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Abandonment of Property - With tenancies, the leaving of a property with a definite intention never to return.

Abstract of Title - Registry System: A condensed history of the title to a parcel of land consisting of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of recording. Land Titles System: A chronological listing of every recorded instrument currently affecting the title to that land.

Acceleration Clause - A clause in a mortgage which provides that where default has occurred in making any payment of monies due under a mortgage or in the observance of any covenant in a mortgage and under the terms of the mortgage, by reason of such default, all monies secured thereby become due and payable.

Acceptance - The offeree's consent to enter into a contract to be bound by the terms of the offer.

Accrued Interest - The interest earned for the period of time that has elapsed since interest was last paid.

Acquittance (Quebec) - Also called Main-Levee. See Discharge of Mortgage.

Adjustable Interest Rate Mortgage {C.M.H.C.) - A mortgage which establishes a rate or series or rates to apply during the initial construction advance stage and for a different rate to apply to the final or repayment stage of the loan.

Adverse Possession - The right by which someone occupying a piece of land might acquire title against the real owner, if the occupant's possession has been actual, continuous, hostile, visible, and distinct for a statutory period. Adverse possession is not possible under Land Titles.

Affidavit - A statement or declaration reduced to writing and sworn to or affirmed before some officer who is authorized to administer an oath or affirmation such as a notary public, or commissioner for oaths.

Agency - An agency is created when one person, called the principal, authorizes another person, called the agent, to act on behalf of and subject to the control of the principal.

Agreement of Purchase and Sale - A written agreement between vendor and purchaser in which the purchaser agrees to buy certain real property and the vendor agrees to sell upon terms and conditions as set forth in that agreement.

Agreement for Sale/Balance of Sale - A method of financing a sale, but different from a mortgage. The buyer does not receive a deed nor does title pass to him immediately - he receives a contractual interest on a time basis. Payments are made directly to the seller who in turn is still responsible for any outstanding mortgage on the property.

Alienation - The transfer of title of property.

Alienation Clause - A type of acceleration clause that demands payment of the entire debt upon sale or other transfer of the title.

Allotment - An amount of money set aside for future investment in mortgages.

Amending Agreement - An agreement between the lender and borrower registered on title by the lender whereby the terms of the registered mortgage are changed.

Amortization - The process of retiring debt or recovering a capital investment through scheduled, systematic repayments of principal; a program of periodic contributions to a sinking fund or debt retirement fund; that portion of a fixed mortgage payment applied to reduction of the principal amount owed.

Amortization Schedule - A table showing the amounts of principal and of interest comprising each level payment due at regular intervals and the outstanding principal balance of the loan after each level payment is made.

Amortized Mortgage - A mortgage requiring periodic payments which include both a partial repayment of the debt and interest on the outstanding balance.

Anniversary Date - The same date in each calendar year during the term of the mortgage with the first anniversary date taking place one year from the date interest is finally ad justed.

Apportionment - A pro-rated division and distribution of prepaid or accrued taxes, prepaid insurance premiums, prepaid rents and other income and expenses. Apportionment usually occurs when a property is sold, and is the manner of determining the amounts due to and from the parties.

Appraisal Report - A verbal or written estimate of value. Usually it is a written statement giving an opinion of value of an adequately described property, as at a specific date and supported by pertinent data.

Approved Lender - An institution authorized to lend money on the security of real or immovable property approved by: a) the Governor-in-Council for the purpose of making loans under the National Housing Act, or b) a mortgage insurance company for the purposes of making loans insured by that company.

Appurtenance - A right used with the land for its benefit.

Arm's Length - A transaction freely arrived at in the open market unaffected by abnormal pressures or by the presence of normal competitive negotiation as might be true in the case of a transaction between related parties.

Arbitration - The determination of a dispute by a disinterested third party.

Assessment - A value placed upon property for taxation purposes.

Assignee - One who takes the rights or title of another by assignment.

Assignment of Lease - The absolute or conditional transfer of the rights of either party to a lease.

Assignment of Mortgage - The transfer of ownership of a mortgage from one party to another.

Assignment of Rentals - The enforced diversion from the mortgagor to the mortgagee of the revenue from the mortgaged property.

Assignor - One who transfers or assigns the rights or title to another.

Assumption of Mortgage - The act of assuming liability for an existing mortgage on a property by the purchaser of that property. With builders' loans, the assumption is usually evidenced by written agreement.

Attachment - The seizure of property by court order.

Attornment - The creation, by agreement, of the relationship of landlord and tenant where the mortgagor remains in possession of the property as a tenant of the mortgagee.

Balloon - The principal balance of a mortgage loan outstanding on maturity of the term. A balloon mortgage is one which does not fully amortize over its term to maturity.

Bank Rate - 1 ) The rate at which the Bank of Canada charges on loans to the charted banks. 2) The rate at which the chartered banks lend demand money to their prime customers. 3) The minimum rate at which the Bank of Canada makes a short term advance to chartered banks, to savings banks governed by the Quebec Savings Bank Act and to investment dealers who are money market jobbers. Historically the bank rate has been administered directly by the Bank of Canada and was changed from time to time as a symbolic indicator of the bank's attitude toward monetary policy. However, recently (beginning March 13, 1 1980) the bank rate was set at 1/4 of 1 % above the weekly average tender rate of 91-day Treasury Bills.

Basis Point - One one-hundredth of one percent. Used to describe the amount of change in yield in money debt instruments, including mortgages.

Basket Clause - A provision in a governing act which allows trust and loan corporations to make investments and loans not authorized, but not specifically prohibited, of up to usually about 7% of assets.

Bench Mark - A durable post, block or other device established by surveyors to indicate a definite point from which elevations are set.

Binder Insurance - A written agreement (sometimes oral) whereby one party agrees to insure another party pending receipt of, and final action upon, the application for insurance.

Blanket Mortgage - A single mortgage registered against two or more individual parcels of real property.

