Real Estate Glossary for Ontario

Introduction

Welcome to our in-depth Real Estate Glossary. This resource aims to demystify the jargon you'll encounter

in the residential real estate market, whether you're a seller, buyer, landlord, tenant, or investor.

Table of Contents

General Terms

Buying and Selling

Landlords and Tenants

Investing

Legal and Financial

General Terms

MLS (Multiple Listing Service): A database where real estate professionals list properties for sale or rent.

Closing Costs: Expenses incurred by buyers and sellers when transferring property ownership.

Equity: The difference between a property's market value and the mortgage balance.

Appraisal: A professional assessment of a property's market value.

Escrow: A neutral third party holds funds or documents until specified conditions are met.

Title: Legal ownership of a property.

Deed: A legal document that transfers property ownership.

Mortgage: A loan specifically for purchasing real estate.

Down Payment: Initial payment made when buying a property.

Fixed-Rate Mortgage: A mortgage with a constant interest rate.

Adjustable-Rate Mortgage (ARM): A mortgage with a variable interest rate.

Pre-Qualification: An initial assessment of a buyer's ability to secure a loan.

Home Inspection: A thorough examination of a property's condition.

Home Warranty: A service contract covering repairs and maintenance.

Earnest Money: A deposit made to show the buyer's good faith.

Short Sale: Selling a home for less than the mortgage balance.

Foreclosure: The legal process where a lender takes back a property.

Realtor: A real estate agent who is a member of the National Association of Realtors.

Broker: A person licensed to arrange real estate transactions.

Listing Agent: Represents the seller in a real estate transaction.

Buyer's Agent: Represents the buyer in a real estate transaction.

Dual Agency: One agent represents both the buyer and seller.

CMA (Comparative Market Analysis): Evaluation of similar, recently sold homes to determine value.

FSBO (For Sale By Owner): Selling property without a real estate agent.

Home Equity Line of Credit (HELOC): A line of credit secured by a home.

Refinancing: Replacing an existing loan with a new one.

Amortization: Paying off a loan over time through regular payments.

Lien: A legal claim against a property.

Zoning: Government regulations controlling property usage.

Fair Market Value: The price a property would sell for under normal conditions.

Capital Gain: Profit from selling a property.

Assessment: A valuation for taxation purposes.

Property Tax: A tax based on property value.

Easement: The right to use another person's land for a specific purpose.

HOA (Homeowners Association): An organization governing a residential community.

Condominium: A type of ownership where individuals own units in a building.

Townhouse: A multi-floor home that shares walls with other units.

Single-Family Home: A standalone home meant for one family.

Multi-Family Home: A property designed to house multiple families.

Walkthrough: A final inspection before closing.

Contingency: Conditions that must be met for a contract to proceed.

Offer: A formal bid to buy a property.

Counteroffer: A response to an initial offer.

Closing: The final step in a real estate transaction.

Possession Date: The day the new owner takes possession.

Vendor Take-Back Mortgage: The seller provides some or all of the mortgage financing.

Land Transfer Tax: Tax paid when property ownership changes.

Staging: Preparing a home for sale through decoration and repairs.

Curb Appeal: The attractiveness of a property when viewed from the street.

Open House: A scheduled period for the public to view a property for sale.

Buying and Selling

Pre-Approval: A lender's confirmation of how much a buyer is eligible to borrow for a mortgage.

Offer to Purchase: A formal document outlining the terms under which a buyer agrees to purchase a property.

Contingency: A condition that must be met for a real estate contract to become binding.

Home Inspection: A comprehensive review of the property's condition, often conducted by a certified inspector.

Closing Date: The date on which the sale of the property is to be finalized.

Earnest Money Deposit: A deposit made by the buyer to show good faith when entering a contract.

Listing Price: The price at which a property is initially offered for sale.

Sale Price: The actual price a property sells for, which may be higher or lower than the listing price.

Counteroffer: A new offer made in response to an offer received from the buyer.

Private Sale: A property sale conducted without the use of a real estate agent.

Exclusive Listing: A property listing available only through one broker or agent.

Multiple Offers: When more than one buyer makes an offer on a property.

Seller's Market: A market condition characterized by high demand and low supply, favoring sellers.

Buyer's Market: A market condition characterized by low demand and high supply, favoring buyers.

Appraisal Contingency: A clause that allows a buyer to back out if the property doesn't appraise for the purchase price.

Financing Contingency: A clause that allows a buyer to back out if they can't secure a mortgage.

