ABSOLUTE FEE (see FEE SIMPLE)

ACCELERATION CLAUSE
The right of the mortgagee (lender) to demand payment of the principal amount upon default or upon sale of the property.

ACCRUED INTEREST
Interest earned but not yet paid.

ADJUSTABLE RATE MORTGAGE (ARM)
Is a mortgage where the interest rate is adjusted periodically based on a pre-selected index such as the Consumer Price Index of inflation rate. Also known as the renegotiable rate mortgage the variable rate mortgage or the Canadian roll over mortgage.

ADJUSTMENT INTERVAL
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, usually on a yearly basis.

ADMINISTRATOR
A person appointed by court in cases where there is no will to administer an estate.

ADVERSE POSSESSION
Occupation of lands inconsistent with the right of the true owner.

AFFIDAVIT
A written statement made under oath.

AGREEMENT FOR SALE
A contract for the sale of property whereby the vendor agrees to accept instalment payments. The purchaser's interest is registered as a right to purchase and legal title is not transferred until payments are complete.

AMORTIZATION
Repayment of a loan with periodic payments of both principal and interest calculated to pay off the loan at the end of a fixed period of time.

APPLICATION FORM
The written form on which the borrower makes a formal application for a loan.

APPRAISAL
A written estimate of a property's current market value usually completed by an impartial party with knowledge of real estate markets.

ASSESSED VALUE
A valuation of the property done by a provincial government assessment authority which is used for taxing purposes. In theory, assessed values and appraised values should be the same.

ASSIGNMENT
A disposition or transfer of a charge.

ASSUMPTION CLAUSE
The agreement between a buyer and seller, where the buyer takes on or assumes an existing mortgage on the property. This usually is done to save the purchaser money compared to his having to arrange a new mortgage. Typically mortgages do not allow for assumption unless certain conditions are complied with (called a "non-assumption" clause). Furthermore, the original borrower is still liable for the loan unless the borrower gets a release from the lender (called "novation").

ASSURANCE FUND
A fund set up by the Provincial Government to compensate any person who:
(a) Is deprived of property because of operation of the Act; or
(b) suffers loss from any omission, mistake or wrongdoing by land title staff.

BALANCE SHEET
A document showing the financial situation - assets, liabilities, and net worth - of a company at a specific point in time.

BALLOON PAYMENT
A balloon payment is where a certain pre-determined lump sum is payable during the term or at the end of a mortgage.

BENEFICIARY
A person entitled to a benefit under a will or trust.

BEQUEST
A gift by will.

BLANKET MORTGAGE (OR INTER-ALIA MORTGAGE)
A mortgage covering at least two pieces of property as security for the same loan. This provides greater security for the lender. Partial releases can be granted depending on appropriate principle paydown.

BLENDED MORTGAGE PAYMENT
A regular instalment payment composed of both principal and interest in which part of the money received is applied toward the principal of the loan and part is put to pay the interest. This is the norm for mortgage payments. Blended payments are separate from the concept of a blended rate mortgage.

BORROWER (MORTGAGOR)
One who applies and receives a mortgage loan.

BROKER
An individual in the business of finding and arranging funding and/or sales of property in exchange for a fee or commission.

BUILDER'S LIEN
A claim against property by a contractor, material supplier, or worker for amounts due in respect of work done or materials supplied to improve the property.

BUILDING SCHEME
Restrictions imposed on each parcel in a development for the benefit of the estate as a whole.

BY LAW
A law passed by a municipality.

CAPS
Limits on the amount, or interest by which an adjustable rate mortgage can change.

CERTIFICATE OF ENCUMBRANCES
A certificate showing the state of title to land as of a certain date.

CHARGE
Means an estate less than fee simple and includes any encumbrance registered on title.

CLOSING DATE
The date on which the property legally changes hands or when the charge is registered against the property and money changes hands.

C.M.H.C. INSURANCE
If a property purchaser puts less than 25% down, they must have Canada Mortgage and Housing Corporation insurance. It insures the lender against the purchaser defaulting on the mortgage.

CODICIL
An instrument altering or confirming a will; an addition to a will, adding, subtracting or clarifying provisions of the document.

COMMITMENT
A promise by a broker or investor to purchase or lend money on specified terms and conditions.

COMMITMENT FEE
The fees charged by a lender or broker to prepare the loan documents, make credit checks, arrange for an appraisal and sometimes inspect property.

