Navigating the housing and real estate market can seem like a confusing task if you don’t understand the terminology being used. To help make housing a little easier to understand, here’s some common legal lingo you may hear in real estate and home buying.
- Amortization: the period of time required to reduce a debt to zero when payments are made regularly, this would refer to the amount of time you hold a mortgage loan.
- Appraisal: the process that determines the market value of a property.
- Assumption: a legal document signed by a homebuyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder.
- Building permit: a certificate that must be obtained from the City by the property owner or contractor before a building can be erected or repaired.
- Closing costs: costs that are in addition to the purchase price of a home, such as legal fees, transfer fees and disbursements. These are payable at closing date.
- Conditional offer: an offer to purchase that is subject to specified conditions. There is usually a stipulated time limit within which the specified conditions must be met.
- Covenant: a clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation.
- Deed: legal document, which is signed by both the vendor and the purchaser transferring ownership. This document is registered as evidence of ownership.
- Default: failure to make mortgage payments, defaulting on the loan, may give cause to the mortgage holder to take legal action to possess (foreclose) the mortgaged property.
- Encumbrance: a registered claim for debt against a property, such as a mortgage.
- Foreclosure: legal procedure in which the lender gets ownership of the property if the borrower defaults on the mortgage loan.
- Lien: a claim against a property for money owing.
- Offer to Purchase: written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated in the document.
- Survey: a document that illustrates the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments.
- Zoning bylaws: City or regional laws that specify or restrict land use.
