Glossary of Real Estate Terms and Definitions
There are many terms used in the pre-construction condominium and real estate market. This glossary will provide a list of terms and definitions commonly used in the industry to help you gain a deeper understanding of the pre-construction condominium market and the buying process.
10 Day Cooling Off Period
Purchasers of pre-sale condominiums will have ten days to evaluate their choice once they purchase a property. If they choose to opt-out of the agreement they will be able to do so without facing any penalties.
Accelerated Amortization
The process in which the mortgagor will make extra payments toward their mortgage principle in order to pay it off quicker. Accelerated Amortization usually means more or higher payments than a traditional mortgage.
Affordable Housing
The Canada Mortgage and Housing Corporation (CMHC) defines affordable housing as a household that spends more than 30% of its pre-tax income on adequate shelter. It’s a broad term that can include housing provided by the private, public and non-profit sectors and can include all forms of housing such as rental, ownership and cooperative ownership.
Agreement Of Purchase & Sale (APS)
A written contract between the buyer and seller outlining the details of the purchase and sale of a property.
Amalgamation
The process whereby a single condominium is created by combining two or more adjacent condominiums.
Amendment
The ability to make changes to a real estate purchase agreement or contract in order to improve or correct the original document.
Amenities
A feature(s) of a property that makes it more appealing to potential buyers. In the form of a shared common space. Examples include fitness centre, concierge security, recreational area, guest suite etc.
Amortization
A technique used to lower the value of a loan or intangible asset over a period of time, in the form of regular installments. Example: Mortgages are monthly or biweekly payments amortized over a period of 25 years.
Apartment-Style Condominium
Similar to a rental apartment complex. These units may have originally been rental apartments and later converted to condominiums.
Appraisal
Assessing the value of a property. Real Estate Appraisers evaluate the price of the property based on market value and the upgrades made to the property.
Appraisal Fee
The cost of a professional appraiser coming to the property to evaluate its current market value. Fees for this may vary.
Appraised Value
Based on market value, the price that buyers are willing to purchase a property for. This can differ from the agreed upon purchase price for a home. Ex: The buyer may offer more or less than the appraised value.
Appreciation
The increase in the value of the property over time. The appreciation rate depends on the fair market value of other properties in the neighbourhood and any upgrades made to the property.
Approved Lender
Financial institutions approved by the Canada Mortgage and Housing Corporation (CMHC) to make loans under the National Housing Act. Mortgagers borrow money from these lenders and slowly pay it off over time.
Arrears
A part of a debt that is overdue that usually happens after missing one or more payments.
Art Levy
When the developer creates public art displays within the complex for zoning approvals. The cost of this art is sometimes passed on to purchasers of the condominium who pay for their share.
Asset
Items of value that are owned. Home-owners can consider their property an asset because it will increase in value over time. An asset of a condominium corporation include items such as furniture or recreational equipment.
Assigned Parking
A parking space in a common area that is assigned to a particular individual. If parking spaces are assigned then residents do not own the space, they only have exclusive access to park in that space. Assigned parking spaces are provided by the Condominium Board and can be changed at any time.
Assignee
In the form of a person or company that receives the transfer of property, title or rights from an assignor.
Assignment Agreement
When the original buyer of a unit sells their interest in a property before they take possession of it. The buyer can sell the contract they have with the builder to a new purchaser.
Assignment Sale
The sale of a pre-construction unit in the form of contract. An assignment sale happens when the unit or tower has not been built yet. No one can take ownership of this unit once it goes through an assignment sale unless the contract is sold to someone else. Once the building has been registered, the purchaser can transfer the ownership title.
Assignor
An individual who transfers their rights or interests in a property to another individual. The individual receiving the rights or interest to the property would be deemed as the assignee.
Back-To-Back Townhomes
A series of townhomes that share side walls and rear walls with one another. Each unit has its own entrance giving homeowners their own space. These homes still offer a one or two car garage and usually range from two to three bedrooms.
Balance Due on Closing
The amount of money the buyer must pay the seller on the day the sale of a property is finalized.
Balance on Completion
A statement that outlines the full purchase price that needs to be paid by the buyer to the seller, less any costs or payments that have already been made by the buyer, i.e. the remaining balance.
Bank Draft
A cheque or payment that is issued through the bank on behalf of the payer. A bank draft ensures the payee a secure form of payment and is usually required when there is a large sum of money being transferred.
Barrier-Free
Designed for those with physical and sensory disabilities. Barrier-free homes are made accessible and can accomodate all individuals. Barrier-free buildings will have elevators, ramps and lifts.
Boutique-style Condominium
A mid-rise building that offers less than 100 units in the development. Boutique-style condominiums are attractive because they usually offer larger floor plans and they bring a greater sense of community in the building because there are less units.
Breach of Contract
When an individual breaks their contract by not obliging by the rules and regulations listed on the contract.
Brochure
A condominium brochure is usually provided by the developer and outlines the details of the project including suite features, location and amenities.
Broker
An individual that oversees a real estate transaction and usually represents the buyer, seller or both. A real estate broker usually has a group of agents working under them and may be more knowledgeable about the area or development that their agents are selling in. They may also have more knowledge about real estate laws.
Builder
An individual or company hired by a developer to construct the condominium and bring it to fruition.
Building Codes
A set of rules and regulations that builders must abide by when the construction takes place. These building codes will ensure the structural sufficiency of the foundation and will ensure the safety of residents, tenants and guests residing in the building.
Bylaws
Rules and regulations that take place in a condominium community. These bylaws apply to owners, tenants, and visitors. Bylaws must be registered with the land titles office to be legally enforced. Bylaws can be adopted or changed by a majority vote of the unit owners.
Canada Mortgage and Housing Corporation (CMHC)
A corporation with the government of Canada that aims to provide affordable housing for everyone in the country. They research real estate trends nationally and internationally to provide advice to the government and consumers.
Cap
The limit an interest rate can increase on an adjustable rate mortgage (ARM). The cap is used in an agreement between the mortgagor and lender to ensure that the buyer’s monthly payment will not increase over the set amount.
Capital Appreciation
An increase in the value of an asset based on a rise in market price. It is the difference between the purchase price and sales price of an asset.
Capital Gains
The profits an investor makes when selling an asset, this can take the form of stocks, bonds or real estate. Once the asset appreciates in value and the investor sells it more than what they bought it for, this is when capital gains occur.
Capitalization Rate
The rate used to determine the rate of return that is expected to be generated on a real estate investment property. This number is based on the Net Operating Income (NOI) of which a property is expected to generate. It is used to determine the investors potential return on their real estate investment. The Cap Rate is calculated by dividing the property’s NOI by the Current Market Value.
Capitalized Value
The assessment of the value of an asset based on the total income expected over it’s economic life span.
Capped Adjustments (Capped Fees)
Buyers can negotiate a cap on closing adjustments before entering into a purchase of sale agreement which means that they are only eligible to pay the capped amount they agreed upon.
Capped Development Charges and Levies
Development charges and levies are charges from the government. They are essentially the tax that comes with a condominium closing cost and can be used on items such as schools, roads, pipes, childcare, emergency services etc. A capped development charge is when the buyers agreement will say that levy charges are capped at a certain amount so the buyer will not pay anything higher than the capped amount.
Cash Flow
When investors purchase a property, they are looking for something that will give them high cash flow, this is the amount calculated after all of the expenses are paid, including mortgage, taxes, repairs, operating expenses etc. While investors are getting tenants to pay them a monthly rental income, this is only passive income. The cash flow and long-term financial reward comes from the appreciation of the property.
Cessation of Charge
Once a mortgage is completely paid off, investors or home-owners will receive a cessation of charge confirming the official termination of a mortgage.
Clause
A clause in a real estate contract is a condition that will allow the buyer to get out of their contract without any penalties. A clause is there to protect the buyer should anything go wrong in the real estate transaction.