COMMITMENT LETTER
A letter outlining the amount, and terms and conditions under which a lender is willing to offer on a mortgage.

COMPOUND INTEREST
Means calculating interest upon interest. Payments on mortgages can also be compounded usually either semi-annually or monthly. Interest only payments are compounded monthly payments.

CONDOMINIUM ACT
A statue permitting the sub-division of property by a strata plan into strata lots which allows a building to be sub-divided by reference to floors, walls and ceilings.

CONSTRUCTION LOAN
A short-term interim loan for financing construction. The lender advances funds at different stages of the construction.

CONVERTIBLE
May be prepaid or changed to another term at any time. If payable, the additional interest cannot exceed three months on the amount owing at the time of the prepayment or change to another term.

CONVEYANCE
An instrument (other than a will) which transfers property.

COVENANT
A promise or undertaking contained in a deed or mortgage.

CONVENTIONAL LOAN
A loan arranged by a major financial institution such as a bank, credit union or trust company.

CREDIT REPORT
A report documenting the credit activity and history of the borrower. Credit is rated from I or R1 (excellent) to I or R9 (terrible).

DEED
A document signed, sealed and delivered.

DEFAULT
Failure to meet legal obligations in a contract. Common defaults in mortgages are failure to make payments, pay taxes, arrange insurance or pay out at maturity.

DISCHARGE
The removal of mortgages and financial encumbrances on a property.

DOWN PAYMENT
The amount of money paid to make up the difference between the purchase price and the mortgage amount. Conventional financing usually requires a 25% or greater down payment unless insured through Canadian Mortgage and Housing Corporation (CHMC), which will allow much smaller down payment (as low as 5%).

DUE ON SALE CLAUSE
A provision in a mortgage that allows the lender to demand full payment upon sale of the property.

DUPLICATE CERTIFICATE OF TITLE
A certified copy of the original certificate of title, which can be issued to the owner of the property or held on deposit at the land titles office.

EASEMENT
A right or obligation attached to property wherein the dominant tenement has the right to access or use the property of the servient tenement.

ENCUMBRANCE
Any debt, mortgage, judgement, lien or government claim to or upon property for any purpose whatsoever whether by act of parties or by statute.

EQUITABLE MORTGAGE
A form of mortgage created by deposits of title deeds or more usually the duplicate certificate of title.

EQUITY
The difference between the fair market value and the total encumbrances against the property.

EQUITY OF REDEMPTION
The borrower's right to repay the mortgage and retain ownership of the property.

EXECUTE
To perform or execute a deed.

EXECUTOR
A person or execute a deed.

FEE SIMPLE
The greatest estate in property that an individual can possess.

FORECLOSURE
Legal proceedings by way of a mortgage or agreement for sale whereby the lender extinguishes the rights of the borrower.

GRANT
Conveyance or transfer of ownership of property. The person making the grant is called the grantor and the person receiving the interest is called the grantee.

GROSS DEBT SERVICE RATIO (GDS)
The percentage of gross income required to cover monthly payments associated with housing. Costs included in this calculation are usually monthly mortgage payments, 1/12th. annual property taxes, heat allowance and 1/2 maintenance fees, where applicable. The maximum GDS most lenders will usually consider is 32% of your before tax income.

HEIR
A person entitled to succeed to property of a person dying intestate.

INSTRUMENT
Any crown grant or other conveyance of crown land, or any document in writing relating to the transfer or land.

INTER ALIA(see BLANKET MORTGAGE)

INTEREST
Charge paid for borrowing money, calculated as a percentage of the remaining balance of the borrowed amount.

INTESTATE
A person dying without a will.

INVESTOR
A money source for a lender.

INTERIM AGREEMENT
The agreement for the purchase and sale of property - usually prepared by the real estate agent or broker.

INTERIM FINANCING(see CONSTRUCTION LOAN)

JOINT TENANCY
A form or property ownership where the ownership is shared between two or more people as an undivided interest.

JUDGEMENT
Means any judgement, decree or Order of any Court.

LAND REGISTRATION DISTRICT
Areas established throughout the province wherein Land Titles and records are kept and conveyances and charges are registered for all properties located within that area. British Columbia is divided into seven land title districts and has a registry located in each area.

LEASE
An instrument granting sole possession of property to another person for a specified period and under specific conditions. The person who grants the lease is the Landlord and the person in possession is the Tenant. A tenant could also become a "Landlord" by sub-leasing the property to another tenant.

LEGAL DESCRIPTION
A method of describing land for registration or other purposes.

