Glossary

AMORTIZATION

Period required to pay back a mortgage loan in full through regular payments. The amortization is usually based on fixed terms of 10, 15, 20 or 25 years.

BROKERAGE CONTRACT

Agreement under which a person authorizes a real estate broker to act on his behalf, for a given period of time, as intermediary in the purchase, sale, rental or exchange of immovable property. The brokerage contract formalizes the rights and obligations of the broker and his client by mutual consent. In an exclusive brokerage contract the client agrees, for the term of the contract, not to use the services of a broker other than the one with whom he signed the contract. Usually, the exclusive brokerage contract also states that the client who is party to the contract cannot sell or buy the immovable himself.

BUILDING INSPECTION

General verification and assessment of the state of the main components of an immovable (foundation, structure, roof, heating system, electrical system, etc.).

CADASTRAL DESIGNATION

Information concerning an immovable (location, area, value, etc.), contained in the cadastre (land registry) for a given region. Cadastre Public register containing the technical data on each immovable in a given region (lot). A lot number used to publish the applicable rights is assigned to each property indexed in the cadastre.

CERTIFICATE OF LOCATION

Document containing a report and a plan in which the land surveyor expresses his opinion on the location and condition of an immovable in terms of the titles, the cadastre and the applicable laws and regulations.

CERTIFICATE OF PRACTICE

Operating permit issued by the Association des courtiers et agents immobiliers du Québec (ACAIQ) to any natural person, partnership or legal person who meets the legal requirements to carry out real estate brokerage activities in Quebec. The granting of a certificate by the ACAIQ is conditional on the successful completion of a series of specialized real estate brokerage courses and an entrance examination for the profession.

CHARGE

Amount to be paid according to a preset deadline. For example, tax payable on the use of a public utility.

CO-OWNERSHIP PROPERTY

Immovable in which the ownership is divided between several owners. Right of ownership shared between several persons concerning a single property or a group of properties. Co-ownership is considered to be undivided when the right of ownership does not entail a physical division of the property. Co-ownership is deemed to be divided when the right of ownership is divided between the co-owners in fractions (lots), each containing a physically divided unit and a portion of the common area.

CO-OWNERSHIP FEES

Expenses related to the maintenance and management of the common areas of a co- ownership property. Monthly payment, usually fixed, used to set up a fund to pay for current and unforeseen expenses (repairs, equipment replacement, etc.).

Counter-proposal

A proposal presented in response to a promise to purchase or to another counter-proposal and which in itself constitutes a new promise. Note: The main purpose of the counter-proposal is to signify refusal of a proposal by the other party to the transaction.

Deed of sale

A contract, usually drawn up by a notary, used to formalize the sale of an immovable to a buyer.

Deposit

A sum of money that accompanies a promise to purchase an immovable. The deposit must be placed in a trust account and will be deducted from the balance payable upon the signing of the deed of sale, or it will be returned to the party who made the promise to offer if the sale does not go through.

DESCRIPTION SHEET

Document used by a real estate broker or agent to present the features (construction year, taxes, measurements, etc.) of an immovable covered by a real estate brokerage contract.

DOWN PAYMENT

Personal contribution of the buyer to the financing of an immovable. Cash portion deducted from the selling price, which determines the amount of financing required to complete the purchase. Note: If the down payment for the purchase of the immovable is less than 25% of the purchase price, the loan must be insured by the Canada Mortgage and Housing Corporation (CMHC) or by GE Capital Mortgage Insurance Canada.

Droit de mutation (taxe de bienvenue)

Taxe imposée par les municipalités pour tout transfert du droit d’une propriété sur son territoire.

EASEMENT

Restriction of the right of ownership for reasons of private interest, general interest or public use. Right of access or use of land by others for a defined purpose (passage, parking, public utilities, etc.).

Evaluation

Process that consists of estimating the market value of an immovable based on the general condition of its components and its specific features. The evaluation is often the result of a comparison with similar immovables that are up for sale or were recently sold in the same area.