Closed Mortgage
This type of mortgage has a pre-payment limit. Borrowers will only be allowed to pay a certain percentage towards their principal every year and if they exceed that limit they will have to pay penalty fees. Closed mortgages usually have lower interest rates than open mortgages do. Borrowers are also committed to their entire term, if they opt-out of their mortgage before their term is up, they will have to also pay penalty fees.
Closing Date
The final step in the real estate transaction. The closing date occurs after the buyer formally accepts the offer and the ownership of the property is transferred over to the buyer.
CMHC Insurance Fee
Lenders need to pay CMHC an insurance premium which they will then pass onto the mortgagor. The insurance fee is based on the down payment of the home and the price that the mortgagor needs to borrow. The higher percentage of the price of the home and value, the higher the insurance fee.
Co-op Housing
A form of social housing that provides its members with non-profit housing. It is a method of renting that is considered to be more affordable as most co-ops only charge for upkeep or they are subsidized by the government. They are controlled by members who have a vote in decisions so there are no outside landlords. Tenants can live in this type of housing as long as they wish, as long as they comply with the bylaws or rules agreed upon by the members.
Comfort Letter
A mortgage lender might ask the borrower to write a comfort letter that gives a better explanation about their financial background. A comfort letter is usually requested when a lender needs clarity on financial circumstances that were not explained on their credit or employment documentation.
Coming Soon
Condos that will be starting sales soon without a finalized date. When sales begin, platinum agents will have first access to floor plans and prices.
Common Elements
Parts of the condominium that belong to all owners, including shared spaces such as amenities, lobbies, locker areas, elevators, walkways etc. Common elements can also include security systems, heating and air conditioning systems, light fixtures, hot water, electrical, road maintenance such as snow removal, garbage collection and repairs. Some freehold townhomes charge a small monthly fee for common elements, usually for road maintenance.
Common Elements Condominium Corporations
This is a unique type of condominium corporation as there are no units - investors own their property outright. The common elements are collectively owned and tied to a parcel of land. These common elements may include roads, a ski hill, golf course or community centre. Condominium owners can enjoy their common elements and jointly pay for the upkeep and repair.
Common Expenses
The shared costs of owning and operating common elements such as cleaning fees, repairs and maintenance of amenities. These expenses are split between every unit owner to lower the fees.
Common Law
When partners have lived together for at least 12 months in a conjugal relationship. Common Law partners are treated as marital partners in a court of law.
Community Housing
A type of affordable housing owned and operated by not-for-profit organizations and municipal governments. They offer long-term housing accommodations for individuals or families with low-incomes and provides them with affordable and safe housing options.
Compound Interest
The addition of interest to the principal sum of a loan or deposit. It is reinvesting interest so at the end of the period or in the next period the interest accumulates. Example: If a buyer purchases a home and it is worth 5% more than what they bought it for after the first year, the buyer keeps the home for the second year and it accumulates another 5% interest, it is now worth 10% more than what the buyer originally bought it for. Compound interest is essentially interest on top of interest.
Condominium
A residential building with shared common space. Each unit will have individual owners but the property is usually owned by a single company that oversees the maintenance of the entire building. A condominium can range from low, mid to high-rise and will could have a mix of residential suites, retail, office, shared amenities and live/work units.
Condominium Act
An act of legislation that regulates the creation, operation and maintenance of a condominium.
Condominium Board
A board of directors that manage a condominium corporation on behalf of the unit owners. They are responsible for making all of the major decisions in the condominium regarding the grounds, maintenance and finances.
Condominium Corporation
A legal entity made up of homeowners representing the interests of all unit owners in the condominium. A Corporation without share capital, created under the Condominium Act for the purposes of administering the operation, maintenance and repair of the common elements and assets of the condominium.
Construction Company
An organization, company or enterprise that builds a wide variety of towers, homes, roads etc. They are responsible for building condominiums and communities for both the private and commercial sector.
Construction Loan Agreement
The contract between the borrower and lender that describes the terms and conditions of the loan including how much was borrowed, the schedule the loan was disbursed and a breakdown of costs. Construction loans are usually short-term loans that provide funding for the land development and construction costs.
Contingency
A condition that makes a real estate contract invalid if certain events were to occur. These conditions can be established by either the buyer or seller and can be negotiated before the contract is signed. These conditions could prevent the deal from closing if any unforeseen circumstances were to occur.
Contract
A legally binding agreement between two separate parties. Real estate contracts are between the buyer and seller. The agent helps the buyer with the details such as how much they are willing to offer and how much they will pay for closing costs. A real estate contract also outlines any clauses such as penalties to fulfill obligations.
Conveyance
A legal term used to describe the transfer of property from one person to another. This term is mostly used when discussing the transfer of a title. A conveyance also refers to a written contract between the buyer and seller stating the agreed upon purchase price, date of transfer and obligations between both parties.
Date of Completion
The day the property is transferred to the buyer and the money is transferred to the seller. This is also the day the new owner can move in.
Declaration
Often referred to as a condominium declaration. It is a document that each owner receives once they purchase their unit. It provides information about the building such as information about the unit’s boundaries, shared common spaces, exclusive common elements such as patios, terraces, balconies, parking spots etc.
Default
Also known as a notice of default, occurs when the borrower does not make their mortgage payments. The lender will send the borrower a notice of default giving them a certain number of days to pay any outstanding fees. This is usually the first step in the foreclosure process.
Delayed Occupancy Compensation
Compensation the buyer receives if their move in date is delayed after their agreed upon date. Anyone that is entitled to delayed occupancy compensation can make a claim with the builder or Tarion within one year of taking occupancy or after termination of the purchase agreement.
Delayed Occupancy Date
Based on Tarion, there are four agreed upon occupancy dates that the builder must abide by when a buyer purchases a home, these include The First Tentative Occupancy Date, Final Tentative Occupancy Date, Firm Occupancy Date, Outside Occupancy Date. If the builder is delayed after the Outside Occupancy Date, the buyer is eligible for compensation from the builder.
Delayed Occupancy Warranty
A warranty program with Tarion that guarantees the buyer can move in to their suite by the agreed upon date. If the delay occurs after the permitted amount of days then the builder is required to compensate the buyer.
Deposit
A partial payment that indicates the commitment to follow through with a contractual agreement of a real estate purchase. This is the first step of the real estate transaction and comes before the down payment.
Depreciation
The decline in value of a piece of property. When a landlord purchases a home or condominium unit with the intention to rent it out, they will have to pay tax on the income they make from the rental property. However, the Canada Revenue Agency (CRA) recognizes this loss and will allow the landlord to deduct costs incurred from the property as a percentage of the asset’s overall value. Landlord’s can continue deducting expenses over a period of time as the property depreciates.
Detached
A stand-alone residential home that shares no common walls with another house or dwelling. A home set on its own lot and gives the buyer ownership rights to that set of land. Usually considered a single-family home.
Developer
A company, organization or enterprise that creates proposals with the city to create a residential building, residential homes or mixed-use communities that includes residential homes, retail, office space and community facilities.
Development Permit
The formal permission to begin construction or demolition of the proposed site. A development permit must come from the city in which the proposal is requested and must be approved before building takes place.
Discharge Fee
A fee paid when the borrower finishes paying off their loan or refiances with another lender, also known as an exit fee.
Discharge of Mortgage
When the borrower is no longer obligated to make payments to the loan of their mortgage. This could be due to the mortgage being paid in full or refinanced by the borrower.
Disclosure Statement
An official document that outlines the terms, conditions, risks and rules of a financial transaction, such as a loan or an investment.
Down Payment
A percentage of the purchase price that buyers must provide from their own funds. In other words, it is the difference between the purchase price of a property and the amount advanced by the mortgage lender.
Dual Front Townhomes
These townhomes greatly contribute to the exterior of the home and streetscape by eliminating garage doors and driveways. Dual Front Townhomes have a garage located behind the townhome, that can be accessed by a laneway or private street.
