Legal Term Glossary For Real Estate Law

The following is a dictionary or glossary of real estate legal terms. Definitions are based on Alberta law and/or Canadian federal law. In connection with understanding real estate legal terms, we also include details about the registrations found on Alberta Land Title Certificates.

Absorption Rate: This refers to the rate that homes are currently being sold in a community. The scale is set as how many months it would take at the current rate home sell in the area, for all the homes to sell then currently listed for sale.

Addendum: This is another way of saying that all the parties to a contract legally agree to add a term to a contract. An addendum is the document that adds the term.

Adjustable Rate Mortgage: This type of mortgage includes an interest rate that fluctuates over the term of the mortgage. I.e. not a fixed rate. The rate goes up or down based on a predetermined factor such as the Bank of Canada prime rate.

Adjustment Date: This is the date from which regular mortgage payments start accruing interest. For example, if you pay your mortgage payments monthly on the first of the month, but buy a home on the 15th of a month, the adjustment date is the first of the month following the purchase. You pay interest from the 15th to the adjustment date, either pre-paid or on the first of the month, and then regular payments start on the next mortgage payment date following the adjustment date.

Adjustments: Financial adjustments made to the purchase price in a buyer or sellers favour. For example, if the full month of condo fees are paid by a seller when a buyer is purchasing mid-month, then the seller gets an adjustment of the percentage of condo fees they paid but the buyer will get the advantage of.

Adverse Possession: Where someone, other than the legal owner to property, takes actual possession of that property.

Agreement for Sale: This is a contract that is used to sell land in Alberta. The most commonly used agreement for sale is the Real Estate Purchase Contract drafted by AREA.

Alberta Land Titles Office: With one located in Calgary and one located in Edmonton, this government office is responsible for registering documents in the Alberta Land Titles system.

AMBA: The Alberta Mortgage Brokers Association is an association for Mortgage Brokers in Alberta.

Amenities: These include features of a home that make it special. For exmaple, walk in closets and lake access for part of the amenities of a home.

Amortization: The specific time frame needed to completely payout your initial mortgage principal amount when regular payments are made. This does not include prepayments or missed payments. Common amortization periods include 20, 25 and 30 years. This is different from a mortgage term.

Annual Percentage Rate (APR): The APR is a standardized interest rate that you pay for a mortgage each year. The APR differs from your set interest rate in the mortgage in that the APR includes all the costs associated with the mortgage. This allows people to compare “apples to apples” when deciding on what a mortgage costs. For example, the APR also includes any broker fee or lender fee payable if you move forward with the mortgage.

Appraisal: An evaluation process to determine a property’s value at a specific point in time.

Appreciation: This is the amount that the value of a home or property increases over time.

Architectural Controls: These are rules set out to ensure that properties confirm to a preset design guideline. They allow a City, developer, community or other body to keep a community set standard of appearance.

AREA: The Alberta Real Estate Association. This is a body which, amongst many other things, historically drafts the contracts and documents used by real estate agents in Alberta.

AREA Contract: The contract most often used for real estate purchases and sales in Alberta when real estate agents act for buyer and/or seller.

Arrears: And amount due and owed but not paid to a third party such as a mortgage lender, tax authority or Condo.

As Is: A term used to indicate that there are no representations or warranties with respect to a specific property.

Assessed Value: The assessed value is the value that a city or municipality assigns to a home for property tax purposes. The assessed value usually varies from the actual value as the assessed value is based on a specific date in the tax year. In addition, the city or municipality does not assess individual or specific characteristics of each home.

Assignee: An individual or corporation whom is receiving a right or interest in property.

Assignment: This legal process allows a person, party to a contract, to assign the contract to someone else. For example, if you contract to buy a home, then assign the contract to someone else, that person then buys that home. Some assignments keep liability on the person assigning the contract, while others terminate liability to that person.

Assignment of Rents: Used when a person who borrows funds through a mortgage rents out the property subject to the mortgage. The assignment of rents allows the lender to go to any tenants and demand the payment of rent to the lender if the borrower fails to make a mortgage payment(s).

Assignor: An individual or corporation whom is transferring a right or interest in property.

Assumable Mortgage: Alberta law allows all mortgages to be assumed by someone else. This means that a new person owns the land with the mortgage and the new owner now has a responsibility for making the mortgage payments. Some lenders require the person assuming the mortgage to qualify for the mortgage prior to allowing the assumption.