Blended Payments - The method or repayment where periodical payments of principal and interest are made in such a way that the payments remain constant in amount.

Blended Rate - An interest rate on an increased loan which is derived from a formula taking into account the interest rate on the existing loan and the interest rate required on the monies.

Block Funding - The allotment by a lender of funds for a number of loans for one builder.

Bona Fide - In good faith, with valuable consideration and with absence of notice of any problems. Bonus 1) A sum paid by the mortgagor, or retained by the mortgagee from the advance of mortgage money, as part of the consideration for the making of the loan. 2) A sum paid by the mortgagor to the mortgagee as consideration for prepayment of all or part of the principal outstanding.

Book Value - The capital amount at which property is shown on the books of an account. Usually it is the original cost, less reserves for depreciation plus additions to capital.

Borrower's Resolution - A document certified by the secretary of the borrowing corporation, under corporate seal, containing a brief description of the property and the mortgage terms, and authorizing the borrowing of those specific monies.

Borrowing By-Laws - A document as evidence that a corporation has the power to mortgage property under its company charter.

Breach of Contract - Failure without legal reason to perform any promise which forms the whole or part of the agreed terms contained in the contract.

Break-Even Point - See Default Point.

Bridge Financing - See Interim Financing.

Builder's Loan - A mortgage loan made to a builder for the purpose of erecting the house and for assumption of that loan by an approved purchaser.

Builder's Lien (Alberta) - See Mechanics' Lien.

Builder's Risk Insurance - Fire and extended coverage insurance for a building under construction. Coverage increases automatically as the construction progresses and terminates at completion.

Building Code - A set of minimum regulations respecting the safety of the buildings with reference to public health, fire protection and structural sufficiency.

Bundle of Rights - Legal rights - which real estate ownership embraces which include the right to use the property, to sell it, to lease it, to enter it or to give it away. Plus the right to refuse to take any of these actions.

Buy Down - A lump sum payment as consideration for the reduction in the interest charged on a loan from that which would normally be charged.

Buy-Sell Agreement - An agreement between an interim lender and a permanent lender under which the, loan made by: the interim may be acquired by the permanent lender.

Call Clause - See Acceleration Clause.

Caution - A notice registered on title by a person claiming to have a proprietary interest (i.e. a right to call for or receive a transfer charge) in land or in a charge of which he is not the registered owner to protect his interest. The registered owner of the land or charge cannot deal with the land of charge without consent of the cautioner.

Capital Cost Allowance - A deduction from rental income such part of the capital cost of property as is allowed by regulation under the Income Tax Act.

Capitalization - 1 ) In the appraisal process the conversion of earnings anticipated from the typical operation of a property into a sum of present worth (capital value). 2) In mortgaging, the conversion of interest into a principal sum and the subsequent amortization of that sum with interest.

Caveat - See Caution.

Caveat Emptor - "Let the buyer beware". The buyer must examine the goods or property he is buying and he, therefore, buys at his own risk.

Central Bank - A body established by a national Government to regulate currency and monetary policy on a national-international level. In Canada, it is the Bank of Canada; in the United States, the Federal Reserve Board; in the U.K., the Bank of England.

Certificate of Charge - A mortgage document in the Land Titles System.

Certificate of Location (Quebec) - See Surveyor's Certificate.

Certificate of Occupancy - A certificate provided by the City Building Inspector that a property has been constructed under the authority of the issued building permit and may be occupied.

Certificate of Search (Quebec) - See Sheriff's Certificate.

Cessation of Charge - A discharge of a mortgage registered under the Land Titles Act.

Charge - A mortgage under the Land Titles Act is a charge. Like a mortgage a charge arises by contract. With a charge, however, there is no transfer of the title or possession buy the land is charged with the payment of a debt or the discharge of an obligation. It has certain incidents annexed to it by statue such as the right of foreclosure, which it would not otherwise have.

Chattels - Movable possessions, personal property (generally items that may be removed without injury to the freehold estate).

Chattel Mortgage - A mortgage given on chattels. Usually given as collateral security to a mortgage on real estate. As an example, a chattel mortgage on refrigerators and stoves in an apartment building.

Closed-End Fund - The investment in real estate equities or mortgages on a one-time-only basis. At the "end" of the investment cycle the asset is sold and the proceeds distributed on the basis of the original investment.

Closed Mortgage - A mortgage which does not contain any prepayment rights.

Closing - The conclusion or consummation or a transaction.

Cloud on Title - Any encumbrances or claim that affects title to real property.

Co-Applicant - A person applying with another for a loan.

Co-lnsurance - A sharing of risk between insurer and insured depending on the relation of the amount of the policy and a specified percentage of the actual value of the property insured at the time of loss.

Collateral Security - An additional security, for the better safety of a mortgagee, i.e. a chattel mortgage.

Commercial Pledge (Quebec) - Also called Nantissement Commercial. See Chattel Mortgage.

Commitment - A contract issued by a lender reciting the basic terms of a loan and accepted by the borrower.

Completion Bond - See Performance Bond.

Completion Loan - The single disbursement of the total loan following satisfactory completion of the property.

Compliance Inspection Report - An inspection report provided by C.M.H.C. that a property is being constructed in reasonable conformity with the residential standards.

Compound Interest - Interest charged not only on the principal sum but also on interest amounts charged in preceding periods which accumulate as new principal. In interest law the words compounded, calculated, computed, converted, or convertible are considered to by synonymous terms.

Condemnation - See Expropriation.

Conditional Sales Agreement - An agreement by which it is provided that the title to the goods (other than building materials) remains in the seller until payment in full of the purchase price, possession being given forthwith and-the price usually being payable in installments.

Condominium - The fee ownership of a separate amount of space in a multiple occupancy building with proportioned tenancy in common ownership of common elements used jointly with other owners. For glossary of terms see Section 7 of the Phase 11 manual.