Dwelling Unit
A set of living quarters with a private entrance either from outside the building or from a common hall, lobby, vestibule or stairway inside the building. The entrance to the dwelling must be one that can be used without passing through the living quarters of some other person or group of persons.
Easement
The legal right to use another person’s land for a specific purpose. When a person or third party is granted an easement, they are granted the legal right to use the property, but the legal title to the land itself remains with the owner of the land.
Economic Depreciation
The measure of a decrease in the value of an asset over time. A property could depreciate in value due to new construction in close proximity, construction of new roads or road closures, a decline in the quality of a neighbourhood.
Education Levies
These levies are dedicated to building new schools in the area.
End Loan
A long-term loan that begins once the construction is completed. This loan is used to pay off construction loans or any other form of interim financing. These are interest-only loans that require full repayment of principal and accrued interest.
Equitable Mortgage
A mortgage in which the lender is secured by taking possession of the original title documents of the property that serves as security for the mortgage. It gives the mortgagee the right to foreclose the property if there are missed payments.
Equity
The difference between the value of the property and the amount still owing on the property. An appraisal is used to establish the value of the property and gives the owner the price they can sell it for. When the owner sells the property, they pay off the rest of their mortgage and anything left over is the equity or the profit they made on that property.
Equity of Redemption
Refers to the right of a mortgagor in law to redeem his or her property once the debt secured by the mortgage has been discharged.
Escape Clause
A set of terms or conditions in a real estate contract that will allow a party to terminate the contract without any repercussions.
Exclusive Use Agreement
An exclusive use area is part of the common property that is reserved for use by one condominium unit, examples include balconies, decks, parking spaces, and storage lockers. An exclusive use agreement gives an owner exclusive use of these areas and that means that the owner is responsible for maintaining these areas.
Extension Agreement
A term of a lease agreement that allows the tenant to extend the previous term of the lease under the existing agreement.
Facade
The front exterior of a condominium that faces the street. The facade is usually visually appealing and draws the eye to the architectural lines and design.
Features & Finishes
Usually includes the interior of a building or condominium unit. The buyer is entitled to all of the interiors and materials when purchasing a home. The buyer can make a selection with the type of samples, materials or upgrades they want in their home while it is being built.
Final Closing
The final phase of the pre-construction process when the city has completed their final inspection of the property and the building is officially registered, the buyer will then receive the title of their home.
Final Closing Costs
Once the building is registered and the buyer receives the title of their property, their lawyer will contact them to pay the remaining closing costs, these include various fees, title insurance, land transfer tax and the remainder of the down payment, if applicable.
Final Closing Statement of Adjustments
During the final closing process, the buyer's real estate lawyer will provide the buyer with a Statement Of Adjustments, a document that outlines the necessary financial adjustments that will be made as the property is transferred from the builder to the buyer. These adjustments will include recalculations on property tax and condominium/maintenance fees.
Final Tentative Occupancy Date
If the first tentative occupancy date cannot be met, the final tentative occupancy date must be set within 30 days of roof completion. If the final occupancy date cannot be met then the builder will have to provide 90 days of written notice and they can extend the occupancy date one more time for up to 120 days.
Firm Occupancy Date
A date set by the builder with 90 days of prior notice if the first two tentative occupancy dates cannot be met. If the builder extends this date once the firm occupancy date has been set then the builder will be reaching a delayed occupancy date which will make the buyer eligible for delayed occupancy compensation.
First Refusal
A clause in a lease or agreement that gives a potentially interested party the right to buy a property before the seller negotiates any other offers. This clause allows the seller to notify the potentially interested buyer before putting the home up for sale, the interested buyer has the right to refuse the offer. The right of first refusal usually refers to a tenant interested in purchasing the home they are renting.
First Tentative Occupancy Date
The anticipated date that the condominium unit will be ready for the buyer to move in, as agreed upon by the builder and buyer. Builders are allowed to set more than one tentative occupancy date.
Fixed-Rate Mortgage
The interest of a fixed-rate mortgage remains the same for the life of the loan. Fixed-rate mortgages are not affected by fluctuations in the market giving borrowers stable monthly payments.
Floor Plan
A visual drawing or scaled diagram of a condominium unit or home from a bird’s eye view. A floor plan is usually created by the architect and can help the buyer visually see how their home will be laid out. The floor plan may also provide measurements of each room to give the buyer an idea of how big their space will be.
Floor Plate
Usually refers to commercial real estate, the floor plate is the amount of leasable square footage on an individual floor of a building.
Free Assignment
The freedom for the buyer to sell their pre-construction unit before the condominium is finished. It is the ability to sign away the right to the condo.
Freehold Property
A type of ownership that means that the buyer owns the home and the property purchased. The owner has the right to change the interior, exterior or yard as they please. The owner essentially has the right and control of their land.
Gap Financing
A term associated with mortgages. It is an interim loan given to finance the difference between the sales price of a property and the funds available to the potential buyer to purchase the home. Example: A potential buyer who has $80,000 in financing for a home with a sales price of $100,000 is facing a $20,000 financing gap.
Graduated Amortization Financing
A type of fixed-rate mortgage that starts with an initial low monthly payment to help low-income homeowners and gradually increase over time. A low initial interest rate is also used to qualify the buyer. This is a good solution for millennials however, the success depends on future earnings of the mortgagor.
Green Design
Designing condominiums in a way that is safe for the environment and complies with the principles of social, economic and ecological sustainability. Also known as environmental design or environmentally sustainable design.
Gross Rent Multiplier (GRM)
Measures the value of an investment property by using a simple formula. This is great for investors looking at different properties to purchase and rent out as an added income. The GRM is calculated by dividing the fair market value by the estimated gross annual rental income. This calculation will tell the buyer that it will take 8 years to pay off their mortgage using their annual rental income.
Guarantor
A guarantor acts as a co-signer on a property and is willing to pay a borrower's debt in the event that the borrower cannot fulfill their payment obligations.
High Ratio Mortgage
A mortgage that is given when the borrower puts less than 20% of a down payment toward the purchase of their home. Buyers can qualify for up to 95% of their home’s value based on employment, credit score, amortization.
High-Rise
A multi-storey structure between 13 to 40 storeys. Many developers build high-rise towers because they can hold the most amount of residential units comfortably and can incorporate mixed-use elements such as retail, commercial and office space.
Holdback
Mechanisms used when a seller, at the time of closing the transaction, still has outstanding contractual obligations to fulfill before the sale proceeds can be released. Holdbacks are common in real estate transactions and can be negotiated by both parties in order to close the transaction.
Homeowners Association (HOA)
An elected group of homeowners living in a complex or community that collect fees from the home-owners in the area to maintain the common spaces and to enforce rules and regulations.
HST
If a buyer is purchasing a pre-construction unit, they will need to pay the harmonized sales tax (HST) on the purchase price. There are two ways to go about this, paying the tax with cash at closing or through the mortgage. Some builders will include the HST in the purchase price.
HST on Appliances/Chattels
Condominium units may come with an appliance package but buyers will need to pay HST on any appliances that come with the property. The HST will be determined by the quality and the number of appliances.
HST Rebate
Buyers purchasing pre-construction units can be eligible for an HST Rebate to alleviate the pressure of paying the HST of a condominium unit. Buyers can qualify for an HST rebate when they buy a newly built or substantially renovated home or condo. They can also qualify for an HST rebate if they purchase a new home or condo with the intention of renting, also known as New Residential Rental Property Rebate (NRRPR).
Improvements and Betterments
When a unit owner renovates, upgrades or improves their unit which will increase the value of their unit or property.
Induction Cooktop
A cooktop that uses an electromagnetic field to heat up the surface of the stove top. Induction cooktop are different from gas or electric cooktops and ultimately save money in the end because more heat is getting to the cookware rather than the air around the cooktop. Induction cooktops are quick, safe and efficient.