Assumption: With respect to mortgages, this is the process and/or documents needed for an individual or individuals to take over responsibility of a mortgage on a property previously mortgaged by someone else. The person assuming the mortgage assumes all of the obligations of the mortgage. NOTE: The assumption of a mortgage does not automatically extinguish the liability of the original or previous individual(s) to the lender.

AWRA: Alberta West Realtors Association is the real estate board for communities in West Central Alberta. These communities include: Athabasca, Banff, Canmore, Edson, Fox Creek, Grande Cache, Hinton, Jasper, Mayerthorpe, Slave Lake, Swan Hills and Whitecourt.

Bareland Condominium: A type of Condominium subdivision where ownership units are defined by monuments (survey stakes), and where ownership boundaries may extend past the inside of the Condominium Units exterior walls.

Bill Of Sale: This is a document that transfers ownership of chattels (generally not land) to the buyer of those items.

Bi-Weekly Mortgage Payment: With this type of mortgage payment, a borrower pays the mortgage payments every two weeks. If accelerated, this allows borrowers to make an extra full payment each year which reduces the amortization of the mortgage significantly, saving interest.

Blended Payment: A mortgage payment that blends, in regular payments, the interest owed and a prepayment of a part of the principal.

Breach Of Contract: This refers to an action of a party to a contract that violates one or more of the terms of the contract. A breach of contract may lead to Damages or Specific Performance.

Bridge Financing: Also referred to as Interim Financing, allows a buyer of a new home to borrow the money needed as a down payment backed or secured by the equity they have in an existing home. Once the sale of the existing home closes, the sale proceeds are used to pay back the bridge financing.

Brokerage: Is a company that holds the license for Real Estate Agents or Mortgage Brokers.

Building Permit: A permit required from a municipality by a property owner or contractor prior to building or, at times, repairing a home or structure on land in that municipality.

Buyer’s Agent: Is the real estate agent representing a potential buyer to a property.

CARA: Central Alberta Realtors Association is the real estate board representing real estate agents in Central Alberta. This includes the communities of Alder Flats, Blackfalds, Bowden, Camrose, Castor, Hardisty, Innisfail, Killam, Lacombe, Penhold, Pigeon Lake, Olds, Red Deer, Rimbey, Rocky Mountain House, Stettler, Sundre, Sylvan Lake, Trochu, and Winfield.

Cash Difference: The difference between the full amount owed to buy a property under a purchase contract (including adjustments for taxes, Condo fees, HOA fees, etc) and the part of the purchase price being paid by mortgage.

Cash to Close: All funds owing under a purchase contract (including adjustments for taxes, Condo fees, HOA fees, etc) to buy property not already paid by deposit.

Caveat: Latin for “warning”, a caveat is registered against title to a property to warn the world about something. A caveat may secure a financial right against property given by an agreement in writing, or prevent future owners from doing certain things with the property. Caveats Run With The Land.

Certificate of Lis Pendens: See Lis Pendens.

Certified Copy Of Title (or CCT): This is a official copy of title. This is not a specific documents printed on special paper. A certified copy of title may be printed from any printer once downloaded from the Alberta Land Titles office database. If lost, they are easily replaced.

Chattel: A chattel is something in or on a property that is not attached to the property. For example, a rug or table. In a real estate contract, unless specifically included, fixtures do not come with a home when sold.

City: A City in Alberta is an incorporated area with at least 10,000 people living within it.

Clear Title: Clear title refers to title to a property free of financial encumbrances. When buying a home, a clear copy of title refers to the title that shows the new owner’s mortgage but not the old mortgage from a previous owner(s).

Closed Mortgage: A closed mortgage either prohibits the early pay back of the mortgage loan or improperly referring to a partially closed mortgage that allows for the payback and ending of the mortgage with a Prepayment Penalty.

Closing Costs: These include costs added to the total cost of buying a home on top of the purchase price. For example, closing costs include legal fees, transfer fees, tax adjustments, and disbursements. Payment of the closing costs for part of the bank draft buyers bring to t heir lawyer’s office along with the remainder of their down payment.

CMHC: Canada Mortgage and Housing Corporation, a Canadian Crown Corporation that, amongst other things, insures high ratio mortgages.

Co-Borrower: Legally both borrowers are Co-Borrowers. Many people refer to a person who helps another person qualify for a mortgage to be a co-borrower, however both individuals are on the mortgage and title to the property and have equal rights and obligations under the mortgage. This is different from a guarantor.

Commitment Letter: This refers to a letter issued by a financial institution stating that they intend to fund a mortgage on specific terms to a person. It is important to note that these letters are not legally binding and lenders may withdraw the offer to lend. Further, some Commitment Letters, once accepted my have a financial penalty if the approved borrower fails to follow through with the borrowing of funds as set out.

