Binder
A document accompanying a homeowner’s insurance policy that verifies the property is properly insured.

Homeowner’s Warranty
A guarantee on the workmanship or construction of a home including the functionality of some appliances. The warranty also pays for some repairs within a specified period.

Household Income
The total combined income of all members within a household.

Housing Discrimination
The illegal practice of discriminating against buyers or renters of dwellings on the basis of race, colour, religion, national origin, sex, family status, or disability.

High-Ratio Mortgage: A mortgage loan that exceeds 75% of the lending value of the property and must be insured against default of payment.

Highest and Best Use: This refers to the use of land that would most likely produce the greatest net return over a given time.

Holdback: An amount of money retained by a construction lender or owner until satisfactory completion of the work perform by a contractor; a standard holdback is 10% of the cost of the building project.

Hypothecate: To use something as security without giving up possession of it.

Immediate Participation Loan: A loan in which all of the partners contribute their share immediately.

Improved Land: This is land which is liable to be separately assessed, and which has a building on it. Land is in actual agricultural use is also considered improved, whether or not it has any buildings on it.

Improvement district: This is a municipality. Its powers are exercised by board of trustees. The actions of the trustees are subject to Provincial supervision. This type of municipality has been established in previously unsettled or sparsely settled areas, without municipal organization, where a new resource industry located and municipal government was required immediately. Once a new resource community becomes more established, the improvement district is usually replaced by a conventional local municipality.


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

Goods and services produced in other countries and sold in Canada.

Income Approach (To Value)
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
Real property that is used, or is capable of being use in the normal market, primarily for the production of annual income through leasing of the property.

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.

Income Statement
A statement that allows an individual to calculate his or her company’s pre-tax profits by subtracting total expenses from total revenues. Also referred to as a profit & loss statement or P&L.

Income Tax
A tax that is levied by the Federal Government and by some Provincial or Municipal Governments on the annual income of an individual or a company. The amount or percentage taxed is based on the amount of an individual’s earned and unearned income, using the government’s graduated tax scale.

That which cannot be forfeited or done away with.

Protection of exemption from loss or damage.

Independent Bank
A locally owned bank that is operated without being affiliated with a bank holding company. Also known as a community bank.

In real estate, an index is a table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes.

An increase in the level of prices or a decline in purchasing power, caused by an increase in available currency and credit beyond the goods and services that are available.

Informal Trust
An investment account registered in the name of an adult, but is in trust for a child. The trust is used to save or invest funds for a child who can access and use the funds when he or she reaches the legal age. Also known as in-trust account or “bare” trust.

Basic facilities, services, and installations needed for a community or society to function. Transportation and communication systems, hydro and electric, and public institutions such as schools and hospitals are all examples of infrastructure.

Going in; right of entrance.

Initial Interest Rate
The introductory interest rate on an adjustable-rate mortgage (ARM), which typically changes at a predetermined time.

An order of a court of equity prohibiting an act or compelling an act to be done.

Inspection Report
A formal written report detailing the examination of a property’s visible structure and internal systems. The inspection and report are done prior to the completion of a real estate transaction.

A payment made towards the settlement of a debt that is typically paid at regular intervals to the creditor or lender.

Institute of Canadian Bankers (ICB)
An institute that provides education and training programs specific to professionals in the financial-service industry.

A formal written legal document.

Insufficient Funds (NSF)
When there are not enough funds in a bank account to cover a pre-authorized payment, cheque, or draft made on the account. Also known as non-sufficient funds (NSF).

Insurable Interest
An interest of such a nature that the occurrence of the event insured against would cause financial loss to the insured. Such interests, for example, may be that of an owner, a mortgagee, a lessee or a trustee.

Insurable Title
A title that a title insurance company is willing and able to insure.

Insurable Value
The term is used conventionally to designate the amount of insurance that may be carried, on destructible portions of a property to indemnify the owner in the event of loss.

Intangible Asset
An asset such as a patent, permit, computer program, or claim that has no physical properties. It is difficult to assign values to these types of assets.

Intangible Property
Property such as stocks, bonds, or franchises that gets value from what it represents and not from its physical nature. Business furniture and equipment are examples of tangible personal property because they do not represent something else of greater value and they serve their intended functions.

Canada’s largest shared network of Automated Teller Machines (ATMs) that enables cardholders to access their accounts from any ATM on the network regardless of which bank the cardholder does business with or which bank owns the ATM.

Interac Direct Payment
A way to pay for goods and services electronically using your bank card. The merchant swipes your card, you approve the amount, select the type of bank account (usually chequing or savings), enter a Personal Identification Number (PIN), and give final approval for the funds to be immediately withdrawn from your bank account and transferred into the merchant’s account. You are given a paper record to verify the transaction.

Interest Adjustment Date
The date one month prior to commencement of amortization when accrued interest computed on the moneys advanced becomes due.

Interest Factor
The decimal equivalent for an interest rate on a unit amount for a certain period of time. Computed by interest rate divided by number of days in basic year, times the number of days accrued.

Interest Rate
Interest Rate is the percentage charged on outstanding loan balances.

Interest Rate Cap
A limit that is imposed upon interest rate increases and decreases for an adjustable rate loan. The cap or limit can be imposed from one adjustment period to the next or over the entire life of the loan.

Interim Financing (Construction Financing)
Interim loans are used to provide construction financing until the permanent loan can be funded.

Internal Rate of Return
That rate at which the present worth of all present and future investment costs equals the present worth of all present and future investment benefits.

nternational Banking
The operation of bank branches and subsidiaries located outside Canada. This area of banking also includes the supervision of correspondent banking relationships, foreign exchange trading, and trade finance.

International Chamber of Commerce (ICC)
A world business organization that brings business people and experts together to formulate policies in such areas as banking, taxation, and the environment.

International Organization for Standardization (ISO)
An international organization created to promote standardization around the world. ISO sets standards in many businesses and technologies, including computing, communications, engineering, and environment.

1. The amount of goods and raw materials in stock and ready for sale. 2. A detailed list of all goods and materials in stock that is compiled at regularly scheduled intervals over the operating year.

Putting money into something, such as a stock, bond, or property, usually for income or profit.

Investment Banking
Bank operations that manage a bank’s funding position, as well as its holdings of Treasury bills, bonds, and preferred and common stock.

Investment Income
Income that is earned from investments such as interest, dividends, and capital gains.

Unalterable. Impossible to take back or retract.

Income Bond: Bonds that pay a fixed rate of interest contingent upon earnings. These bonds may originate from reorganization because of a default on mortgage bonds.

Income/Expense Ratio: Ratio if operation expenses to gross income and expressed as a percentage (also known as operating ratio).

Income Property Loan: A loan that is secured on property that already has a source of income, e.g., rents that will cover the debt service payments on the loan.

Indenture: A document of deed, usually in duplicate, expressing certain objects between parties.

Inflation: A general increase in consumer prices, most often expressed as an annual percentage rate.

Injunction: A judicial process or order requiring the person to whom it is directed to do or refrain from doing a particular act.

Instrument: Any document that is submitted for registration or that is already registered at a Land Registry Office.

Insurable Value: The term is used conventionally to designate the amount of insurance that may be carried on destructible portions of a property to indemnify the owner from the date the mortgage is advanced.

Interest Adjustment: A date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin, as interest payable is due from the date the mortgage is advanced.

Interest Escalation: Rate of interest on a loan is raised periodically during the term of the loan so as to encourage early repayment.

Interest-Only Loan: A loan, which requires the payment of interest by the borrower during the term of the loan, with the principal being due in full at the end of the term.

Interest Rate: The cost of a loan expressed as a percentage

Interim Financing: Interim loans are used to bridge the gap between the construction loan and the permanent loan (hence “bridge loans) lasting from one to three years.

Intermediate Term Loan: A short-term loan from three to five years with partial or no amortization (balloon loan).

Irrevocable: Incapable of being recalled or revoked; unchangeable, unalterable.


Joint Account
A bank account that is co-owned or held by two or more people who share equally in the rights and liabilities of the account.

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.

Joint Venture
An arrangement under which two or more people or businesses go into a single venture as partners. Priority is determined solely by date of registration.

The official and authentic decision of a court of justices upon the respective rights and claims of the parties to an action or suit therein litigated and submitted to its determination.

Judicial Sale
A legal remedy available to a mortgagee when a mortgage is in default.

Junior Mortgage
A mortgage that is subsequent to the claims of the holder of a prior (senior) mortgage.

Joint and Several Note: Promissory note on which there are two or more promisors who are jointly and severally liable.

Joint Tenancy: The ownership of a property by two (or more) persons.
Junior Financing: This is a subordinate mortgage or loan very often given by a seller or property, second in priority to an existing loan.

A password that is required to decipher encrypted data.

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.

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.

To arrange alternating or overlapping deposits into investments, such as CDs, to vary and get a better the rate of return.

Includes not only the ground or soil, but also everything that is attached to the earth, whether by course of nature as trees and herbage, or by the hand of man, as houses and other buildings. It includes not only the surface of the earth but everything under it and over it. Condominium Acts divide land horizontally thereby limiting the vertical ownership.
It includes dwellings, tenements (rents), hereditaments (property that can be inherited) whether corporeal (tangible) or incorporeal (intangible) and any undivided share in land.

