Whether you're buying your first home or you're an experienced investor, understanding real estate terminology helps you make confident, informed decisions.
This glossary covers essential terms specific to Ontario real estate transactions, from Agreement of Purchase and Sale to Zoning By-Laws.
A
Agreement of Purchase and Sale
A legal contract between a buyer and seller outlining the terms and conditions of a real estate transaction, including purchase price, closing date, and any conditions.
Amortization
The length of time required to pay off a mortgage loan in full. In Canada, typical amortization periods range from 15 to 30 years.
Appraisal
A professional estimate of a property's market value, typically conducted by a licensed appraiser for mortgage lending purposes.
Assessment
The value placed on a property by MPAC (Municipal Property Assessment Corporation) for property tax purposes. This may differ from market value.
B
Buyer's Market
A market condition where supply exceeds demand, giving buyers more negotiating power and often resulting in lower prices.
Bridge Financing
Short-term loan used to bridge the gap between buying a new home and selling your current one.
Brokerage
A licensed real estate company that employs brokers and salespersons to facilitate property transactions.
C
Chattels
Personal property items not permanently attached to the home (e.g., appliances, window coverings). These must be specifically included in the Agreement of Purchase and Sale.
Closing
The final step in a real estate transaction when ownership is transferred from seller to buyer and all funds are exchanged.
Closing Costs
Expenses beyond the purchase price, including legal fees, land transfer tax, title insurance, and home inspection fees. Typically 1.5-4% of purchase price.
CMHC (Canada Mortgage and Housing Corporation)
A federal Crown corporation that provides mortgage loan insurance to lenders when buyers have less than 20% down payment.
Comparative Market Analysis (CMA)
An evaluation of similar recently sold homes used to help determine a property's market value.
Conditional Offer
An offer to purchase that includes specific conditions that must be met before the sale becomes binding (e.g., home inspection, financing approval).
Condominium
A form of ownership where you own your individual unit and share common elements with other owners. Governed by a condominium corporation.
CREA (Canadian Real Estate Association)
The national association representing real estate professionals across Canada.
D
Deposit
Money submitted with an offer to purchase to demonstrate good faith, typically held in trust by the listing brokerage until closing.
Down Payment
The portion of the purchase price paid upfront by the buyer. Minimum 5% in Canada, but 20% or more avoids CMHC insurance premiums.
Dual Agency
A situation where the same real estate professional represents both buyer and seller in a transaction. Requires written consent from both parties.
E
Easement
A legal right allowing someone to use a portion of your property for a specific purpose (e.g., utility access).
Encroachment
When a structure or improvement extends beyond property boundaries onto a neighbor's land.
Equity
The difference between your property's market value and the outstanding mortgage balance.
F
Firm Offer
An unconditional offer to purchase with no conditions or subjects.
Fixtures
Items permanently attached to the property (e.g., built-in appliances, light fixtures). These are typically included in the sale unless specifically excluded.
Freehold
Ownership of both the property and the land it sits on, as opposed to leasehold or condominium ownership.
G
GDS (Gross Debt Service) Ratio
The percentage of gross income required to cover housing costs (mortgage, property taxes, heating, 50% of condo fees). Typically should not exceed 32%.
H
Home Inspection
A professional examination of a property's condition, typically performed during the conditional period of a purchase.
HST (Harmonized Sales Tax)
13% tax in Ontario applicable to newly constructed homes. Resale homes are exempt from HST.
I
Interest Rate
The cost of borrowing money for a mortgage, expressed as a percentage. Can be fixed or variable.
Irrevocability
The date and time until which an offer remains open for acceptance. After this time, the offer is void unless extended.
J
Joint Tenancy
A form of co-ownership where each owner has equal interest. Upon death, ownership automatically passes to surviving owner(s).
L
Land Transfer Tax
A provincial tax paid by the buyer upon transfer of property ownership. In Toronto, an additional municipal land transfer tax applies. First-time buyers may qualify for rebates.
Leasehold
Property ownership where you own the building but lease the land from a landowner.
Lien
A legal claim against a property by a creditor that must be paid when the property is sold.
Listing Agreement
A contract between a seller and real estate brokerage authorizing the brokerage to market and sell the property.
M
MLS® (Multiple Listing Service)
A database of properties for sale maintained by local real estate boards, accessible to REALTORS® and the public.
Mortgage
A loan secured by real property, used to finance the purchase of a home.
Mortgage Broker
A licensed professional who arranges mortgages between lenders and borrowers.
Mortgage Pre-Approval
A commitment from a lender stating how much they're willing to lend you, subject to certain conditions. Valid for 90-120 days.
MPAC (Municipal Property Assessment Corporation)
The agency responsible for assessing property values in Ontario for taxation purposes.
N
Notice Period
The time required to provide written notice before vacating a rental property or closing a sale.
O
Offer to Purchase
A formal written proposal by a buyer to purchase property at a specified price and under specified terms.
OREA (Ontario Real Estate Association)
The provincial association representing real estate professionals in Ontario.
P
PIPEDA
Personal Information Protection and Electronic Documents Act - federal legislation governing how private sector organizations collect, use, and disclose personal information.
Possession Date
The date when the buyer takes physical possession of the property, usually the same as the closing date.
Pre-Construction
Properties purchased before construction is complete, often directly from builders or developers.
Property Tax
Annual tax levied by municipalities based on assessed property value, used to fund local services.
R
REALTOR®
A registered trademark identifying licensed real estate professionals who are members of the Canadian Real Estate Association (CREA) and subscribe to its Code of Ethics.
RECO (Real Estate Council of Ontario)
The regulatory body that governs real estate professionals and brokerages in Ontario.
Right of First Refusal
A contractual right giving someone the first opportunity to purchase a property before it's offered to others.
S
Seller's Market
A market condition where demand exceeds supply, giving sellers more negotiating power and often resulting in higher prices.
Status Certificate
A document provided by condominium corporations containing financial statements, reserve fund information, and rules. Required for condo purchases.
Survey
A precise measurement and drawing of property boundaries, structures, and easements.
T
Tarion Warranty
New home warranty protection provided by Tarion Warranty Corporation in Ontario, covering defects in materials and workmanship.
TDS (Total Debt Service) Ratio
The percentage of gross income needed to cover all debts including housing costs, loans, and credit card payments. Typically should not exceed 40%.
Tenancy in Common
A form of co-ownership where each owner has a specific percentage of interest that can be transferred independently.
Title
Legal evidence of property ownership, registered with the Ontario Land Registry.
Title Insurance
Insurance protecting against title defects, survey issues, fraud, zoning violations, and other title-related problems.
TRESA (Trust in Real Estate Services Act)
Ontario legislation governing the conduct of real estate professionals and brokerages.
TRREB (Toronto Regional Real Estate Board)
The real estate board serving the Greater Toronto Area, providing MLS® services and market statistics.
U
Underwriting
The process lenders use to evaluate mortgage applications and determine loan approval.
V
Variable Rate Mortgage
A mortgage where the interest rate fluctuates with the lender's prime rate throughout the term.
Vendor Take-Back Mortgage
Financing arrangement where the seller acts as lender for part of the purchase price.
W
Waiver
The voluntary removal of a condition from an offer to purchase.
Walkthrough
A final inspection of the property before closing to ensure it's in the agreed-upon condition.
Z
Zoning By-Laws
Municipal regulations governing how land and buildings can be used (residential, commercial, industrial, etc.).
Have Questions?
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