LETTERS OF ADMINISTRATION
Court authorization given to a person to administer an estate. It is required when a person dies without a will or intestate. Letter or Administration can be with will annexed if there is a will but the named executor has died.

LETTERS PROBATE
A Court certificate to the effect that the will has been proven and that the executor is authorized to deal with the estate.

LIEN
A claim upon property for the payment of a debt or obligation.

LIFE ESTATE
An estate that endures during the person's lifetime.

LIS PENDENS
A notice of pending Court action which temporarily freezes any dealing with the property by the owner.

LOAN TO VALUE RATIO
The percentage ratio between the total value of the encumbrances against a property divided by its market value.

MERGER
The fusion of two or more estates.

MORTGAGE
A transfer of an interest or estate in property to secure payment of a debt; document which specifies a specific amount of money, which is to be used for purchase of a home, using the property as collateral, whereupon a lien is placed on the property as security for repayment of the debt.

MORTGAGEE
The lender.

MORTGAGOR
The borrower.

NON-ASSUMPTION CLAUSE(see ASSUMPTION CLAUSE)

OPTION TO PURCHASE
An offer conferred by agreement to accept or reject an offer to buy property within a certain period of time.

ORDER NISI
A direction by the Court for the mortgage to be repaid in full within a certain period of time - usually ranges from one day to six months.

ORDER ABSOLUTE OR FINAL
A direction by the Court which forecloses out any interest of the previous owner and transfers it to the person who receives the Order. It is applied for after expiration of the Order Nisi.

ORIGINATION FEE(see COMMITMENT FEE)

PITI
Principal, interest, taxes and insurance.

PORTABILITY
The ability to transfer a mortgage including rate and terms, from one existing property to a new property.

POWER OF ATTORNEY
A legal document authorizing one person to act on behalf of another. There are different kinds of Powers of Attorney depending on the purpose and scope of the appointment.

PREPAYMENT
A privilege in a mortgage permitting the borrower to make principal payments in advance of their due date.

PREPAYMENT CLAUSE
A clause in a mortgage agreement that allows you to pay off all or part of the mortgage before the maturity date.

PREPAYMENT PENALTY
Money charged for early payment of principal. In residential mortgages the usual prepayment penalty is three months interest.

PRINICIPAL
The amount of debt, not including interest, penalties and other ancillary charges.

QUIT CLAIM DEED
Type of deed that transfers all the rights of a grantor to a grantee. It is utilized in foreclosure situations where the owner voluntarily relinquishes title to his property.

RATE COMMITMENT
The length of time a lender is willing to offer a borrower the quoted interest rate. Rate commitments can vary from 30 to 180 days.

RIGHT TO PURCHASE
A right conferred by an agreement for sale.

SEVERANCE
The conversion of a joint tenancy into a tenancy in common.

SIMPLE INTEREST
Interest calculated on per annum basis.

STATUTORY DECLARATION
A written statement of facts signed under oath.

SURVIVORSHIP
A surviving joint tenant's right to the property on the death of the other tenant.

SWEAT EQUITY
Equity created by an owner's work on the property.

TAX CERTIFICATE
A certificate issued by a municipality showing that the taxes have been paid.

TAX HOLD BACK
When property taxes are included with the mortgage payments and are in arrears, the lender will withhold funds from the loan amount to cover interim or final taxes payable to the municipality.

TAX SALE NOTICE
A notice that property has been sold for taxes.

TENANCY IN COMMON
Ownership of land by several co-owners distinguished from joint tenancy because of the death of a co-owner. His share passes to his heirs as separate property and not to the surviving joint tenant.

TERM
The length of time a mortgage has been committed for. The interest rate usually remains constant during this term unless the commitment states otherwise.

TOTAL DEBT SERVICE RATIO (TDS)
The percentage of gross income needed to cover monthly payments towards housing (see GDS) and all other debts and financial obligations. The maximum TDS most lenders will usually consider is 40 % of you before tax income.

TRANSFER
The passage of a right or interest from one person to another.

USURY
Interest charged in excess of the legal rate (60% per annum) allowed under the Criminal Code.

WEEKLY AND BI-WEEKLY PAYMENTS
This clause allows the borrower to make mortgage payments once a week or once every two weeks. This accelerates the reduction of the mortgage because the borrower is making the equivalent of one extra monthly payment per year.

WILL
A legal document which provides for the distribution of an estate and appointment of an executor following the death of the testator.