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
This is a system of land registration under which the registrar or master of titles passes on the validity of the instrument, determines its legal effect, and the Government guarantees title.

Large Value Transfer System (LVTS)
A system, being developed by the Canadian Payments Association, that is designed to settle large value payments, possibly $50,000 and over, at the central bank on a same-day basis.

Late Charge
An additional charge a borrower is required to pay as penalty for failure to pay a regular instalment when due.

Late Payment
An installment or sum of money that is paid to a lender after the due date as specified in the loan agreement.

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.

Lead Lender
A financial institution that heads up a financial consortium or syndicate of two or more lenders to provide funds for a mortgage.

A contract between landlord (lessor) and tenant (lessee) for the occupation or use of the landlord’s interest in a property by the tenant for a specified period of time and for a specified consideration (rent).

Lease Guarantee Insurance
Insurance that protects the owner of leased commercial and industrial real estate loss of rental income through the failure of a tenant to make rental payments.

Lease Extension
An option that allows a leasee to continue an existing lease. Lease extensions typically continue from month to month at the original monthly payment amount.

Lease Option
A written agreement between a property owner and a tenant that allows the tenant to use a property in exchange for rent, but it also gives the tenant the option to buy the property for a certain price within a specified time period.

An estate or interest in an estate in real property held by virtue of a lease for a term of years. A leasehold is considered personal property.

An estate or interest in an estate in real property held by virtue of a lease for a term of years. A leasehold is considered personal property.

Leasehold Mortgage
A mortgage given by a lessee on the security of their leasehold interests in the land.

Legal Description
The written geographical (metes and bonds) description of a property as described in the land register.

Legal Mortgage
A mortgage which results from the law alone, e.g. legal mortgage of minors, interdicted persons, or the crown.

Lending Value
The property value for mortgage purposes. Usually, the lesser of appraised value or sale price.


Letter of Credit
A written letter that gives authorization to a person or company to draw on a bank or which states that the bank will honour the credit up to the stated amount.

Letter of Intent
A letter, note or memorandum setting out a clear intention to take a certain course of action or to enter into a formal agreement. In particular, a letter or other form of writing confirming an intention to enter into a bargain, without intending to create any legally binding contract.

Level Payment
A method of repayment where periodical payments of principal and interest are made in a certain way so the payment amount remains constant.

The use of credit or borrowed funds in conjunction with a sum of money to increase the rate of return from an investment, such as buying securities on margin.

Leveraged Property
A property that is financed using mortgage debt.

A borrower’s debts and legal obligations.

Liability Insurance
A policy that protects owners against claims by other parties of negligence, personal injury, or property damage.

Licence by estoppel
A licence or, strictly, aform of proprietary estoppel that comes into existence when a licensee has taken action, especially one involving the expenditure of money on land, with the consent, encouragement or acquiescence of the landowner and, as a result, has been lead to believe that he may continue to exercise a privilege he has so gained

A legal hold or claim of a creditor on property owned by another party.

Lien Holdback
When mortgagees withhold 15 percent of loan monies advanced on new construction, typically for a time period equal to the statutory period in Mechanics’ Lien Acts for the registration of lien claims.

Lien Waiver
A legal document that is used by individuals or firms that have lien rights who wish to waive those rights. The waiver must be signed by those holding rights in order for it to be legal.

Line of Credit
A credit agreement, often arranged before funds are needed, in which a financial institution agrees to lend money to a client up to a maximum amount for a specific period of time. Having a line of credit provides flexibility for customers and enables them to meet short-term cash requirements. Also referred to as a bank line or credit line.

Liquid Assets
Assets in the form of cash or personal property that is easy to convert to cash. Real estate is an example of a liquid asset.

To settle the debts of a business or individual by selling the debtor’s property, assets, and liabilities.

The capacity to convert assets to cash quickly, without suffering significant losses.

Lis Pendens
A legal notice or document that informs those involved in a real estate transaction that a pending court proceeding could affect the title to the designated property.

Listing Inventories
A list of the properties for sale in a given market.

Live-work Space
A structure or dwelling in which the occupant lives and works. A loft is a popular type of live-work space.

Load-bearing Wall
Any exterior wall or interior wall that supports its weight and the weight of other parts of the building.

Loan Application
A document that is filled out by those who want to borrow money. Applicants must provide detailed financial information on the application for the lender to consider before loans are granted.

Loan Application Fee
A cost charged by a lender for processing loan application documents that are submitted by prospective borrowers.

Loan Commitment
A promise made by a lender to advance a specific loan amount on specific terms.

Loan Processing
The steps taken by a lender to convert a loan application into an approved loan for the potential borrower. These steps include processing the application, conducting a credit investigation, evaluating the loan, etc.

Loan Servicing
After a loan is granted, it must be maintained by the lender to ensure the loan terms are met. Servicing a loan involves collecting payments, keeping accounting records, computing interest and principal, etc.

Loan Term
The amount of time, as written in the promissory note, for a borrower to repay a loan, such as a mortgage. Most conventional mortgages have a loan term of 5 or 10 years.

Loan-to-Value (LTV)
The ratio of the principal amount of the loan to the lesser of the purchase price of the property or the property’s appraised value. This can be expressed as an 80% loan, or 80% LTV.

Local Improvement Charge
A fixed annual fee levied by a municipality against specific real property for a specific period which amortizes the capital costs of local improvements such as sewers, paved roads, etc. This charge is in addition to real estate taxes.

Local Taxes
Taxes imposed by local governments (municipalities) to pay for its services. These taxes are in addition to Federal and Provincial taxation.

A lender’s guarantee that the quoted mortgage rate will not change for a specific period. The borrower wants the lock to stay in effect until closing.

A lender’s guarantee that the quoted mortgage rate will not change for a specific period. The borrower wants the lock to stay in effect until closing.

Long-term Capital Gain or Loss
Profit or loss from the sale of a capital asset that is held for more than one year (12 months). See also “Short-term Capital Gain or Loss.”

Long-term Liabilities
Money owed over a period longer than 12 months, such as mortgages, bank loans, and other obligations.

Loss Payable Clause
An insurance policy provision for payment of a claim to someone, other than the insured’s interest in the insured property.

Low-doc Loan
A mortgage that requires less income or asset verification than conventional loans. Low-documentation loans are designed for the entrepreneur or self-employed, for recent immigrants, or for borrowers who cannot or choose not to reveal their financial information. A substantial down payment and excellent credit history are generally required. This type of loan will also yield a higher interest rate.

Low-documentation Loan
A mortgage that requires less income or asset verification than conventional loans. Low-doc loans are designed for the entrepreneur or self-employed, for recent immigrants, or for borrowers who cannot or choose not to reveal their financial information. A substantial down payment and excellent credit history are generally required. This type of loan will also yield a higher interest rate.

Low-down Mortgages
Loans that allow a low down payment, usually less than 10 percent.

Low-down-payment Loan
A mortgage where the borrower puts down a small amount and borrows a high percentage of the purchase price.

Lowball Offer
An offer made by a potential buyer that is well below the market bid.

LPQ Amount
Representing the three types inquiries made when financing mortgages (Loan / Purchase / Qualification). ‘Loan’ can be for home improvements, debt consolidations or investment purposes and you must be a homeowner to take out a mortgage loan. A ‘Purchase’ can be a first-time homebuyer or a purchase of a new property; you do not have to own a home when making a purchase. Qualification is simply pre-qualifying or getting pre-approved for an X amount.

When applications are submitted, the ‘LPQ amount’ is dependant on the type of mortgage inquiry. Typically a ‘Loan’ is a fixed amount that is always lower then the value of the home. ‘Purchase’ amount is the purchase price of the home/property and can be up to 100% of the value (down-payments are not factored at time of submission). ‘Qualification’ is considered a target value but may come back substantially lower (or higher in some cases). The ‘LPQ amount’ is an unbiased approach to represent the potential amount but rarely the actual amount.

Land Acquisition Loan: Loan advanced to acquire land as opposed to improving land or buildings.

Land Contract: A contract drawn between a buyer and seller for the sale of property.

Land Development Loan: Loan advanced for the purpose of developing raw land for residential and related uses.

Land Transfer Tax: A fee paid to the government for the transferring of property from seller to buyer.

Landlord: The person from whom another holds tenancy.

Land-Usage: The usages of a land allowed under zoning ordinances, which act to control land-usage in a specified community by creating building codes and set-back requirements. Typical land-usage zones: residential, multi-family, commercial, industrial, public, semi-public, institutional and agricultural.

Lease: A contract under which the lessor is obliged to give the lessee the enjoyment and use of a thing for a certain time, in return for rent.

Leasehold: A type of interest in a property that is certain only for a specified period of time granted by contract.

Leasehold Appraisal: A method of estimating the value of a leasehold property.

Leasehold Mortgage: A mortgage loan on a home where the building is on leased (rented) land. The lender takes an interest in the lease..

Legal Description: A written description by which a property can be definitely located and which is acceptable to registration in a land registry system.