Constant - The percentage of the loan paid in equal regular payments that provide principal reduction and interest payments over the life of the loan. Usually expressed annually.

Contract - An agreement of two or more persons on a sufficient consideration to do or not to do a particular thing. When real property is involved, a dated, written, signed agreement between two or more competent parties to do or not to do a legal act, for a legal consideration, within a specified time.

Conventional Mortgage - A mortgage loan that is not required to be insured as it is less than a statutory percentage of value (75%).

Convertible Mortgage - A mortgage loan which can be converted into equity ownership.

Conveyance - Means an assignment, appointment, lease, settlement and other assurance and covenant to surrender made by deed on a sale, mortgage, demise, or settlement of any property or on any other dealing with or for any property.

Co-Operative - A form of multiple ownership of real estate in which a corporation or business trust entity holds title to a property and grants the occupancy rights to - shareholders by means of proprietary lease or similar arrangements.

Correspondent - A company that originates, processes, and administers mortgage loans or other real estate investments on a continuing basis for investors.

Co-Signor - See Guarantor.

Cost Approach (To Value) - One of the steps in the valuation process. The estimate of value by this approach is reached by estimating the value of the land and adding to this the improvements, less accrued depreciation.

Coupon Rate - The contractual interest rate stated in the mortgage document.

Covenant - An agreement written into deeds and other instruments promising performance or non performance of certain acts or stipulating certain uses or non-uses of the property.

Credit Charge - In respect to a lending transaction, the aggregate of all charges against, and amount paid or payable directly or indirectly by or on behalf of a borrower.

Creditor - One to whom a debt is owing.

Cross Default Clause - Mutual clauses in two or more mortgages which state that a default under one mortgage constitutes a default under the other(s).

Debt Coverage Ratio - The ration of net operating income to annual debt service.

Declaration of Trust - An acknowledgment by one holding title to property (mortgage) that he holds it in trust for the benefit of someone else.

Dedication - The granting of land by the owner for some public use and its acceptance for such use by authorized public officials.

Deed - A legal document in writing, duly signed, sealed and delivered, that conveys title or an interest in real property.

Deed of Loan and Hypothec (Quebec) - See Mortgage

Deed of Sale (Quebec) - See Assumption of Mortgage.

Deed Restriction - See Restrictive Covenant.

Deed of Uses - A deed purporting to grant or convey land to such uses as the grantee may appoint.

Default - Failure to fulfill contractual obligations.

Default Point (Income Property) - That point at which the income from a property is equal to the sum of all of its operating expenses, real estate taxes and debt service. The total of these expenses may be expressed as a percentage of the annual income before deductions or as a number of dollars per physical unit (square feet, etc.)

Deficiency Judgement - A court order to pay the balance owed on a loan if the proceeds from the sale of the security are insufficient to pay off the loan.

Deficiency Settlement - A monetary settlement by a mortgage insurer where the net proceeds under a Power of Sale action are less than the mortgagee's total claim.

Demise - To transfer or convey an estate for a term of years.

Direct Sales Comparison Approach (To Value) - See Market Approach.

Discharge of Mortgage - A document executed by the mortgagee, and given to the mortgagor when a mortgage loan has been repaid in full before, at, or after the maturity date, releasing them from all obligations and covenants contained in the mortgage.

Disclosure Statement - A written statement by lenders disclosing information about a specific loan as may be required under various consumer protection acts.

Discount - 1 ) The sale of a mortgage for less than the principal balance thereby effecting an increase in the percentage of interest paid on the investment. 2) In appraising, the valuation of the present worth of an income stream at a specific interest rate.

Distress, Power of - The right to seize the goods and chattels of a debtor, to hold them or to sell them and apply the proceeds on the indebted ness.

Dominant Tenement - That to which a servitude or easement is due, or for the benefit of which it exists

Dower - A widow's life estate interest in one-third of the real estate held in "fee simple" by her late husband, at the time of the marriage or later acquired by him.

Easement - A nonpossessing interest held by one person in land of another person whereby the first person is accorded partial use of the land for a specific purpose. An easement restricts but does not abridge the rights of the fee owner to the use and enjoyment of the easement holder's rights. Easements fall into three board classifications: surface easements, subsurface easements and overhead easements.

Economic Life - The estimated period over which it is anticipated that a property may profitably by utilized.

Effective Gross Income (Income Property) - The annual income before deductions used in the calculation of an applicant's debt service ratios.

Egress - Going out.

Eminent Domain - The right reserved by government to take by expropriation private property for public benefit provided it pays just compensation therefore.

Emphyteutic Lease (Quebec) - The only type of lease which can be hypothecated in Quebec. It cannot be for less than 9 years or more than 99 years. The lessee agrees to pay rent and also to make certain improvements to the realty.

Encroachment - An improvement that intrudes illegally upon another's property.

Encumbrance - A mortgage in fee or for a less estate, a trust for securing money, a lien, and a charge of a portion, annuity or other capital or annual sum; and "encumbrancer" has a corresponding meaning, and includes every person entitled to the benefit of an encumbrance, or to require payment or discharge thereof.

Equity - In mortgaging, the difference between lending value, or cost, and indebted ness.

Equity Capital - Collective term for the various classes of share capital or stock in a company. It also embraces earned and capital surplus items found on a typical balance sheet.

Equity Real Estate Investment - The investment in the equity in leveraged or unleveraged real estate by investors. These investors are usually institutional and who may or may not have provided the mortgage financing.

Equity of Redemption - The right of the mortgagor to have title to his property restored to him when he has repaid the mortgage in full.

Equity or Shareholder's Equity - The difference between the assets and liabilities of a corporation sometimes called net worth. Refers to ownership interest in common and preferred shareholders in a company.

Equitable Mortgage - A mortgage which has a claim solely on the equity of redemption and not to the title of the property itself.