Insurable Value
The maximum dollar amount an insurance policy will cover in the event that an insured asset is deemed lost. This can include the improvements on the land and equipment that existed on the property. Insurable value can provide a full replacement cost of the property, reproduction cost, or depreciated value.
Insurance Appraisal
An insurance appraisal is conducted on behalf of an insurance provider to estimate the value of the property to be insured.
Interest Adjustment
The interest adjustment date sets the rate of interest payable on a mortgage and usually occurs one month before mortgage payments begin.
Interest Rate
The amount or percentage that is added to the loan when applying for a mortgage. This is how the lender makes money off of the loan. Interest rate can apply to a variable mortgage rate or a fixed mortgage rate.
Interim Occupancy
Interim occupancy refers to a period of time between the buyer taking possession of a unit and the final transfer of the property. This happens when the city has designated the property as safe to live in, but the building is not yet officially registered. The building is registered once the municipality does a final inspection. This means that buyers are legally allowed to occupy their suite, but the developer can’t give the buyer title of the property until the building passes its final inspection.
Interim Occupancy Closing Costs
When the buyer is occupying their unit in the interim, they will need to pay Interim Occupancy Closing Costs which is essentially rent to the developer as the mortgage still needs to be registered and the buyer needs to take full ownership of the property. These costs cover common expenses such as condo/maintenance fees, property taxes and monthly interest payments. Once the building is registered, buyers will pay final closing payments and can start making mortgage payments.
Joint Tenancy
When two or more people have equal shares in a real estate property. The owners are referred to as joint tenants and each individual has an equal right to keep or dispose of the property. Joint tenancy is a common form between spouses.
Land Titles
A system used to record legal ownership of a property and land ownership rights. A legal document conveying title to a property.
Land Transfer Tax - Municipal
Some municipalities such as the City of Toronto also requires a land transfer tax along with the provincial land transfer tax. The buyer always pays for the land transfer tax, not the seller. Rebates are available for first-time homebuyers as well.
Land Transfer Tax - Provincial
A tax required by the provincial government when a property title is transferred from one individual to another. Land transfer tax is based on the selling price of the house and can range from 0.5% to 2.5% depending on the price of the home. Ontario offers a rebate on land transfer tax for first-time homebuyers.
Landlord
A land building or owner that has leased their land to another individual, known as the tenant.
Landscape Architect
Designs the exterior or the landscape of the building. This type of work usually involves the integration of man-made designs with the natural environment. Many developers hire landscape architects to design or change a landscaped area outside of the building.
Law Society Levy (LSUC)
A lawyer that acts for one or more parties in a real estate transaction. Buyers will usually pay a Law Society Levy that will appear on their final statement of adjustments. Usually the real estate transaction levy surcharge is about $65 per transaction.
Lease
When an individual is not ready to purchase a home they may choose to lease a property, also known as renting. Individuals who lease become tenants of a property and sign a legal binding contract with their landlord.
Lease Agreement
A formal contract between two parties, the lessor and the lessee. This contract sets out the terms and agreements that allows the lessee to rent out the property from the lessor, the legal owner of the property. Also known as a rental agreement.
Leasehold Interest
An interest in land which includes the right to exclusive possession and use of an asset or property for a specified period of time under the terms of a lease agreement.
Leasing Service
When the landlord responsible for paying all of the property’s operating expenses including maintenance, taxes and insurance. In this type of lease the landlord typically provides utilities including water, electricity and maintenance services.
Legal Fees
Fees associated with the purchase of a property. Buyers need a real estate lawyer during the transaction to provide them with services such as preparing and reviewing purchase agreements, mortgage documents, title documents and transfer documents. They may also help with negotiating a contract between the buyer and seller.
Leverage
A technique that allows an individual to control a valuable asset. This term usually refers to real estate investors that buy and sell houses for a living. Leverage increases the potential for greater return on investment depending on how much they put down, how much they rent their property for and for how long they rent it out before they sell it.
Liability Insurance
In a real estate transaction, all parties involved in a sale must purchase liability insurance to protect themselves from the risk of a deal gone wrong. This can include a buyer’s bankruptcy, natural disasters that damage the property or any action between either party done with malicious intent. Liability insurance is designed to protect the insured in the event of a failed sale, so that he will not be held liable for the financial loss.
Live-work Space
A property that is used for both living and working in. This type of property or unit is designed to allow an owner or tenant run their business in their home. Some condominiums create live-work units in their complex to add to the residential and commercial space in their complex.
Loft
An apartment-style home that lies over top of another larger space. Lofts can usually be found in business districts sitting on top of a business residence.
Low-Rise
A small building that reaches up to 4-storeys high or less than 35 metres. Developers build low-rise condominiums to provide just enough housing for residents and to create a small community in the building.
Maintenance Fees
Refers to the cost that home-owners pay the condominium corporation for the upkeep or maintenance of common shared spaces such as amenities. This term is also known as condo fees.
Managed Property
A portion of property owned by a unit owner but managed by the condominium corporation under the terms of the bylaws. Requires the corporation to maintain, repair or replace any common property, i.e. anything in a condominium complex that is not contained within the boundaries of a condominium unit.
Market Price
The price agreed upon by the buyer and seller. It is not necessarily the price the home was listed for but the price the buyer is willing to pay and the seller is willing to accept.
Market Rental
The amount of rent a landlord is willing to charge and a tenant is willing to pay. Usually needs to be a reasonable amount based on similar prices of rent in an area or neighbourhood.
Market Value
An opinion of what an asset is worth based on supply and demand, what it would sell for in a competitive market and any upgrades in the property.
Masonry
Refers to any work that is done by a mason, a person who builds with any type of natural or artificial materials such as stone, bricks or tiles. This usually includes the mortar that is used to hold these building materials together.
Maturity
The maturity date of a mortgage is the date when the term ends or when all loans have been paid. The maturity date is also known as the renewal date in which the mortgagor has the option to renew their mortgage with their existing lender or refinance their mortgage with a new lender.
Meeting Minutes
The minutes are the formal record of a meeting between the developers and the municipality the developers are requesting to build in. The minutes include a summary of the discussions, decisions and changes made of a building proposal.
Micro Condos
Smaller than average living units, usually only contain one room that has the kitchen, living space and bed. Micro condos usually range between 200-400 square-feet and are efficient in the way they store their appliances and furniture.
Mid-Rise
An enclosed building reaching between 5-storeys to 12-storeys. Mid-rise buildings are usually shorter in height but wider in size and have enough units to fit residents comfortably while possibly adding some retail space in the building.
Mixed-use Condominium
A condominium that features more than just residential units. Mixed-use condominiums usually include commercial, retail and office space to provide condominium owners the convenience of having restaurants, grocery stores or other businesses in their building.
Monthly Interim Occupancy Fees
Occupancy fees that buyers make while they are occupying their unit but do not yet have a mortgage or ownership rights to the property. When a condominium needs to be registered by the city but is considered safe to live in, buyers essentially need to pay ‘rent’ to the developers for occupying the unit. These fees can include maintenance fees, property tax etc. on a monthly basis until the building is registered and the title is transferred to the buyer.
Monthly Mortgage Payments
A monthly payment that reduces a mortgage loan. Mortgage payments are mixed between principal and interest. The principal is the amount of the house that needs to be paid and the interest is the percentage the lender charges for lending the funds of the mortgage.
Monthly Rental Income
The income a landlord makes for renting out their property to a tenant. Tenants are expected to pay on a monthly basis and to pay the amount specified on their rental agreement.
Mortgage Approval
The amount a mortgagee has approved to lend the mortgagor for a certain term and a certain interest rate. Once the mortgage is approved, the borrower needs to start making payments to pay off their mortgage.
Mortgage Broker
A person, company or firm that connects borrowers to lenders. Mortgage brokers usually analyze the needs of the borrower and will present different rates from various lenders based on the borrowers interests. Mortgage brokers will get a commission from the lender for providing them with a new client.
