Glossary of Common Terms

Investment Terms

Absentee Investor: An investor who puts money into a property with the intention of making a profit and does not live in the property.
Capital Gain: The financial gain on the sale /exchange of investment real estate as set out in the Income Tax Act.
 a group of people living in the same place or having a particular characteristic in common.

Depreciation: A loss in value usually due to physical deterioration over time.
Financial Freedom: The ability to live a lifestyle of your choosing without the encumbrance of financial stress.
Income Property: Property that is used to generate income by renting or leasing all/a portion of.
Landlord: The person from whom another holds tenancy.
Lease: Contract between landlord and tenant for the occupation or use of the landlord's property by the tenant for a specified time and for a specified consideration.
Liquid Asset: An asset that is either cash or is easily converted into cash.
Nest Egg: A sum of money saved for the future.
Non-liquid Asset: An asset that is not easily converted into cash.
Owner Occupied Investor: An investor who lives in a property as well as using the property to provide additional income and revenue.
Risk: The measure of uncertainty, exposure and vulnerability imposed on an investor with regards to any financial loss that may accrue.
Superintendent: A person responsible for the maintenance of a building.
Tax Shelter: The tax write-off possible through the depreciation benefits available on investment real estate ownership.
Tenant: One who occupies land or tenement under a landlord.
Vacancy Rate: A percentage of the amount of vacant and empty spaces available in the rental market.

Mortgage Terms

Amortization: The amount of years required to repay the entire amount of the mortgage loan.
Appraisal: An estimation of value
Basis Point: When calculating a mortgage rate, the equivalent of 1/100ths of 1%
Default: Failure to fulfill an obligation or payment.
Deposit: Payment of money or other valuable consideration as pledge for fulfillment of contract.
Equity: The interest an owner of real property has in its total assets after allowing for encumbrances and creditors' claims.
Escrow: A neutral third party holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met. Escrow also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.
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.
Interest Rate: The percentage that is charged for the use of borrowed money.
Mortgage: A conveyance of property to a creditor as security for payment of a debt with a right of redemption upon payment of the debt.
Mortgagee: The one to whom property is conveyed as security for the payment of a debt; the lender or creditor.
Mortgagor: The one who gives the mortgage; the borrower or debtor.
Mortgage Principal: The amount of money that is to be repaid to a lender before interest payments.
Term: In a mortgage "term" is the actual length of time for which the money is loaned.
Title: The means of evidence by which the owner of land has lawful ownership thereof.
Variable Rate Mortgage: A mortgage in which the interest rate fluctuates during the term and either payments or balance outstanding are adjusted accordingly.

Real Estate Terms

Agent: One who is authorized by a principal to represent the principal in business transactions with a third party. In the real estate profession, it refers to a broker.
Building Codes: Regulations established by local governments providing for structural requirements for building.
Building Permit: A document issued by the municipal authority certifying the blueprints for construction and allowing work to commence.
Common Area: The area in a rental property that are shared by all or some of the tenants, such as elevators, hallways, foyers, etc.
Condominium: The fee ownership of a specified amount of space with tenancy-in-common ownership of portions used jointly with other owners (the common elements).
Conveyance: The transfer of an interest in property from one person to another.
Date of Completion: The date specified in the agreement of purchase and sale, when the purchaser is to deliver the balance of money due and the vendor to deliver a duly executed deed and vacant possession of the property (unless otherwise agreed).
Deed: An instrument in writing, duly executed and delivered, that conveys title or an interest in real property.
Duplex: A two-family dwelling/house.
Exclusive Listing: The giving of the sole right to offer the described property for sale according to the terms of the agency agreement.
Joint Tenancy: Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.
Multiplex: A multi-family dwelling/house.
Real Estate Broker: A person who represents a principal in a real estate trade.
Realtor: A registered word that may only be used by an active member of a real estate board affiliated with the Canadian Real Estate Association.
Residential Income Property: A non-commercial property that provides an investment opportunity, whether by living in a portion of it and leasing the remainder (owner-occupied) or by renting out the premises entirely (absentee investment).
Salesperson/Sales representative: An employee of a broker authorized to trade in real estate.
Triplex: A three-family dwelling/house.
Zoning By-law: A by-law under the Ontario Municipal Board that prohibits the use of certain areas of land for any other purpose other than the purpose set out in the by-law. It is also known as a Restricted Area By-law.