Canadian Real Estate Glossary

Canadian Real Estate Glossary


Absolute Net: Absolute Net is a commercial real estate leasing structure that places the maximum financial responsibility on the tenant. In an absolute net lease, the tenant assumes not only the usual obligations of rent and utilities but also all other expenses related to the property, including property taxes, insurance, and maintenance costs. This lease type shifts virtually all financial burdens associated with property ownership from the landlord to the tenant.

Abstract: A brief summary or overview of a legal document or contract.

Acceptance: The formal agreement to an offer or proposal, creating a binding contract between the parties.

Accelerated Depreciation: A tax strategy that allows real estate owners to depreciate the value of their property at an accelerated rate, resulting in larger tax deductions in the early years of ownership. This method enables property owners to recover the cost of their investment more quickly and can provide significant tax benefits for income-producing properties.

Acceleration Clause: A clause in a mortgage or loan agreement that allows the lender to demand full payment if certain conditions are not met.

Access: The means by which a property can be entered or reached, either by foot or by vehicle. It encompasses the physical routes, roads, or pathways that provide a way to enter, exit, or navigate within a property. The quality and convenience of access points are important considerations for property evaluation, as they can impact desirability, functionality, and property value.

Accessory Dwelling Unit (ADU): A secondary, self-contained residential unit that is located on the same property as a primary dwelling. ADUs are typically smaller in size and can be either attached to or detached from the main dwelling. They provide additional housing options and can be used for various purposes such as rental income, accommodating family members, or as a home office. ADUs are subject to local zoning and building regulations, which dictate their size, design, and usage requirements.

Accrued Interest: The accumulated interest on a loan or investment since the last payment date.

Acre: An acre is a unit of measurement commonly used in real estate to quantify the size of land. It represents an area of 43,560 square feet or approximately 4,047 square meters.

Addendum: A supplemental document or attachment that provides additional information or modifies the terms of an existing contract.

Adjustable Rate Mortgage (ARM): A mortgage loan with an interest rate that can change periodically based on market conditions.

Adjustable Cost Basis: The modified or updated value of an asset used for tax purposes, typically in relation to real estate. It takes into account factors such as capital improvements, depreciation, and other adjustments that affect the original purchase price or basis of the property. This adjusted cost basis is crucial for determining capital gains or losses when the property is sold.

Adjustment Period: The specific time interval during which the interest rate on an adjustable-rate mortgage (ARM) is fixed. This period can vary depending on the terms of the loan, typically ranging from one to ten years. After the adjustment period ends, the interest rate may change periodically based on predetermined factors, such as market conditions or a specific index, leading to potential adjustments in the monthly mortgage payment.

Adverse Possession: The legal concept where someone can gain ownership of another person's property through continuous and unauthorized use.

Agency Closing: A real estate transaction where the buyer and seller utilize the services of the same real estate agency to handle the closing process. In this scenario, the agency acts as a neutral third party, facilitating the necessary paperwork, financial transactions, and legal formalities to complete the sale. This type of closing can provide convenience and efficiency for both parties involved in the transaction.

Agent: A licensed professional who represents buyers or sellers in real estate transactions.

Agreed Boundary: A legally recognized and mutually accepted division or limit between adjacent properties. It is typically established through a formal agreement between property owners, often with the assistance of a surveyor. The agreed boundary helps define the ownership rights, responsibilities, and limitations for each property, providing clarity and resolving potential boundary disputes.

Agreement for Sale: A legal agreement where the seller finances the purchase of a property instead of a traditional mortgage.

Agreement of Sale: Also known as a purchase agreement or sales contract, is a legally binding document that outlines the terms and conditions agreed upon between a buyer and seller in a real estate transaction. It specifies the purchase price, financing terms, contingencies, and other important details of the sale.

Air Rights: The legal rights to use the space above a property, typically for construction or development purposes.

Alienation Clause: Also known as a due-on-sale clause, is a provision commonly found in mortgage agreements that grants the lender the right to demand full repayment of the loan if the property is sold or transferred to a new owner. This clause protects the lender's interest by ensuring that they have the option to collect the remaining loan balance rather than continuing the loan with a new borrower.

Allowances: Specific amounts of money allocated within a contract or agreement for the purpose of covering future expenses or selections by the buyer. These allowances are typically set aside to accommodate items such as upgrades, repairs, or customizations that the buyer may choose after the initial agreement is made. 

Amendment: A modification or change made to an existing contract or agreement.

Amenities: The features and benefits of a property or its surroundings that enhance its appeal, comfort, and value. These can include various facilities, services, or characteristics that contribute to the enjoyment and convenience of the property, such as swimming pools, fitness centers, parks, playgrounds, security systems, or proximity to schools, shopping centers, or public transportation.

Amortization: The gradual repayment of a loan through regular installment payments over a specified period.

Annual Income: The total income earned from a property over a year, often used for rental properties.

Annual Percentage Rate (APR): The annual cost of borrowing, including both the interest rate and any additional fees or charges.

Annuity: A financial arrangement where a fixed sum of money is paid periodically to an individual, typically over a specified period of time. In the context of real estate, an annuity can involve a property owner receiving regular rental income or lease payments from a tenant. It provides a consistent cash flow stream and can be a valuable investment vehicle for both property owners and tenants seeking long-term financial stability.

Anticipatory Breach: A situation where one party in a contract communicates or demonstrates their intention to not fulfill their obligations before the agreed-upon performance date. This breach occurs when one party reasonably believes that the other party will not be able to meet their contractual obligations, leading to potential legal remedies such as terminating the contract or seeking damages.

Appraisal: The process of determining the value of a property, usually conducted by a licensed appraiser.

Appraised Value: The estimated monetary worth of a property as determined by a professional appraiser. This value is based on various factors such as the property's location, size, condition, comparable sales, and market conditions.

Appreciation: The increase in the value of a property over time.

Appurtenance: A right or privilege associated with a property, such as an easement or right-of-way.

Arbitration: A process of resolving disputes between parties through a neutral third-party arbitrator, rather than through the court system.I

Architectural Style: The distinctive design and aesthetic features of a building or property.

As-Is: A property sold in its current condition, without any repairs or renovations made by the seller.

Asking Price: The initial price set by a seller when listing a property for sale.

Assessed Value: The value assigned to a property by a tax assessor for the purpose of calculating property taxes.

Assessment: The process of determining the value of a property for taxation purposes.

Assessor: A government official responsible for determining the value of properties for taxation purposes.

Assignment: The transfer of rights, interests, or obligations from one party to another.

Assignment of Mortgage: The transfer of an existing mortgage from one party to another.

Assistance Animal: An animal that provides support or assistance to individuals with disabilities, protected under fair housing laws.

Assumable Mortgage: A mortgage loan that can be transferred to a new buyer, typically with the lender's approval.

Assumption: The transfer of an existing mortgage from the seller to the buyer when a property is sold.

Attorney-in-Fact: A person granted the authority to act on behalf of another through a power of attorney.

Automatic Stay: A legal provision that stops creditors from taking certain actions, such as foreclosure, against a debtor during bankruptcy proceedings.

Association Fees: Regular fees paid by homeowners or property owners in a planned community or condominium for maintenance and shared expenses.

Awning: An awning is a secondary covering attached to the exterior of a building, typically made of fabric or other materials, that provides shade and protection from the elements.

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