Mortgage Interest
The percentage a lender charges for lending money to the borrower. The interest is the way the lender makes money for providing funds to the borrower. The borrower will pay off the interest while paying off the principle of their home through agreed monthly installments.
Mortgage Letter
A formal document provided by the lender to the borrower that outline the details of the agreement as well as the terms and conditions of the loan.
Mortgage Pre-Approval
A tentative promise from a lender that states they will loan a borrower a certain amount of money for the purchase of a property. The mortgage pre-approval goes through a process that checks the borrowers income level and credit score to ensure the borrower will pay their monthly mortgage installments on time.
Mortgage Refinance
The start of a new mortgage term with a different lender and different interest rate, usually happens at the end of the mortgage term known as the amortization period.
Mortgage Renewal
The end of an existing mortgage term and the start of a new mortgage term with the same lender.
Mortgage Term
The length of time the borrower is committed to a mortgage rate with a specific lender. After the end of the mortgage term the remaining amount of the mortgage will need to be renewed, refinanced or paid in full.
Multiple Assignments
When a buyer purchases more than one pre-construction unit. This usually happens when an investor is interested in multiple units that they can rent out. An assignment refers to the contract stating that the buyer purchased a certain unit before the condominium is built.
Mutual Agreement
The time in which the buyer and seller reach an agreement about the purchase price and the contract, usually occurs after negotiations are made.
Net Operating Income (NOI)
A technique used to calculate the profitability of a real estate property that generates income, i.e. rental property or commercial. This formula can be determined by calculating the Gross Operating Income (GOI) which is the real estate income minus vacancy or credit loss and subtract this number by the Operating Expenses (OE) such as maintenance fees, insurance etc. NOI is the best way to assess the financial health of a property because it is least susceptible to manipulation.
Net Purchase Price
The amount the seller is able to keep after all of the fees and commissions are deducted. Usually the fees include attorney fees.
New Condominium
This term refers to the new condominium developments that are coming to an area, neighbourhood or municipality. These condominiums are not yet selling, they are in the pre-construction phase and the developers would have just started to market the condominium before they start selling.
New Home Buyer Act Protection
A law provided by the government of Ontario that protects the interest of the buyer. This act provides warranties and protections for purchasers of new homes and ensures that homes are safely and properly built. The government of Ontario has authorized Tarion to enforce these warranties based on ‘The Act.’
New Residential Rental Property Rebate (NRRPR)
When a buyer purchases a pre-construction home or condo, they are obligated to pay HST on the purchase price. However, there is a rebate is applicable known as NRRPR that buyers can qualify for if the first people to occupy the home are tenants. This rebate comes from the Government and not the builder so buyers have to wait until after they purchase the home to apply for the rebate.
Non-Assignment Clause
If the contract contains a non-assignment clause it may prohibit the assignment of specific rights. A non-assignment clause gives one party the ability to sue for breach of contract. Usually a non-assignment clause on the Agreement of Purchase and Sale will prohibit the buyer from leasing, selling, assigning or transferring the property during the assignment term. It is important for the buyer to go over their agreement and make any negotiations before signing.
Non-Compliance Sanction
A sanction that may be imposed by a condominium corporation against unit owners, tenants, or visitors who violate the bylaws. Sanctions may be in the form of fines or other penalties.
Non-Conforming Use
Non-conforming means a structure that was built based on the zoning and development guidelines that were active at the time but if changes are made to those guidelines then the building no longer complies with those regulations. Non-conforming use is the use of a property that was allowed under the zoning regulations at the time but is no longer permitted use. Non-conforming use properties are usually allowed to continue to build as is but may be subject to restrictions.
Non-Delineated
Individual spaces in the condominium that are separate from residential units such as parking spaces, lockers etc. The lease of a non-delineated area usually ends with the sale of the related residential unit.
Notice of Arrears
A formal written notice to a unit owner of his or her unpaid condominium contributions such as maintenance fees. This is usually the first step toward legal action to collect past due contributions.
Notice of Assessment (NOA)
A statement by the Canada Revenue Agency (CRA) that is given annually after the tax period listing the details of taxes owing or a tax refund they are entitled to. The NOA also lists deductions of total income for the year. NOA’s are usually required by a lender or mortgage broker when applying for a new mortgage.
Now Selling
Pre-construction condominiums that are in the ‘Now Selling’ phase, this means that the units are selling and interested buyers can purchase the right to the condominium but are unable to move in until the condominium is built.
Occupancy Closing
Before a condominium is registered under the Land Registry System, purchasers must assume occupancy of the unit but will not take full ownership until the building is registered.
Occupancy Date
The date the buyer is allowed to occupy the property and await final closing.
Occupancy Fees
The right to occupy the unit before the unit is registered with the Land Registry System. Occupancy fees are known as ‘phantom rent,’ where buyers will pay maintenance fees, property tax and interest while they are waiting for final closing.
Occupancy Inspection
This inspection analyzes the condition of the interior and exterior of the property. Occupancy inspections are designed to meet the requirements of lenders and the government.
Occupancy Permit
A permit given to the developer by a municipality that certifies the new condominium unit has passed municipal inspection and is safe to occupy.
Offer to Purchase
An offer made by the buyer to purchase a unit that outlines the details of the offer and the terms and conditions between the buyer and seller.
On-site Management
Refers to property management services that are performed on the premises of the condominium complex such as ongoing repairs and landscaping.
Ontario Real Estate Association (OREA)
Represents a group of real estate sales agents and brokers that are licensed and registered under the real estate board. OREA helps realtors sell homes by providing education, support, skills, tools and resources to allow agents to be the best they can be and to properly represent their clients.
Open Mortgage
This type of mortgage gives borrowers the flexibility to pay off their mortgage at any time without a penalty. They usually have higher interest rates and variable rates that can change at any time. Borrows can always switch their mortgage to a closed fixed rate if an open rate is not for them.
Outside Occupancy Date
The latest date that the builder agreed to provide the buyer with occupancy of their condominium unit. The builder and buyer must agree with this date at the time of signing the purchase agreement.
Panel Ready Appliances
A custom cover that is installed on the front of an appliance (refrigerator, dishwasher etc.) that matches the cabinetry in the kitchen.
Parcel of Land
Lot of land that developers purchase to build on. A parcel of land has specific boundaries that distinguishes one parcel of land from another. One parcel of land can also have different owners to create a mix of residential, commercial and office space.
Parcel of Tied Land (POTL)
A Parcel of Tied Land (POTL) is a real estate entity that’s typically found in a townhome-style condominium complex. The POTL is made up of a freehold parcel of land and the home that sits on it (a standard condominium unit). Because it’s located within a condominium complex, the POTL is tied to a share of the property’s common elements, or “Common Elements Condominium” (CEC). These refer to the amenities the condominium corporation manages and often include such things as roads, sidewalks, parking lots and playgrounds.
Park Levies
These levies are dedicated to building a new park in the property of the condominium. Purchasers may need to pay for their share of the park.
Parking
Parking options are usually built below ground and are dedicated to residents in a condominium building. There may be additional parking spaces including visitor, retail and bicycle parking. Homeowners can also buy a parking space, known as assigned parking. Buying or renting a parking space ensures that a certain spot is reserved to an owner or tenant of a unit.
Parkland Contribution
Developers usually create a public park near their complex when they are building a condominium. Parks have many communal benefits and once a park is built in the complex, residents will pay a fee for their parkland contribution. These fees are usually shown on their Statement of Adjustments during their closing costs.
Patent Defect
Problems or issues with a property that the buyer finds upon inspecting their unit. These are considered obvious problems such as a hole in the wall, something broken etc. This is rare in a pre-construction development because no one has lived in the property prior and may be more common in a resale home.
Pergola
An open structure without a roof that provides partial relief from the sun. Often seen on patios and outdoor areas, this structure is often used for decorative purposes that is complemented with climbing vines or other plants.