Lending Value: An independent appraiser’s value interpreted by the lender as to the worth of a property in the current market, given a reasonable time period to sell the property.

Lessee: Tenant under a lease.

Lessee’s Interest: The market value of a property less the value of the lessor’s interest. The present worth of the annual advantage, if any, accruing to the lessee by reason of the contract rent being less than the economic rent.

Lessor: The person who grants use of the property under lease to a tenant.

Letter of Commitment: Letter written by the lender stating the amount of the loan, specified interest rate, term of loan and specific conditions.

Letter of Credit: Letter issued by a bank or other lending institution promising payment to a third party in accordance with the terms of the agreement. Letters of credit may be used in situations where a deposit or security is required, e.g. a builder who is about to sign a contract and has to put up security that the job with be finished, or a security deposit under a long-term lease.

Leverage: Upside leverage in real estate occurs when the yield or net return on property exceeds debt services for a loan. Downside or reverse leverage occurs when the debt service is greater than the nest return on investment.

Lien: A legal claim against a property for money owed; a lien may be filed by a supplier or a subcontractor, who has provided labor or materials but has not been paid; a lien must be properly filed by a claimant; is has limited life, prescribed by statute that varies from province to province; if the lien holder takes action with the prescribed time, the owner may be obliged to pay the amount claimed by the lien holder; the lien holder may force the sale of a property to pay off the debt.

Lien Hold Back: A percentage of the contract price or estimated cost of work to be done, which is held back from the mortgage advance.

Line of Credit: A maximum credit limit allowed by a bank to a borrower, as long as the borrower maintains an acceptable balance on account or has a good credit rating. The terms of the credit line will vary from time to time according to the changing circumstances of the borrower or the bank.

Lis Pendens: A legal document giving notice that an action or proceeding is pending in the courts, which affects the title to the designated property.

List (Asking) Price: The price placed on a property for sale by the seller.

Listing: An agreement (oral or written) between a vendor and a broker authorizing the broker’s offer the vendor’s property for sale or lease.

Listing Agreement: A legal agreement between the listing broker and seller, setting out the services to be rendered, describing the property for sale and stating the terms of payment; a commission is generally payable to the broker upon closing.

Loan Coverage: The ratio of the nest operating income to debt service; in general, loan coverage of 1.3 is considered adequate for a loan to value ratio of 75%.

Loan Fee: A charge for making a loan in addition to the interest charged to the borrower.

Loan Loss Reserve: A reserve shown on a balance sheet of a real estate company as provision for any future losses in assets.

Loan Origination: Analysis of loan applications from prospective purchasers to determine if they meet with requirements. Upon approval, the lender will issue a commitment letter.

Loan Portfolio Turnover: The average length og time required for the turnover of mortgage loans, i.e., until maturity.

Loan Processing: Upon application and approval of a loan, the lender has to go through a fairly standard procedure to finalize and disburse the loan such as the setting up of files, ordering of credit reports, verification of employment and bank account, etc.

Loan-to-Value Ratio: The ratio of the loan to the lending value of a property expressed as percentage.

Local municipality: Means a city, town, village or township.

Lock-in Clause: A clause that restricts prepayments of a loan during a specified period of the whole term of the mortgage. This ensures that the lender receives a stipulated return on his investment and discourages “shopping around” for another loan.


A study of the economy as a whole, particularly the interaction of its various components.

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.

Manufactured Housing
Homes that are pre constructed in a factory then transported and assembled to a lot where they are placed temporarily or permanently. Styles vary from modest trailers to homes that look as if they were built on site.

The amount (expressed as percentage points) that a lender adds to an index to arrive at the final interest rate. For example, if the index is 9 percent and the margin 2.75 percent, the final interest rate is 11.75 percent.

Marital Deduction
For estate tax and gift tax purposes, a deduction that allows you to transfer assets to your spouse tax-free.

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 estimated value of a property that an owner can expect to receive if he or she sells under normal conditions. Also known as “Fair Market Value.”

Marketable Title
A title that may not be completely clear but has only minor objections that a well-informed and prudent buyer of real estate would accept.

Market Value
The highest price which a buyer, willing, but not compelled to buy, would pay, and the lowest a seller, willing, but not compelled to sell, would accept.

A credit card issued by MasterCard International which is distributed by many financial institutions around the world. Card holders use the card to borrow money against a credit line. The funds must be repaid and interest is charged if a balance is carried from month to month.

The date when the principal balance of a loan is due and payable to the lender. Also, the date when a bond pays off its principal.

Maturity Date
The final day of the term of the mortgage.

Maximum Financing
A loan given for a property where the buyer puts down the lowest allowable down payment possible.

Meals and Entertainment
Deductible expenses in your business such as the cost of taking a client to a restaurant (meals) or a sporting event (entertainment). However, these expenses are only partially deductible (50 % in Canada).

Mechanical Systems
The heating, cooling, plumbing, and electrical systems within a house or building.

Median Price
In a specific area, the amount paid for a property where half of the properties in the area sell for less and half sell for more.

A method for resolving a dispute using a neutral third party (a “mediator”) who works to resolve the differences of those in the dispute. A mediator cannot make a binding decision, whereas an arbitrator can.

Merged Credit Report
A summary of a person’s credit history from the big two credit bureaus: Equifax and Trans Union.

Metes and Bounds
A system of land description whereby all boundary lines are set forth by use of terminating points and angles. Metes refers to a limit or limiting mark and bounds refers to the boundary lines.

The study of the individual parts of the economy, with emphasis given to the market process and how it works.

Mileage Allowance
The number of miles a leased vehicle can be driven over the life of the lease. Mileage allowance is detailed in the lease agreement.

Mileage Limitation
See “Mileage Allowance.”

Mill Rate
A rate which when multiplied by each one thousand dollars of property assessment gives the annual real estate taxes.

Minimum Average Balance to Avoid Fees
The balance in the account from day-to-day must average this amount when calculated. If the account balance falls below this amount, the account holder is subject to the monthly charge and/or per usage transaction charges.

Minimum Balance to Avoid Fees
The balance in the account from day-to-day must average this amount when calculated. If the account balance falls below this amount, the account holder is subject to the monthly charge and/or per usage transaction charges.

Minimum Balance to Open an Account
The minimum initial deposit required to open a bank account.

Minimum Monthly Balance
The least amount of money in a bank account during an entire month.

Minimum Payment
The minimum amount a cardholder must pay to keep the account from defaulting. Some card issuers set high minimums if they are uncertain of the cardholder’s ability to pay. Most card issuers require a minimum payment of three to five percent of the outstanding balance.

Mint Condition
The state or appearance of a building, vehicle, or item that is like brand new.

Mixed-income Housing
A community or neighborhood where the residents earn wages and salaries that vary drastically.

Altering or making changes to the terms of a loan agreement.

Monetary Policy
The Bank of Canada’s ability to influence the economy through changes in short-term interest rates and the money supply.

Money Factor
A leasing term that expresses the cost of borrowing. It is similar to the interest rate paid on a conventional vehicle loan, but is expressed as a difficult-to-understand fraction. To convert the money factor to a recognizable interest rate, multiply it by 24. For example, a money factor of .00345 x 24 = 9 percent interest. The money factor is negotiable, and consumers who lease a new vehicle should look for a money factor close to the current interest rate charged for new-vehicle loans.

Money Laundering
A process used by individuals to conceal illegally acquired funds by converting them into seemingly legitimate income. The term is generally associated with organized crime and those dealing narcotics dealers who need to legitimize illegally earned funds.

Money Market Account
A bank account that restricts the type and number of withdrawals. The account also earns interest similar to money market funds.

Money Market Funds
A mutual fund that invests in short-term debts.

Money Market Mutual Fund
A mutual fund that invests in short-term debt instruments such as Treasury bills, commercial paper, and large CD’s. Also referred to as money market fund (MMF).

Monthly Periodic Rate
The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12. See also “Periodic Rate.”

Mop and Glow
A term used in the automobile industry that refers to add-ons such as paint sealant. These add-ons do not increase the value of the vehicle, but they increase profits for the dealer.

A period during which a borrower is granted the right to delay fulfillment of an obligation.

Any charge on real property as security for a loan.

Mortgage Acceleration Clause
A provision or clause in a loan agreement that allows a lender to demand full payment of the loan balance under certain circumstances. Such circumstances can include the sale of the property, loan default, or mortgage refinancing. This clause is not commonly used in Canada or by Canadian lenders.

Mortgage Banker
One who originates mortgages with the intent to sell them to permanent investors with an agreement that the originator service these loans for the investor.

Mortgage Broker
An individual who finds clients perspective lenders at no charge. Mortgage Brokers have special relationships with lenders and can offer clients the best rates and service in Canada. CanEquity goes to great lengths to ensure our clients are serviced by the best Mortgage Brokers in the country.

Mortgage-Backed Securities
An NHA MBS represents an undivided interest in a pool of insured residential first mortgages. As mortgages, these financial instruments are secured by the value of the underlying real estate. NHA MBS carry the CMHC Timely Payment Guarantee and, as such, represent an obligation of the Government of Canada.

