Real Estate Terms Glossary


AAA (see Alberta Assessors’ Association)

AACI (see Accredited Appraiser Canadian Institute)

Accelerated Payments
A mortgage payment option whereby the monthly mortgage payment is either split in half or in quarters and is paid every two weeks (bi-weekly) or every week (weekly).

A building design concept that relates to individuals with disabilities. It refers to building features that facilitate entry or use by individuals with physical and/or sensory impairments.

Accredited Appraiser Canadian Institute
A designation granted by the Appraisal Institute of Canada.

Accredited Mortgage Professional
A national designation for mortgage professionals in Canada issued by Mortgage Professionals Canada.

Accredited Municipal Assessor of Alberta
A designation granted by the Alberta Assessors’ Association.

A document that is attached to, and made part of, an original contract as a result of making changes to elements that have already been agreed to.

Adjustable-rate mortgage (ARM)
A mortgage whose interest rate changes periodically based on the variations in a specified index. 

Adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM). 

Adjustment period
The time that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

A formal written statement of fact sworn to or affirmed by the author and witnessed as to the authenticity of the author’s signature before a person such as a notary or commissioner of oaths who is authorized to administer an oath.

The ability of an individual to carry the cost of ownership of a property in relation to his or her available income.

A consensual relationship created by contract or by law where one party, the principal, grants authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party and where the agent accepts responsibility for representing the principal.

Agency Law

The body of law applicable to consensual relationships in which one person (i.e. the agent) consents to act on behalf of another person (i.e. the principal), and thereby legally binds the principal in his or her connection with a third person. 

An industry professional who is expressly or implicitly authorized to act or represent another party.

AGM (see Annual General Meeting)

Agreement for Sale
A financial arrangement between a seller and buyer in which the seller carries the financing for the buyer’s purchase of the property. However, the title remains in the name of the seller and the seller registers a caveat on title protecting his or her financial interests until such time as the funds are repaid by the buyer.

The businesses that are involved in the production, storage, processing and wholesale marketing of agricultural products.

Agricultural Building
A building used for the production of food or other goods through endeavours such as farming, ranching or forestry.

AIC (see Appraisal Institute of Canada)

Alberta Assessors’ Association
A non-profit, member-based association focused on property assessment valuation.

Alberta Building Code
Provincial legislation that states the technical specifications required for new building construction and building materials in Alberta.

Alberta Land Surveyor 
A licensed professional involved in gathering, storing, processing and delivering geographic information involved in the determination of property boundaries or assembly and analysis of land-related information.

Alberta Land Surveyors’ Association
A self-governing professional association legislated under the Land Surveyors’ Act of Alberta that regulates the practice of land surveying for the protection of the public and the administration of the profession.

Alberta Mortgage Brokers Association
Alberta’s professional association for licensed mortgage brokers and mortgage associates.

Alberta New Home Warranty Program (also New Home Buyer Protection Act)
The New Home Buyer Protection Act applies to new homes constructed with a building permit applied for after February 1, 2014. The legislation covers single family homes, duplexes, multi-family homes, condominiums, manufactured homes (including ready to move homes), and recreational properties. The legislation does not cover dorms, work camps, hotels, and rental apartments. under the warranty periods. The minimum required warranty coverage terms are:

    • 1 year labour and materials
    • 2 years for defects in labour and material related to delivery and distribution systems
    • 10 years for major structural
    • 5 years on building envelope, with a requirement for the warranty provider to offer the option to purchase additional years of coverage

Alberta Real Estate Association (AREA)
A provincial professional association with 10 real estate boards operating in Alberta and more than 10,000 Alberta REALTORS® as its members.

Alberta Real Estate Foundation
An organization created under Alberta’s Real Estate Act to promote the development of educational initiatives for real estate professionals and consumers, support law reform and research regarding the real estate industry, and other projects and activities to advance and improve the real estate industry.

Alberta Registry Agents
A network of community-based service centres, offering a wide range of registration, information and licensing services on behalf of the Government of Alberta.

Alberta Securities Commission
The regulatory agency responsible for administering the province’s securities laws and ensuring that persons who sell securities in Alberta are registered and conduct themselves according to applicable laws and professional standards.

ALSA (see Alberta Land Surveyors’ Association)

AMAA (see Accredited Municipal Assessor of Alberta)

AMBA (see Alberta Mortgage Brokers Association)

A document that records a correction, addition, deletion or other changes to any previously agreed-to terms in the original contract.

The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.

Amortization period
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

Amortization Schedule
A table illustrating the amount of principal and interest that comprise each of the periodic installments and the outstanding principal balance of the loan after each level payment is made.

