PACKAGE LOANCombination of two types of loan, eg., construction loan and permanent financing. The borrower benefits by only having to negotiate with a single lender and only having to pay a single set of closing costs.

PARTIAL DISCHARGEA discharge of a definite portion of the mortgage lands usually given after the mortgagor has prepaid a specific portion of the mortgage debt.

PARTICIPATION LOANAn agreement whereby two or more lenders share in advancing a portion of a loan made by the originating or “lead” bank. Terms of the agreement set out a method of apportionment and interest rates. The lead lender generally services the loan for which it receives a fee.

PARTNERSHIP1) An arrangement whereby individuals join together to lose money and/or
2) An arrangement whereby in the beginning a general partner has the experience and the limited partners have the money and in the end, the general partner has the money and the limited partners have had the experience.

PERCENTAGE RENTAL AGAINST MINIMUMA rental paid under a percentage lease whereby rent paid by a tenant varies according to volume of business, eg., a percentage of gross receipts, sales or revenue, and paid to the extent that it exceeds a minumum rental.

PERCENT PAID OFFThe percent of principal which is paid off at a given time under an amortization schedule, ie equity build up.

PERCENTAGE RENT PLUS MINIMUMA percentage rental which must be paid in addition to the minmum, ie minimum rent is not credited against percentage rent payable.

PERMANENT FINANCINGA long-term mortgage usually intended to finance both land and improvements after completion of construction and used to pay off a construction loan.

PERSONAL LIABILITYA person liable on a debt to the full extent of his entire assets, as opposed tolimited liability where a maximum or a ceiling is fixed on the amount of assets that can be drawn upon to satisfy a debt. Joint and several liability fixes the liability of each individual borrower for the total debt; joint liability binds all the borrowers together in one action; and several liability fixes the liability of each borrower to the extent of his share of the debt.

PERSONAL PROPERTYAll property except land and the improvements thereon.

POLARISThe Province of Ontario Land Registration Improvement System’s new simplified method of registration of transfer, charge, discharge, etc.

POSTPONEMENT CLAUSEA junior mortgage may contain a postponement clause, by which the mortgagee permits the borrower to renew or relace an existing first mortgage that falls due prior to the maturity date of the junior mortgage.

POWER OF SALEThe right of a mortgagee to force sale of the property without judicial proceedings should default occur.

PREPAYMENT CLAUSEA clause inserted in a mortgage, which gives the mortgagor the privilege of paying off all or part of the mortgage debt in advance of the maturity date.

PREPAYMENT PENALTYThe sum of money (the amount of extra interest as set out in the mortgage document) a mortgagee may require from a mortgagor to exercise the option in a mortgage to prepay any outstanding principal.

PRIME RATEThe rate charged by banks to their most credit-worthy borrowers. Sometimes also referred to as the rate of interest paid on government bonds.

PRIOR CHARGEAn encumbrance ranking in priority to the mortgage in question.

PRO FORMA (Statement)A financial statement of the gross income, operating costs and net operating costs and net operating income for a specified financial period,eg one year, using specified assumptions.

PRE-QUALIFICATIONAn interview with a client (usually) prior to the writing of an offer to purchase real estate in order to determine the applicants qualifications for mortgage purposes.

PRINCIPALThe amount actually borrowed.

PRIOR ENCUMBRANCEA claim on the property, ranking in priority to the mortgage in question.

PROGRESS ADVANCESLoan advances made on a property under construction whereby the lender makes advances on the basis of the retention at all times of an amount of the loan which in his/her opinion will be sufficient to complete the building should the borrower fail to complete it.

PROJECTED INCOMEEstimated income from property.

PROMISSORY NOTEA written document acknowledging a debt and promising payment.

PROPERTYRefers to the rights which an individual enjoys by virtue of his/her ownership.

PURCHASE-MONEY MORTGAGEA mortgage loan taken back by the vendor of property in lieu of purchase money in order to help finance the purchaser.