Financing

Means used by a buyer to acquire an immovable. Financial resource, often in the form of a mortgage loan provided to the buyer by a financial institution for the purchase of an immovable (see Mortgage loan).

Indirect costs

Additional expenses to be paid when buying an immovable, including building inspection, property evaluation, loan application, notary fees, taxes, insurance, etc.

INTEREST RATE

Percentage representing the amount of interest produced by an amount of one hundred dollars. A 6.5% interest rate will produce an interest amount of $6.50 payable to the lender for every $100 borrowed. The interest rate is used to calculate the amount to be paid to the lender in exchange for financing to allow the buyer to purchase an immovable.

MORTGAGE

Real right granted to a creditor on an immovable as collateral for a debt. This right creates an obligation on the part of the borrower to abide by the loan payback terms by tying the immovable to the agreement (see Financing and Mortgage loan).

MORTGAGE LOAN

Method of financing in which the immovable is used as collateral for debt repayment.

MORTGAGE LOAN INSURANCE

Insurance taken out by the buyer of an immovable in order to guarantee the payment of the monthly instalments required to reimburse a mortgage loan in full. Note: If the down payment for the purchase of the property is less than 25% of the purchase price, the loan must be insured by the Canada Mortgage and Housing Corporation (CMHC) or by GE Capital Mortgage Insurance Canada.

NET PROCEEDS FROM THE SALE

Residual amount deriving from the sale of an immovable once all selling expenses have been deducted, i.e. mortgage loan balance, broker commission, legal fees, tax adjustments, etc.

PRINCIPAL

Amount of money borrowed through a mortgage loan.

PROFESSIONAL LIABILITY INSURANCE

Professional liability insurance is a security taken out by real estate brokers to protect themselves against the financial consequences of any fault, error, negligence or omission which their representatives or themselves could be responsible for in the course of their activities.

PROMISE TO PURCHASE

Undertaking by a person to purchase an immovable under certain conditions set by that person. Contract through which the seller agrees to sell the immovable once he/she has accepted the promise to purchase.

Real estate broker

Natural person, partnership or legal person who holds a certificate issued by the Association des courtiers et agents immobiliers du Québec authorizing them to carry out brokerage transactions, for compensation, on behalf of others for the purchase, sale, rental or exchange of immovable properties. A real estate broker may employ real estate brokers or agents to represent him/her. By law, the broker has full responsibility for the professional actions of the persons who represent him/her.

REAL ESTATE BROKERAGE

Professional activity of real estate brokers and agents. Brokerage transactions and professional acts carried out by real estate brokers and agents in regards to the purchase, sale, rental or exchange of immovable properties. Profession which can only be practised by holders of a certificate issued by the Association des courtiers et agents immobiliers du Québec.

RIGHT OF OWNERSHIP

Recognition that gives a property owner the right to use, enjoy and freely and fully dispose of the property, to the extent of the limits and conditions imposed by law.

Right of withdrawal

Privilege which a natural person has to withdraw from a real estate brokerage contract for the sale of his/her immovable within three days following receipt of the contract duplicate signed by both parties, unless there is a written waiver. After this period, if the contract is marked “irrevocable”, it cannot be cancelled under any circumstance nor can the term be changed unless the broker or agent agrees. Note: The right of cancellation applies when the contract involves a predominantly residential building containing less than five dwellings.

SELLING EXPENSES

Additional expenses to be paid when selling an immovable, including mortgage loan balance, real estate broker commission, notary fees, tax adjustments, etc.

TRANSFER TAX (WELCOME TAX)

RTax levied by a municipality on any transfer of right of ownership within its territory.

TRUST ACCOUNT

Deposit account at a financial institution in which a real estate broker can deposit sums entrusted to him/her in the course of a real estate transaction. When presenting a promise to purchase, the buyer often gives the listing broker a deposit on the purchase of the immovable. This deposit must be placed in a trust account.