Glossary: Part 1
There are lots of “terms” and “words” used in the Real Estate Industry that may not be heard by Buyers and Sellers until they get into the actual purchasing or selling process. Here are some commonly used words, terms or phrases that you may encounter during a Real Estate Transaction:
Agency: A relationship which arises out of a contract, where an agent is authorized by a principal to engage in certain acts, usually in dealing with one or more third party(s). A buyer will sign a Buyer Agency Agreement giving the Realtor authority to act on their best interests with their permission as either a Client or Customer.
Balance Due on Completion: Usually this is found in the “Schedule A” of an Agreement of Purchase and Sale; it means the amount of money a purchaser will be required to pay to the Seller to complete the purchase after all adjustments are made. This process is done directly through the Mortgage Company and the Lawyers, money is forwarded electronically in order for the deal to close.
Chattels: Moveable possessions and personal property that may be removed from the home without causing damage to the property. The most common examples found in real estate transactions are appliances, window coverings and hot tubs. However, we use an analogy when describing to Buyers and Sellers what a “chattel” is: If you could pick the home up and shake it whatever falls out and is not attached to the walls permanently are considered a chattel. If you are unsure whether you want to leave something in the home when you sell or if you are a Buyer and want something you saw during a showing, include it in the “Inclusions” portion of the offer.
Deposit: The payment of money as consideration as a pledge for fulfillment of the contract. The deposit amount is established in the Agreement of Purchase and Sale and will be held in a Trust Fund by either the listing office, co-operating office or lawyers. The deposit for the Angus area is typically between $1,000-$5,000 on average, while other larger areas (such as Toronto) commonly see deposits reaching $40,000+.
FINTRAC:The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is an agency of the Government of Canada responsible for facilitating the detection, prevention and deterrence of money laundering, terrorist activity financing and other threats to the security of Canada.
Fixtures: Permanent improvements or items that may not be removed without damaging the property or decreasing its value. Common examples of fixtures are ceiling fans, bathroom mirrors, and garage door-openers.
Holdback: An amount of money held back on closing by the lawyers to cover the cost of something that is missing from the home that should have been there on closing or if damage has been found by the Buyer’s during the final walk-through. The details of a holdback are typically done through the lawyers and agreed upon by both the Seller and Buyer in order to get the deal closed.
Mutual Release: A form required to be signed when a deal does not firm up due to conditions not be fulfilled. Both parties must sign the mutual release in order for the Buyer to receive their deposit back and for the Seller to sell to another purchaser.
Title Insurance: A policy that insures the lender against loss due to a flaw in the title of the property held as collateral for a mortgage. Title Insurance is taken out through the lawyer and is usually part of the fee that they charge for closing the purchase of the sale.