AMP (see Accredited Mortgage Professional)

Annual percentage rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

Apartment Condominium
A style of residential condominium involving units that are part of a building and attached to each other on one or more sides. This condominium style has a shared entrance, usually through the building lobby.

Applicant (Mortgage)
Refers to all borrowers, co-borrowers, and guarantors on a mortgage loan application.

A formal, impartial estimate or opinion of value, usually written, of a specific and adequately described property, as of a specific date and supported by the presentation and analysis of relevant data pertinent to a property.

Appraisal Assignment
An agreement between a real estate appraiser and a client to provide a valuation service on real estate.

Appraisal Institute of Canada
A national, member-based association that offers real estate appraiser designations in Canada.

Appraisal Process
A systematic analysis of the factors that bear upon the value of real estate. It consists of an orderly process by which the problem is defined, the work necessary to solve the problem is planned, and the data involved are acquired, classified, analyzed, and interpreted into an estimate of value.

Appraisal Report 
A formal report detailing an opinion of the value of a property based on the findings of a real estate appraiser. The report must state the purpose of the appraisal, the date of the appraisal and be signed by the appraiser. See also Real Estate Appraisal.

Appraisal Review
The act or process of reexamining an appraisal report as to its completeness and accuracy and to ensure compliance with the applicable appraisal standards.

An individual authorized to perform real estate appraisal services for a fee. A real estate appraiser is an accredited professional whose main service typically involves estimating the value of real property at a specified date in a manner that is independent, impartial and objective.

An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Area Measurement
A type of measurement that represents the physical surface or spatial area that exists within rooms, buildings or to define a lot. This measurement represents the 2-dimensional relationship created by multiplying the width of an item by its depth.

Past due payments.

A group of silicate minerals that naturally form in host rocks throughout the world. These minerals are made up of millions of thin, fibrous crystals that are strong, durable and resistant to heat, electricity, chemical corrosion, sound, and moisture.

Asking Price
The amount of money that a seller is asking or intends to ask for his or her property.

Assessed Value
The value placed on real property by a municipality as a basis for determining property taxes.

The process of determining the property value for taxation purposes. Assessment is used to determine the property owner’s proportionate share of municipal taxes on an annual basis.

Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).

Assigned Parking Stall
A parking stall that is part of the common property and is therefore owned collectively by the condominium corporation. When a parking stall is assigned, the Board of Directors is effectively granting a unit owner sole benefit of that parking stall. However, responsibility for care and maintenance of the parking stall typically remains with the Board of Directors. The Board of Directors can choose to reallocate the assignment whenever they wish. These parking stalls are not individually illustrated on Condominium Plans. 

Assigned Storage Area
A storage area that is part of the common property and is therefore owned collectively by the condominium corporation. When a storage area is assigned, the Board of Directors is effectively granting a unit owner sole benefit of that storage area. However, responsibility for care and maintenance of the storage area typically remains with the Board of Directors. The Board of Directors can choose to reallocate the assignment whenever they wish.  These storage areas are not individually illustrated on Condominium Plans. 

A person to which an assignment (transfer) of property, rights or interest is made. 

The transfer of a mortgage from one person to another.

Assignment of Mortgage
An agreement that consists of the transfer (i.e. selling) of an interest and all rights in the mortgage contract and the security in the property to a new lender or third party in return for payment of money.

A person who makes a transfer under an assignment. 

An individual who is licensed as a real estate associate or mortgage associate as defined in the Real Estate Act and as administered through the Real Estate Council of Alberta. An associate must be registered with a licensed brokerage in order to trade in real estate or deal in mortgages. An associate holds the basic licensing level in the real estate or mortgage brokerage industry.

Associate Broker
An individual who is licensed as an associate broker as defined in the Real Estate Act and as administered through the Real Estate Council of Alberta. An associate broker holds the qualifications of a real estate broker, but is not authorized to operate a brokerage. An associate broker is registered with a real estate brokerage and authorized to trade in real estate on its behalf.

Assumable Mortgage
The process of an individual acquiring the title and access to a property that has an existing mortgage registered. Lenders typically require the individual to qualify under the terms and conditions of the existing mortgage before allowing the mortgage assumption to occur.

The act of taking possession of mortgaged property whereby the buyer accepts liability for the debt and takes responsibility of the seller’s existing mortgage at the interest rate and terms as laid out in the original mortgage documents. The seller remains liable to the mortgage lender unless the lender agrees to release the seller from the debt obligation.

Attached Goods
An improvement or personal property item attached to the real property or building. Whether an item becomes a fixture depends largely on the circumstances, with emphasis placed on the method of how the item is affixed to the property.