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QUANTUM MERUITThe amount that should be paid as merited by the service performed.

QUIT CLAIM DEEDA general release of all claims or rights to a parcel of land.

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REALTORA real estate broker holding active membership in a local real estate board.

REDEMPTIONThe buying back of a mortgage estate by payment of the sum due on the mortgage.

REDEMPTION PERIODA period of time allowed by law during which a mortgagor may redeem his property by paying off the entire debt in arrears.

REFINANCETo pay off (discharge) a mortgage and other registered encumbrances and arrange a new mortgage.

REGISTRATION AND DISCHARGE DATESDates of registration by number and date in the local Registry Office and/or Land Titles, then given to the mortgagee. When the loan has been paid in full at or after maturity date, then the mortgagee executes the “discharge” or cessation of charge and registers same to liquidate the mortgage and allow the mortgagor to redeem the mortgage.

RELEASE OF COVENANTA release given to the mortgagor of a property that has been sold to a new purchaser who is acceptable to the mortgagee. This release is usually given after the new mortgagor has signed an assumption agreement.

RENTAL HOLD BACK STANDBY LOANA hold back is an amount withheld from the borrower under permanent financing until a certain occupancy rate is achieved. As this deprives the construction lender of full takeout protection, the developer may obtain a standby loan commitment to supplement the hold back.

RENEWAL AGREEMENTAn agreement whereby the lender may agree to extend the loan, but possibly on revised terms as to principal repayments and interest rate.

RENTAL REQUIREMENTSThis is the “ceiling” portion of a permanent loan commitment that is advanced upon reaching a minimum rental or occupancy rate.

RENTAL VALUEThe monetary amount reasonably expectable for the right to the agreed use of real estate. It may be expressed as an amount per month or other period of time, or per room, per front foot, or other unit of property.

RENT CONTRACTRental received by the real estate owner under any lease contract.

RENT ECONOMICIs the income that real estate can command in the open market at any given time for its highest and best use.

REPRODUCTION COSTThe cost of reproducing a new replica property on the basis of current prices with the same or closely similar materials.

RESTRICTIONA limitation placed upon the use of property contained in the deed or other written instrument in the chain of title.

RESTSThe periodical balancing of an account made for the purpose of converting interest into principal, and charging the party liable thereon with compound interest.

RETURN ON INVESTMENT(a) Free and clear return is calculated as the percentage of net operating income to total investment in the property
(b) Cash flow return is the ratio of cash flow to equity investment (also know as return on equity and cash-on-cash return)
(c) Total return is cash flow including loan amortization as a percentage of the total invested.

REVERSIONThe right to repossess and resume the full and sole use and proprietorship of real property which temporarily has been alienated by lease, easement o otherwise. According to the terms of the controlling instrument, the reversionary right becomes effective at a stated time or under certain conditions such as the termination of a leasehold, abandonment of a right-of-way, or at the end of the stimulated economic life of the improvements. The present or discounted value of something to be collected at some future date.

RIGHTThe interest one has in a piece of property. A claim or title enforceable by law.

RIGHT OF SURVIVORSHIPThe distinguishing feature of joint tenancies which provides that, where land is held in undivided portions by co-owners, upon the death of any joint owner, his/her interest in the land will pass to the surviving co-owner, rather than his/her estate.

RIGHT OF WAYThe right to pass over another’s land, more or less frequently, according to the nature of an easement.

RIPARIAN RIGHTSThe rights of the owners of land on the banks of watercourses, to take advantageous use of the water on, under, or adjacent to his/her land, including the right to acquire decretions, wharf slips, and fish therefrom.

RUNNING WITH THE LANDA covenant is said to run with the land when it extends beyond the original parties to the agreement and binds all subsequent owners to either liability to perform it or the right to take advantage of it.

