1. Real Estate
Definition: Real estate refers to property consisting of land and the buildings on it, as well as the natural resources within the property’s boundaries. This includes residential, commercial, and industrial properties.
2. Title
Definition: A title is a legal document that proves ownership of a property. It details the rights of the owner and any potential liens or restrictions on the property.
Procedure: When you purchase a property, the title is transferred from the seller to you during the closing process. Your real estate lawyer or notary will conduct a title search to ensure there are no issues that could affect your ownership.
3. Mortgage
Definition: A mortgage is a loan specifically for purchasing real estate. The property itself serves as collateral for the loan.
Procedure: You’ll work with a lender to qualify for a mortgage based on factors like your income, credit score, and the amount of your down payment. Your monthly mortgage payments include principal and interest.
4. Down Payment
Definition: A down payment is the initial amount you pay upfront when purchasing a property. It is usually expressed as a percentage of the property’s purchase price.
Standard Practice in BC: The minimum down payment ranges from 5% to 20% of the purchase price, depending on the type of property and the buyer’s qualifications. A larger down payment can help reduce your mortgage amount and monthly payments.
5. Offer
Definition: An offer is a written proposal to purchase a property at a specified price and with specific terms.
Procedure: Your real estate agent will help you draft an offer that includes the price, conditions, and timelines. The seller may accept, reject, or counter the offer.
6. Deposit
Definition: A deposit is a sum of money paid by the buyer to demonstrate their commitment to purchasing the property. It is held in trust by the listing brokerage until the transaction is completed.
Procedure: The deposit is usually due within a few days of an accepted offer and forms part of your down payment.
7. Subject To
Definition: “Subject to” clauses are conditions that must be met for the sale to proceed. Common examples include “subject to financing,” “subject to inspection,” and “subject to the sale of the buyer’s current home.”
Procedure: If the conditions are not met within the agreed-upon timeframe, the deal is not completed.
8. Completion and Adjustment Date
Definition: The completion date is when the sale becomes final, and the title is legally transferred to the buyer. The adjustment date is when you and the seller divide property expenses such as property taxes and utility bills.
Procedure: On the completion date, your lawyer or notary facilitates the transfer of funds and ownership. The adjustment date ensures that all costs are fairly allocated between the seller and buyer.
9. Possession Date
Definition: The possession date is the day you can officially move into your new home. It typically follows the completion date and marks when you take physical ownership of the property.
Procedure: You receive the keys and access to the property on the possession date as stated in your purchase agreement.
10. Other Key Terms to Know
- Pre-Approval: This is an evaluation from a lender that estimates how much you can borrow. Getting pre-approved shows sellers that you are a serious buyer.
- Closing Costs: These are additional expenses incurred during the purchase, such as legal fees, property transfer tax, and inspection fees.
- Property Transfer Tax (PTT): A tax levied when property changes ownership. In BC, first-time buyers may qualify for exemptions up to a certain amount.
- Amortization Period: The length of time it will take to pay off your mortgage in full.
- Lien: A legal claim against the property that must be settled before the title can be transferred.