Permit
A document that gives an individual or developer the authorization to build a new structure or demolish, relocate, repair, alter or make additions to an existing building.
Pick Up/Drop Off (PUDO)
An acronym that stands for “Pick up, drop off” and is often used to describe a dedicated zone in a condo, often in front of an entrance and reachable by cars, where residents and visitors can embark or alight from a vehicle.
Platinum Access
Platinum Agents will receive first access when selling pre-construction units, this is known as Platinum Access. Platinum Access means that a selected group of agents will receive first access to the floor plans available and are able to sell pre-construction units for a lower price. Platinum Access is one of the first stages of selling before the public opening.
Platinum Agent
There are very few platinum agents in the real estate industry. When a condominium is in the pre-construction phase, developers need to sell at least 70-85% of all units before they start construction. In order to do this, developers rely on Platinum Agents to sell most of these units. Platinum Agents receive first access to floor plans and can offer their clients special prices and incentives before sales open up to the public and the price increases. Registering with a platinum agent means that clients will get their first pick on all units and will receive the lowest prices available.
Popcorn Ceiling (Stipple)
A textured ceiling commonly used by most builders. The ceiling creates a texture that is similar to ‘popcorn’ and is created by spraying a styrofoam or stucco on the ceiling. Popcorn ceilings are usually found in living rooms, hallways and bedrooms.
Porte Cochere
A covered driveway entrance and exit where condo residents and visitors may be picked up or dropped off from a vehicle. Originally used to describe a coach gate or carriage porch. From the French term, “porte cochère.”
Post-Dated Cheques
A cheque with a future date written on it by the payer. Post-dated cheques are commonly used by tenants that give their landlords post dated cheques ready to be deposited for each month that they are renting.
Power of Attorney (POA)
As many Canadians age or significant life events arise, many people will appoint someone they trust to be their power of attorney. This is a legal, written document that says that someone will act on their behalf and manage their legal and financial affairs in the event that someone is unable to manage their own finances or if they are mentally incapable of making their own decisions.
Pre-Construction
There are many steps in the construction process. The pre-construction phase is the first step of this process. During this phase developers will create a proposal that they will submit to the city for approval. The proposal explains the site plans, architectural design, costs, materials used and specifications. During this phase, the city and developer will work out any potential issues and will make some changes to the proposal. Once approved, the developer will rely on Platinum agents to sell most of the units and at that point the developer will start construction.
Pre-Construction Condos
When a buyer purchases a condominium unit before the condominium is built. When buyers purchase a pre-construction unit, they are signing a contract stating that once the condominium is built they will have full ownership of the unit they purchased.
Pre-Delivery Inspection (PDI)
Before the buyer takes possession of their new home, the builder is required to guide the buyer through a pre-delivery inspection (PDI). During this inspection the buyer will see their new home for the first time and the builder will take them through a thorough inspection. If something is damaged, missing or not working properly the builder will add this to a PDI form indicating that there were issues before occupancy. After the inspection the buyer is expected to sign the PDI form. The builder will fix any issues listed on the PDI form right away.
Pre-Qualification
Refers to an evaluation to check a potential borrowers credit. This is the first step before a pre-approval on a mortgage that ensures the borrower has good credit to qualify for a mortgage.
Price List
The prices of a pre-construction unit. The price list varies depending on the square-footage and number of bedrooms a buyer wants. The price list may also include any special incentives, parking prices and locker prices.
Price Per Square Foot (PSF)
The calculation of a value of every square foot in a condominium unit. The price per square foot can be easily calculated and is a good way to compare the price of units in an area.
Principal
The balance of the remaining total of a home. Principal is a mortgage term and is referred to as the amount the buyer borrowed to purchase a home and has to pay back overtime. Whereas the interest is the amount the lender chargers for lending the money. When a buyer has a mortgage payment, they are paying off both their principal and interest.
Privately Owned Publicly Accessible Spaces (POPS)
Parks and open space are crucial for a thriving city. That is why parks and open spaces are being added to condominium developments. POPS means that parks are accessible to everyone but are privately owned because they are sitting on the developer's land. The city works with developers to create guidelines for public parks and encourages public parks to be built. These parks are maintained and operated by the developers which usually means that condominium owners will need to pay a fee to keep up the maintenance of the parks.
Profit
The amount a buyer or investor makes once they sell their pre-construction unit. Condominiums appreciate in value overtime, when an investor buys a property and sells it for a higher value they need to pay off the rest of their mortgage and any money remaining is their profit.
Property Insurance
Home-owners will need to purchase home insurance or property insurance which is a monthly or annual payment to an insurance company. Property insurance protects home-owners from a fire, theft or water damage. Insurance companies will usually cover the costs to repair any damage to the property or anything inside of the home.
Property Management
The process of overseeing and maintaining a property to generate income. Property management companies can work on residential, commercial or industrial real estate spaces. The property manager can act on behalf of the owner and usually seeks out tenants to rent a space.
Property Tax
Real estate properties are subject to taxation by local governments. Anyone that owns a property in the province is expected to pay property tax every year. This tax pays for services in the community including public education, emergency services such as local police and firefighters, libraries and community centres. Property tax is calculated based on the tax rate of the municipality the property sits on, the education tax rate and the property value.
Purchase Contract
When a buyer is interested in purchasing a property, a realtor will draw up a purchase contract. This contract includes the purchase price, possession date, contact information for both parties and legal land description. A purchase contract is also needed to get approved for a mortgage as the lender will ask for a copy of the purchase contract.
Quadrant
Four quarters of a circle. Usually describes a master-planned community that has four phases in the development.
Qualifying Buyer
A buyer interested in a real estate property and the seller determining that they have met the criteria to purchase a property. Qualified buyers are determined by a number of factors including being pre-approved for a mortgage, having sufficient funds to cover the down payment, having a good income to support the home and a good credit score.
Real Estate Council of Ontario (RECO)
An organization responsible for regulating the real estate trade and professionals on behalf of the provincial government. RECO enforces the rules and regulations that salespeople and brokers must follow in the industry and protect the public interest by creating a fair and knowledgeable marketplace.
Real Estate Investment Trust (REIT)
A company that primarily owns and operates income-generating real estate such as shopping malls, hotels, condominiums and office spaces. REITs are usually publicly traded and have a list of shareholders, they make money by buying large-scale real estate and collecting equity.
Real Estate Lawyer
Lawyers are necessary in the home buying process, they have a list of responsibilities including reviewing the purchase agreement and preparing mortgage documents, title documents and transfer documents. Real estate lawyers will also handle any disputes between the buyer and developer.
Realtor
A licensed real estate professional who is also a member of a real estate board. Realtors must follow the rules and regulations provided by their board to conduct fair real estate sales.
Registration
Registration occurs during the final closing process when the final documentation is signed and a bank draft is provided to the vendor to pay any outstanding funds. Once the vendor’s legal team receives the final documentation, the registration will be processed and the buyer will receive their mortgage and a title transfer.
Rental Agreement
A written contract between the landlord and the tenant. This is separate from a lease because a lease is a fixed-term agreement. A rental agreement states the term of the rental, the agreed-upon amount of rent for the duration of the term, what is included in the rent and what is not and the conditions for terminating the contract.
Rental Guarantee
A program designed for investors that will ensure that they receive guaranteed income on their property regardless of tenancy. It is a paid membership that provides landlords with coverage against lost rental income, payment of legal fees and court costs incase of a legal dispute.
Rental Management Service
Also known as a property management company. Landlords will sometimes hire a rental management service that looks for prospective tenants, collects rent and handles any maintenance or repair issues of the property. They maximize cash flow and minimize vacant tenancy while protecting the landlord’s investments.
Rental Rate
The amount of rent a landlord will charge a tenant during the lease term. Rental rates can be calculated based on a few factors including the rate of rent charged in the neighbourhood, the property’s worth, the demand for tenants and covering expenses. Once a landlord and tenant agree on a rate, the landlord will start charging them monthly.
