and Mortgage Terms
Abandonment occurs when a person with a right or interest in a property
voluntarily gives up that right or interest, either by physically "abandoning"
the property or by showing the intention to give up the right or interest.
A decrease or reduction in the price of a property (or in rent chargeable to a
tenant). Usually occurs as a result of the discovery of a negative fact about
the property, which decreases its value from the price originally agreed upon by
Quite literally, being capable. A Purchaser is ready, willing and able to
complete a transaction when she has funds and has signed the documents required
to transfer title to a property. If the Vendor is not ready, willing and able to
complete the transaction on the date set for completion, the Purchaser may
tender upon the Vendor and sue as a result of the failure to complete the
An owner of a property who lives elsewhere, leaving tenants in control and
occupation of the property.
The ratio of the number of properties in an area that have been sold against the
number available. Used to show the volatility of a market.
ABSTRACT OF TITLE:
A summary listing of the documents registered in the local land registry office
and which affect title (ownership) of a particular property.
This method of
estimating the value of property uses similar properties available in the same
market to extract the value of a parcel of land.
Adjoin or share a common boundary, or share even a small portion of a boundary.
Depreciation is the reduction of the value of a property or chattel as a result
of the passing of time (i.e. a new car may be worth $20,000.00, $18,000.00 after
one year, $16,000.00 after two years etc.). Usually used for tax purposes, the
depreciation in the value of a property may be used as a tax deduction. If a
property or chattel loses its value quickly, this depreciation rate may be
accelerated so that most of the value is lost in the first few years and then
the depreciation rate decreases later in the property's life span
A positive response to an offer or a counter-offer that creates a binding
agreement between the parties. Acceptance may be conditional upon the occurrence
of certain events.
The right to enter a property. Access may be restricted to certain times, to
certain persons and to certain purposes (i.e. access for the purpose of
The ease with which one can reach a certain place, person or thing. A property
may be inaccessible because it is located far back along a winding, mountainous
road that is often blocked in winter. A property may also be said to have good
accessibility to highways, shopping, schools etc.
A provision in a mortgage that gives the lender the right to demand immediate
payment of the outstanding loan balance under certain circumstances. Usually
when the borrower defaults on the loan.
A building separate from the main structure on a property. Often used for a
specific purpose, such as a workshop, storage shed or garage.
ACCREDITED ASSESSMENT EVALUATOR (AAE):
A professional designation. A property evaluator who has achieved the
requirements of the International Association of Assessing Officers.
Interest which has already been earned but has not yet been paid.
A statement by a person to the effect that they are aware of a certain fact. May
also be a sworn document to the same effect, which further states that the
person signing the document did so voluntarily.
The process of taking title to or ownership of something.
The cost to the purchaser of obtaining title to anything, including real
property. Acquisition cost includes the cost of the transaction of obtaining
title, including legal fees and expenses, interest charges on mortgages, land
transfer tax, etc.
The natural growth of a piece of land resulting from forces of nature
An adjective describing something that has come into existence but has not yet
been claimed by or distributed to its rightful owner.
43,560 square feet. A measurement of area.
ACT OF GOD:
When used in insurance policies, an event caused by natural forces such as rain,
lightning, floods or earthquakes which results in damage to property or
ACTION TO QUIET TITLE:
A legal proceeding begun for the purpose of settling competing claims to
property and establishing clear legal title in one party.
The amount of time that has passed since a building or other structure was
built. See also: EFFECTIVE AGE
With reference to an agent or representative. The limits of the power the agent
or representative has to bind her principal to an agreement or to a statement.
ACTUAL CASH VALUE:
An insurance term, the value of a building calculated by subtracting the
decrease in value caused by age and wear and tear from the cost of replacing the
An award of the court to compensate an injured party for losses incurred as a
result of the actions or omissions of another party.
Wrongful removal of a tenant from possession of a premises, usually by a
landlord, contrary to the terms of the lease.
As opposed to constructive possession. When the owner of a property occupies the
property on a day-to-day basis. Constructive possession is when the owner takes
actions to establish and maintain his ownership of a property without actually
occupying it himself (i.e. leasing it to tenants, removing squatters, hiring a
Latin meaning "according to value." Taxes that are said to be ad valorem are
assessed according to the value of the property.
A loan that finances the three major phases of a land development project: (i)
acquisition, (ii) development and (iii) construction.
An addition to a document that forms part of it. Similar to a Schedule to an
Agreement of Purchase and Sale. May be used to add specific and detailed
information material to the contract or upon which contractual terms are based.
ADDITIONAL PRINCIPAL PAYMENT:
A one-time or lump-sum payment made by a borrower in addition to the regular
payments on a loan or mortgage which reduces the principal owing on the debt.
ADEQUATE PUBLIC FACILITIES ORDINANCE:
An ordinance by the local level of government controlling development by
requiring that infrastructure works (roads, sewers, hydro lines) be completed
prior to or concurrent with the building of dwellings or commercial buildings in
a new development.
An inexact term used to described any property which is situated near or
abutting a certain piece of property. Note, an abutting property will always be
adjacent but an adjacent property may not be abutting.
