Residential Real Estate Terms Defined

Residential Real Estate Terms Defined

Residential real estate transactions in Alberta are most commonly governed by the various versions of the Alberta Real Estate Association’s template forms of agreement.  These templates continually evolve and their standard terms aim to highlight and address many of the key considerations sellers and buyers should consider when agreeing to these transactions.  Within these forms of agreement and during the transactions’ various processes (seeking and securing financing, execution of documents with the lawyer, etc.) buyers and sellers will encounter many real estate terms.  Here, we aim to provide some further information with respect to the meanings of some of these terms.

Addendum
An Addendum is a supplementary document that is attached to, and becomes part of, the original contract as a result of making changes to contractual obligations that have already been agreed to.

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

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, within which structures and improvements are located.

Breach of Contract
A failure to fulfill a contractual obligation.

Bridge Loan
A loan for a short duration (typically up to 1 year) with a higher interest rate intended to cover immediate cash requirements until permanent financing is secured or the sale of a property occurs.

Certificate of Compliance
A statement 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 statement may be either a stamped property survey if the existing development meets regulations or 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 and provides insight into any compliance-related liabilities a property may have.

Certificate of Title
A certificate that displays information about a property, including the legal land description, municipal jurisdiction, ownership and registered interests.

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. This typically coincides with the possession date.

Easement
A right acquired by one party to use or access the land of another. Once registered on title, an easement is a binding interest in the land that runs with the land regardless of any change in ownership.

Encroachment
A structure that is placed, erected, or built on an adjoining property. It also applies to soffits and eaves that overhang the adjoining land.

Estoppel Certificate
A statement from a condominium corporation that confirms the financial information it provides regarding a unit is correct as of the date of the statement and can be relied on by a third party. Upon issuing the Estoppel Certificate, the condominium corporation is barred from changing any of the statements it has certified as correct. This assists with confirming financial liabilities of a condominium property.

Fee Simple 
The highest estate form of land/property ownership with the most rights with the fewest limitations. Although generally considered absolute ownership, it is still subject to the restrictions imposed by government.

Foreclosure
The legal process by which a lender takes possession and ownership of a property due to the borrower’s failure to comply with the terms and conditions of the mortgage agreement.

High Ratio Mortgage
A mortgage loan that exceeds 80% of the appraised property value or sale price whichever is less.

Improvement
An item or fixture that is permanently affixed to the land, including things like decks, fences and detached garages.

Joint Tenancy
A form of land/property ownership that involves two or more owners, with each owner having the right of survivorship for the single, indivisible ownership interest. Therefore, each owner’s interest in the land/property will automatically pass to the surviving joint owner(s) and cannot be willed to another party.

Land Titles Office
The official location for processing land title documents. Alberta has 2 Land Titles Offices – 1 in Calgary and 1 in Edmonton.

Lien
A financial claim permitted by statute to be registered against the title of a property for the payment of a debt.

Material Latent Defect
A physical deficiency that is not visible and renders a property dangerous or potentially dangerous, unfit for habitation or unfit for the purpose for which it is acquired. It may also include defects that would involve great expense to remedy, notices from local authorities that prejudicially affect the property or a lack of appropriate permits.

Misrepresentation
A false or misleading statement or representation made by one party to another or others. It may also be an omission and occur with non-disclosure or concealment of material facts.

Mortgage
A legal agreement specifying the pledging of real property to a lender as security for a debt.

Mortgage Insurance
A credit risk management tool protecting the lender from losses due to default on the mortgage by the borrower. It is typically required when the loan to value ratio for the property is 80% or greater.

Real Property Report
A legal document produced by a land surveyor that displays the boundaries of a property and the location of improvements to the land relative to the boundaries. It also illustrates other issues affecting 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. An RPR can remain current, regardless of when it was prepared, if no changes have been made to the property since the time the RPR was prepared.

Tenants in Common
A form of ownership of land/property that involves two or more land owners with no right of survivorship by any owner, with each owning separate ownership interests in the property. Therefore, each owner may will his or her share of the land/property to another party.

Title
A document that records the information about the land, such as the legal land description, municipal jurisdiction, ownership and registered interests.

 

The terms above are only some of the multitude of terms buyers and sellers may encounter during the course of a residential real estate transaction. We welcome the opportunity to further discuss real estate terms with you, in the event we can assist in clarifying their meanings and interpretations. For assistance or more information, please contact our office at 780-469-0494 or email us directly at reception@edmontonlaw.ca.