Rental Ratio
The ratio of a rental income versus the price of a property. To find this ratio, take the annual amount of rent received and divide by the price of the property, that number will be the rent to value ratio.
Rental Replacement
A policy that states that any building that had rental units in it that is being redeveloped will need to replace these rental units in the new building. The new building will need the same number, size and type of rental housing units that have been affected by the redevelopment. The tenant residing in the previous building will need an acceptable place to reside during the redevelopment and has the right to return to occupy a new rental unit. Rental Replacement policies protect tenant rights and ensure that there are enough rental-dedicated units in the city.
Resale
Resale listings are any homes or condominium units that have been previously occupied or previously owned. The resale value of a home depends on the home’s condition, neighbourhood, local amenities as well as the overall economy and housing market.
Rescission Period
The period of time a buyer has to cancel the purchase of their condominium unit, this is also known as the 10-day cooling-off period. As long as it is stated in the contract, a buyer has 10 days to cancel their purchase for any reason without penalties.
Reserve Fund
The Condominium Act requires all condominiums to collect a reserve fund. It consists of money saved to pay for long-term repair or replacement of a condominium’s common property. Money is collected for this fund as part of the owner’s monthly contributions. The reserve fund is intended to ensure that the corporation has enough money to pay for future repairs.
Residential Condominium
A condominium built with the intention of only holding residential units. Residential condominiums do not have mixed-use purposes such as commercial, retail or office space in the building. Each condominium unit is individually owned and each homeowner has their own individual space while sharing common amenities.
Residual Income
Additional income generated once all personal debts and expenses are paid. Another revenue stream that is usually calculated through investments in stocks and bonds or real estate. Investment properties where someone is making money after mortgage and utilities/maintenance fees are paid is considered residual income.
Return on Investment (ROI)
A number that measures the rate of return on an investment property. The ROI can be calculated using a simple formula: A number (percentage) of the buyer’s total investment is calculated by dividing the amount the property is worth when the buyer sells by the amount they paid when they bought and then multiplying the result by 100. Real estate investments can provide returns through capital gains and also through rental income.
Right To Lease On Occupancy
Some pre-construction agreements state that the purchaser has no right to lease or sublease the property during the occupancy period. If the investor will be in a state of occupancy for six to twelve months with no right to rent out the property, the investment may become expensive. Buyers can negotiate the right to lease on occupancy before signing the purchase agreement.
Right To Recission
Allows borrowers to cancel a home equity loan or line of credit with a new lender three days before closing or cancel a refinance transaction with a new lender. The lender is required to return any fees taken within 20 days of the borrowers right to recission.
Sales Representative
Also known as a real estate agent or sales agent. A person that represents either the buyer or seller of a real estate property. They are licensed professionals that will arrange a real estate transaction and will negotiate a contract with the best interests of their clients.
Section 37
Payments that developers can make to the city in order to receive zoning regulations. If the developer wants to build something, they need to provide community benefit agreements in the form of cash in exchange for approval. Purchasers of a condominium may have to pay for their share of these community benefits.
Sellers Market
A term referred to when sellers have the upper hand in the market. They may get multiple bids on their offer and there is a lot of competition amongst buyers. A sellers market usually leads to higher sale prices on homes because the demand is so high.
Semi-Detached
A single family dwelling with two seperate homes and two separate owners that are split between a common wall. Semi-detached homes are built as a pair in which each house layout is a mirror image of the other.
Setback
A term that refers to the minimum distance that a house or a condominium must be built from the end of the lot line or the distance from the street. The specific setback distance is determined by the municipality that is in charge of zoning. Setbacks are determined to create a safe public space and to maintain a certain appearance.
Sewer Connection Fees (Utility Connection Fees)
A connection fee is charged to all new users or existing users that increase their use of the sewer system. The Connection Fee is designed so that existing users, both commercial and residential, do not have to pay to subsidize the cost of new sewer connections for any new users.
Site Analysis
Refers to the architectural process of evaluating a particular location and looking at elements such as topography, trees, waterways, habitats and weather before creating an architectural design. The site analysis will help architects determine the placement, form, structure and materials that will remain sustainable.
Site Inspection
A thorough inspection of all aspects of the condominium’s common property. It is one of the first duties carried out by a condominium’s Board of Directors. The site inspection may reveal any issues or concerns that need to be addressed by the New Home Warranty. Site inspections will also be carried out at least annually by the property manager and as required by reserve fund reporting professionals.
Site Plan Approval (SPA)
A process required by the city that developers must follow before they start building. A site plan approval ensures that buildings follow certain guidelines laid out by the city. Each site plan approval process varies per city, however, they all have similar guidelines. Design requirements must be approved by the city regarding site layout, street widening, parking, drainage and landscaping improving the quality and appearance of the development.
Smooth Ceiling
Smooth ceilings are usually used in kitchens and bathrooms while other rooms may have textured popcorn ceilings. Smooth ceilings are modern, blend seamlessly with the walls and create an elegant appearance in a room.
Special Assessment
A one-time charge declared by the board of directors to pay for unexpected expenses that cannot be covered by reserve funds. Unit owners must pay the special assessment in addition to their regular monthly condominium contributions. Special assessments are a one time fee and should not be used as a routine method of funding for major repairs, instead a reserve fund is used to future repairs.
Stacked Townhouse
A mix between a low-rise condominium and a single family dwelling. Stacked townhomes consist of separate housing units that are stacked on top of one another with a height of two to three storeys. A stacked townhouse will have private stairs to access upper units rather than shared corridors like a condominium.
Standard Unit By-Law
Based on the Condominium Act, all condominiums in Ontario are required to provide unit insurance on behalf of every homeowner. If repairs are needed in a condominium unit due to damage such as a fire or flooding, a condominium corporation is required to pay for those damages but only repair it based on the standard unit by-law. This means that condominium corporations will not cover any renovations or improvements made to the unit and the homeowner should have their own insurance to cover these expenses.
Statement Of Adjustments
A document that outlines the purchase price of the home and any financial adjustments that will be made as the property is transferred over to the buyer. Fees on the statement of adjustments may include land tax, condominium fees, utility charges, Tarion enrollment fee and development charges and levies.
Statement of Critical Dates
A form signed between the buyer and the builder that lists the agreed upon occupancy dates. The builder and buyer have to agree on three critical dates that state when the buyer can move into their unit. If the unit is not ready for occupancy by the Outside Occupancy Date, then the buyer can terminate the transaction during the purchaser’s termination period. The buyer will also be entitled to a delayed occupation compensation.
Status Certificate
A document that provides information about the financial status of a unit and/or condominium corporation. The status certificate contains information such as the condominium declaration, by-laws, budget, reserve funds, insurance, management contract and rules and regulations. The purpose of status certificates is to provide potential buyers with as much information as possible about their unit as well as the physical and financial situation of a building. Certificates also allow prospective owners to learn about the rules and regulations of the building.
Storage Unit
Storage facilities within a condominium may vary. Storage units in a condominium may include lockers that are located on the common property. Storage units on common property can be leased or assigned to unit owners and are considered exclusive use areas.
Studio
A condominium unit with one large room which combines the living room, kitchen and bedroom in a single room. Studio units are also known as bachelor apartments and are designed to suit one person that can use this room for multiple purposes.
Subsidized Housing
A type of affordable housing in which the government or a private organization helps pay the rent for low-income families. Anyone that is eligible for subsidized housing will pay 30% of their monthly income to their rent and the government or private organization will cover the rest. Subsidized housing can include co-operative housing or non-profit housing.
Tarion
A company created by the Ontario government to provide new homeowners with warranty to protect their biggest investment. This warranty protection is provided by Ontario’s builders and lasts up to seven years. They investigate warranty claims, resolve warranty disputes, provide closing protection for new home buyers and prosecute illegal builders.