ADJUSTABLE RATE MORTGAGE (ARM):
Also known as a Variable Rate Mortgage, a loan secured against land which has an
interest rate that changes according to some outside index -- such as the
federal prime rate or the interest rate paid on government bonds -- over the
term of the mortgage. The change in interest rate will result in a change in the
periodic payments due under the mortgage.
ADJUSTED COST BASE:
ADJUSTED SALES PRICE:
For the purposes of determining capital gains or losses. The acquisition cost of
a property or chattel, plus the cost of any improvements to the property.
The result of estimating the value of a property by comparison to comparable
properties. Take the actual sale price of a property comparable to the subject
property, then add the value of any extras which the subject property has but
the comparable property did not, then subtract the value of any deficiencies in
the subject property not shared by the comparable property.
Also known as Adjustment Period. The period of time (i.e. week, month, year)
between changes in the interest rate charged on a adjustable-rate mortgage.
See Adjustment Interval.
In real estate sales, the changes made to the selling price to account for the
advantages and disadvantages of the subject property, market conditions etc.
When closing a real estate transaction, the changes to the purchase price made
as a result of realty taxes over- or under-paid by the Vendor, fuel oil
provided, tenant's rental payments etc. (Contained on the Statement of
A person appointed by a Court to deal with the estate of a deceased person who
died without leaving a will (who dies "intestate"). Note, an executor is a
person who is named in a will to deal with the estate of a deceased person.
The date the interest rate changes on an adjustable rate mortgage.
AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements
Verb: to deliver a portion of money borrowed under a mortgage or loan before the
loan instrument requires the money to be delivered.
Noun: the money so delivered.
A supplement to any document that contains additional information pertinent to
the subject. Appraisers use an addendum to further explain items for which there
was inadequate space on the standard appraisal form.
A type of mortgage where the interest rate varies based on a particular index,
normally the prime lending rate.
The value of an asset (property or otherwise) that includes the original price
plus the value of any improvement, and less any applicable depreciation.
An opinion of a property's sales price, after adjustments have been made to
account for differences between it and another comparable property.
The additional value a property enjoys based on subjective criteria such as look
A declaration that a certain set of facts are truthful.
A calculation used to determine an individual's likelihood of being able to meet
the obligations of a mortgage for a particular property. Takes into account the
down payment, closing costs and on-going mortgage payments.
A person who has been appointed to act on behalf of another for a particular
Any feature of a property that increases its value or desirability. These might
include natural amenities such as location or proximity to mountains, or
man-made amenities like swimming pools, parks or other recreation.
AMERICAN SOCIETY OF
An organization of appraisal professionals and others interested in the
The repayment of a loan through regular periodic payment.
The breakdown of individual payments throughout the life of an amortized loan,
showing both principal contribution and debt service (interest) fees.
The length of time over which an amortized loan is repaid. Mortgages are
commonly amortized over 15 or 30 years.
A measure of electric current describing the magnitude.
The rate of annual interest charged on a loan.
A sum of money paid at regular intervals, often annually.
A form used to apply for a mortgage loan that details a potential borrower's
income, debt, savings and other information used to determine credit worthiness.
A PRIORI knowledge refers to
a knowledge of the actual population, rather than that estimated by observation.
A ''defensible'' and
carefully documented opinion of value. Most commonly derived using recent sales
of comparable properties by a licensed, professional appraiser.
A not-for-profit educational organization established by the appraisal
profession in the United States in 1987. It is dedicated to the advancement of
professional valuation and responsible for establishing, improving, and
promoting the Uniform Standards of Professional Appraisal Practice (USPAP).
A world-wide organization dedicated to real estate appraisal education,
publication and advocacy.
The basic building blocks of the property valuation process, including property
inspection, market analysis and basic economics.
The end result of the appraisal process usually consists of one major
standardized form such as, the Uniform Residential Appraisal Report form 1004,
as well as all supporting documentation and additional detail information. The
purpose of the report is to convey the opinion of value of the subject property
and support that opinion with corroborating information.
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and
interprets USPAP. The ASB is composed of up to seven appraisers appointed by the
Foundation's Board of Trustees. The ASB holds public meetings throughout the
year to interpret and amend USPAP.
An opinion of the fair market value of a property as developed by a licensed,
certified appraiser following accepted appraisal principals.
An educated, certified professional with extensive knowledge of real estate
markets, values and practices. The appraiser is often the only independent voice
in any real estate transaction with no vested interest in the ultimate value or
sales price of the property.
The natural rise in property value due to market forces.
Any transaction in which the two parties are unconnected and have no overt
common interests. Such a transaction most often reflects the true market value
of a property.
The value of a property according to jurisdictional tax assessment.
The function of assigning a value to a property for the purpose of levying
The comparative relationship of a property's assessed value to its market value.
The jurisdictional official who performs the assessment and assigns the value of
Any item of value which a person owns.
Transfer of ownership of a mortgage usually when the loan is sold to another
A mortgage that can be taken over by the buyer when a home is sold.
When a buyer takes over, or "assumes" the sellers mortgage.
Any number of houses or other dwellings which are physically attached to one
another, but are occupied by a number of different people. The individual houses
may or may not be owned by separate people as well.