Refers to the person appointed to act on behalf of a donor in a Power of Attorney. 

Attributed Knowledge
A concept under the common law that presumes all real estate professionals registered with the brokerage share information and advice and have knowledge of confidential information concerning all the clients of the brokerage.

A person who engages in the business of selling or offering for sale by public auction, goods, wares, merchandise or effects of any kind. In Alberta, only a qualified auctioneer can conduct the bidding at a public auction and must be licensed by the province through Service Alberta.

Refers to the licence and registration certificate issued by RECA to real estate professionals and is one of the requirements for trading in real estate in Alberta.

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Backup Offer
A backup offer is when a buyer submits an Offer to Purchase on a property that is conditionally sold. If the seller accepts the backup offer, it would be next in line if the conditions are not satisfied on the conditional offer that is already in place. 

The amount of unpaid mortgage remaining after a payment has been made.

Balanced Market
A real estate market condition where demand from buyers is in equilibrium with the supply of properties.

Balance sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.

Balloon mortgage
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.

Balloon payment
The final lump sum payment that is made at the maturity date of a balloon mortgage.

Bare Land Built-Out Condominium Plan
A type of Bare Land Condominium Plan in which a unit has been re-divided into smaller units. The unit boundaries are defined by the width and depth of each parcel of land and identified using survey monuments (e.g. steel pins, wooden stakes) placed on or under the ground.

Bare Land Condominium Plan
A type of Condominium Plan in which units are individual parcels of land. The boundaries for units within a Bare Land Condominium Plan are defined by the width and depth of each parcel of land and identified using survey monuments (e.g. steel pins, wooden stakes) placed on or under the ground.

Barely Blended Condominium Plan
A type of condominium plan in which units within a bare land condominium have been re-divided into smaller units with boundaries that are defined by the space within a building. The new unit boundaries are based on walls, floors, and ceilings. In effect, a Barely Blended Condominium Plan combines a Conventional Condominium Plan with a Bare Land Condominium Plan. 

A type of foundation that consists of an enclosed space constructed in whole or in part below ground level. Due to the depth to which holes must be dug to construct basements, they can often be used as habitable space by a building’s occupants.

Basis point
A basis point is 1/100th of a percentage point. For example, a fee calculated as 50 basis points of a loan amount of $100,000 would be 0.50% or $500.

Beacon Score
A number that is generated by the Equifax Credit Bureau to rank the credit-worthiness of individuals. 

Bilateral Contract 
A legally enforceable agreement where the parties are bound by their exchange of mutual promises.

A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Biweekly payment mortgage
A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial saving in interest.

Blanket mortgage
The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.

Blended Payments
The periodic mortgage payments of principal and interest where the payments remain constant in amount, although the portions attributed to principal and interest will vary with each payment as the time elapses in the amortization period.

Board Meeting (Condominiums)
A meeting at which only the Board of Directors gathers to address the affairs of the condominium corporation. However, if the Board of Directors relies on any advisors (e.g. condominium manager), they may be asked to attend. Board meetings occur at regularly scheduled intervals. 

Board of Directors (Condominiums)
A group of individuals who are elected by unit owners to carry out the duties and responsibilities of the condominium corporation according to the rules and procedures set out in the bylaws and governing policies of the condominium. 

The party who obtains financing from a lender with the agreement that it will be repaid, with interest, within a defined timeframe. 

The violation of any legal obligation.

Bridge loan
A form of the second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."

A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Broker Delegate
An industry professional within a brokerage who is assigned to carry out a number of broker duties and responsibilities as specified by the broker.

The company, partnership or sole proprietorship licensed by the Real Estate Council of Alberta as a real estate brokerage authorized to trade in real estate or mortgage brokerage authorized to deal in mortgages. A brokerage must have a broker responsible for its operation. 

Builders’ Lien
A lien for the unpaid value of work and/or materials in favour of the party who did the work on, or supplied the materials to a property, in accordance with the Builders’ Lien Act. 

Builders’ Lien Act
Alberta legislation that allows registration of a lien against a property by any person involved in the building of, or improvements to, that property, including workers, contractors, and sub-contractors.

Building Codes
Provincial standards for the design, construction, and alteration of buildings to ensure the safety of future occupants and visitors to the premises. Alberta Building Code regulates the construction and safety of structures for both old and new buildings. Standards set by the Codes include electrical wiring, fire alarm systems, fire extinguishers, emergency routes, occupancy limits, lighting, and ventilation. These codes exist in addition to the requirements of the Municipal Land Use Bylaw.

Building Infrastructure
A core component of a building that participates in making a safe, healthy and comfortable environment for occupants.