Tarion Fee
The builder will pay the Tarion Fee for warranty protection and may pass this along to the buyer. The fee usually ranges from $400 to $1500 and the price is usually based on the price of the home.
Tarion New Home Warranty
This warranty covers all new Ontario homes and doesn’t cover renovated or previously occupied homes. This warranty will provide a new home buyer with two to seven years of limited warranties plus deposit protection and delayed closing compensation. It can cover anything from defects and violations of the Ontario Building Code that affect health and safety and major structural defects.
Tax Credit
A non-refundable credit that allows first-time home buyers to claim a tax refund of up to $750 in the same year they purchase a home. To receive a Home Buyer’s Tax Credit, first-time home buyers need to have a qualifying home which include condominium units, single-family homes, semi-detached homes, townhomes and apartments.
Tax Deduction
An income tax deduction lowers the amount of income subjected to tax. Home-owners or investors can deduct some expenses such as property tax, mortgage interest and rental expenses.
Tenancy Agreement
An agreement signed by a landlord and tenant that lists the details about the rental agreement including the term of agreement, the amount of rent owed, items included, responsibility of the tenant and the deposit amount.
Tenant
A person who rents or leases a dwelling from a landlord for residential or commercial purposes.
Tenants in Common
Co-owners of a property. Tenants in common share an equal amount of the title of their home. This type of ownership is common among spouses.
Timeshare
A timeshare is usually used for a vacation property and is an arrangement that lets the purchaser share the property costs with others in order to guarantee time at the property. Timeshare ownership splits the property between designated weeks including a fixed-week option where the owner can select the week they want to occupy the property, a floating week option that allows the buyer to choose weeks with certain limits and a point system where the timeshare is worth a certain amount of points and the buyer can use those points toward another property in the same system.
Title
A legal term that refers to the registered owner of a property. One or more people can be on the title of a property and can split the title between joint tenants or tenants in common.
Toronto Multi-Residential Tax Rate
The City of Toronto has a property tax rate for every property in the city including residential, multi-residential, commercial, industrial and farmland. This tax rate may increase by 1 or 2% every year and the amount of property tax charged depends on the property class.
Total Debt Service (TDS) Ratio
The percentage of a homeowners income needed to cover all of their debts. To calculate a TDS ratio add all monthly debts and divide that figure by gross monthly income and multiply that sum by 100. Lenders use this formula to determine if a borrower can manage monthly mortgage payments.
Tower-In-The-Park-Site
A style of building usually designed for high-rise condominium buildings. Tower-In-The-Park condominiums are popular among high-profile cities including New York and Toronto. They consist of high-rise buildings that are surrounded by green space and landscaping including trees and lawns. They are usually built away from the street to make room for an entrance with parking and have a simple architectural style.
Townhomes
A row of single-family homes that shares one or more walls with other independently owned units. They are usually uniform homes that are usually two-storeys high.
Transfer of Title
Title transfers can be completed by a real estate lawyer and is the process through which a seller transfers ownership of a property to the buyer. Transferring the title of a property with a lawyer will ensure the change of ownership is accurately documented and will protect the buyer.
Transit Score
A rating that measures how well an area is served by public transportation. This rating is based on a scale of 0-100. A transit score is useful for investors or tenants looking for a property in an area and are concerned about how well the public transportation is in that area.
Trustee Fee
A trustee is defined as a person who legally holds a piece of property for another person. In real estate, the bank or financial company that issues the loan for the mortgage is considered the trustee of the property. The trustee is entitled to be paid for the services he/she provides on behalf of the trust. Professional trustees, such as banks, trust companies, and some law firms will charge between 1.0% and 1.5% of trust assets per year and may charge a higher percentage for smaller trusts.
Unit
A unit is a living space that is owned by individual condominium owners. The unit boundaries are separately owned by purchasers whereas anything outside of the unit boundaries are owned by the condominium corporation and are considered common shared spaces.
Unit Boundaries
Marks the difference between private and common property in a condominium. Homeowners own everything within their unit and everything outside is owned by the condominium corporation.
Unit Rental
Landlords that rent out their condominium unit to generate an extra income. Tenants occupying a unit will need to abide by the bylaws in the condominium.
Utility
A service that is used by a household including electricity, gas and water. When a tenant is renting out a condominium unit, there is a Utilities Availability Clause in the landlord-tenant contract that requires the landlord to ensure the tenant's ability to acquire water, electricity and natural gas. This does not necessarily mean that the landlord puts those utilities in his or her name, it just means that the landlord will provide them in the unfortunate case that the tenant is unable to successfully contract for the services.
Utility Connection Fees
Utility Charge/Smart Meters - Hookup Fees: A connection fee or hookup fee is a one time administration charge to connect a new homeowners utility bills when they have a change in address. A smart meter tracks the amount of energy used in a unit or a household and is used as a communication gateway to the supplier. Utility companies are then able to charge for the amount of energy used in the household.
Vacancy Rate
The percentage of available units in a condominium or rental property. The vacancy rate shows the amount of units that can still be purchased or rented out.
Value Assessment
Determines the value of a home for property tax purposes. A residence is assessed to figure out the dollar amount its worth by the city to determine the amount the resident will need to pay their property tax.
Variable Rate Mortgage
A type of mortgage in which the interest rates will be adjusted, usually on a quarterly basis. This means that the borrower’s mortgage payments will fluctuate based on the interest levels changing. This type of mortgage is more of a financial gamble than a fixed mortgage rate which gives the borrower one interest rate and payment for the rest of the term.
Vendor
The vendor is another term for a seller. Usually a real estate contract is between the vender ‘seller’ and the purchaser ‘buyer.’
Victorian-Style
A style of architecture and design dating back to the mid-1800s to the early-1900s. This style is based on Queen Victoria who reigned between these years. Victorian-style has decorative patterns, bright colours, asymmetrical shapes and have a historic look. There are many modern condominiums being built in neighbourhoods or subdivisions that feature many Victorian-style buildings.
VIP Condos
One of the first stages in the sales of pre-construction condos. Purchasers interested in VIP Condos will receive first access to floorplans, special incentives and the lowest prices before sales open to the public.
Visitor Parking Space
Temporary parking spaces available in a condominium reserved for visitors and guests that come by to visit residents living in the unit. The amount of visitor parking spaces depend on the condominium and each resident may have a certain number of parking passes for visitors.
Walk Score
A rating between 0 to 100 that measures the level of walkability at any given address. A Walk Score will tell residents and tenants how walkable a neighbourhood is. A high Walk Score has many benefits including saving money on a car, maintaining a healthy lifestyle and protecting the environment.
Warranty Protection
There are different warranty protections for each new home provided by the province or programs such as Tarion. These warranties cover any serious defects caused by the structure or materials. These warranties protect the home-buyer for a certain amount of time.
Wide Shallow Floor Plan
Wide units provide an open-concept layout that give residents the ability to design their place as they please. Wide shallow floor plans offer a lot of space and bring in the most natural light. Since these floor plans offer so much space, residents will have more options when it comes to setting up their furniture based on their own personal preferences. These floor plans offer the most return when it comes time to reselling the home.
Zoning Approval
Approval required by the city before they issue a building permit for a project. The zoning approval is based on the zoning laws of the area and ensures that the building is being constructed within all the setbacks required and complies with the zoning requirements for land use and capacities.
Zoning Bylaws
Provincial or municipal laws that impose restrictions on the use of land. These bylaws will control how the land will be used, where a structure can be built, the types of buildings that are permitted on the land as well as the size, dimension, height, setbacks and parking requirements that are permitted.
Zoning Regulations
The process of dividing land into zones such as residential, commercial, agricultural, industrial. A zoning regulation is a type of regulation that states what cannot be done on the land. Developers need to abide by the zoning regulations of each municipality, some of these regulations will tell the developer how big they can build the tower, what the structure and form can look like and the placement of the building on the land.