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SALE AND LEASEBACKA method of financing where a property is sold to a purchaser who simultaneously enters into a long-term lease of the property with the vendor. The vendor (now lessee) remains in possession for the specified term of the lease and covenants to pay the rental to this purchaser (now lessor) as well as all operation expenses.
This enables the user to free his cash investment in the real property for some other use.

SALES HOLD BACKA percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee.

SANDWICH LEASEA lease in which the “sandwich party” is the lessee f one party and the lessor to another. Usually, the owner of the sandwich lease is neither the fee owner not the user of the property.

SEALED AND DELIVEREDA term indicating that a conveyor has received adequate consideration a evidenced by his/her voluntary delivery. The word “sealed” adds more strength, since under old conveyancing law an official seal was used as a substitute for consideration.

SECOND MORTGAGEA mortgage loan granted, (and registered) when there is already a first mortgage registered against the property.

SERVIENT TENEMENTAn estate or land over which an easement or some other service exists in favour of the dominant tenement.

SET BACKThe distance from the curb or other established line within which no buildings may be erected.

SHORT FORM MORTGAGEMortgage document which follows the exact language of the long form prescribed by law but is abbreviated, using shortened terminology, at the same time having the identical legal effect.

SINGLE FAMILY DWELLINGA residential property designed for occupancy by one family and situated on land zoned specifically for that purpose.

SPECIFIC PERFORMANCEA remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.

SPECULATIVE BUILDER OR DEVELOPEROne who builds without having a commitment to buy or lease from a purchaser or tenant.

STANDBY COMMITMENTA commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.

STATUTE OF LIMITATIONSThat period of time specified by statute within which an action at law must be brought or else be forfeited.

STATEMENT OF ADJUSTMENTSA statement prepared by lawyer setting out the details of a mortgage transaction.

STATUTEA law established by an act of the legislature.

STATUTE OF FRAUDSA law which provides that certain contracts must be in writing in order to be enforceable at law. It includes real estate contracts.

STEP DOWN LEASEA lease providing for decreases in rental payment at specified dates.

STEP UP LEASEOpposite to step-down lease.

SURVEYA document that illustrates the property boundaries and measurements, the position of major structures on that property, any registered or viable easements.

SURVIVORSHIPThe right of a person t secure ownership by reason of his/her outliving someone with whom s/he shared undivided interest in the land.

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TAKEOUT MORTGAGE LOANA long term mortgage loan that is advanced to borrower on completion of construction or in compliance with any other conditions in the loan commitment. The funds are normally used to pay off or take out the construction lender.

TAX LIENA lien imposed by a taxing authority on real estate for failure to pay taxes within the time required by law.

TENANCY IN COMMONOwnership of ad by two or more persons: unlike joint tenancy in that interest f deceased does not pass to the survivor, but is treated as an asset o the deceased’s estate.

TENUREA system of land holdings for a temporary time period.

TERMThe length of time which a mortgage agreement covers. Payments made may not repay the outstanding principal by the end of the term because of a longer amortization period.

TIME IS OF THE ESSENCERequires punctual performance of a contract on closing date and is indicated by so stating as in an Agreement of Purchase and Sale.

TITLEThe means of evidence by which the owner of land has lawful ownership thereof.

TITLE INSURANCEA policy which insures the lender against loss due to a flaw in the title of property held as collateral for a mortgage.

TITLE SEARCHAn examination of the chain of title to real property as indicated in the public records in order to determine the ownership of the subject property and the existence of any encumbrances or defects.

TORRENS SYSTEMSystem of title recordation provided by provincial law, it is a system for the registration of land title, indicating the state of the title, including ownership and encumbrances without the necessity of an additional search of the public records. Also known as the “Land Titles System”.

TOTAL DEBT SERVICE (TDS)The percentage of gross annual income required to cover payments associated with housing and all other debts and obligations.

TRANSFERTo convey from one person to another.

TRANSFER OF CHARGEAssignment of a mortgage under the Land Titles System.