Escheat - The reversion of property to the state in event the owner thereof dies leaving no will and having no legally qualified heir to whom the property may pass by lawful descent.

Escalation Clause - Lease provisions whereby the tenant pays for increases in certain expenses over a specified base. Usually these expenses are maintenance, insurance premiums and real estate taxes. The base is usually those expenses incurred by the landlord in a specified year.

Escrow - Securities, instruments, or other property deposited by two or more persons with a third person, to be delivered on performance of a certain event.

Estoppel Declaration - A statement signed by the mortgagor confirming the terms of the loan and that there is no defence, offset, or counterclaim to such balance of interest or indebtedness. Also applies to leases. An admission or declaration by which a person is prevented from proving the contrary.

Expropriation - Taking private property for public use, with fair compensation to the owner, through the exercise of the right of eminent domain.

Extended Coverage Endorsement - An endorsement that may be attached to fire insurance policies. If generally includes coverage against the peril of windstorm, hail, explosion, riot, civil commotion, damage by aircraft or vehicles and smoke.

Extension Agreement - An agreement extending a loan past the original maturity date.

Exculpatory Clause - A clause in a contract holding one party harmless in the event of some default.

Fee Simple - The highest estate or absolute right in real property.

Fiduciary - An individual or a trust institution charged with the duty of acting for the benefit of another party as to matters coming within the scope of the relationship between them. A trustee and beneficiary is an example of a fiduciary relationship.

Final Order of Foreclosure - A judgement which extinguishes the mortgagor's (defendant's) equity of redemption and beneficial title goes over to the mortgagee. With an equitable mortgage, the equitable estate is forfeited and transferred to the mortgagee.

Finders Fee - A fee or commission paid by a lender or borrower to a broker for respectively, referring or obtaining a mortgage loan.

First Mortgage - A mortgage registered before all others on title.

Fiscal Policy - The policy pursued by the Federal Government to direct the economy through taxation and the level and allocation of public spending.

Fiscal Year - A corporation's accounting year. Some companies do not use the calendar year for their bookkeeping. (i.e., a department sore which finds December 31st too early a date to close its books after the Christmas rush and so perhaps has a January 31st fiscal year-end).

Fixture - Chattels that have been annexed to the land so as to lose their character as chattels. A chattel becomes a fixture if it was affixed to improve the freehold rather than merely permit enjoyment of the chattel regardless of the degree of physical affixation.

Flat Payment - An all inclusive monthly payment that is calculated to include principal, interest and taxes. Under this system there is no specific breakdown as to the amounts of the principal, interest and taxes.

Floating Rate Mortgage - A mortgage which provides that the interest rate chargeable will change on a periodic basis during the term of the loan according to a pre-determined formula.

Floor Loan - A portion of a mortgage loan that may be funded upon conditions less stringent than those required for funding the full amount. For example, the floor loan, equal to perhaps 50 percent of the full amount, may be funded upon completion of construction without occupancy requirements, but substantial occupancy of the building may be required for funding the full amount of the loan.

Forbearance - The waiving of a covenant in a mortgage document.

Foreclosure - A remedy available to a mortgagor which deprives the mortgagor of his equitable right to redeem where there is default under any of the covenants in the mortgage.

Freehold - An estate of inheritance, or for life, existing in or arising from real property of free tenure.

Front-End Money - Funds required to start a development and generally advanced by the developer or equity owner as a capital contribution to the project.

Gale Date - 1) In mortgaging, the date on which interest is charged or compounded on the loan; 2) In leasing, the date on which rent is due.

Gap Financing - An interim loan given to finance the difference between the floor loan and the maximum permanent loan as committed.

Garnishment - A proceeding that applies specified monies, wages, or property to a debt or creditor by proper statutory process against the debtor.

General Mortgage Bond - A bond which is secured by a blanket mortgage on the company's property, but which is usually outranked by one or more other mortgages.

Giving in Payment (Quebec) - Also called Dation en Paiement. See Quit Claim.

Graduated Payment Mortgage - In this type of mortgage, initial payments of principal and interest are less than the equal payments on an equivalent loan but increase by fixed percentage each year until they reach a level sufficient without further increase, to repay the outstanding balance of the loan within the remainder of the amortization period.

Grant - A technical term used in deeds of conveyance to indicate a transfer of an interest or estate in land.

Grantee - The party to whom an interest in real property is conveyed (the buyer).

Grantor - The person who conveys an interest in real estate by deed (the sellor).

Gross Area - The total floor area of a building, except that of unenclosed areas, measured from the outside of the exterior walls.

Gross Debt Service Ratio (Single Family) - The ratio of an amount equal to the acceptable mortgage charges to an amount equal to the effective gross annual income of the borrower.

Gross Income (Income Property) - The annual income from a property, fully occupied and before any deductions.

Gross Lease - A lease which provides that all expenses attributable to the real estate are paid by the landlord. Local terminology may require some expense to be paid by the tenant.

Gross Leasable Area - The total floor area designed for tenant occupancy and exclusive use and is that area on which tenants pay rent. As adopted by the shopping centre industry it is measured from the centre line of joint partitions and from outside wall faces.

Ground Lease - Contract for the rental of land usually for a long term.

Guarantor - One who promises to pay a debt or perform an obligation contracted by another in the event that the original obligor fails to pay to perform as contracted.

High Ratio Loan - A loan that exceeds statutory loan to value limits (75%) and is therefore required by statute to be insured.

Hold back - The withholding of or nonadvancement of a portion of a mortgage loan to maintain adequate security, 1 ) pending achievement of a performance requirement, or as 2) protection against liens

Homologated Lines (Quebec) - Notice of a certificate of location of the municipality's future intention to expropriate the lands in whole or in part.

Hypothecary Creditor (Quebec) - See Mortgagee.

Hypothecary Debtor (Quebec) - See Mortgagor.

Hypothecation (Quebec) - Now generally any pledge to secure an obligation, such as hypothecation of securities for a loan.