Title Search: A check on the title of the property to ensure the seller is the legal owner.

Title Insurance: Insurance that protects against problems with the title to a property.

Home Warranty: A policy that covers certain home repairs for a specified amount of time.

Due Diligence: The process of investigating a property before finalizing a deal.

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

Broker: A person who is licensed to run their own real estate business.

Commission: The fee paid to agents and brokers, usually a percentage of the sale price.

As-Is: A property being sold in its current condition, with no repairs made by the seller.

Closing Statement: A document summarizing the financial transactions enacted during the closing process.

Escrow Account: An account where funds are held by a third party until conditions are met.

Loan-to-Value Ratio (LTV): The size of a mortgage compared to the value of the property.

Mortgage Broker: A professional who compares various mortgage options on behalf of a buyer.

Mortgage Term: The length of time you are committed to a mortgage rate, lender, and conditions.

Principal: The original amount of a loan, not including interest.

Interest: The cost of borrowing money, usually expressed as a percentage.

Amortization Schedule: A table detailing each periodic payment for an amortizing loan.

Prepayment Penalty: A fee for paying off a mortgage before the term is up.

Rate Lock: A guarantee that a buyer will receive a specific interest rate on a mortgage.

Underwriting: The process lenders use to assess the eligibility of a borrower.

Short Sale: A sale where the proceeds will fall short of what the owner owes on the mortgage.

Foreclosure: The legal process where a lender takes control of a property due to unpaid mortgage.

Relocation Services: Assistance provided in finding and moving to a new home, often provided by employers.

Days on Market (DOM): The number of days a property has been listed for sale.

Curb Appeal: The attractiveness of a home when viewed from the street.

Staging: The act of preparing a home for sale, often through the use of furniture and decor.

Open House: A scheduled event where a home for sale is opened to the public for viewing.

Showing: A private viewing of a home by a potential buyer.

Back-Up Offer: A secondary offer on a home that becomes active if the primary offer falls through.

Bidding War: A situation where multiple buyers are competing to purchase the same property.

Chain of Title: The history of all the documents that transfer title to a parcel of real property.

Clear Title: A title without any kind of lien or levy from creditors or other parties.

Conditional Offer: An offer to purchase property dependent on certain conditions being met.

Conveyance: The act of transferring property from one owner to another.

Disclosure: A statement by a seller regarding information about the property.

Landlords and Tenants

Lease Agreement: A legal contract outlining the terms under which one party agrees to rent property from another.

Security Deposit: A sum held by the landlord as security for the duration of the lease.

Rent Control: Government-imposed limits on the amount a landlord can charge for rent.

Tenant Screening: The process landlords use to evaluate the suitability of a potential tenant.

Eviction: The legal process of removing a tenant from a rental property.

Subletting: When a tenant rents out their unit to another person.

Renters Insurance: Insurance that covers a tenant's belongings in case of damage or theft.

Lease Term: The duration of the lease agreement.

Month-to-Month Lease: A lease agreement that renews automatically each month.

Fixed-Term Lease: A lease agreement for a specified period, usually one year.

Pet Deposit: An additional security deposit to cover potential damages caused by pets.

Late Fee: A charge for not paying rent on time.

Notice to Quit: A formal notice from the landlord asking the tenant to leave.

Walkthrough Inspection: An inspection conducted before move-in and after move-out to assess property condition.

Amenities: Features that provide comfort, convenience, or pleasure, such as a gym or pool.

Utilities: Basic services like water, electricity, and heating.

Landlord: The owner of a rental property.

Tenant: The individual renting the property from the landlord.

Property Manager: A person or company hired to manage a rental property.

Maintenance Request: A formal request from a tenant for repairs.

Normal Wear and Tear: Expected decline in the condition of a property due to normal use.

Application Fee: A fee charged to cover the cost of reviewing a rental application.

Guarantor: A person who agrees to take responsibility for a tenant's lease obligations.

Occupancy Limit: The maximum number of people allowed to live in a rental unit.

Rent Escrow: An account where a tenant can deposit rent until a landlord makes necessary repairs.

Rent Stabilization: Laws that limit how much and how often rent can be increased.

Roommate Agreement: A contract outlining the terms agreed upon by people sharing a living space.

Single Room Occupancy (SRO): A rental unit that combines living and sleeping spaces.

Vacancy Rate: The percentage of all available rental units in a specific area that are vacant.

