Real Estate Legal Terminology – Part 1
Navigating the Ontario real estate market can feel overwhelming, especially when faced with complex legal terminology and industry jargon. Whether you’re a first-time homebuyer, seasoned investor, or real estate professional, understanding these key terms is crucial for making informed decisions and protecting your interests throughout any property transaction.
Here is part 1 of our list of common real estate terminologies. Stay tuned for additional words to help you navigate your transactions.
Abatement – A reduction in the purchase price of a property due to defects or other issues discovered during an inspection.
Agreement of Purchase and Sale – A legal contract that outlines the terms and conditions of a real estate transaction.
Assessed Value – The value of a property as determined by the Municipal Property Assessment Corporation (MPAC) for property tax purposes.
Assignment of Rents – A legal agreement assigning the right to collect rent from tenants to a lender or other party.
Beneficiary – a person or entity chosen to receive assets or benefits from a donor in the event of their incapacity or death.
Bill of Sale – A legal document that records the transfer of ownership of personal property, such as appliances or furniture, from one person to another.
Bridge Loan – A short-term loan used to finance a real estate purchase while awaiting funds from the sale of an existing property.
Building Compliance – Adherence to building codes, bylaws, and regulations to ensure a property is safe and meets legal requirements.
Capital Gains Tax – A tax levied on the profit made from the sale of an investment property.
Caveat Emptor – A Latin phrase meaning “let the buyer beware,” emphasizing the buyer’s responsibility to perform due diligence on a property’s condition and potential issues.
Chattel – Personal property that is movable and not permanently affixed to a building or land, such as furniture or appliances.
Chargeback – A specific expense billed directly to the unit owner such as for damages repairs not covered by the monthly common expenses.
Clearance Certificate – A document issued by the Canada Revenue Agency (CRA) to confirm that a non-resident seller of Canadian property has complied with Canadian tax laws when disposing of taxable property.
Closing Cost – Fees paid at the end of a real estate transaction, including legal fees, land transfer taxes, and other expenses.
CMHC – The Canada Mortgage and Housing Corporation, a federal agency providing mortgage insurance and housing-related programs.
Conditional Offer – A purchase offer dependent on specific conditions being met before the deal is finalized.
Common Expenses – Monthly fees paid by condominium unit owners to cover shared expenses, such as maintenance and utilities.
Consenting Spouse – A spouse who agrees to a real estate transaction affecting their matrimonial home, typically providing written consent and receiving independent legal advice.
Discharge of Charge – The legal process of removing a lender’s claim or “charge” on a property’s title after a mortgage loan has been paid off in full.
Easements – The right to use someone else’s property for a specific purpose, such as accessing a shared driveway or utility lines.
Encroachment – When a structure or improvement on one property extends onto or over the boundary of an adjacent property without permission.
Estate Trustee – A person appointed to manage a deceased person’s estate, including their real estate assets.
Fixed Rate – An interest rate that remains unchanged throughout the term of a mortgage.
Fixtures – Personal property that has become permanently attached to a building or land, such as built-in appliances or lighting.
Foreclosure – A legal process where a lender takes possession of a property to sell it and recover mortgage debt owed by the property owner.
Freehold – Ownership of a property and the land it’s built on, with full rights to use and modify the property as permitted by law.
Understanding these essential real estate terms empowers you to navigate Ontario’s property market with confidence and clarity. From the initial offer to final closing, each phase of a real estate transaction involves specific terminology that can significantly impact your rights, obligations, and financial outcomes.
While this glossary provides a solid foundation, real estate transactions are complex legal matters that often require professional guidance. Always consult with qualified real estate professionals, including experienced lawyers, agents, and mortgage brokers, who can provide personalized advice based on your specific situation and the latest regulatory changes.