If you are buying or selling a home, or even jumping into the real estate industry, there could be a lot of terms you may be unfamiliar with at first. While the list can go on forever, we thought we would start off with 20 terms that we believe are good to know in real estate industry:
1. Acceleration Clause: A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
2. Alienation Clause: This is a clause that enables the mortgagee to demand payment of the outstanding balance including interest upon sale or transfer of title. (also known as a “due on sale” clause)
3. Balloon Payment: The final lump sum payment that is due at the termination of a balloon mortgage.
4. Cloud on Title: Any encumbrance or claim that affects title to property.
5. Contingencies: When making an offer or counter-offer, you’ll probably want to include provisions to cover yourself in case the deal doesn’t wind up working for you. For example, you might have a contingency that says the purchase of a home will be dependent on being able to sell a current home, obtaining the necessary financing to purchase the home, or the home passing an inspection.
6. Encumbrance: Outstanding claim or lien recorded against property or any legal right to the use of the property by another person who is not the owner.
7. Foreclosure: Remedial court action taken by a mortgagee, when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor.
8. Grantee: The party to whom an interest in real property is conveyed.
9. Grantor: The party who conveys an interest in real property by deed.
10. Injunction: A judicial process or order requiring the person to whom it is directed to do or refrain from doing a particular thing.
11. Kicker: An extra bonus or additional payment over and above the fixed interest already paid to an investor eg. A percentage of gross profits or cash flow.
12. Lien: A right, given to a creditor, creating an interest in the real property until the debt is discharged.
13. MLS: The MLS (or multiple listings service) is a searchable listing of homes for sale, with detailed information on each. A real estate agent can add your home to the MLS or help you search the MLS to find your dream home — though many online searches allow anyone to browse the MLS for property
14. Mortgage Commitment: A formal indication, by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms
15. Notice D.O.R: Notice filed in court by mortgagor under foreclosure proceedings that he desires an opportunity to redeem.
16. Prepayment Clause: A clause inserted in a mortgage, which gives the mortgagor the privilege of paying the mortgage debt in advance of the maturity date, on stipulated terms.
17. Running with the Land: A covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent takers to either liability to perform it or the right to take advantage of it.
18. Tenure: A system of land holdings for a temporary time period.
19. Valuation: Estimated worth or price. The act of ascertaining how much specific real property is worth.
20. Zoning Bylaw: A bylaw passed by a municipality and approved by the Ontario Municipal Board, prohibiting the use of land in certain areas for any purpose other than as set out in the by-law. In the Planning Act, it is called a Restricted Area By-law.
Now that you’re familiar with these terms you can feel more confident when communicating with real estate agents, brokers and realtors. If you have any questions or would like to learn more, feel free to contact us at info@heritagerealty.ca.