Illegal View (Quebec) - The existence of any exterior openings in a building which create an illegal view of adjoining lands.

Income Approach (To Value) - One of the steps in the valuation process of an income property. The estimate of value is reached by estimating the annual income less an allowance for vacancies and bad debts and subtracting annual operating expenses, real estate taxes and insurance premiums to obtain the net operating income. This is then converted by capitalization into a capital value.

Income Property - Real property that is used, or is capable of being used in the normal market, primarily for the production of annual income through leasing of the property.

Indefeasible - That which cannot be forfeited or done away with. Indemnity Protection or exemption from loss or damage.

Ingress - Going in; right of entrance.

Injunction - An order of a court of equity prohibiting an act or compelling an act to be done.

Instrument - A formal written legal document.

Insurable Interest - An interest of such a nature that the occurrence of the event insured against would cause financial loss to the insured. Such interests, for example, may be that of an owner, a mortgagee, a lessee or a trustee.

Insurable Value - The term is used conventionally to designate the amount of insurance which may be carried on destructible portions of a property to indemnify the owner in the event of loss.

Insured Loan - A loan where all or part of the principal and interest and permitted costs are insured against loss by C.M.H.C. under the N.H.A. or by a private mortgage insurance company.

Interest Adjustment Date - The date one month prior to commencement of amortization - when accrued interest computed on the monies advanced becomes due.

Interest Factor - The decimal equivalent for an interest rate on a unit amount for a period of time. Computed by interest rate divided by number of days in basic year times the number of days accrued.

Interim Financing - The availability of funds on a day to day basis to assist a developer in financing the construction of project between advances made by the lender of the construction loan.

Internal Rate of Return - That rate at which the present worth of all present and future investment costs equals the present worth of all present and future investment benefits.

Irrevocable - Unalterable.

Joint Tenancy - Where two or more persons acquire the same undivided interest in land, at the same time, with the same title and right to possession, through the same conveyance, with the rights of each dependent on surviving the other.

Joint Venture - An association between two or more parties to own and/or develop real estate. It may take a variety of forms including partnership. It is formed for specific purposes and duration.

Judgement - The official authentic decision of a court of justice upon the respective rights and claims of the parties to an action or suit therein litigated and submitted to its determination.

Junior Mortgage - A mortgage that is subsequent to the claims of the holder of a prior (senior) mortgage.

Land - Includes only the ground or soil, but everything which is attached to the earth, whether by course of nature as trees and herbage, or by the hand of man, as houses and other buildings. It includes not only the surface of the earth but everything under it and over it. Condominium Acts do divide land horizontally thereby limiting the vertical ownership. It includes dwellings, tenements (rents), hereditaments (property that can be inherited) whether corporeal (tangible) or incorporeal (intangible) and any undivided share in land.

Land Titles System - This is a system of land registration under which the registrar or master of titles passes on the validity of the instrument, determines its legal effect, and the Government guarantees title.

Late Charge - An additional charge a borrower is required to pay as penalty for failure to pay a regular installment when due.

Lead Lender - A financial institution which heads up a financial consortium or syndicate to provide funds for a mortgage.

Lease - A contract between landlord (lessor) and tenant (lessee) for the occupation or use of the landlord's interest in a property by the tenant for a specified period of time and for a specified consideration (rent).

Lease Guarantee Insurance - Insurance which protects the owner of leased commercial and industrial real estate against loss of rental income through the failure of a tenant to make rental payments.

Leasehold - An estate or interest in an estate in real property held by virtue of a lease for a term of years. A leasehold is considered personal property.

Leasehold Mortgage - A mortgage given by a lessee on the security of his leasehold interests in the land.

Legal Description - The written geographical description of a property as described in the land register.

Legal Mortgage - The written geographical description of a property as described in the land register.

Lending Value - The property value for mortgage purposes. Usually the lesser of appraised value or sale price.

Lessee -Tenant.

Lessor - Landlord.

Letter of Credit - A letter authorizing a person or company to draw on a bank or stating that the bank will honour the credit up to the stated amount.

Level Payment - The method of repayment where periodical payments of principal and interest are made in such a way that the payments remain constant in amount.

Leverage - The use of borrowed monies to change one's return on cash investment. For positive leverage the rate of return on the investment must be higher than the cost of the money borrowed (interest plus amortization).

Leveraged Property - A property financed with mortgage debt.

Lien - An Equitable Lien is an equitable right conferred by law to one person to a charge upon the real property of another until certain specific claims are satisfied. The holder of an equitable lien is entitled to judicial sale but not the right of foreclosure.

Lien Holdback - The practice of mortgagees withholding 15 percent of mortgage monies advanced on new construction. This holdback is usually for a period of time equal to that statutory period in Mechanics' Lien Acts for the registration of lien claims.

Lien Waiver - A document in legal form signed by persons or firms which have lien rights, waiving those rights.

Line of Credit - An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specific borrower.

Lis Pendens - A legal document giving notice that an action or proceeding is pending in the courts which affects the title to the designated property.

Local Improvement Charge - A fixed annual charge levied against specific real property for a specific period by a municipality which amortizes the capital costs of local improvements such as sewers, paved roads, etc. This charge is in addition to real estate taxes.

Lock-In (Period) - A period during which no prepayment of mortgage principal (whether partial or in full) is allowed.

Loss Payable Clause - An insurance policy provision for payment of a claim to someone, other than the insured's interest in the insured property.

Market Approach (To Value) - One of the steps in the valuation process. The property being appraised is compared with similar properties that have recently been sold or offered for sale. Adjustments are made to compensate for differences between the comparables and the subject property to obtain the market value of the subject.

Marketable Title - A title that may not be completely clear, but has only minor objections that a well-informed and prudent buyer of real estate would accept.

Market Value - The highest price which a buyer, willing, but not compelled to buy, would pay, and the lowest a seller, willing, but not compelled to sell, would accept.