Rent-to-Own: An agreement where a portion of rent payments go toward purchasing the property.

Tenant Union: An organization of tenants who work together to negotiate with landlords.

Housing Tribunal: A legal body that resolves disputes between landlords and tenants.

Rent Abatement: A reduction in rent, often due to uninhabitable conditions.

Rent Receipt: A written record of rent payment.

Key Money: An illegal payment required by a landlord to secure a rental.

Double Net Lease: A lease where the tenant is responsible for both property taxes and insurance.

Triple Net Lease: A lease where the tenant is responsible for property taxes, insurance, and maintenance.

Gross Lease: A lease where the landlord pays all property charges.

Percentage Lease: A lease where rent is based on a percentage of monthly or annual sales.

Covenant: A clause in a lease outlining the obligations of either the landlord or tenant.

Rent Roll: A document or spreadsheet outlining the rent paid by each tenant in a property.

Default: Failure to fulfill a lease obligation, such as not paying rent.

Mitigation of Damages: The legal requirement to minimize losses when a lease is broken.

Right of First Refusal: A tenant's right to purchase the property before the landlord sells to another party.

Holdover Tenant: A tenant who remains in a property after the lease has expired.

Implied Warranty of Habitability: The legal obligation for a landlord to provide a livable property.

Quiet Enjoyment: The tenant's right to use and enjoy the rented property without interference from the landlord.

Arbitration: A method of resolving disputes without going to court, often used in landlord-tenant disagreements.

Investing

Passive Income: Earnings derived from a rental property, limited partnership, or other enterprise.

Active Income: Income earned from performing a service, including wages, tips, and commissions.

Cash-on-Cash Return: The annual income over the cost of the investment.

Cost-Benefit Analysis: Evaluating the benefit of an investment relative to its cost.

Value-Add Property: A property that has features added to it to increase its value.

Turnkey Property: A fully renovated property that is ready for immediate occupancy.

Distressed Property: A property that is under foreclosure or pending foreclosure due to defaulting on mortgage payments.

Off-Market Property: Real estate that is not publicly listed for sale.

Portfolio: A range of investments held by a person or organization.

Real Estate Crowdfunding: Pooling money online to buy into a real estate investment.

Speculation: The act of buying property with the hope that its value will increase.

Market Value: The current value of a property in the marketplace.

Replacement Cost: The cost to replace an asset at its current market value.

Operating Expenses: Costs associated with running and maintaining a property.

Break-Even Point: The point at which total revenue equals total costs, resulting in neither profit nor loss.

Profit Margin: The amount by which revenue from sales exceeds costs.

Holding Costs: Costs associated with keeping a property before it’s sold.

Property Yield: The income from a property as a percentage of its market value.

Equity Multiple: The total cash distributions received from an investment, divided by the total equity invested.

Debt Coverage Ratio: Net operating income divided by total debt service.

Loan-to-Cost Ratio (LTC): The ratio of the loan amount to the total cost of the project.

Loan-to-Value Ratio (LTV): The ratio of a loan to the value of the purchased property.

Private Equity: Capital that is not listed on a public exchange.

Public Equity: Capital that is listed on a public exchange.

Risk Tolerance: The degree of uncertainty in investment returns that an investor is willing to endure.

Legal and Financial

Prime Rate: The interest rate that commercial banks charge their most creditworthy customers.

Fixed Interest Rate: An interest rate that will remain the same for the lifetime of the loan.

Variable Interest Rate: An interest rate that can change over time.

Compound Interest: Interest calculated on both the initial principal and the accumulated interest.

Balloon Payment: A large payment due at the end of a loan’s term.

Home Equity: The market value of a homeowner's unencumbered interest in their property.

Refinancing: Replacing an existing loan with a new one, usually with better terms.

Second Mortgage: A loan that is secured by the equity in a home.

Underwriting: The process a lender uses to determine if the risk of offering a loan is acceptable.

Credit Report: A detailed report of an individual's credit history.

Debt-to-Income Ratio: A personal finance measure that compares the amount of debt to income.

Escrow Account: An account where funds are held in trust while a buyer and seller finalize a deal.

Loan Term: The amount of time you have to pay off a loan.

Prepayment: Paying off a loan before it is due.

Principal Balance: The outstanding balance of a loan, not including interest and fees.

Reverse Mortgage: A loan where a homeowner can borrow money against the value of their home.

Title Search: A check to ensure that the seller is the legal owner of the property and that there are no liens against it.