Canadian Real Estate Glossary

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate transaction, including purchase price, deposit, conditions (financing, inspection), closing date, and included/excluded items. In Ontario, the standard form is produced by the Ontario Real Estate Association (OREA).

The total length of time it takes to pay off a mortgage in full, assuming regular payments. In Canada, the maximum amortization for insured mortgages is 25 years. Uninsured mortgages may have longer amortization periods up to 30 or 35 years. Longer amortization means lower payments but more total interest paid.

The regulatory body that oversees real estate professionals in British Columbia. BCFSA replaced the Real Estate Council of BC (RECBC) and is responsible for licensing, education, compliance, and discipline of real estate licensees in the province.

The designated broker who is responsible for ensuring a brokerage complies with all applicable legislation and regulations. Each brokerage must have exactly one broker of record who oversees trust accounts, registrant conduct, and complaint handling.

A business entity authorized by the provincial regulatory body (RECO, BCFSA, or RECA) to trade in real estate. All salespersons and brokers must be registered under a brokerage. The brokerage, not the individual agent, holds the representation relationship with clients under TRESA.

A tax on the profit from selling an asset. In Canada, the principal residence exemption means most homeowners pay no capital gains tax on the sale of their primary home. Investment properties are subject to capital gains tax — 50% of the gain is added to taxable income (66.7% for gains over $250,000 starting 2024).

Latin for "buyer beware." A legal principle stating that the buyer is responsible for checking the quality and suitability of a property before purchase. In real estate, this means the seller is generally not required to disclose defects unless specifically asked or required by law (e.g., latent defects, material facts under TRESA).

A document prepared by a land surveyor showing the property boundaries, building locations, easements, and encroachments. In some provinces, a survey may be required for the transaction or by the buyer's lender. Title insurance is often accepted as an alternative.

The date on which the real estate transaction is completed. Title is transferred from seller to buyer, the purchase price is paid, keys are exchanged, and the buyer takes possession of the property. Land transfer tax and other closing costs are paid on this date.

A federal Crown corporation that provides mortgage default insurance for home buyers with less than 20% down payment. CMHC insurance protects the lender (not the buyer) and is mandatory for high-ratio mortgages. Premium rates range from 2.8% to 4.0% of the mortgage amount depending on the loan-to-value ratio.

A clause in the Agreement of Purchase and Sale that must be satisfied before the contract becomes firm and binding. Common conditions include financing approval, home inspection, and status certificate review (for condos). Conditions protect the buyer by allowing them to withdraw if the condition is not met.

A form of property ownership where the buyer owns an individual unit and shares common elements (hallways, gym, pool, parking) with other owners. Each unit owner pays monthly maintenance fees to the condominium corporation. In BC, condominiums are called "strata properties" and governed by the Strata Property Act.

A sum of money paid by the buyer as a show of good faith when making an offer. The deposit is held in the listing brokerage's trust account and is applied to the purchase price on closing. If the buyer breaches the agreement, the seller may be entitled to keep the deposit as damages.

A new form of representation under TRESA where a brokerage assigns different salespersons or brokers to represent the buyer and seller in the same transaction. Each designated representative owes full fiduciary duties to their respective client. Information barriers must be in place within the brokerage.

The portion of the purchase price paid upfront by the buyer, not financed through a mortgage. In Canada, minimum down payments are: 5% for homes up to $500,000; 10% for the portion between $500,001 and $1,499,999; 20% for homes $1,500,000 and above. Less than 20% down requires CMHC insurance.

A legal right that allows a person or entity to use another person's land for a specific purpose. Common examples include utility easements (allowing gas/electric lines), right-of-way easements (allowing access across property), and drainage easements. Easements run with the land and survive changes of ownership.

An intrusion of a structure or improvement onto another property or onto public land. Examples include a fence built over a property line or a deck extending onto a neighbor's lot. Encroachments can create legal disputes and may affect the sale of the property.

Any claim, lien, charge, or liability attached to a property that may affect its value or the owner's ability to transfer title. Examples include mortgages, liens, easements, restrictive covenants, and unpaid property taxes. Title searches reveal encumbrances.