Maturity Date - The final day of the term of the mortgage.

Mechanics' Lien - A lien for the price of the work or materials provided upon the estate or interest of the owner in land. It ceases to exist upon the expiration of a statutory period after the last work is done or the last material furnished unless in the meantime a claim of lien is registered.

Metes and Bounds - A system of land description whereby all boundary lines are set forth by use of terminating points and angles - metes referring to a limit or limiting mark and bounds referring to boundary.

Mill Rate - A rate which multiplies by each one thousand dollars of property assessment gives the annual real estate taxes.

Moratorium - A period during which a borrower is granted the right to delay fulfilment of an obligation.

Mortgage - Any charge on any property for securing money or money's worth.

Mortgage Banker - One who originates mortgages with the intent to sell them to permanent investors with an agreement that the originator service these loans for the investor.

Mortgage Bond - A charge on a company's assets and earnings. It is a mortgage held by a trustee, paid by the borrower, but who acts on behalf of the lenders.

Mortgage Clause - See Loss Payable Clause.

Mortgagee - The lender or creditor.

Mortgagee in Possession - A mortgagee goes into possession when he deprives the mortgagor of the management and control of the mortgaged property.

Mortgage Impairment Insurance - A master insurance policy carried by mortgage lenders which provides them with insurance proceeds in the event of an otherwise uninsured loss of a property securing their debt. Some policies also insure losses resulting from the borrower's failure to pay real estate taxes.

Mortgage Insurance - Insurance available through C. M. H. C. or private insurers covering whole or partial losses of principal and interest of a mortgage loan.

Mortgage of a Mortgage - Also called a sub-mortgage or a derivative mortgage. A lender who holds a mortgage borrows some money, and as security for the loan he mortgages the mortgage he holds. In fact, he assigns the mortgage on the condition that it will be reassigned to him when he has paid the amount of the loan to him.

Mortgaged Out - Situation when the total mortgage debt equals or exceeds the market value or cost of the property.

Mortgage Portfolio - The aggregate of mortgage loans held by an investor.

Mortgage Servicing - The task carried out either by the lender or another party, of collecting mortgage payments falling due and managing other mortgage administrative duties.

Mortgagor - The borrower or debtor

Net Lease - A lease which provides that all expenses attributable to the real estate are paid by the tenant. Local terminology may require some expenses to be paid by the landlord.

Net Operating Income - In the valuation process the annual income available after operating expenses and real estate taxes to service the debt and provide the owner with a return on his investment.

Net Yield - The interest rate return on a mortgage after deducting the percentage equivalent of mortgage servicing from the coupon rate of the mortgage.

Non-conforming Use - A property which is being used in contravention of current zoning by-laws but is permitted to remain because it pre-dates the enactment of the zoning by-laws.

Non-Disturbance Agreement - An agreement that permits a tenant under a lease to remain in possession despite any action by a mortgagee.

Notary (Quebec) - One authorized by the state to take acknowledgements and oaths. In Quebec a notary must have a law degree. He specializes in real estate, wills, estates and like matters. He performs title searches and prepares authentic deeds.

Notice to Quit - An eviction notice.

Open-End Fund - A fund which continually receives new money and adds new property or mortgages. Investors get into or out of the fund by buying or selling unit shares. Shares are valued on the basis of appraised values.

Open Mortgage - A privilege given to the mortgagor permitting him to prepay all or part of the principal amount at anytime with or without notice or bonus.

Par - An expression used when a mortgage is sold or purchased for the outstanding balance without premium or discount.

Pari Passu - On An Equal Basis. When mortgages are syndicated the lenders participate equally. No one party has preferential access to gains or is able to opt out of losses. In company stock it refers to equal ranking of a company's preferred shares.

Partial Discharge - A release from the mortgage of a definite portion of the mortgaged lands usually given after the mortgagor has prepaid a specific portion of the mortgage debt.

Participation - Income Participation - The lenders' right to share in the annual income produced by the property over the term of the mortgage, in addition to receiving debt service on the mortgage. Equity Participation - Partial ownership of income or investment property given by the owner to the lender as part of the consideration for making the loan. It may have an indefinite term and may endure beyond the maturity of the loan. It need not involve any "equity" investment by the lender beyond the amount of the mortgage loan.

Party Wall - A wall jointly owned and jointly used by two parties under easement agreement or by right in law and erected at or upon a line separating two parcels of land each of which is, or is capable of being, a separate real estate entity.

Perfecting Title - The elimination of any claims against title.

Performance Bond - A bond issued by a duly incorporated surety company covering the faithful performance of the contract and the payment of all obligations arising under the contract.

Permanent Loan - An amortizing loan on completed property which is intended to remain on that property over the full amortization period. The terms and conditions of the loan usually change during that period.

Personal Liability - The borrower's assets are pledged or subject to claim in addition to a primary security.

Personalty - Personal property, chattels, leasehold estates.

Piggy-Back Mortgage - See Wrap-Around Mortgage.

Plot Plan - A drawing showing a layout of improvements on a site, including their location, dimensions and landscapes. It is generally a part of the architectural plans.

Plottage - The increase in value of a plot of land created by the assembling of small parcels into one ownership.

Police Power - The right of government to limit property rights without compensation provided the limitation is not specific to one parcel.

Portability - The ability of a homeowner to take a mortgage with them to a new property when selling their home, thereby avoiding payout penalties, enjoying existing terms and interest rates for the remainder of the mortage.

Postponement - The deferment of a prior charge on title to another

Power of Attorney - A written instrument duly signed and executed by an owner of property which authorizes someone to act on behalf of the owner, to extent indicated in the instrument.

Power of Sale - A clause generally inserted in mortgages giving the mortgagee the right and power, on default by the mortgagor of monies due, to sell the mortgaged property by public auction, private contract or tender.

