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Understanding Your Real Estate Property Buy and Sell Contract

Whether you buy or sell real estate properties the first time or the fifth time, you may still be confused about the real estate terms mentioned in the contract. Here is a glossary of some of the most common real estate terms that you’re likely to encounter which will help you better understand the language of real estate. Contact us for more info!

Adjustment Date:
The day from which all calculations of interest, tax adjustments, utility bill adjustments (if applicable) are made to the credit of either the buyer or the seller. This is usually (but not always) the same as the possession date.

Appraised Value:
An estimate of a property’s market value, used by lenders in determining the amount of the mortgage.

Appreciation:
The increase in a property’s value over time.

Assessed Value:
The value of a property, set by the B.C Assessment Authority, and used by the local municipality for the purposes of calculating property tax.

Buy-down:
When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and the market rate directly to the lender or to the purchaser.

Closing:
The real estate transaction’s completion, when the parties involved agree that all legal and financial obligations have been met and the deed to the property is transferred from the seller to the buyer.

Closing Costs:
Expenses in addition to the purchase price for buying and selling a property.

Condominium Common Property, or Common Elements:
The portions of a condominium development owned in common (shared) by the unit owners, e.g. pool exercise room, lobby, etc. A strata fee is charged to every unit owner for the use of the common property.

Condominium Ownership:
Shared ownership in a strata-titled property. Owners have title (ownership) to individual units and a proportionate share in the common property.

Counter offer:
An offer made by the seller back to the buyer altering one or several terms and/or conditions of the offer as originally written.

Debt Service Ratio:
The per centage of a borrower’s income that can be used for housing costs. Gross Debt Service (GDS) Ratio is the amount that a lender will permit a borrower to use from his/her gross income in order to qualify for a loan for housing costs, including mortgage payment and taxes (and condominium fees, when applicable).Total Debt Service (TDS) Ratio is the maximum per centage of a borrower’s income that a lender will consider for all debt repayment (other loans and credit cards, etc.) including a mortgage.

Deed:
A legal document that conveys (transfers) ownership of a property to a buyer.

Easement:
A legal right to use or cross (right-of-way) another person’s land for limited purposes. A common example is a utility company’s right to run wires or lay pipe across a property.

Encroachment:
An intrusion onto an adjoining property. Common examples are a neighbour’s fence, storage shed, or overhanging roof line that partially (or even fully) intrudes onto your property.

Check complete real estate terms glossary.