Common Area: See Common Property.

Common Property: Common property refers to the property shared by all homeowners in a condominium complex. For example, it includes roadways, sidewalks, hallways, elevators, etc.

Comparative Market Analysis (CMA): A term that references the process for determining the value of a property. The CMA compares properties similar to a subject property which recently sold on the open market. A CMA compares locations, communities, features, state of repair and any other significant factor that affects the value of a property.

Completion Day: This is the day that the purchase and sale of property finalized with the transfer of funds form buyer to seller.

Conditional Offer: This refers to an offer to purchase a property that remains subject to the waiving of specified conditions. Potential buyers (and sometimes sellers) have a set time limit to waive the conditions. The entire contract is conditional on the buyer or seller being satisfied with the issue the condition relates to such as a home inspection or financing.

Condominium (Condo): This is a form of real estate subdivision, whereby owners own a specified part of the total property. Common Property is owned by the Condominium Corporation. A Condominium Plan sets own the various Condominium Units subdivided from the original parcel of land and is registered at the Land Titles Office of Alberta. In some jurisdictions, Condos are referred to as Stratas.

Condominium Corporation: A condominium corporation that legally owns all shared space in a Condo and manages the entire property owned by all Condominium Unit holders. The total of all shares in every Condominium total 10,000 Units.

Condominium Management Company: This is a company that is under contract with a Condominium Corporation for the regular management of the entire Condominium.

Condominium Unit Factor: All the space (land, floor space, etc) in a condominium is divided into units. Each unit is either owned by an owner, or by the Condominium Corporation, with regards to Common Space. The percentage of all space owned by individual owners is divided by the total space in the Condominium and that percentage is divided out of the 10,000 “shares” in the Condominium Corporation. The Unit Factor is then used to determine the amount of condo fees owed by a peculiar Condo Unit.

Construction Loan: A construction loan is a loan or mortgage used to build a home or building. Often the loan is funded in stages based on set stages of the construction process. For example, the loan is advanced on the purchase of the property, more money is advanced on the completion of the foundation, more once the building is ready to be locked up (doors and windows in place,), Etc.

Co-Operative: This is a form of property ownership. Similar to a condominium, this structure has a co-operative, a legal body, own the land and assigns an exclusive right to use a defined space (the person’s home). A person “owning” property in a co-operative, is a member of the co-operative and all members have a right to vote to form the leadership group.

Conventional Mortgage: A conventional mortgage is one not insured by CMHC, Genworth or other high risk mortgage company. A Conventional Mortgage is where the borrower has more than 20% equity in the property when entering into the mortgage.

Counter Offer: A rejection of an offer made by a potential buyer or seller of a property, and a new offer with different terms made back to the party who had made the original offer.

County: This term may be used interchangeably with Municipal District. They form specific rural regional governments in Alberta.

Covenant: A clause or term in a legal contract which, when related to a mortgage, gives the parties to the mortgage a right or an obligation. Covenant is another word for a legally binding promise.

CREA: The Canadian Real Estate Association is the Canadian organization representing real estate agents in Canada. They support the real estate industry and lobby to help protect both agents, the public and the industry.

CREB: The Calgary Real Estate Association. This is the association that governs real estate agents licensed in the Calgary area.

Crown Land: This is land own by the Government. There is both federal crown land and provincial crown land. Some of this land is leased to individuals or companies for exclusive use, while much of this land is open to public use.

Damages: A financial amount determined by agreement or a court as to the monetary compensation for another party to a contract’s breach of that contract.

Debt Service Ratio: The percentage of a potential home buyer’s income that can be used to pay mortgage payments on a mortgage to be used for purchasing property. This ratio is used to determine how much a buyer can afford in terms of monthly mortgage payments.

Deed: This is an American term used for the title to a property. It shows ownership and all registrations against the title. In Alberta, we use the term Title.

Default: This means the failure of someone to follow a binding term in a contract. In reference to a mortgage, this means the borrower failed to make a mortgage payment. Defaulting on a mortgage, allows the lender to take legal action to foreclose on the property (force the sale of the property to pay back the loan).

Deposit: An amount of money paid in trust when a person buys a home. The deposit is security for a seller where the funds are forfeited to the seller if the buyer refuses or cannot buy the home. Deposit funds are usually returned to a buyer if the buyer, under the terms of the Conditional Contract, does not waive Conditions.