A listing agreement where the seller authorizes one brokerage to market and sell the property for a specified period. The listing brokerage earns the commission regardless of who finds the buyer. In Ontario, exclusive listings are not posted on MLS but may be marketed by the listing brokerage directly.

The legal obligation of a registrant to act in the best interests of their client. Fiduciary duties include loyalty, confidentiality, full disclosure, obedience to lawful instructions, and proper accounting. These duties arise when a client-registrant relationship is established through a representation agreement.

Canada's financial intelligence unit responsible for detecting and preventing money laundering and terrorist financing. Real estate brokerages are required to verify client identity, keep records, and report suspicious transactions. Non-compliance carries significant penalties including fines and criminal charges.

An offer to purchase that does not contain any conditions. A firm offer is binding immediately upon acceptance. Firm offers are more attractive to sellers because there is no risk of the deal falling through due to unmet conditions, but they carry more risk for buyers.

A mortgage qualifying ratio that compares annual housing costs (mortgage payments, property taxes, heating, and 50% of condo fees) to gross annual income. The maximum GDS ratio for most lenders is 39%. This is one of two key ratios used in Canadian mortgage qualification.

Goods and Services Tax (GST) or Harmonized Sales Tax (HST) applies to new construction and substantially renovated homes in Canada. Resale homes are generally exempt. Ontario charges 13% HST on new homes, BC charges 5% GST, and Alberta charges 5% GST. New housing rebates may apply to reduce the tax burden.

A mortgage where the borrower puts down less than 20% of the purchase price. High-ratio mortgages require mortgage default insurance (CMHC, Sagen, or Canada Guaranty). The insurance premium is added to the mortgage balance. Maximum amortization for insured mortgages is 25 years.

A visual examination of a property's physical structure and systems (roof, foundation, HVAC, plumbing, electrical) performed by a qualified home inspector. While not mandatory, home inspections are highly recommended for buyers. The inspection condition in the APS allows the buyer to withdraw based on findings.

A form of co-ownership where two or more persons hold equal, undivided interests in a property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenant(s), bypassing the estate and probate process.

A provincial tax paid by the buyer when purchasing real property. The tax is calculated on a marginal rate structure. Ontario and BC charge LTT, while Alberta does not. Toronto has an additional municipal land transfer tax. LTT is paid on the closing date.

A hidden defect in a property that is not discoverable through a reasonable inspection. Examples include a cracked foundation hidden behind drywall or environmental contamination. Sellers have a duty to disclose known latent defects that render the property dangerous or unfit for habitation.

A legal claim against a property as security for a debt. Common liens include mortgage liens, construction liens (claims by contractors for unpaid work), tax liens (unpaid property taxes), and judgment liens. Liens must generally be cleared before title can be transferred.

Any fact that would reasonably affect a person's decision to enter into a real estate transaction. Under TRESA, registrants must disclose known material facts to buyers and sellers. Examples include known defects, environmental contamination, neighborhood issues, or pending assessments.

A cooperative database system operated by organized real estate boards that allows brokerages to share listing information. When a property is listed on MLS, it is exposed to all participating brokerages, maximizing exposure to potential buyers. The Canadian Real Estate Association (CREA) owns the REALTOR and MLS trademarks.

The length of time a mortgage agreement (interest rate, payment amount, conditions) is in effect. In Canada, mortgage terms typically range from 1 to 5 years, after which the mortgage must be renewed. This is different from the amortization period, which is the total time to pay off the mortgage.

Under TRESA, a situation where the same brokerage represents both the buyer and seller in a transaction. All parties must give informed written consent. The brokerage cannot advocate for either party and must treat both fairly. This replaced the concept of "dual agency" under REBBA.

A tax imposed on non-Canadian citizens and non-permanent residents purchasing residential property in certain provinces. Ontario charges 25% NRST on the purchase price. BC has a Foreign Buyer Tax of 20% in certain areas. These taxes are designed to discourage foreign speculation in Canadian housing markets.

A defect in a property that is visible or discoverable through a reasonable inspection. Examples include a cracked window, stained ceiling, or damaged flooring. Sellers generally have no duty to disclose patent defects since the buyer can observe them.