Building Permit
The formal permission provided by a municipality for new construction or modification of an existing structure. 

Building Structure
A core component of a building that creates the overall framework of the building.

Building System
A core component of a building that either contributes to the creation of the overall framework or participates in making a comfortable indoor environment for occupants.

Bundle of Rights
A collection of real property rights that an owner enjoys including the right to possess the land and to use it, the right to lease the land, the right to sell the land, the right to give the land away and the right to retain the land.

Business Assessment 
A value placed on a premise occupied for the purpose of, or in connection with, operating a business for taxation purposes.

Buydown Mortgage
A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.

An individual who is in the process of purchasing real estate and enters into a purchase contract to that effect.

Buyers’ Market
A real estate market condition where property supply is strong and buyer demand is weak.

A set of directives that govern the affairs and behaviour of a condominium corporation and individual unit owners. They work in conjunction with the Condominium Property Act and Regulation and empower the condominium corporation to control, manage and administer the units and common property. Bylaws may only be created, amended or repealed through the passing of special resolutions by the condominium corporation. 

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Call option
A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.

Canada Mortgage and Housing Corporation (CMHC)
federal crown corporation mandated to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions, including the establishment of mortgage default insurance for lenders.

Canadian National Association of Real Estate Appraisers
A national, member-based association that offers real estate appraiser designations in Canada.

Canadian Residential Appraiser
A designation granted by the Appraisal Institute of Canada.

Canadian Uniform Standards of Professional Appraisal Practice 
A generally accepted and recognized standard of appraisal practice for real property valuation adopted in Canada and by certain Canadian appraisal associations and organizations.

An individual who is in the process of meeting the specific education and work experience requirements for designation as a real estate appraiser. Candidates are allowed a specified period of time to earn an appraisal designation, as set by the respective association.

A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease.

The power provided under law to a person to enter into binding contracts.

Capital improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Case Law
The body of legal decisions where the court has interpreted legislation when applying it to a specific set of facts. Court decisions can be made at various levels within the judicial system (e.g. Provincial CourtCourt of Queen’s Bench, and Court of Appeal provincially and the Supreme Court of Canada federally). The decisions of a higher court may alter decisions made by lower courts, and the prior decisions of courts will influence future court decisions. Therefore, case law is based on judicial precedent rather than statutory law. See also Statute Law.

Cash Back
A mortgage feature whereby the lender refunds a sum of money either as a percentage of the mortgage principal or as a lump sum.

Cash-Out refinance
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

Latin for “let him beware,” a caveat is a written legal notice registered against the title of a property warning that a claim or an interest has been made against the property by a third party. The registration of a caveat is only notice of a claim and does not relate to the validity of the claim being made.

Caveat Emptor
A doctrine of the common law that translates to “let the buyer beware.”

Certificate of Compliance
A confirmation from the municipality that the location of building(s), structures and development on a property comply with all the regulations of the Land Use Bylaw. The response may be either in the form of a stamped property survey if the existing development meets regulations or by way of a written letter if the development on the property does not meet regulations. A certificate of compliance is usually required by mortgage lenders and standard real estate purchase contracts.

Certificate of Title
A document that records the information about the land, such as the legal land description, municipal jurisdiction, ownership and registered interests. The Land Titles Office no longer issues a paper Certificate of Title, but a paper copy may be available from any Registry Agent in Alberta. An electronic copy is available on the Spatial Information System (SPIN) operated by Alberta Registries, Service Alberta. See also SPIN.

Certified Appraisal Reviewer 
A designation granted by the Canadian National Association of Real Estate Appraisers.

Certified Mortgage Appraisal Reviewer 
A designation granted by the Canadian National Association of Real Estate Appraisers.

Chain of title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change frequency
The frequency (in months) of payment and interest rate changes in an adjustable-rate mortgage (ARM).

The name given to a mortgage when registered under the Land Titles Act.

Charging Clause 
A provision in a mortgage document that charges the borrower’s interest in the real property as security for payment of the debt obligation.

Chattel Mortgage
An agreement that charges the borrower’s personal property identified in the agreement as security for a loan. A lender may take security on personal property in order to enhance the extent of their security for a loan. This may be the case when borrower’s real property is insufficient for a lender to proceed with the loan.

The movable items not securely affixed to the land or buildings, as furnishings and appliances that are not considered part of the real property. They may be referred to as personal property. 

A person who applies or has applied for payment of benefits or financial compensation.

Clear title
A title that is free of liens or legal questions as to ownership of the property.

The party in a real estate transaction that is represented by a real estate professional. As per the Real Estate Act Rules, a client is a person who has entered into a service agreement with an industry member whether or not that service agreement is in writing.