Mortgage Bond
In recent years, there has been an increased activity in mortgage bonds, mainly for larger loans. When a very large loan is required, the number of potential lenders is limited. A loan in the category of $50,000,000 for instance, is usually made by the mortgage bond method that is really a device for dividing up the loan. A bond could be issued for an amount as low as $100,000 and sold to various pension funds through investment dealers on a public issue, or more commonly sold as a private placement issue.

Mortgage Clause
See Loss Payable Clause.

Mortgage Constant
The percentage of the mortgage paid in equal regular payments that provide principal reduction and interest payments over the life of the mortgage. Usually expressed annually.

The lender or creditor. A mortgagee goes into possession when he or she deprives the mortgagor of the management and control of the mortgaged property.

Mortgage Disability Insurance
An insurance policy that pays the monthly mortgage payment for the insured individual if he or she becomes disabled. The disability must be one that is covered under the policy and payments are only made for a specified amount of time.

Mortgage Impairment Insurance
A master insurance policy carried by mortgage lenders that provides him or her with insurance proceeds in the event of an otherwise uninsured loss of a property securing their debt. Some policies also insure losses resulting from the borrower’s failure to pay real estate taxes.

Mortgage Insurance
Required if you are contributing between 5% and 25% of the value of the property as the down payment. Available through CMHC or GECMIC covering whole or partial losses of principal and interest.

Mortgage Investment Corporation (MIC)
An investment vehicle pursuant to the Income Tax Act.

Mortgage Lien
A legal claim against a mortgaged property which must be paid when the property is sold.

Mortgage Life Insurance
A term policy that pays off an entire mortgage if the borrower passes away. See also “Mortgage Insurance.”

Mortgage Term
The length of time the interest rate is guaranteed for a mortgage. Mortgage terms normally range from 6 months to 5 years or more, after which time you can repay the balance of the principal owing or re-negotiate the mortgage at current rates.

Mortgaged Out
Situation when the total mortgage debt equals or exceeds the market value or cost of the property.

Mortgage Portfolio
The aggregate of mortgage loans held by an investor.

Mortgage Servicing
The process of managing the mortgage administrative duties.

The borrower or debtor.

Motivated Buyer
A prospective buyer with strong personal reasons who must purchase a property quickly. A strong motivation to buy is generally due to time restraints.

Motivated Seller
A property owner who has an urgent need to sell his or her property quickly. Sellers are often motivated for a fast sale because of time restraints or financial difficulties.

Move-in Condition
When the new owner or occupant is given the go ahead to move in, the property is said to be in move-in condition. This means construction is completely finished, all the touch ups are done, the appliances are in working order, and the property has been thoroughly cleaned making it ready for occupancy.

Move-up Buyer
A homeowner who sells his or her property in order to purchase a more expensive home. The homeowner is basically upgrading.

Moving Expenses
Expenses incurred when an individual moves for employment purposes. Moving expenses are deductible if they are the reasonable costs of moving yourself, your family, and your possessions. The cost of meals while moving is not longer deductible.

Refers to the Manufacturer’s Suggested Retail Price. In the automobile industry, the MSRP is typically the selling price for a vehicle and its options.

A building or dwelling that has more than four residential units.

Multiple listing
A listing agreement entered into with a member of a multiple listing organization in a particular area. In effect, an exclusive right to sell granted to the organization, but with the provision that the details will be circulated to other members of the organization. Instructions to sell a property are submitted by the seller to a broker who, as a member of the listing organization, is obliged to make details available to other members, although the seller remains contracted directly to the original listing broker. The listing broker then submits a list of properties on which he is retained either to a central bureau (a multiple listing service) or circulates the details to the other members of the organization who generally act as subagents.

Multiple-listing service (MLS)
An arrangement by which real estate brokers place their listings together so that all members of the multiple-listing service have an opportunity to sell properties listed by other members of the service. The original or ‘listing’ broker obtains an exclusive right to sell and then agrees to supply details of the listed property to all members of the service, usually through a central office operated by a local real estate board or association.

Maintenance Fee: A monthly fee condominium lot owners must pay. This fee covers heating costs, common-property upkeep, garbage removal, management fees etc. Also referred to as an assessment fee.

Margin of Safety: A measure of the extent to which a loan is protected by property values or operating income. In the case of a mortgage, the margin of safety is the excess of equity (at fair market value) above the outstanding amount of the loan.

Market Value: This is generally referred to as the highest price which a property will bring if put for sale on the open market.

Maturity Date: The final day of the term of the mortgage agreement. The mortgage agreement must be repaid in totality or the agreement renewed.

Mechanic’s lien: A lien filed and registered against property by a person or corporate body, for labor and/or materials supplied for the improvement of the property.

Mineral rights: A Right given to one to remove, mine, or explores various subterranean minerals or deposits. This does not always give the owner of the mineral rights title to the property itself.

Mortgage: A pledge of security of a particular property for the payment of a debt or the performance of some other obligation.

Mortgagee: One who lends money to a mortgagor

Mortgagor: One who borrows money against real estate as his security.

Municipality: Is an area whose inhabitants are incorporated. Its powers, except in the case of an improvement district, are exercised by a council composed or individuals elected by the electors of the municipality.

Net Income: The total amount of profit made from property after expenses and charges have been deducted.

Net Lease: A lease which requires the tenant to pay all costs on building maintenance usually paid by owner, such as taxes, insurance, repairs etc.

No Money Down Financing: Paying as little for a property up front in order to maximize return on investment.

Notice: To give notice is to make a person or entity aware of a certain fact.

Offer to Purchase
A written contract outlining the terms under which the buyer agrees to purchase the property. There may be conditions attached to the offer, for example: offer being subject to arranging the mortgage or selling a home.

Offline Debit Card
A card with traits from both ATM cards and credit cards (usually VISA or MasterCard). Banks issue this type of card either instead of or in addition to an ATM card. The card can be used anywhere the VISA or MasterCard logo is displayed, but a line of credit is not accessed — the customer’s chequing account is debited. It is “offline” because the account is not directly accessed — there is a delay of 24 to 72 hours before the debit is made in the account. If you sign a slip of paper to complete the transaction, it is offline. In the Canada, a Personal Identification Number (PIN) may be required to use an offline debit card.

On-Us Item
A payment that is deposited at the same financial institution in which it was drawn or written. For example, a cheque that is written by one bank customer and deposited by the recipient at another branch of the same bank. These items are not cleared between institutions and therefore are not represented in statistics of payments exchanged between financial institutions in the clearings.

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.

Online Banking
The access of banking information and accounts to complete transactions using a personal computer or terminal through a financial institution’s web site on the Internet. Also known as Internet banking.

Online Bill Payment
Online bill payment systems allow people to pay their bills electronically through the Internet as opposed to writing cheques and mailing them to creditors, or actually going into the bank. Using online bill payment is simple because clients log into their bank’s website, enter the names of the creditors they want to pay along with the account numbers, and they can virtually pay all bills from the comfort of their own homes.

Online Debit Card
A method of payment in the form of a card that immediately deducts funds from a person’s bank account when used. The card may have a VISA or MasterCard logo on it, or just the name of the bank that issued the card, similar to an ATM card.

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.

Open House
A low-pressure sales approach used by realtors to advertise a property that is for sale. The realtor invites potential buyers to drop by and see the property without making a formal appointment.

Open Listing
A property that multiple brokers can market and compete to sell for a commission.

Open Mortgage
A type of loan that can be paid off prior to maturity without penalty.

Operating Loan
A loan that is intended for short-term financing. This type of loan is often used for cash flow support or to cover operating expenses from day to day.

A legal contract that permits the owner, depending on the type of option, to purchase, sell, or lease an asset at a set price for a specific time period.

Features (or add-ons) that are added to a vehicle, often by the dealer, which can include a high-quality stereo system, anti-theft devices, detailing, and undercoating. Some options are for aesthetic purposes only, known as “mop and glow,” and do not increase the value of the vehicle.

Oral Agreement
A verbal or spoken agreement. This type of agreement is legal, but because it is unwritten it is harder to prove.

Ordinary Dividends
The distribution of a company’s profits that are subject to full taxation.

Ordinary Income
Income that does not qualify as a capital gain including wages, interest, dividends, and net income from a business.

Original Principal Balance
The amount of money borrowed from a lender.

Origination Date
The date on which a loan is funded.

Origination Fee
A fee charged by the lender to the borrower for processing a loan. The fee includes the costs for preparting loan documents, checking the borrower’s credit history, inspecting the property, and conducting an appraisal if applicable. CanEquity tries to use lenders who do not charge this fee, but we will cover the cost in full if using such a lender necessary.

Over-the-limit Fee
A fee charged to a credit card holder for exceeding the allowable credit limit on the card.

The act of overdrawing a bank account. This means that the account holder wrote a cheque or withdrew funds greater than the available balance in his or her bank account. Also known as insufficient funds.

Overdraft Annual Cost
A fee charged by the bank to cover the overdraft feature on a client’s chequing account. The client pays the fee even if the overdraft protection is never activated. This fee may be charged in addition to the one-time fee.

Overdraft Minimum Amount
The minimum amount that will be transferred to the client’s account if a potential NSF (not sufficient funds) occurs.