A legal remedy available to mortgage lenders in Ontario and some other provinces to sell a property when the borrower defaults on their mortgage payments. Unlike foreclosure, power of sale does not require court proceedings and is faster. The lender must give the borrower notice and an opportunity to bring the mortgage current.

A Canadian tax provision that exempts gains on the sale of a principal residence from capital gains tax. To qualify, the property must be ordinarily inhabited by the taxpayer or their family. Only one property per family unit can be designated as a principal residence per year.

An annual tax levied by municipalities on the assessed value of real property. In Canada, property tax rates vary widely by municipality and are used to fund local services (roads, schools, fire, police). Property tax is calculated by multiplying the assessed value by the municipal tax rate.

The regulatory body governing real estate professionals in Alberta. RECA sets education requirements, administers licensing, and ensures registrants comply with the Real Estate Act. Alberta's licensing program requires two courses: Fundamentals and Practice of Real Estate.

The regulatory body that governs the conduct of real estate brokerages, brokers, and salespersons in Ontario. RECO administers licensing, investigates complaints, enforces compliance with TRESA, and operates the insurance program. All Ontario registrants must maintain their RECO registration.

Money set aside by a condominium corporation for major repairs and replacement of common elements (roof, elevator, parking garage). The adequacy of the reserve fund is assessed through a Reserve Fund Study, which must be conducted every 3 years in Ontario. An underfunded reserve may lead to special assessments.

A limitation on how a property can be used, registered against the title. Examples include restrictions on building height, commercial use, or exterior modifications. Restrictive covenants run with the land and bind future owners. They are commonly found in planned communities and heritage districts.

A document issued by a condominium corporation that provides key information about the financial health and legal status of the condo. It includes the declaration, by-laws, reserve fund study, financial statements, and any pending lawsuits or special assessments. In Ontario, buyers typically make their offer conditional on review of the status certificate.

A federal mortgage qualifying requirement where borrowers must prove they can afford payments at a higher interest rate than their actual mortgage rate. The qualifying rate is the greater of 5.25% or the contracted rate plus 2%. The stress test applies to all federally regulated lenders and insured mortgages.

A mortgage qualifying ratio that compares all annual debt payments (housing costs plus car loans, credit cards, student loans, etc.) to gross annual income. The maximum TDS ratio for most lenders is 44%. Used alongside GDS to determine mortgage qualification.

A form of co-ownership where two or more persons each hold a distinct, undivided interest in a property. Unlike joint tenancy, interests can be unequal (e.g., 60/40) and there is no right of survivorship — upon death, a tenant in common's share passes through their estate, not to the surviving co-owner.

An insurance policy that protects against losses from defects in title, survey issues, fraud, and other title-related risks. In Canada, title insurance is commonly used as an alternative to obtaining an up-to-date survey. It provides coverage for issues like title fraud, existing liens, and encroachments not revealed by a title search.

An examination of the public land registration records to confirm ownership, identify encumbrances, and verify that the seller has the legal right to sell. In Ontario, this is done through the Land Registry Office (Teranet). Title searches are an essential part of the closing process performed by the buyer's lawyer.

A land registration system used in several Canadian provinces (including Alberta and parts of Ontario) where the government guarantees the accuracy of the title register. Under Torrens, the registered owner has indefeasible title — their ownership cannot be challenged except in cases of fraud. This provides certainty and simplifies title searches.

Ontario legislation that governs the conduct of real estate brokerages, brokers, and salespersons. TRESA replaced the substantive provisions of REBBA 2002 with modernized rules including mandatory written representation agreements, multiple and designated representation, enhanced disclosure requirements, and consumer protection measures.

A bank account maintained by a real estate brokerage to hold funds belonging to clients and other parties in a transaction. Trust funds (such as deposits) must be deposited within 5 business days and never commingled with the brokerage's operational funds. Trust account management is strictly regulated under TRESA.

Municipal by-laws that regulate how land can be used within specific areas. Common zoning categories include residential, commercial, industrial, agricultural, and mixed-use. Zoning determines what can be built, density limits, setback requirements, and permitted uses. Changes require applications to the municipal planning department.