Closed Mortgage
The restriction or denial of repayment rights until maturity of the mortgage.

Finalizing a real estate transaction, which includes signing of the title documents, calculations of adjustments and disbursements of funds.

Closing Costs
The total costs for the respective parties associated with a real estate or mortgage transaction. Closing costs are typically due on the closing date, which is the date at which the real estate or mortgage transaction is finalized.

Closing Date
The date when the financial adjustments are made for each party in a real estate or mortgage transaction. In real estate, it is the date when the title to the property transfers to the new owner, after which, the new owner assumes financial responsibility for the property.

Closing statement
Also referred to as the statement of adjustments. The final statement of costs incurred to close on a loan or to purchase a home.

A borrower’s pledge of specific property to a lender to secure the repayment of the loan by the borrower.

The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.

Combination loan
With this type of loan, you receive a first mortgage for 80 percent of the loan amount, and a second mortgage at the same time for the remainder of the balance. If avoiding PMI (mortgage insurance) is important to you, consider combination loans--known as 80/10/10 loans or 80/20's.

Combined loan-to-value (CLTV)
The unpaid principal balances of all the mortgages on a property (first and second usually) divided by the property's appraised value.

Commercial Building
A building intended for business use.

Commercial Condominium
A condominium that consists of units within an office tower, low-rise/single-level business centre or single-purpose facility, such as medical, dental or professional offices. 

Commercial Lease
A type of contract granting temporary use or occupation of a commercial property for a specified period in exchange for a specified amount of rent. 

Commercial Property
The real property used to conduct retail or service businesses with the prime objective of making a profit.

The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is a percentage of the price of the property or loan.

Commitment Letter
A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."

Common Areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation). They are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Common Area Maintenance Expenses
The costs charged in a commercial lease for the maintenance, repair, and replacement of the common areas, amenities and building systems of the property. These costs are typically assigned based on the amount of space leased. 

Common Law
The accumulated legislation that is enacted by the courts. The courts create laws based on decisions (i.e. precedents) that were made previously by the same or different courts.

Common Property
The physical space that is not considered to be part of a unit within a condominium and that is jointly owned under the condominium corporation. 

Common Property Expenses
The expenses associated with the maintenance, repair, and replacement of the common property of the condominium corporation.

Common Property Unit
In a barely blended condominium, a unit that includes areas for use by unit owners that is owned by the condominium corporation who is responsible for its care and maintenance.

Community property
In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.

An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

Comparative Market Analysis (CMA)
A method of property valuation used by real estate professionals for estimating the value of residential properties.

Payment for performance of service.

The acquisition of knowledge, skills, and abilities at a level of expertise sufficient to be able to perform in an appropriate employment setting.

Competing Interests
When the interests of clients represented by the same brokerage compete with each other in regards to a real estate transaction or potential transaction.

A person who files a formal written complaint to the Real Estate Council of Alberta.

A formal written statement made by a person concerning an industry professional’s alleged failure to follow the standards of business practice as set out by the Real Estate Council of Alberta.

Compliance Stamp
The official mark on a Real Property Report from a municipality confirming that a property’s location and improvements comply with the requirements of the Land Use Bylaw in that respective municipality. 

Compound interest
This refers to any interest earned on an account holder's principal balance, as well as any prior interest.

An aspect of a contract that serves as an impediment to an enforceable contract, until such time as it has been satisfied or waived. Conditions are typically placed in a contract by a party to that contract in order to protect its interest(s) and include a specific period of time after which the condition(s) will expire. Each condition may have the same or a different expiry. Real estate purchase contracts may include conditions added for the benefit of the seller, buyer, or lender. 

Conditional Offer
A conditional offer sets out the terms of the sale such as the purchase price, the date of closing, the names of the parties, and the amount of any required deposit, but it also includes conditions that must be met within a specified period of time in order for the contract to be binding on the parties. These conditions could include a satisfactory home inspection or financing acceptable to the buyer.

Conditional Sale
Is a real estate transaction where the seller has accepted the buyer’s Conditional Offer. 

A form of property ownership that includes both the individual ownership of a unit and the shared ownership of common property with other unit owners.

Condominium Additional Plan Sheet
A document on which instruments for or against a Condominium Plan and condominium corporation are officially registered with Alberta Land Titles. It may also be referred to as the Condominium Sheet or Condo Sheet by real estate professionals.

Condominium Administrator
An individual appointed by the court to manage the affairs of a condominium. The court determines what powers and duties of the Board of Directors and/or condominium corporation are to be delegated to the administrator, the length of the appointment, any terms and conditions the may accompany the appointment and the compensation for the administrator’s services.