Pre-Authorized Cheques - Direct withdrawals of due payments from a borrower's bank account in accordance with authority granted by the borrower.

Premium - 1 ) The amount often stated as a percentage, paid in addition to the face value of a mortgage when the mortgage is being purchased. 2) The charge for insurance coverage.

Prepayment Clause - A clause inserted in a mortgage, which gives the mortgagor the privilege of paying all or part of the mortgage debt in advance of the maturity date.

Prepayment Penalty - The sum of money (usually equal to an amount of interest) a mortgagee may require from a mortgagor to prepay all or part of any outstanding principal.

Price-Yield Tables - A published set of tables showing the price required to be paid for a mortgage in question.

Probate - Letters probate are issued by the Surrogate Court or the Court of Probate certifying that the will has been proved and that the executor has been duly appointed.

Progress Advance Loan - A loan made usually to a builder where monies are advanced from time to time as construction progresses.

Purchase Leaseback - See Sale Leaseback.

Purchase Money Mortgage - See Vendor Take Back Mortgage.

Quick Settlement - An option available from C.M.H.C. on designated, graduated payment mortgages whereby the lender can sell the loan to C.M.H.C. in the event of default rather than proceeding normally to acquire title.

Quiet Enjoyment - The right of a lessee to use the leased property without interference from the lessor.

Quiet Possession - The right granted by a mortgagee to the mortgagor that he may use the property without interference by the mortgagee until there is default. Also vice versa.

Quit Claim - In conveyancing - to release or relinquish a claim.

Real Estate - The physical land and appurtenances including structures affixed thereto.

Real Estate Investment Trust (REIT) - An investment trust that specializes in investing in real estate related investments including mortgages, construction loans and real property in varying combinations.

Real Property - The interests, benefits, and rights inherent in the ownership of the physical real estate. It is the bundle of rights with which the ownership of real limitations, and does not include personal property.

Realty - Real Property.

Recasting - Any increase in loan based in part or in total on unforeseen increased costs incurred during construction.

Receiver - In connection with mortgage actions, an appointee of a court, requested by a mortgagee, to receive and account for the rents and profits from the mortgaged premises.

Reconveyance - See Discharge of Mortgage.

Redemption - It is the duty of a mortgagee, on being paid by the mortgagor, the principal, interest and costs due and with such payment, to hand to the mortgagor the title deeds together with an executed reconveyance of the mortgaged property.

Registry System - A system of land registration where all interests in land are recorded in chronological order. The registrar assumes no responsibility for the documents legal effect.

Release of Covenant - An agreement by a lender to terminate the personal obligation of a) a mortgagor, usually upon sale of a property to a new purchaser who is acceptable to the mortgagee and who has signed an assumption agreement or other appropriate legal document b) a guarantor whose covenant is no longer required.

Renewal Agreement - An agreement whereby the lender may agree to extend the loan, but possibly on revised terms as to principal repayments and interest rate.

Rentable Area Multiple Tenancy Floors - Generally calculated by measuring to the inside finish of permanent outside building walls, or glass line if at least 50% of the outer wall is glass, to the office side of corridors and/or other permanent partitions, and to the centre line of joint partition walls.

Rentable Area Single Tenancy Floors - Generally calculated by measuring to the inside finish of permanent outer building walls or from the glass line where at least 50% of the outer building wall is glass. It includes all area within outside walls less areas not used exclusively by the tenant.

Rent Roll - A statement listing the tenants in occupancy, the area or unit occupied by each, their lease expiry date and rent payable and other leasing details which may be required.

Renunciation or Privilege (Quebec) - See Lien Waiver.

Replacement Cost - Cost of replacing the subject property new with one having exactly the same utility.

Replacement Reserve - A cash reserve for the future replacement of fixed assets.

Reproduction Cost - The cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.

Restrictive Covenant - A contract between neighbouring landowners restricting the use of one of the parcels. It must be negative in nature.

Rests - The periodical balancing of an account made for the purpose of converting interest into principal, and charging the party liable thereon with compound interest, e.g. half-yearly.

Return on Equity - The percentage that the annual cash flow after debt service is of the equity in the property.

Return on Investment - The percentage that the annual cash flow after the debt service is of the cash investment in the property.

Reversion - A right to future possession retained by an owner at the time of a transfer of an owner's interest in real property.

Right of Survivorship - The distinguishing feature of joint tenancies and tenancies by the entirely which provide that, where land is held in undivided portions by co-owners, upon death of any joint owner, his interest in the land will pass to the surviving co-owner, rather than to his heirs or devisees.

Right-of-Way - The right to pass over another's land, more or less frequently, according to the nature of the easement.

Sales Holdback - A percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee who has assumed the responsibility of the mortgage by the appropriate legal document.

Sales Leaseback - A technique in which a seller deeds property to a buyer and the buyer simultaneously leases the property back to the seller usually on a long-term basis.

Seasonal Deficiencies - Work necessary to finish a property which cannot be completed immediately because of seasonal or climatic conditions.

Secondary Financing - Financing real estate with a loan, or loans, that are subordinate to a first mortgage.

Secondary Mortgage Market - An unorganized market where existing mortgages are bought and sold.

Second Mortgage - A mortgage registered secondly on title after another mortgage. A third mortgage is registered thirdly and so on.

Security of Tenure Agreement - See Non-Disturbance Agreement.

Seed Money - See Front-End Money.

Servicing Agreement - A written agreement between an investor and mortgage loan correspondent stipulating the rights and obligations of each party regarding the origination and continuing administration of loans.

Servient Tenement - The parcel of land over or through which an easement runs.

Servitudes (Quebec) - A charge or burden resting upon one estate for the benefit or advantage of another.

Severance - The subdivision of a parcel of land.

Sheriff's Certificate - A signed statement from the sheriff's office certifying that there are no Writs of Execution in the sheriff's hands against specific land and that he has not sold the land within a specified period of time.