Overdraft Protection
A bank service that links a chequing account to either a savings account or line of credit to provide protection against insufficient funds or overdrafts.

Owner Financing
A real estate transaction where the person selling the property lends the buyer all or a portion of the money for the purchase.

Owner Occupant
A borrower who occupies or lives in the property used as security or collateral for the loan.

Occupied Property: Land is considered occupied when used as a residence, place of business, being cropped, grazed, fallowed, logged or reserved for hay.

Offer to Purchase: The document, which sets forth all the terms and conditions under which purchaser offers to buy a property. This offer, if accepted by a seller, becomes a binding agreement of purchase and sale.

Open Mortgage: A mortgage that may be prepaid, with or without penalty, prior to the expiration of its term.
Operating Expenses: The expenses incurred to keep a property in usable condition, not including mortgage payments or the accompanying interest.

Option: A right or a consideration to purchase or lease a property upon specified terms within a specified time. If the right is not exercised, the option holder is not subject to liability for damages. If exercised, the grantor of option must perform.

Option Agreement: A contract, with consideration, given to a purchaser of a property, giving him/her the right to purchase at a future date.

Parcel: Means land it is:
(i) a lot or block in a registered subdivision or a quarter section or any part of such lot, block or quarter               section;
(ii) a number of lots, blocks or quarter sections that are assessed in a single assessment;
(iii) any subdivided area that is assessed in a single assessment.
Plan of Subdivision: A pictorial description of the way in which a landowner intends to divide one large piece of land into numerous smaller pieces.

POLARIS: A term for computerized land records (Ontario) and the program that allows someone to search the land records using the internet.

Postponement Clause – A mortgage may contain a postponement clause by which the mortgagee permits the borrower to renew or replace an existing first mortgage that falls due prior to the maturity date of the later-registered mortgage.

Power of Attorney: Legal authority for one to act on behalf of another.

Power of Sale: The right of a mortgage to sell property, secured by mortgage, upon default of the mortgagor. Any mortgagee, provided the mortgage is made by deed, has a power, when the mortgage money comes due and us not paid by the mortgagor, to sell the mortgaged property.

The proceeds of sale of a mortgage property are used to discharge any prior encumbrance to which the sale is not made subject; to meet the costs of the sale; to pay the mortgagee’s debt – principal, interest and costs; to pay the due debts of other mortgages; and the balance, if any, foes to the mortgagor.

PREIG Canada: Professional Real Estate Investors Group (PREIG) Canada

Proceeds: The total amount from a public auction or private sale.

Promissory Note: A promise to pay a specified amount of money on a demand or by a fixed date.

Property Identification Number (PIN): Usually made up of a five-digit block number and four-digit property number and serves as the unique identifier for every property brought into the computerized system of land records.

Property Management: The maintenance, supervising, renting, collecting and paying of expense in regards to real estate.

Pyramiding: The process of building real estate wealth by allowing appreciation and mortgage principal reduction to increase the investors’ equity in a series of ever larger properties.

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.

Quiet Enjoyment
The right of a lessee (tenant) to use the leased property without interference from the lessor (owner).

Quiet Possession
The right granted by a mortgagee to the mortgagor to use the property without interference by the mortgagee until there is default. Also vice versa.

Quit Claim
In conveyancing, to release or relinquish a claim. In mortgages, a form of title transfer of ownership from the owner to the mortgagee. A default remedy.


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

Rate Cap
A predetermined limit that dictates how much the interest rate on a loan can change, either at each adjustment period or over the life of the loan.

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. To lock-in your interest rate with, fill out our easy-to-use online mortgage application.

Rate Index
A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.

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.

A comparison of two figures used to evaluate business performance (e.g. debt/equity ratio and return on investment). It is a relation in degree or number between two similar things.

Real Covenant
A covenant that is so related to an estate in land that the benefit passes to a purchaser or assignee of the land and may be enforced at law.

Real Estate
The physical land and appurtenances including structures affixed thereto.

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.

Real Estate Attorney
An attorney or lawyer who specializes in real estate transactions. This includes dealing with property tax issues and the transfer of land and buildings.

Real Estate Broker
An individual who is licensed to represent a buyer or a seller of real estate and collects commissions for the work. Most brokers have agents working for them and they collect a portion of those commissions in exchange for providing office space, marketing, and other overhead.

Real Estate Investment Trust (REIT)
An investment trust that specializes in investing in real estate related investments, including mortgages, construction loans and real property in varying combinations.

Real Property
The interests, benefits, and rights inherent in the ownership of the physical real estate. It is the bundle of rights with which the ownership of real estate is endowed, with limitations, and does not include personal property. Often called “property”, “real estate”, or “land”.

The process of creating a new base for property taxation by updating assessments to reflect more current values. Ontario had its first province-wide reassessment in 1997, its second in 2000, and its third in 2002.

Real property.


A manufacturer’s reduction on the price of a vehicle as an incentive for potential buyers to make a purchase. Rebates often appeal to buyers with no credit or less-than-perfect credit who do not qualify for the lowest-rate loan. A rebate may also appeal to first-time buyers who don’t have much of a down payment or a trade in.

Rebate Card
A type of credit card where customers accumulate cash, points, merchandise, or services based on card usage. Customers basically receive a small pay back for using the card.

Any increase in loan based in part or in total on unforeseen increased costs incurred during construction.

In connection with mortgage actions, an appointee of a court, requested by a mortgagee, to receive and account for the rents and profits from the mortgaged premises.

A prolonged period of time (often defined as two successive quarters) in which economic activity declines or decreases.

Recognized Gain or Loss
The amount of gain or loss reported for income tax purposes. You may be able to defer recognizing gain or loss on certain property exchanges, such as like-kind exchanges.

1. Getting two things to correspond. For example, making sure your chequebook agrees with the bank’s records. 2. Reestablishing cordial relations.

The transfer of title to the borrower after a mortgage is completely paid.

The duty of a mortgagee, on being paid the principal, interest and costs due by the mortgagor, to hand to the mortgagor the title deeds together with an executed reconveyance of the mortgage property.

The act of paying off one mortgage with another mortgage to take advantage of lower interest rates. Refinancing is also used to transform equity into cash for vacations, home improvements, or for consolidating debt. CanEquity has access to some of the best refinance products available on the Canadian market.

1. To give back, return, or repay (typically money). 2. The excess of your withholding and estimated tax payments for the year that you paid over your tax liability. The Federal Government then issues a tax refund if you paid more taxes over the year for your tax bracket.

Regional Bank
A bank with a primary market in a regional or metropolitan area, but takes deposits from throughout the province in which it is located. In Canada it is generally called a Credit Union.

Registered Education Savings Plan
Education savings plans that grow tax free until a child is ready to pursue a post-secondary education, at which time the money is withdrawn to help finance the costs.

Registered Retirement Savings Plan (RRSP)
A savings plan introduced by the Federal Government to encourage Canadians to save money for retirement. The investment and the interest earned on the RRSP is sheltered meaning it will not be taxed as long as the funds remain in the plan.

Registry System
The system of land registration where all interests in land are recorded in chronological order. The registrar assumes no responsibility for the legal effect of the document.

Release of Covenant
An agreement by a lender to terminate the personal obligation of a mortgagor,
a. usually upon sale of a property to a new purchaser who is acceptable to the mortgagee, and who has signed an assumption agreement or other appropriate legal documents
b. releasing a guarantor whose covenant is no longer required.

An increase in the amount of land that occurs when a body of water (such as a river or sea) permanently withdraws.

Relocation Benefits
Monetary assistance and other considerations given to employees who must relocate at their company’s request. This can include reimbursement for packing and moving, house-hunting trips, and temporary housing/storage expenses.

Relocation Company
A company or business that specializes in providing assistance to individuals who are being relocated by their employers.

Renewal Agreement
An agreement whereby the lender may agree to extend the mortgage loan but possibly on revised terms as to principal repayments and interest rate.

Remaining Balance
The unpaid or remaining principal left on a loan.

Remaining Term
The length of time remaining for a borrower to pay off the rest of an installment loan as scheduled.

Rent Loss Insurance
Insurance that covers a loss in rental value or income if a property becomes unfit for habitation due to a hazard or damage.

A periodic payment or return that a tenant makes to an owner of land, as recompense for a right to use and profit from the exclusive occupation of that land, or any other corporeal property, for a determinable period of time.

Rent Roll
A statement listing the tenants in occupancy, the area or unit occupied by each, their lease expiry date and rent payable and other leasing details that may be required.

Repayment Period
With a home equity line of credit, that portion of the life of the loan that follows the draw period. During the repayment period, the borrower cannot take out any more money, but must pay down the loan.

Repayment Plan
Modifications made to the repayment terms of an existing loan after the borrower is delinquent. Often used when the borrower misses payments, but the lender does not foreclose.

Replacement Cost
Cost of replacing the subject property new with one having exactly the same utility.


Replacement Reserve
A cash reserve for the future replacement of fixed assets.

If a borrower stops making payments on a property, the lender has the legal right to take back the property.

Reproduction Cost
The cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.

Resale Value
The price or dollar amount that a property owner is able to negotiate when selling an existing home or property.

The cancellation of a contract as agreed by all of the parties involved.