Condominium Bylaws
Rules that govern the affairs and behaviour of a condominium corporation and individual unit owners. They work in conjunction with the Condominium Property Act and Regulation and empower the condominium corporation to control, manage and administer the units and common property. Bylaws may only be created, amended or repealed through the passing of special resolutions by the condominium corporation. 

Condominium conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of the property.

Condominium Corporation
A legal entity that consists of all unit owners within a condominium. 

Condominium Document Condition
A condition in a purchase contract that gives the buyer the opportunity to review certain condominium documents associated with a unit and condominium he or she is interested in.

Condominium Document Reviewer
An individual who specializes in interpreting the information contained within the various documents associated with a condominium. 

Condominium Documents
The package of documents that relate to the structure, finances and management of a condominium. The wide range of documents provides important information to industry professionals and to the sellers, buyers, borrowers and lenders with whom they work. Various documents related to the condominium may be obtained from the seller, member(s) of the Board or the property manager, as the case may be. In addition, some documents may be found on SPIN

Condominium Fees
The monthly fee set by the Board of Directors and paid by a unit owner to the condominium corporation.

Condominium Insurance
The corporation is responsible for acquiring and renewing insurance for the common property. Insurance coverage typically includes the common perils to property (e.g. fire), general liability and liability for the Board of Directors of the condominium corporation. The insurer issues a Certificate of Insurance to the corporation for proof of coverage and this document forms part of the condominium documents provided to unit owners, buyers, and lenders. 

Condominium Manager
An individual or company licensed by RECA that carries out some or all of the duties of a Board of Director and condominium corporation. 

Condominium Management Services
Condominium management services are those in which and individual or brokerage is exercising the power, or performing the duties of, a condominium corporation on behalf of that corporation. These duties commonly include:

  • collecting, holding or disbursing funds levied by the condo corporation or due to the corporation under the Condominium Property Act (e.g., condo fees)
  • enforcing the bylaws or rules of the condo corporation
  • negotiating and entering into contracts on behalf of the condo corporation
  • supervising employees or contractors hired by the condo corporation

Condominium Plan
A 2-dimensional or 3-dimensional plan of subdivision that outlines the size, location, and boundaries of the land and any building located on the property. The Plan also divides the property into units and common areas. There are 3 types of Condominium Plans: Conventional Condominium Plans, Bare Land Condominium Plans and Barely Blended Condominium Plans.

Condominium Property Act
Alberta legislation that sets out the rules for creating, operating and managing condominiums.

Condominium Property Regulation
Alberta legislation that prescribes the processes and requirements for the creation, operation and management of condominiums.

Condominium Unit
The separate parts of the overall condominium plan that are designated for private ownership and exclusive use of the owner. The unit boundaries and the unit factor for each unit are defined by the Condominium Plan.

Confidential Information
Any information concerning a client, such as his or her financial information, personal situation, or the details of a real estate, mortgage brokerage or real estate appraisal transaction.

Conflict of Interest
A situation that undermines the impartiality of a person. According to the Real Estate Act Rules, a conflict of interest arises when there is a real or apparent incompatibility between an industry member’s interests and the interests of a client or potential client.

Conservation Easement
A voluntary agreement between a landowner and a government agency or conservation charity that limits the amount and type of development which can occur on the landowner’s property in order to preserve the ecological and/or natural portions of his or her land.

Construction Loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Consumer Protection Act
Alberta legislation that protects consumers from unfair business practices before, during or after a consumer transaction.

Consumer Reporting Agency (or bureau)
An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.

Contingent Fee
A form of compensation for services provided that is dependent on the result of the service.

A binding agreement, enforceable by the courts, made between 2 or more persons, competent at law to enter into such agreement, for consideration or value, to do or refrain from doing some lawful and genuinely intended act. A contract can contain any number of promises or terms to be performed by either party. The underlying intention of any contract is that it shall be binding on the parties.

Conventional Condominium Plan
A type of Condominium Plan in which units are defined spaces within a building. The boundaries for units for this type of Condominium Plan are determined by floors, walls and ceilings. All areas not included in the units are considered to be part of the common property.

Conventional Mortgage
A mortgage where the loan amount does not exceed 80% of the appraised value or purchase price of the property.

Conversion Condominium
A condominium that involves the creation of units and common areas in an existing building through the registration of a Condominium Plan with Land Titles. Conversion condominiums typically involve buildings which previously offered rental accommodation or leased space, such as apartment buildings, offices, warehouses or storage facilities. Upon registration of a Condominium Plan, the former rented/leased spaces are converted into separately titled units.

Convertibility Clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.

Convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.