Spread - The difference between the cost of money and the yield on the investment.

Specific Performance - A remedy in a court of equity compelling the defendant to carry out the terms of an agreement or contract.

Standby Commitment - An agreement by a lender to provide a certain amount of money on specific terms in the future. Neither party expects funding of the loan. This commitment enables the borrower to arrange construction financing from other sources. The commitment is issued for a fee and the lender is willing to disburse the committed funds in the event that a permanent loan on more favourable terms is not obtained.

Standby Fee - A sum of money given by the borrower to the lender to hold a mortgage commitment for a certain period of time.

Standing Mortgage - A mortgage which provides for equal, regular lump sum payments of principal, usually quarterly, plus accrued interest.

Strata Property (British Columbia) - See Condominium.

Submission - A package of pertinent papers and documents regarding specific property or properties. It is delivered to a prospective lender for review and consideration for the purpose of making a mortgage loan.

Subordinate - Subject to, or junior to.

Subordination - The act of a party acknowledging by written recorded instrument, that a debt due is inferior to the interest to another in the same property. Subordination may apply not only to mortgages, but to leases, real estate rights, and any other type of debt instrument.

Subrogation - A doctrine adopted in favour of the insurer in order to prevent the insured from recovering more than a full indemnity. The substitution of one person for another in reference to a debt, claim or right.

Subscription Policy - An insurance policy which states two or more insurance companies that are sharing the risk.

Surety - One who guarantees the performance of another.

Survey - Land surveys (cadastral surveys). The process by which land boundaries and areas are determined and defined. Surveys are also used for locating and identifying property lines, improvements on the land and easements on the land. Surveys that cover so small a part of the earth's surface that its curvature need not be taken into account are called "plan surveys". Those in which the earth's curvature must be taken into account are called "plane surveys". Those in which the earth's curvature must be taken into account are called "geodesic surveys".

Surveyor's Certificate - A formal statement signed, certified, and dated by a surveyor giving the pertinent facts about a particular property and any easements or encroachments affecting it.

Syndication - A group of trust companies or banks which share in the principal disbursement of a loan to spread risk or to comply with statutory restrictions on loan size. The lead lender will administer the loan, disbursing payments and handling foreclosure if required.

Take-Out Loan - A first mortgage loan that is committed and expected to be made upon completion of a property with the loan proceeds to be used to repay an interim or construction loan.

Tax Certificate - A certificate from the appropriate taxing authority giving the status of real estate taxes or other assessments affecting the property.

Tenants in Common - An ownership of property by two or more persons, each of whom has an interest which may be voluntarily transferred by alienation devise or descent and is not subject to any rights of survivorship.

Tenure - An ownership of property by two or more persons, each of whom has an interest which may be voluntarily transferred by alienation devise or descent and is not subject to any rights of survivorship.

Term - In a mortgage, "term" is the actual length of time for which the money is loaned . GLOSSARY

Term Mortgage - A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date. Sometimes called a straight loan.

Title - The means of evidence by which the owner of land has lawful ownership thereof.

Title Insurance Policy - A contract by which the insurer, usually a title insurance company, agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee or otherwise.

Title Search - An examination of public records to determine the state of title.

Torrens System - The Land Titles System as originated in Australia by a Mr. Torrens in 1858.

Total Debt Service Ratio (Single Family) - The ratio of an amount equal to the annual mortgage charges and acceptable instalment account payments to an amount equal to the effective gross annual income of the borrower.

Transfer of Charge - Assignment of a mortgage.

Tripartie Agreement - See Buy - Sell Agreement.

Trust Agreement - A written instrument duly executed, sealed, and delivered, conveying or transferring property to a trustee, usually but not necessarily covering real property.

Trust Deed - An agreement in writing conveying property from the owner to a trustee for the accomplishment of the objectives set forth in the agreement.

Umbrella Mortgage - See Wrap-Around Mortgage.

Undertaking-to-Insure - A commitment issued by a mortgage insurer stating the mortgage and terms that it will insure.

Usury Rate - The maximum legal rate for interest, discounts, or other fees that may be charged for the use of money.

Variable Interest Rate Mortgage - See Floating Rate Mortgage

Variable Terms Mortgage - A mortgage which provides - for variation of specific terms of the loan particularly the interest rate and or the amortization period, on a predetermined formula during the loan term.

Vendor's Lien - A notice registered on title by the vendor, protecting the vendor, for the unpaid balance of the purchase price. It is usually collaterally secured by a mortgage.

Vendor Take Back Mortgage - A mortgage on real property given by a purchaser to the seller to secure a portion of the purchase price. It is usually collaterally secured by a mortgage.

Vendor Take Back Mortgage - A mortgage on real property given by a purchaser to the seller to secure a portion of the purchase price and delivered at the same time that the property is transferred, as a simultaneous part of the transaction.

Voluntary Conveyance - See Quit Claim.

Warehousing - The temporary advancement of a trust company's own funds in disbursing mortgage loans pending sale to investor clients for whom the- loans were originated.

Waste (By Mortgagee In Possession) - Deterioration of the security caused by gross or wilful negligence.

Waste (By Mortgagor in Possession) - Any destructive act which permanently reduces the value of the security.

Wrap-Around Mortgage - A new mortgage which is registered on title which encompasses a prior existing mortgage for a lower amount and usually for a lesser rate of interest. Payments under the new mortgage include the payments under the original mortgage, and the new mortgagee undertakes to service the prior debt.

Writ - A form of written command in the name of sovereign, state, court, etc., issued to official or other person and directing him to act or abstain from acting in some way.

Yield to Maturity - A percent returned each year to the lender on actual funds borrowed considering that the loan will be paid in full at the end of maturity.

Zero Lot Line - The positioning of a structure on a lot so that one side rests directly on the lot's boundary line.

Zoning - The uses to which property may be put to in specific areas as specified by municipal authorities.