Reserve Fund
Funds that are set aside or reserved by a home owner’s association or condo board for major repairs and improvements to common areas.

Formerly required to be maintained by the bank in accordance with Bank Act regulations, but are now phased out.

Resident Alien
A person who is living as a legal permanent resident, but is not a citizen of that country.

Residual Value
The value of the vehicle at the end of a lease agreement which is agreed upon at the time of signing.

Restrictive Covenant
A contract between neighbouring landowners restricting the use of one of the parcels. It must be negative in nature.

Restructured Loan
A mortgage in which basic terms — such as interest rate, term and monthly payment — are altered or restructured to prevent foreclosure on the property. This is not a regular practice in Canada.

The periodical balancing of an account made for the purpose of converting interest into principal, and charging the party liable therein with compound interest, e.g. half-yearly.

Retail Banking
Banking services offered to individual customers such as savings accounts, personal loans, cheque cashing, and RRSPs.

Retained Earnings
All of the profits or losses accumulated from prior years and from the present year’s income statement, minus dividends paid to you.

Any increase in value, profit, or income that is earned from an investment.

Return on Equity
The percentage that the annual cash flow after debt service is of the equity in the property.
Annual Cash Flow – Debt Service

Return on Investment
The percentage that the annual cash flow after debt service is of the cash investment in the property.

Return on Investment
The gains or profit from an investment that is typically expressed as equity divided by cash flow.

Reverse Mortgage
A type of mortgage loan that allows elderly homeowners to convert built-up equity into cash. The loan comes due if the homeowner sells, moves, or passes away.

A right to future possession retained by an owner at the time of a transfer of an owner’s interest in real property.

A term used by credit card issuers for those card holders who do not pay their card balance in full each month. These card holders carry a partial balance into the next month. Approximately seven out of 10 cardholders revolve their debt.

Revolving Credit
A type of credit line that does not have a specified repayment schedule, but may require a minimum payment to cover interest and contribute to paying off the principal. This is typical for credit card loans, chequing account cash reserves, or overdraft accounts that have pre-approved lines of credit.

Revolving Line of Credit
An agreement between a lender and a borrower where the lender agrees to loan a specific amount to a borrower. Once the money is repaid, the borrower is allowed to borrow the amount again. Credit cards are an example of revolving credit.

Right of First Refusal
An agreement made by a property owner which gives a specific buyer the opportunity to purchase the property before it is offered to anyone else.

Right of Survivorship
The distinguishing feature of joint tenancies and tenancies by the entirety which provide that, where land is held in undivided portions by co-owners, upon death of any joint owner, their interest in the land will pass to the surviving co-owner, rather than to their heirs or devisees.

The right to pass over another’s land, more or less frequently, according to the nature of the easement.

Roll In
This term means that certain closing costs are included or rolled into the mortage loan. As a result, the borrower has lower out-of-pocket closing costs and higher monthly payments. See also “Roll-in Loans.”

Roll-in Loans
A type of refinancing loan that incorporates any closing costs or fees into the loan. This type of loan is great for those who have a reasonable amount of home equity, who want to reduce overall interest expenses, and who plan to stay in their homes.

Roll Over Mortgage
A type of loan where the interest rate is set for a specific term. At the end of this term, the mortgage is said to “roll-over” and the borrower and lender may agree to extend the loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

Royalty Income
Payments or money recieved for the use and exploitation of certain kinds of property, such as artistic or literary works, patents, and mineral rights.


Raw Land: Undeveloped or unimproved land

Real Estate Broker: An individual who represents a vendor or buyer in a real estate sale and who often employs sales agents.

Real Property: The combination of the tangible and intangible attributes of land and improvements.

Realtor: A registered word that may only be used by an active member of a real estate board affiliated with the Canadian Real Estate Association.

Reference Plan: A pictorial description of a piece of land used for the purposes of clearly identifying the location of easements, rights of way, newly created subdivided properties, and other similar items.

Regional Municipality: Is a municipality crated by a special act of legislature, and is a federation of all the local municipalities within its boundaries. Each of the local municipalities in the region has an elected council, and designated members of all of these councils combine to form the regional council. The regional councils are responsible for regional-scale functions such as overall land0use planning, social services, major roads and trunk sewer and water systems. Local councils are responsible for community services such as recreation, libraries, local roads and garbage collection.

Registration:  The submission of an instrument of interest in land to the land registrar for entry into the public record.

Reserve Bid (Price): A minimum sale price set prior to public auction.

Right-of-Way: The right to pass over another’s land more or less freely, according to the nature of the easement.

Road Allowance: A strip of land set aside in original or new surveys for road purposes.

Road Frontage: The distance that a parcel of private property adjoins a public or private road. Substantial road frontage usually greatly enhances  the market value of the property.

Sale Holdback
A percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee who has assumed the responsibility of the mortgage by the appropriate legal document.

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.”

Sale Leaseback
A technique in which a seller deeds property to a buyer and the buyer simultaneously leases the property back to the seller, usually on a long-term basis.

Schedule I Banks
A designation in the Bank Act that refers to Canadian-owned banks that are widely held. This refers to banks where no single owner holds more than 10% of shares.

Schedule II Banks
A designation in the Bank Act that refers to foreign-owned banks and closely held Canadian banks. This refers to banks where a single owner may hold more than 10% of outstanding stock.

Schematic Designs
Structural plans or drawings for a building’s mechanical systems which often include plumbing and electrical functions.

Seasonal Deficiencies
Work necessary to finish a property that cannot be completed immediately because of seasonal or climatic conditions.

Seasonal Unemployment
Changes in the climate and other economic conditions can cause higher unemployment at various times throughout the year. For example, forestry, fishing, and construction are often affected by weather and are only viable during certain months of the year. Retail sales positions are also affected by seasons and holidays because of consumer shopping trends and patterns. For example, additional staff is required during peak shopping seasons such as Christmas.

Secondary Financing
Financing real estate with a loan, or loans, that is subordinate to a first mortgage.

Secondary Mortgage Market
A market where existing mortgages are bought and sold.

Second Mortgage
A mortgage placed on real property which is already encumbered with one mortgage. Determination of first, second, third mortgage is by priority or registration (time and date).

Secure Socket Layer
SSL is a application layer protocol created by Netscape for managing the security of message transmissions in a network. SSL uses the public-and-private key encryption system from RSA, which also includes the use of a digital certificate.

Secured Card
A type of credit card that is secured with a savings deposit from the cardholder. The deposit acts as insurance against the outstanding balance if the cardholder defaults on his or her payments. This type of card is often beneficial to those with little or no credit history, or to those who want to rebuild poor credit.

Secured Debt
A debt that is secured by a lien on a debtor’s property (typically a mortgage loan) that may be taken by the creditor if the debtor defaults on his or her payments.

Secured Loan
The borrower must provide collateral in order to borrow the money.

Negotiable instruments such as stocks and bonds.

Securities/Investment Dealer
An individual who acts on behalf of another party to buy and sell securities and other investments. Also called an underwriter.

1. Something deposited or given as assurance of the fulfillment of an obligation. For example, property is often used as collateral for a loan. 2. A document which indicates ownership such as a stock certificate or bond.

Security Deposit
With vehicle leases, it is an amount of money, often the same as one month’s payment, held by the dealer to ensure the vehicle is returned in good condition. The security deposit is returned at the end of the lease agreement minus any fees or damage charges. Also called a reconditioning reserve.

Servicing Agreement
A written agreement between an investor and mortgage loan correspondent stipulating the rights and obligations of each party regarding the origination and continuing administration of the loans.

Self-Employed Person
An individual who owns and operates a trade or business rather than working as an employee for company. 1. You are self-employed if you are a sole proprietor or a partner working in a business. 2. You can be an employee and self-employed at the same time if you have an independent business outside of your regular employee hours. To qualify for many business tax exclusions and deductions, the business must make a profit in three of five years. In most cases, to qualify you must take and average of the last two – three years tax assessments.

Seller Broker
An individual who earns a commission (paid by the seller of a property) in exchange for finding a buyer and assisting in the negotiation for the real estate transaction.

Seller Carryback or Transfer Back
A form of financing where the property seller accepts a down payment and agrees to accept payments until the property is paid for in full.

Seller’s Market
When the real estate market favors the seller. This type of market usually means the seller is expected to sell quickly and for market or above market value.

Semi-custom Home
A house in which the layout is predetermined by the builder. This means the buyer cannot alter the layout, but he or she can specify some of the features including the type of cabinets and floor coverings.

Service Charge
Fees charged to customers for specific services or as a penalty for not meeting certain requirements such as insufficient funds in a chequing account.

Service Contract
A type of contract that covers certain vehicle repairs after the manufacturer’s or dealer’s warranty expires. Extended warranties are sold by vehicle manufacturers, dealers, and independent companies. With a new vehicle, the extended warranty must usually be purchased by the end of the first year of ownership. Also called an extended warranty

Servient Tenement
The parcel of land over or through which an easement runs.

Settlement Points
Regional collection points in the clearing and settlement system operated by the Canadian Payments Association. Settlement points forward each bank’s regional balance to the Bank of Canada in Ottawa at the end of each day to allow the central bank to adjust the banks’ balances with the central bank.