The transfer of an interest in property from one person to another through written documentation to affect such a transfer.

The formal process of transferring the legal title of land and recording interests in the land, using the prescribed Land Titles forms submitted in the prescribed manner.

Cooperative Housing
A corporation of shareholders with a common interest or purpose. In a housing cooperative, individuals own shares in the corporation but do not own the units. The individual’s proportionate interest (shares) dictates the size of the unit he or she can occupy. The occupancy right to the space is provided under a tenancy agreement with the corporation.

Corporate Relocation
Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

Cost Approach
An appraisal method for determining the value of a property that is based on the current cost of replacing or reproducing the subject property.

Cost of Credit
The difference between the value received by a borrower and the value given by the borrower to the credit grantor in connection with a credit agreement. 

A written agreement or promise usually under seal between 2 or more parties for the performance of an action. In mortgage brokerage, it refers to the clauses in a mortgage agreement that establishes the rights and obligations agreed to by the borrower and the lender.

Crawl Space
A type of foundation that is typically shorter in height than a basement. Crawl spaces are not tall enough to provide habitable space for use by building occupants but they can accommodate some components of the building infrastructure.

Credit Agreement
A legally binding contract between a borrower and lender which includes terms of repayment, the fees, other costs, as well as rules and requirements of the loan.

Credit Bureau
An agency that collects, records, stores and distributes credit and personal date files to authorized lenders (creditors) for a fee.

Credit Report
A record detailing an applicant’s past borrowing and repayment history.

Credit Score
A numerical expression based on a statistical analysis of a person’s credit files which represents the creditworthiness of that person.

Current Real Property Report
A legal document produced by a land surveyor that clearly illustrates the boundaries of a property and the location of improvements to the land relative to the boundaries. It also illustrates other issues impacting the property, such as rights-of-way, easements, encroachments, etc. In addition, it may contain a surveyor’s opinion or concerns regarding these items. A current real property report (RPR) illustrates the up to date improvements on the land and their relationship to the property boundaries whereas an existing RPR may not illustrate the current state of a property if any improvements were made to the land since the date of the RPR.

The party to a real estate transaction that is not being represented by a real estate professional. As per the Rules, a customer is a person who has contacted, but not engaged or employed an industry member to provide services.

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Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.

Inability to make mortgage payments when mortgage payments are due.

A decline in the value of property; the opposite of appreciation.

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earnest money deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.

A right of way giving persons other than the owner access to or over property.

Effective age
An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

Effective gross income
Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is the principal source, but other income may qualify if it is significant and stable.

Electronic funds transfer (EFT)
EFT allows account holders to transfer funds from an account electronically. This method of transfer is not only highly secure but also extremely efficient and easy to transact.

Anything that affects or limits the fee simple title to property, such as mortgages, leases, easements, or restrictions.

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

The lawful expulsion of an occupant from real property.

examination of title
The report on the title of a property from the public records or an abstract of the title.

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Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

fair market value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Fannie Mae
A congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.

Fannie Mae's Community Home Buyer's Program
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family's buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.

fee simple
The greatest possible interest a person can have in real estate.

Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

FHA mortgage
A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

finder's fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

first adjustment
When you can expect the first rate adjustment in your ARM loan.

first mortgage
A mortgage that is the primary lien against a property.

float down option
An option to choose a lower rate within 30 days before the closing of your loan and "float down" to a lower rate than the previously locked-in rate. This allows you to pick the best rate within that time period.

fixed-rate mortgage (FRM)
A mortgage in which the interest rate does not change during the entire term of the loan.

fixed second mortgage
See home equity loan.

flood insurance
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

fully amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.

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good faith estimate
An estimate of charges which a borrower is likely to incur in connection with a settlement.

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hazard insurance
Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

home equity line of credit
a credit line that is secured by a second deed of trust on a house. Equity lines of credit are revolving accounts that work like a credit card, which can be paid down or charged up for the term of the loan. The minimum payment due each month is interest only.

home equity loan
a loan secured by a second deed of trust on a house, typically used as a home improvement loan.

housing ratio
The ratio of the monthly housing payment in total (PITI - Principal, Interest, Taxes, and Insurance) divided by the gross monthly income. This ratio is sometimes referred to as the top ratio or front end ratio.

The U.S. Department of Housing and Urban Development.