Disclose: Under the AREA real estate purchase contract disclosure means a seller lets a buyer know about a problem with the property in writing and in the contract itself.

Dominant Tenement: The owner of property, or property itself that receives the benefit of an easement or encroachment agreement.

Dower Consent: A consent of a person who has Dower Rights, allowing for the document disposing or potentially disposing of an interest in land to be registered at the Alberta Land Titles Office.

Dower Release: An agreement register on title that releases the Dower Rights of a spouse on title, allowing them to dispose of their interest in the property without consent of their spouse.

Dower Rights: Rights given under Alberta law (the Dower Act) to a married person, who is not a legal owner of property on title when either of the married couple has lived in the property. The tiled owner requires consent of their spouse to dispose of an interest in the property (such as transfer ownership, or mortgage the property since title transfers if a foreclosure occurs).

Down Payment: The down payment is the amount of money a homeowner uses to buy a home but does not include the mortgage funds. For example, if buying a home for $500,000 and the mortgage is for $450,000, then the down payment is $50,000. The down payment includes the deposit(s) that formed part of the contract.

Dual Agency: This occurs when one Real Estate Agent acts for both a buyer and a seller in a real estate transaction.

Due On Sale Clause: This is a term in most mortgages that states that if a borrower sells the home, or changes ownership on title, then the mortgage lender may trigger the forced immediate repayment of the full amount borrowed against the property. If the borrower fails to pay back the mortgage loan, on triggering this term, the lender may foreclose.

Easement: A allowance, usually registered on title, that allows someone the legal right and ability to enter onto and use someone else’s land. For example, a property with a zero lot line, allows a home to be built right up to the property line. In the event the homeowner needs to repair something on the side of the house, the easement allows them to enter onto their neighbouring land to make the repairs to the side of their home.

Encroachment: This occurs when a structure built on one property extends past the land owned by that land owner onto someone else’s property. The part of the structure that goes onto the adjacent property is referred to as an encroachment. Encroachments are remedied by moving the structure, removing the structure or entering into an Encroachment Agreement with the owner of the property onto which the structure encroaches.

Encroachment Agreement: Is a contract or agreement that allows an Encroachment to remain in place despite the fact that it extends past a property line onto someone else’s property. The agreement often also deals with liability, maintenance, the lack of right to rebuild the structure, and, at times, the right to force the later removal of the encroachment.

Encumbrance: An encumbrance is a document registered against title to a property that remains binding on anyone who buys that property unless the encumbrance is discharged. For example, a mortgage, right of way or caveat.

Equity: This refers to the amount of value a person has in their home, not borrowed. For example, a $500,000 home with a $300,000 mortgage has $200,000 in equity.

Escrow: This term is primarily used in the United States and refers to an account where funds for the purchase of a home sit until the transaction completes. The term is not normally used in Alberta.

Estoppel Certificate: A certificate issued by someone, usually a condo management company or a renter, stating that no amount is owed in relation to a property or rental agreement. This certificate stops a rental or condo board from going after a new owner to the property for any amount not listed in the Estoppel Certificate.

Exclusive Listing: This is a written contract that allows a specific real estate agent the right to market a home for sale.

Fair Market Value: This represents the value of a home, whether for sale or not, that it would sell for in an open market at a specific point in time.

Fee Simple: This is the way most people own their home in Alberta. While technically the Crown owns all land in Canada, Fee Simple is what is referred to as full ownership. It allows the owner to sell, mortgage, rent, etc the home at their sole unfettered discretion. It is an exclusive use to use the land by the fee simple owner.

Fixed Rate Mortgage: This is a mortgage where the lender sets the interest rate at the time they lend the money secured on a home and the rate remains the same for the full Term of the mortgage.

Fixture: A fixture is something that is attached to a property. For example, a kitchen cabinet if just sitting on the floor is not a fixture, but once mounted in place in the kitchen, becomes a fixture. Fixture, unless specially excluded from a real estate contract, remains with the home for the new owner(s).

FMR: Fort McMurray Realtors is the real estate board in the Fort McMurray area.

Foreclosure: This is a legal procedure in which the lender who secured their debt on the title to a property with a mortgage, receives ownership of the property in the event that the borrower fails to pay the mortgage loan (or follow any specified term in the loan agreement). People often refer to a Judicial Sale as a foreclosure, however this is a different process but with a similar result for the homeowner.

GPAAR: Grande Prairie & Area Association of REALTORS is the real estate board for the Grand Prairie area.