Settlement Statement
A document that contains the details and conditions of a settlement. It describes whom must pay, the amount to be paid, and to whom the money is to be paid.

The subdivision of a parcel of land.

Share Certificate
A certificate of deposit issued by a credit union that pays a specific dividend if held for a specific period. It’s the credit union equivalent of a certificate of deposit. A penalty is usually assessed if all or any of the principal is withdrawn before maturity.

Shared-appreciation Mortgage
A type of mortgage loan where the lender offers a below-market interest rate in exchange for profit sharing when the property is sold. This is typically only done with private funds/lenders.

Shared-equity Partnership
An agreement between multiple buyers where one buyer inhabits the property and the other buyer has an ownership stake as an investment. The partners split the capital gain after the property is sold.

Shareholder’s Equity
The difference between the assets and liabilities of a corporation, sometimes called net worth. Refers to ownership interest in common and preferred shareholders in a company.

Sheriff’s Certificate
A signed statement from the sheriff’s office certifying that there are no Writs of Execution in the sheriff’s hands against specific land and that he or she has not sold the land within a specified period.

Short Tax Year
A tax period that is less than 12 months. This typically occurs with business start-ups or with the transition to a tax year ending on a different date. Short-Term Capital Gain or Loss An individual’s profit or loss from the sale of a capital asset that is held for one year or less. Short-term Liabilities Money that must be paid in less than a year (12 months), including wages, short-term loans, taxes, credit card balances and long-term loans.

Simple Interest
Interest that is calculated only on the principal balance, without compounding.

Simple Interest Loan
A method of allocating the monthly payment between interest and principal. The interest charged is determined by the unpaid principal balance on the loan, the interest rate, and the number of days since the last payment. The rest of the payment goes to the principal. Making early payments or additional payments reduces the loan’s principal and cuts the total interest paid over the life of the loan.

Small and Medium-sized Enterprises (SMEs)
There are many definitions for this term, but banks define small businesses as those having authorized credit limits of $500,000 or less, while medium-sized businesses have authorization levels of up to $1 million.

Smart Card
A card with an imbedded computer chip which stores more information, performs more functions, and is more secure than a credit card or debit card. Smart Cards are often used at colleges or universities for purchasing goods and services on campus.

Social Insurance Number (SIN)
The Government of Canada assigns Social Insurance Numbers to all individuals with an income or those who pay taxes. Individuals must apply for this number. By law, you are required to provide this number to financial institutions with which you have an interest-bearing deposit account.

Society for Worldwide Interbank Financial Telecommunication (SWIFT)
A co-operative owned by the international banking community that operates a global data processing system for the transmission of financial messages.

Specialized Financing Corporation
A term in the Bank Act referring to specialized business-management services such as making investments, negotiating mergers and acquisitions and many other services traditionally offered as merchant-banking services.

Speculation Home or Spec Home or Built on Spec
A house that is built before it is purchased on the assumption that a buyer will be found.

Speculative Builder or Developer
A company or individual that builds houses without a commitment to buy or lease from a buyer or tenant.

Specific Performance
An equitable remedy to compel performance of a real estate or mortgage contract according to the specific terms of the contract.

The difference between the cost of money and the yield on the investment.

Spot Zoning
The zoning of a small area of land, or one or more properties, for a use that is not in harmony with the normal zoning plan for the area, especially if a small area is rezoned in a way that does not conform with the surrounding neighborhood. Spot zoning is normally invalid if the permitted use is very different from the surrounding area; the area involved is small; or it can be shown that the municipality has favored one landowner to the unreasonable detriment of the surrounding area, or so as to prejudice the intention of a comprehensive plan.

Square Footage
The area within a building or structure that is calculated by measuring each rooms by length and width and adding the total.

A time period where the unemployment rate and the rate of inflation are both relatively high.

Standard Card
The most basic type of credit card that is offered to customers. This type of card is typically given to new credit card holders to help them establish credit. Those with higher incomes typically opt for credit cards with more options and higher limits such as a gold or platinum card.

Standby Commitment
An agreement by a lender to provide a certain amount of takeout mortgage financing on specific terms in the future. This commitment enables the borrower to arrange construction financing from other sources. The commitment is issued for a fee and the lender is willing to disburse the committed funds in the event that a permanent loan on more favourable terms is not obtained.

Standby Fee
A sum of money given by the borrowers to the lender to hold a mortgage commitment for a certain period of time. The fee is normally non-refundable.

Standing Mortgage
A mortgage that provides for equal, regular lump-sum payments of principal, usually quarterly, plus accrued interest.

Starter Home
A relatively small and inexpensive property that is typically bought by first time home buyers. This type of property is usually traded up for a more expensive property once the home owner has gained equity in the property.

A paper record of transactions in a bank customer’s account(s) for a certain period, usually each month, which shows debits, credits, transfers, payroll deposits, account balance, cheque fees, service charges, ATM activity, etc.

1. A law established by an act of the legislature. 2. An act of a corporation or its founder intended as a permanent rule.

Statute of Frauds
A law which provides that certain contracts must be in writing to be enforceable at law. This includes real estate contracts.

Statute of Limitations
A period of time specified by statute within which an action at law must be brought or else be forfeited.

Step Down Lease
A lease that allows for decreases in a rental payment on specified dates.

Step-rate Mortgage
A fixed-rate mortgage loan where payments are lower at the beginning of the loan, typically for two years, but then increase after the specified time period.

Step Up Lease
A lease that allows for increases to rental payment at certain time periods.

Sticker Price
This shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price (MSRP), the manufacturer’s destination charge and the fuel economy (mileage). It is the Monroney label affixed to the car window and is required by federal law. The label may not be removed by anyone other than the purchaser.

Shares are purchased in exchange for owning a part of a specific company and can be traded on the stock market.

Sub-prime Borrower
A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.

Sub-prime Mortgage
A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.

A real estate agent who finds a buyer for a property, but is not the property’s listing agent. The subagent usually earns a portion of the commission.

An individual or company that does specialty work for a general contractor such as an electrician or plumber.

Subject to, or junior to.

Subordinate Loan
A mortgage with priority that is below that of another mortgage. This includes second or third mortgages, or home-equity loans.

The act of a party acknowledging by written recorded instrument that a debt due is inferior to the interest to another in the same property. Subordination may apply not only to mortgages but also to leases, real estate rights, and any other type of debt instrument.

A doctrine adopted in favour of the insurer in order to prevent the insured from recovering more than a full indemnity.

Subscription Policy
An insurance policy that states two or more insurance companies are sharing the risk.

The guarantee given for the performance of someone else.

A property survey is a process by which land boundaries and areas are determined and defined and improvements may be plotted thereon. Surveys are also used for locating and identifying property lines, improvements on the land and easements on the land.

Surveyor’s Certificate
A formal statement signed, certified, and dated by a surveyor giving the pertinent facts about a particular property and any easements or encroachments affecting it. These are no longer available in Ontario.

The right of an individual to secure ownership by reason of his or her outliving someone with whom he or she has shared undivided interest in the land.

An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other’s to meet their separate requirements.

Sweat Equity
The value of the work, including renovations, maintenance, or repairs, put into a house by its owner. This can be used in place of a full down payment (up to and including 50% of a down payment).

A group of lenders that share in the principal disbursement of a loan to spread risk or to comply with statutory restrictions on loan size.

Syndicated Loans
Loans given to a company that are backed by a group of banks who share the risk of a large transaction. There is usually a lead bank and several participating banks.


Second Mortgage: A mortgage granted against the security of a property that already has been charged with a first mortgage and therefore as mortgage that ranks as a lower priority in the event of any claim against the secured property. A mortgage may be ranked as first, second, third etc… according to its priority. In practice, any mortgage that is subordinate to a first mortgage may be termed as a second mortgage.

Seizure: The act of taking possession, especially by legal authority or warrant. The act of taking hold or capturing property by force. The act of taking hold or capturing property by force. The forcible taking of possession, in particular by a civil authority or an individual.

Successful Purchaser: A successful purchaser is a person whose bid or tender is the highest offered and which is equal to or greater than the cancellation price. The purchaser, as a further condition, must pay the sale price and the land transfer tax with respect to the land and any accumulated real property taxes and interest charges before becoming the successful purchaser.

Surplus Properties: University property that is excess to the needs of a department is considered surplus property.  Disposal of surplus…

Survey: Surveyor’s report of the mathematical boundaries of land, showing location of buildings, physical features and quantity of land.

Syndicate Mortgage: A syndicated mortgage is where two or more investors invest in one specific mortgage. Syndicated mortgage investment opportunities vary in amount, degree of risk and geographical location.

Tax Arrears: These are real property taxes placed on or added to the collector’s roll that remain unpaid on January 1 in the year following that in which they are placed on or added to the roll. For example, taxes levied on January 1, 2005, become arrears if any portion is outstanding on January 2, 2006.

