Reference
Home Buyer's Glossary
Every term, one plain-English line, grouped into the home itself, the buying process, and the marketing words a listing uses. Follow a link for the full guide.
- Adjustments
- The final tidying up of shared costs on closing day, so that things the seller prepaid or left unpaid, like property tax or fuel in an oil tank, land on the right person.
- Agreement of purchase and sale
- The contract that sets out the price, the conditions, the closing date and what is included. In Ontario this is the document everyone means by the offer.
- Appraisal
- A lender's assessment of what the property is worth. If it comes in below the price you agreed, the lender may lend less and you cover the gap.
- Assignment
- Selling your rights under a purchase contract to someone else before closing, most often on a pre-construction home. Often restricted by the contract.
- Bully offer
- A pre-emptive offer made before the seller's scheduled offer date, usually well above asking and with few or no conditions, intended to end the process early.
- Chattels and fixtures
- Chattels are movable items, like a fridge. Fixtures are attached to the home, like a light fitting. What stays and what goes is decided by the contract, not by assumption.
- Closing costs
- The costs beyond the purchase price that fall due around closing, including land transfer tax, legal fees, title insurance, adjustments and an inspection.
- Closing date
- The day title transfers, the money moves and the home becomes yours.
- Condition precedent
- A requirement written into the offer that must be satisfied before the deal becomes firm, such as arranging financing or reviewing a document.
- Conditional offer
- An offer that only becomes binding once stated conditions are met or waived by their deadlines. Until then you generally have a way out.
- Deposit
- The money you hand over shortly after your offer is accepted, usually within 24 hours, to show the seller you are serious. It is held in the listing brokerage's trust account and counts toward your down payment at closing.
- Down payment
- The share of the purchase price you pay yourself rather than borrow. Your deposit forms part of it, so you owe the remainder at closing, not the full amount again.
- Escalation clause
- A term that automatically raises your offer above competing offers up to a stated ceiling. Not used everywhere and not always permitted.
- Financing condition
- Time written into the offer to get final mortgage approval on that specific property. Pre-approval is not the same thing, because the lender still has to approve the home.
- Firm offer
- An offer with no remaining conditions. Once an offer is firm you are committed to completing the purchase.
- Holdback
- An amount kept back from the seller's proceeds at closing until something specific is completed or resolved.
- Inspection condition
- Time written into the offer to have the home inspected and to decide what to do about what is found. Typically several business days.
- Irrevocable date
- The deadline after which the offer expires if the other side has not accepted it.
- Land transfer tax
- A tax on the transfer of property, payable at closing. Rates vary by province, Toronto charges its own on top, and first-time buyers may qualify for a rebate.
- Latent defect
- A problem that is not visible on an ordinary viewing. Rules on what a seller must disclose vary by province and turn on what the seller knew and whether the defect makes the home dangerous or unfit to live in. If a latent defect is in question, that is a conversation for a lawyer.
- Mortgage pre-approval
- A lender's early indication of how much you could borrow, based on you rather than on a specific home. It is not final approval.
- Notice of fulfilment
- A signed document confirming a condition has been satisfied rather than given up. Similar effect to a waiver, different meaning.
- Occupancy
- On a new build, the period when you can move in and pay occupancy fees before final closing and before you legally own the unit.
- Patent defect
- A problem a reasonable buyer could see on an ordinary viewing, such as a visibly sagging floor. Generally the buyer's risk to notice.
- Possession
- The moment you actually get the keys and can enter the home, which is usually but not always the same day as closing.
- Repair credit
- Money the seller agrees to leave with you at closing instead of doing a repair, so you can arrange the work yourself.
- Repair exposure
- The rough total cost of the mechanical repairs a home is likely to need. Casaroo uses this to describe what the bones may cost you, separate from anything cosmetic.
- Reserve fund
- The condo corporation's savings for major repairs like roofs, elevators and garage membranes. A thin reserve is what makes a special assessment likely.
- Seller property information statement
- An optional form on which a seller answers questions about the property. It is voluntary in most places, and an unanswered form is not an answer.
- Special assessment
- A one-time charge levied on condo owners when the reserve fund cannot cover a major repair. It can arrive without much warning and can be large.
- Status certificate
- The condo corporation's disclosure package for a specific unit, covering fees, the reserve fund, budgets, planned increases, special assessments, lawsuits and insurance.
- Title
- The legal ownership of the property. Your lawyer searches it before closing to confirm the seller can sell and that nothing unexpected is registered against it.
- Title insurance
- A one-time policy that protects against certain title problems discovered later, such as survey issues, unpermitted work registered against title, or fraud.
- Waiver
- A signed document giving up a condition you were entitled to rely on. Signing one moves the deal closer to firm.