Hamlet: A hamlet is a small community within a Municipal District in Alberta. Each must include at least 5 dwellings and have a set name and boundary.

High Ratio Mortgage: These include mortgages with less than 20% Equity in the property when the loan is first advanced.

HOA FEE: An HOA fee is the annual or monthly fee charged by a Homeowner Association.

Holdback: An amount agreed upon by a buyer and a seller of property whereby that amount will be released to the buyer or seller pending one of the parties doing, or in some instances not doing, a specified action. For example, funds form part of a holdback pending a seller replacing the roof on a home. If replaced the holdback is released to the seller. If the seller fails to replace the roof by a specified time, the holdback is released to the buyer.

Home Inspection: Often a condition in a real estate purchase contract in Alberta, the inspection allows a buyer to understand the nature and state of repair of the home, and structures, on the property prior to being bound to a purchase contract. For residential real estate purchases using an AREA contract (unless amended), a home inspection must be completed by a licensed home inspection.

Homeowner Association (HOA): This is an association that manages a specific property. For example, in a lake community, it manages the lake. In other communities, the HOA beautifies the boulevards and entry to the community.

Homeowner’s Insurance: This is a policy of insurance that protects someone who owns property in case of damage or loss to the property and liability that stems from injury to another person as it relates to the property.

Improvement District: Improvement districts are town sites or residential communities located in Provincial or National Parks within Alberta. The two provincial part Improvement Districts include Kananaskis Improvement District and Willmore Wilderness, while the National ones include: Banff, Elk Island, Jasper, Waterton and Wood Buffalo.

Indefeasible Title: This form of title ownership means that no one can go past the current title registered under the Torrens System used in Alberta to defeat the current registrations on title.

Interim Financing: See Bridge Financing: a form of loan that lends money for the purchase of a new home, usually the down payment, secured by equity in an existing home.

Joint Tenant: Is a form of co-ownership where by the co-owners equally own property. In Alberta, joint tenancy includes a Right of Survivorship.

Judicial Sale: This occurs when a person who borrows money using their land or home as equity and that person fails to make payments under the loan. In this case, unlike a foreclosure, the court sells the home and uses the proceeds from the sale to pay back any amount owing under the loan. Any net funds remaining are returned to the borrower.

Latent Defect: A defect to property that is not reasonably discoverable (without causing damage) by a potential buyer doing due diligence on the property.

LDAR: Lethbridge & District Association of Realtors is the real estate board for the Lethbridge area supporting licensed real estate agents there.

Lender: The person, bank, company or any combination of them, who lends funds to another person or company.

Lien: A claim against title to a property for money owing based on a legislated (a law) right to secure a debt against property. For example, a builders’ lien.

Life Estate or Life Interest: This is where a person with ownership in Fee Simple, divides their interest and gives another person “ownership” in the property for the duration of that person’s life. On death of the life interest holder, the full estate reverts back to the Fee Simple owner.

Line of Credit: An amount lent to someone one where they have the right to repay and borrow funds at will up to a predetermined loan amount. When secured against the title to property, the line of credit is secured by way of a mortgage which then appears on title.

Lis Pendens: A type of registration on title indicating that someone has sued the owner of the property and claims an interest in the property, but the courts have not yet determined the outcome of the matter.

Listing: Is a home for sale listed on the MLS. The listing contains important information and features about a property.

Listing Agent: This is the Real Estate Agent under contract with a seller who puts the house up for sale for a property owner and, often, lists it on the MLS.

Listing Agreement: A contract between a property owner and a real estate agent. The agreement sets out a real estate agent is paid for listing the property and then negotiating the contract with potential buyers.

Loan to Value (LTV): This represents the ratio or percentage of equity in property vs amount of the property value borrowed by way of mortgage. Simply, it is the mortgage(s) on title divided by the value of the home. For example, a $400,000 valued property with a $100,000 mortgage has a loan to value of 25%.

Matrimonial Home: A residential living unit used by a (usually married, but often includes common law or adult interdependent partners) couple as the place of primary residence by that couple.

Maintenance Fee: This is the fee usually referred to as a condo fee or condominium fee. It is the monthly or annual fees used to maintain the Condominium Corporation.

Metes and Bounds: This is a system of determining and defining property lines. Traditionally they used stones or natural landmarks such as rivers or lakes. In Alberta, most current land delineation is determined by brass markers buried in the ground by the province.

Metis Settlements: Alberta includes 8 Metis settlements. They are local communities of Metis people and the incorporation of these communities are formed under the Metis Settlements Act of Alberta.