Tax Sale: The sale of a property at the instigation of the tax authorities, when the owner of the property has failed to meet a tax liability. The sale is usually by public auction, but it may be arranged by tnder or sealed bids. The purchaser may acquire an immediate title (tax title) and possession of the property offered for sale, or his right may be postponed in order to enable the delinquent taxpayer a specified period of time in which to repay the tax. The proceeds of the sale are used to pay the unpaid tax and the balance, if any, is paid to the delinquent tax payer.

In some cases, when tax due on a property remains unpaid, the tax authority may sell, at public auction, a lien they have obtained against the delinquent taxpayer’s property. A bidder who pays an amount equal to, or in excess of, the amounts due to the authority acquires a ‘tax certificate’ which may be converted into ownership or the property if the sums due are not paid by the delinquent taxpayer within a specified redemption period.

Take-out Loan
A first mortgage loan that is committed and expected to be made upon completion of a property with the loan proceeds to be used to repay an interim or construction loan.

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 Certificate
A certificate from the appropriate taxing authority giving the status of real estate taxes or other assessments affecting the 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 Liability
The total amount of tax owed by an individual.

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.

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  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.

Tenants in Common
An ownership of property by two or more persons, each of whom has an undivided possessory interest, which may be voluntarily transferred by alienation device or descent and is not subject to any rights of survivorship.

The manner or system of holding lands or tenements in subordination to some superior right, which in the feudal ages was the leading characteristic of real property ownership.

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.

Term Mortgage
A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.

Third-party Originator
An individual or company that begins a loan application, but transfers or sells it to a lender.

Time Deposit
A type of account where deposits are made for a specified length of time (until maturity) at which time the account reverts to another type of account or is “rolled over” for another fixed period of time.

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.

The means of evidence by which the owner of land has lawful ownership thereof.

Title Company
A company that reviews a property’s title prior to its sale. The company looks for any liens or claims and works to fix any issues that are found. They also supervise the closing transaction and ensure that final money transfers are processed correctly.

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 Policy
A contract by which the insurer, usually a title insurance company, agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee or otherwise.

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.”

Title Search
An examination of public records to determine the state of title.

Torrens System
The Land Titles System as originated in Australia by a Mr. Torrens in 1858.

Total Debt Service Ratio (Single Family)
The ratio of an amount equal to the annual mortgage charges and acceptable installment account payments to an amount equal to the effective gross annual income of the borrower.

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.

Trade-in Value
When purchasing a new vehicle, the dealership will accept your existing vehicle as a partial or full payment towards your purchase. The amount credited is typically five percent below the wholesale value of the vehicle.

Trading Down
When a more expensive property is sold to purchase a less expensive property.

Trading Up
When one property is sold to buy a more expensive property.

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

A record of business conducted such as an action in a bank account. It may be a deposit, withdrawal, debit card payment, service charge, or interest payment.

Transaction Date
The transaction date refers to a calendar date when goods or services were purchased or when banking transactions such as cash advances, deposits, and withdrawals were made.

Transfer of Charge
Assignment of a mortgage.

Travelers’ Cheques
Travelers’ cheques are accepted just like cash, but they offer more security to travelers because they can be replaced if lost or stolen. These cheques can be purchased through your bank. Some banks charge a fee for travelers’ cheques while others include the fee in customer service packages.

Treasury Bills (T-Bills)
Short-term government obligations that are payable to the bearer and sold on a discount basis; the difference between a T-bill’s market or discounted price and its face or redemption value is effectively interest if the T-bill is held to maturity.

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.

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

Trust Deed
A written instrument duly executed, sealed, and delivered, conveying or transferring property to a trustee, usually but not necessarily covering real property.

Tenant: One who occupies land or tenement under a landlord.

Term: The actual length of time which money is loaned in a mortgage.

Term Mortgage: a non-amortizing mortgage under which the principal is paid in it’s entirely upon the maturity date.

Timeshare: A shared ownership where the owners are allowed a specific period of time for use of the property.

Title: The evidence of right that a person has to the possession of property.

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.

Underpayment Penalty
A penalty for not paying enough total estimated tax and withholding. To avoid underpayment penalties, you can pay a percentage of last year’s tax due or of the current year’s expected tax due. The taxes may be paid in the form of combined estimated and withholding tax payments.

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.

Unemployment Rate
The percentage of the labor force that is currently unemployed, but is seeking employment and is physically able to work.

Unsecured Claim
A claim or debt where the creditor has no guarantee of repayment because collateral is not required from the borrower. Credit is granted solely on an assessment of the debtor’s future ability to repay the claim or debt.

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.

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.

Consumers might find themselves “upside-down” when their outstanding loan balance is higher than the current fair market value of the item purchased with the loan. For example, this situation is most common with vehicle sales or leases because in the early years of a lease or loan, the vehicle depreciates quickly, but the outstanding balance stays high. See also “Depreciation.”

Up zoning
The practice of changing the zoning in an area typically from residential to increased commercial use. This is a controversial practice because up zoning allows for greater density and congestion 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.

Usury Rate
The maximum legal rate for interest, discounts, or other fees that may be charged for the use of money.

Unvalued Policy
An insurance policy in which the value of the insured property is not specified but, in the event of a claim, is left to be determined on the basis of the actual loss suffered, i.e. any payment made under the policy is based on the strict principle of indemnity.

A right to the use and enjoyment of the fruits or profits of another’s property, without fundamentally changing its substance. “Usufruct (usufruit) is the right to enjoy things of which another is owner, in the same way as an owner, but subject to an obligation to conserve the substance


If the letter V is displayed after the annual percentage rate (APR), this means the interest rate is variable and subject to periodic changes.

Having legal force. This means that if a property title is valid then it is effective or binding by law.

Valuable Consideration
An equivalent or compensation having value given for a thing purchased, as money, marriage, services, etc. It is the granting of some beneficial right, interest, or profit by one party in exchange for the performance of another.


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

Valuation Date
The date used for establishing the assessed value for all properties in the Province. The valuation date for 2001 and 2002 taxation years is June 30, 1999. Formerly called a “base year”.

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
See “Variable Interest Rate.”

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.

Vendor’s Lien
A notice registered on title by the vendor, protecting the vendor for the unpaid balance of the purchase price. It is usually collaterally secured by a mortgage.

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.

A type of credit card that is distributed by financial institutions around the world. A VISA card holder borrows money against a credit line and repays that money with interest if a balance is carried over from month to month.

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

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

Vested Interest: Fixed interest in a property for both now and the future, also unconditional.

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

Walk-away Lease
The most common type of vehicle lease where the lessee may return the vehicle at the end of the lease term, pay any end-of-lease costs, and the lease agreement is finished.This type of lease is also known as a closed-end lease. With this type of lease the lender assumes the risk of predicting the value of the vehicle (residual value) at the end of the lease term. Closed-end lease payments are somewhat higher than open-end lease payments.

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

The temporary advancement of a trust company’s own funds in disbursing mortgage loans pending sale to investor clients for whom the loans were originated.

1. A guarantee given by a company to the purchaser which states that a product is reliable and free from known defects and that the seller will, without charge, repair or replace defective parts within a given time limit and under certain conditions. 2. In real estate, warranty refers a document certifying clear title a property.

Any destructive act which permanently reduces the value of the security.

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.

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
A special form of second or junior mortgage granted against security of a property that is already mortgaged, whereby a new mortgagee assumes (that is, takes over) the obligation to pay interest and principal on the existing or ‘in-place’ mortgage (without assuming or extinguishing that mortgage, which retains its priority) and makes a further ‘wrap-around’ advance to the mortgagor. “A junior mortgage that secures a promissory note with a face amount equal to the sum of the principal balance of an existing mortgage note plus any additional funds advanced by the second lender.

A form of written command in the name of sovereign, state, court, etc. issued to an official or other person and directing him or her to act or abstain from acting in some way.

Water table: The level below which the ground is saturated with water. This is important to know before purchasing a piece of rural property. It is impossible in many areas to have a cellar or basement because of water table conditions. Supply of water from drilled wells is also influenced by water table conditions in the area.

White Print: A copy of the plan of subdivision on which the property that is being searched is located.

Wraparound Mortgage: A refinancing technique where the lender assumes the payments on an existing loan, and grants a new loan with a higher interest rate to the borrower. The new loan therefore “wraps around” the old loan.

WWB: World Wealth Builders providing training for Canadian Real Estate investors since 1993

A symbol used in contracts or other legal documents to indicate or mark where the signature or signatures of the parties involved must be written.

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.

Yield to Maturity
A percent returned each year to the lender on actual funds borrowed, considering that the loan will be paid in full at the end of maturity.

Zoning Bylaw: A bylaw prohibiting the use of land in an area for any purpose other than those explicitly set out in the bylaw. It is passed by a municipality and approved by the Ontario Municipal Board. In the Planning act, it is called a Restricted Area bylaw.

Zero Balance
When the outstanding balance on a credit card is paid and no new charges are incurred during the billing cycle, the card holder’s monthly statement shows a zero balance. This means nothing is left owing to the credit card company.

Zero Down Mortgage
This type of mortgage is a true 100% mortgage financing product that is available in Canada. See also “No Money Down Mortgage.”

Zero Lot Line
The positioning of a structure on a lot so that one side rests directly on the lot’s boundary line.

The uses to which property may be put in specific areas, as specified by municipal authorities.