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A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Some commonly used indices include the 1 Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI).

impound account
An impound account is an account established by the lender to pay a borrower's tax and insurance costs. The borrower's monthly mortgage payment is then increased to cover these costs, with the additional amount being held in the impound account and disbursed by the lender when the payments are due. Lenders typically prefer this arrangement because it reduces the possibility of a lapse in tax or insurance payments that could diminish the value of the lender's investment (your house). Therefore, while it is often possible to opt out of an impound account it will result in additional charges.

interest-only loan option
Loan payments have two components, principal and interest. An interest-only loan has no principal component for a specified period of time. These special loans minimize your monthly payments by eliminating the need to pay down your balance during the interest-only period, giving you greater cash flow control and/or increased purchasing power.

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jumbo mortgage
The current loan limit for a conforming loan is $417,000. Loan amounts of $359,651 and above are considered non-conforming or jumbo mortgages and are usually subject to higher pricing.

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An encumbrance against property for money due, either voluntary or involuntary.

The bank, mortgage company, or mortgage broker offering the loan.

LIBOR stands for London Inter-Bank Offered Rate. This is a favorable interest rate offered for U.S. dollar deposits between a group of London banks. There are several different LIBOR rates, defined by the maturity of their deposit. The LIBOR is an international index that follows world economic conditions. LIBOR-indexed ARMs offer borrowers aggressive initial rates and have proven to be competitive with popular ARM indexes like the Treasury bill.

lifetime cap
A provision of an ARM that limits the highest rate that can occur over the life of the loan.

loan to value ratio (LTV)
The unpaid principal balance of the mortgage on a property divided by the property's appraised value. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.

lock period
The amount of time that a lender will guarantee a loan's interest rate. Once you've locked in the interest rate on a loan, the lender will guarantee that rate for a certain period of time, usually for 30, 45 or 60 days.

A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

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The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period.

maturity date
A pre-set date informing account owners when they can withdraw principal funds without incurring a penalty. (Please note that you may withdraw any generated interest before reaching an account's maturity date at E-LOAN.)

A legal document that pledges a property to the lender as security for payment of a debt

mortgage disability insurance
A disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.

mortgage insurance (MI)
Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LTV of 80.01% or higher.

The person or company who receives the mortgage as a pledge for repayment of the loan. The mortgage lender.

The mortgage borrower who gives the mortgage as a pledge to repay.

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negative amortization
Negative Amortization, or "deferred interest," occurs when the mortgage payment is less than a loan's accruing interest. This causes a loan's balance to grow instead of reduce or "amortize."

non-conforming loan
Also called a jumbo loan. Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because of various reasons, including loan amount, loan characteristics or underwriting guidelines. Non-conforming loans usually incur a rate and origination fee premium. The current non-conforming loan limit is $333,701 and above.

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origination fee
A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan. Usually a percentage of the amount loaned, such as one percent.

owner financing
A property purchase transaction in which the property seller provides all or part of the financing.

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periodic cap
The maximum rate increase for a specific period for a specific loan (ARM) only.

Principal, interest, taxes and insurance--the components of a monthly mortgage payment.

planned unit developments (PUD)
A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.

Charges levied by the mortgage lender and usually payable at closing. One point represents 1% of the face value of the mortgage loan.

Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

prepayment penalty
A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.

This term refers to the total amount of money originally deposited into a Savings or CD account. When taking out a loan however, it refers to the amount of debt, not including interest.

private mortgage insurance (PMI)
Insurance provided by nongovernment insurers that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.

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qualifying ratios
The ratio of your fixed monthly expenses to your gross monthly income, used to determine how much you can afford to borrow. The fixed monthly expenses would include PITI along with other obligations such as student loans, car loans, or credit card payments.

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The annual rate of interest on a loan, expressed as a percentage of 100.

rate cap
A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

rate lock-in
A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

Compensation received from a wholesale lender which can be used to cover closing costs or as a refund to the borrower. Loans with rebates often carry higher interest rates than loans with "points" (see above).

The process of paying off one loan with the proceeds from a new loan using the same property as security.

residential mortgage credit report (RMCR)
A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.

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seller carry back
An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.

simple interest
An amount earned on an account holder's principal, according to a specified rate. This does not include any compounding interest.

stated/documented income
Some loan products require only that applicants "state" the source of their income without providing supporting documentation such as tax returns.

If you are refinancing your first mortgage and have an existing second or home equity line, one option is to "subordinate" the second mortgage: request that your second mortgage holder go back into the second lien position when you replace your existing first mortgage with the new refinance loan.

A print showing the measurements of the boundaries of a parcel of land, together with the location of all improvements on the land and sometimes its area and topography.

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tenants in common
An undivided interest in property taken by two or more persons. The interest need not be equal. Upon death of one or more persons, there is no right of survivorship.

title insurance
Insurance against loss resulting from defects of title to a specifically described parcel of real property.

title search
An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

total debt ratio
Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.

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variable rate
An interest rate that may change once an account opens.

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