MHREB: Medicine Hat Real Estate Board Co-op represents real estate agents in the Medicine Hat area.

Mitigation: This term refers to the step that a person takes to reduce their losses when another party to a contract breaches the contract.

Mixed Use: A parcel of land that includes land use for more than one purpose. For instance a mixed use building may include both residential units and commercial units.

Monument: This is a marker or stone used in determining the edge of a property line. Current monuments in Alberta take the form of a brass stake buried in the ground.

Mortgage: A loan agreement where the loan is secured against the title of a property.

Mortgagee: The person or company that lends money secured by a mortgage.

Mortgage Broker: This is a company or individual licensed in Alberta by RECA under the Real Estate Act to negotiate mortgages between a borrower and a lender.

Mortgage Insurance: This is insurance used when a person has less than 20% equity in their property. The insurance protects the lender so that if the loan is not paid, and the value of the property is not sufficient to pay back all amounts owing to the lender on the sale of a property, the mortgage insurance company then makes payment of any shortfall to the lender. In this case, the insurer may seek repayment of the amount paid out to the lender from the borrower.

Mortgage Life Insurance: This is a life insurance policy, whereby if an insured homeowner passes away, the mortgage lender is repaid in full, thus eliminating the debt secured on title to the property.

Mortgage Maturity: The date that the term of a mortgage expired and all remaining funds owed to the lender become due and payable.

Mortgagor: The person or company that borrows money secured by mortgage on title to a property.

Multiple Listing Service (MLS): The MLS is a database that lists properties listed for sale in a geographic area.

Municipal District: Also called MDs, these local government bodies govern rural areas in Alberta. Municipal Districts are also called Counties and there are many Municipal Districts in Alberta listed here.

New Home Warranty: This is an insurance product required on all new homes and condominiums in Alberta. The warranty offers protection for several types of defects that exist or develop after construction of a new home.

Non-Waiver: This is a form or notice that a buyer or seller, who does not intend on waiving a specific condition in a real estate purchase contract, sends to the other party in the transaction stating that they will not be waiving their condition. This means that the contract is terminated and the parties are placed in their pre-contract positions. Ie any deposit is returned.

Offer to Purchase: The written contract a buyer presents to a seller that sets out the terms a buyer agrees to purchase a property for. If accepted by a seller, this then becomes the legally binding contract. The offer to purchase generally includes conditions, making it a Conditional Offer.

Open Mortgage: This is a mortgage loan where the borrower may freely payout and end the mortgage term without penalty. Typically, these loans are made at a higher interest rate.

Overland Water Drainage Right of Way: A right of way to allow for water to flow across property to control flooding. Often seen as a swale at the real of property, a homeowner may not build anything on the right of way, which often extends past the swale itself.

Patent Defect: A defect in a property that is reasonably discoverable when inspecting a property.

Per Diem: Latin for per day, meaning an amount owed or paid per day. I.e. the per diem payment on a mortgage is the annual principal and interest amount paid over the course of a year divided by 365 days (366 on leap years).

Personal Property: This is not real estate. It includes all Chattels owned by a person.

PIT: PIT means Principal, Interest and taxes. For example, when a mortgage company collects and pays the property tax on a property, the monthly payments include both a principal repayment amount, the interest as well as the pro-rated monthly tax amount.

Postponement Agreement: An agreement registered on title to property that postpones an interest in the property to a someone whose interest is registered subsequent to the first registration. For example, interests in property take precedence in the order they are registered. So a mortgage registered on title after a caveat, has second priority unless the caveat holder agrees to postpone their interest to the mortgage.

Pre-Approval: In regards to a mortgage a pre-approval allows a potential home buyer to pre-set the amount a lender will allow them to borrow based on the buyer’s financial position. This is a guide only and the mortgage company requires details on a specific home purchase to give unconditional approval. People should not waive a Financing Condition based on a pre-approval.

Prepayment Clause: A term in a mortgage that allows a borrower to pay back a portion of the Principal without any penalty. Usually this allows for the annual prepayment of a specified percentage of the Principal and allows the borrower to increase their monthly payments (therefore increasing the amount of principal prepaid with each payment) by a specified percentage each year.

Prepayment Penalty: This is a penalty owed under a Closed Mortgage term when the borrower payout and end the mortgage before the expiry of the Mortgage term. Typically, the penalty is the higher of three months’ interest or an interest rate differential for a fixed rate mortgage and just a three month interest penalty for variable rate mortgages.

Pre-Sale: A pre-sale refers to the sale of property (often condominiums) before they property construction is completed.

