Real Estate Legal Terminology – Part 2
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 2 of our list of common real estate terminologies. Check out part 1 that was posted last week for words that start with A to F.
Stay tuned for the last part on words to help you navigate your transactions.
Harmonized Sales Tax (HST) Rebate – A refund of a portion of the HST paid on the purchase of a new home or substantially renovated property.
Holdback – A portion of the purchase price held back until certain conditions are met, or issues resolved.
Irrevocable Offer – A firm purchase offer that cannot be revoked or withdrawn by the buyer within a specified timeframe, binding them to the purchase if the seller accepts the offer.
Joint Tenant – A type of property ownership where multiple owners have equal shares and the right of survivorship.
Land Transfer Tax – A tax levied by the Ontario government on the transfer of property ownership, based on the purchase price or fair market value.
Land Transfer Tax Rebate – A refund of a portion of the land transfer tax paid by first-time homebuyers or other eligible parties.
Matrimonial Home – A property owned and occupied by a married couple as their primary residence.
Metes and Bounds – A method of describing a property’s boundaries using measurements and directions.
Mortgage – A loan used to finance the purchase of a property, with the property serving as collateral.
Mortgage Payout Statement – A document provided by a mortgage lender that outlines the amount required to pay off a mortgage loan in full, including the remaining principal, interest, and any applicable penalties or fees.
Mortgagee – A financial institution or private lender.
Non-Conforming Unit – A property or unit that does not comply with current zoning, building code, or other regulations.
Non-Resident Speculation Tax (NRST) – A 25% tax on the purchase of residential properties by non – Canadian citizens or permanent residents.
Non-Resident Tax – A tax levied on non-residents who dispose of a Canadian property. A withholding of 25% depending on the type of property is withheld from the net sales proceeds. For depreciable properties (such as rental building), the withholding rate is 50%. Paragraph 17 of the Agreement of Purchase and Sale requires a seller to obtain a clearance certificate from Canada Revenue Agency (CRA) exempting the property from tax.
Occupancy Closing – The date when a buyer takes possession of a property.
Occupancy Permit – A document issued by a municipality allowing a building to be occupied, confirming it meets building code and safety requirements.
Porting – Transferring an existing mortgage, including its terms and conditions, to a new property when a homeowner moves.
Power of Attorney – A legal document authorizing someone to act on another person’s behalf in legal or financial matters, including real estate transactions.
Power of Sale – A legal process allowing a lender to sell a property to recover mortgage debt without going through a court foreclosure process.
PPSA (Personal Property Security Act) – Governs the creation, registration, and enforcement of security interests in a personal property, including refrigerators and stoves (sometimes called chattels found at paragraph 4 of the Agreement of Purchase and Sale).
Principal – The initial amount borrowed in a mortgage loan, excluding interest and other charges.
Property Tax – An annual tax levied by municipalities on the assessed value of a property to fund local services.
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.