Principal: The Mortgage Principal refers to the original amount lent under a mortgage.

Private Mortgage: A mortgage loan where the lender is not a bank or regular mortgage lender. Usually individuals, private companies or small groups of companies and/or individuals, lend money secured against title to property.

Promissory Note: A document where a person promises to pay back a loan or debt to anther person or company. The promissory note may include a clause that allows it to be registered at the Land Titles Office as a Caveat.

Purchaser’s Lien Caveat: A Caveat registered on title protecting the interests of a buyer to property once they enter into a binding contract for that property. It prevents the seller from selling the property to someone else.

Quit-Claim: A quite claim is a document that hand over ownership of a property to another person as part of or in total satisfaction of a debt. For instance, in a foreclosure a person my sign a quit-claim to transfer ownership to the lender without the lender needing to go through the foreclosure process. This may reduce the costs to the lender, which normally are added to the debt of the borrower.

RAE: The Realtors Association of Edmonton. This is the association of real estate agents licensed in the Edmonton Area.

RALD: Realtors Association of Lloydminster & District represents the licensed real estate agents in the Lloydminster area.

Ranges: In Alberta, Ranges are six mile wide columns that define strips of land between meridians. Numbering starts at number one from the east of each Meridian running east to west.

RASCA: Realtors Association of South Central Alberta is the board representing the real estate agents working in South Central Alberta including: Brooks, Bassano, Hanna and Drumheller and surrounding areas.

Real Estate Act: The legislation (law) in Alberta that governs the real estate industry.

Real Estate Agent: Is a person who holds a real estate license and is legally allowed to “trade in real estate” under The Real Estate Act.

Real Property Report: See Survey.

Realtor: Realtor is a trademarked term for a real estate agent. The term may not be used without consent of the trademark owner or licensee who acquires the right to further license the term.

RECA: Is the Real Estate Council of Alberta. This is a regulatory body established by the Alberta government to regulate real estate agents, real estate brokers, mortgage brokers, etc and help to protect the public.

Refinance: When a borrower wants to or has to replace a maturing mortgage, wants to change lenders or wants to take out Equity from their home, a refinance is the process of securing a new mortgage and paying out an existing mortgage with the funds secured in the new loan.

Release of Dower Rights: See Dower Release.

Rescind: A situation where a contract is ended and each party is put back into the position they were in prior to entering into the contract.

Reserve Funds: An amount of money held by a Condominium Corporation that acts as a contingency for the regular repairs and replacement of the Condo’s assets.

Restrictive Covenant: A document registered on title to a property that restricts what the owner of the property may do with the property. For example, some restrictive covenants restrict where a garage may be built. Others specify the type of fencing or paint colour that may be used on the property.

Reverse Mortgage: This type of mortgage is most often associated with older property owners. In this instance the lender lends money secured by way of mortgage. Under a Reverse Mortgage, the borrower makes no regular payments to the lender. On the sale of the property or, in some, the death of the borrower or if the borrower moves out of the property, then the principal and all accrued interest must be paid to the lender.

Right of First Refusal: This is an option for someone to buy a property if the current owner wants to sell. Often secured on title by way of Caveat.

Right of Survivorship: A right of a Joint Tenant to property to receive ownership of a co-owned interest in property on the death of a joint tenancy co-owner.

Run with The Land: Is a term meaning that a right, restriction or obligation continues to apply to a property notwithstanding a change in ownership.

Second Mortgage: The priority of mortgage interests in a property (when more than one appear on title) are sequential. Meaning that the first mortgage on title receives funds first on a judicial sale or foreclosure. Remaining funds then go to the next mortgage register on title. A second mortgage is simply another mortgage loan listed second on the title to property.

Sections: A section is an area of land, 36 of which form a Township. There are 640 acres in a section of land.

Seller Financing: See Vendor Take Back Financing.

Seller’s Lien Caveat: A caveat protects the seller if a portion of the purchase price is unpaid by a buyer.

Set Back: This is a prescribed distance that is required between a structure on a property (such as the home, garage or deck) and the property line.

Short Sale: This occurs when someone sells a property but the mortgage amount remaining or owed exceeds the current value of the home.

Specific Performance: This is a type of relief that a party to a contract may apply to the court for. If granted, a court order for Specific Performance forces a party to a contract to complete the contract. Specific Performance is usually granted where a monetary payment does not properly make the injured party whole. For instance, since land is considered unique, money does not make up for not getting a specific piece of property.

Statement of Adjustments: This statement lists the amounts owing by a buyer to a seller with respect to property. It also shows the amounts already paid towards or credited to a seller. The statement includes adjustments for taxes, HOA fees, Condo Fees, rent, security deposits, etc.

Strata: See Condominium.

Subservient Tenement: Refers to the land that has granted an interest to an adjacent parcel of land (the Dominant Tenement) giving rights to the owner of the Dominant Tenement to access or use the land..

Summer Village: These areas are no longer able to be formed in Alberta. Historically, these areas formed in the same way as a Village however these communities tended to consist of recreational property used in the summers only. Of note and unique in Alberta, residents in these villages are able to vote in both the summer village community as well as the residents’ regular home community.

Supplemental Tax Assessment: This reflects an increase to property taxes not associated with the annual tax assessment process. For instance, if a home is built on bare land, the city may issue a supplemental tax assessment to increase the tax on the property based on the new increased value at a time between annual tax assessments.

Survey: A document, also referred to as a Real Property Report (RPR), which illustrates the property, its boundaries and measurements, the location of buildings and structures on the property, and visually shows any easements or encroachments. RPRs are prepared in compliance with the Surveyors Manual of Standard Practice and prepared by the Alberta Land Surveyors’ Association.

Tenancy at Will: A form of tenancy that allows a buyer to take possession of the property they are purchasing even if the full purchase price has not been paid. For tenancy at will in Alberta, a buyer needs to show that they have insurance, all their non-mortgage money, a signed direction to pay, tenancy at will agreement and Transfer Back, and have an unconditional mortgage properly executed. During this time a buyer is liable for taxes and utilities and may not damage (renovate) the property. If the seller is not paid, they may evict the buyer at will (usually with 24 or 48 hours’ notice).

Tenant in Common: A form of property ownership whereby more than one owner co-owns a specific property. In Alberta, Tenants in Common do not have a Right of Survivorship and the co-owners own the property in whatever specific percentage that they each hold to the property.

TIPP: This stands for Tax Installment Payment Plan. This is a monthly automatic payment set up with a municipality for the property taxes. Alternatively, a property owner may make payments annually.

Title: The legal document that shows details as it relates to a specific property. I.e. it shows ownership, mortgages and any other registration on title.

Title Insurance: This is a policy of insurance bought by a homeowner or soon to be homeowner to protect themselves or the mortgage lender. The policy insures against many risks including title defects, and title fraud.

Torrens System: A land titles system used in Alberta where the Province of Alberta guarantees the registrations on title. This means that the titles, as registered may be absolutely relied upon.

Towns: These are areas with multiple dwellings incorporate as a town if they have a minimum of 1,000 people living there.

Townships: Six mile wide rows that are numbered form number one starting at the US boarder (Montana) and run North to the Northwest territories.

Townships: A township is also a six by six square mile area of land defined by the edges of Ranges and Townships.

Transfer Back: A Transfer of Land that transfers a property back to a seller in the event that a buyer is not able or will not finish paying for a property.

Transfer of Land: A transfer or Transfer of land is a document that, when registered at the Alberta Land Titles Office, changes ownership of the property to which it relates.

Umbrella Mortgage: This type of mortgage secures a loan against several properties in the same mortgage document.

Utility Right of Way: A specified corridor reserved for municipalities or utility companies to run gas and electric lines to a home. Homeowners are not permitted to build on a Right of Way.

Variable Rate Mortgage: See Adjustable Rate Mortgage.

Vendor Financing: See Vendor Take Back Financing.

Vendor Take Back Mortgage: Also known as Seller Financing or Vendor Financing. This is a situation where a buyer borrows some of the funds needed to buy a property from the person selling the property. The loan is secured by way of mortgage against the property and the terms of the mortgage are contracted to in the Offer to Purchase.

Villages: A village is a community where 30% of the population decides to form a village and there are at least 300 people living within its boundaries.

Voidable: A contract what one party has the right to decide if they wish to void or rescind the contract.

Waiver: A document that waives a person’s right under a contract. For example, the waiver of a condition waives the right of a buyer or seller to undo a contract under a contract that was subject to a specific condition.

Writ: A writ is a registration on title, or Encumbrance, that shows that the owner of the property was sued, and the person suing them won in court. The writ secures the amount owed against the title to the property.

Zero- Lot Line: This is a property where no set back distance is required between a home and the property line. The home may be built right up to the edge of the property line.

Zoning bylaws: City or regional municipality rules and regulations which specify or restrict the permitted uses of specific property. Cities set these rules which are not found on title to the property.