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Glossary

A B C D E F G I L M N O P R S T V Z
A

Actual gross income

The potential gross income deduced from a standardised provision for losses of rent and bad debts.

Added value

Increase in the value of a property in relation to its purchase price and/or market value.

Amortisation

The period needed to pay a mortgage and complete the reimbursement.

Asset

What you own or can use

B

Balance of sale

It is a seller’s claim from the purchaser. The balance of sale is part of the notarised contract. It is refundable any time and without charges. Usually the balance of sale is granted by the seller in order to ease the sale of his property.

Bankruptcy discharge

Through an order of discharge, the bankrupt is relieved of his provable debts; No right of prosecution exists with regard to the cancelled debts unless the debtor recognises the debt after the discharge.

Behind closed doors

It refers to a meeting that takes place without an audience, i.e. in private.

Bill of sale

A contract usually prepared by a notary, which formalises the sale of a building.

Brokerage contract

It is an agreement wherein a natural or legal person authorises a real estate broker to act on his or her behalf for a given period of time as an intermediary for the purchase, sale, lease or exchange of immovable property.

Building complex

A “building complex” refers to several buildings located close to each other and comprising more than twelve dwellings altogether, if such buildings are jointly managed by a single person or persons related through taxes (c. I-3) as far as the law is concerned and if some of them jointly share an accessory, an outbuilding, or in the absence of a common wall, part of the framework.

C

Cash flow

It is what’s left after operating costs and debt servicing have been subtracted from the gross income.

Certified appraisal

It is a method of estimating the market value of a building depending on the general condition of its components and specific characteristics. The assessment is often the result of a comparison with similar buildings on sale or recently sold in the same area.

Co-ownership

It refers to a building that is shared by several owners; shared property rights between several people, on the same property or collection of buildings.

Co-ownership is said to be undivided when the property right is not accompanied by a physical division of the property.

Co-ownership is said to be divided when the property right is apportioned among the co-owners in portions (lots), each having a physically divided private section, and a portion of shared or common areas.

CPC

It is a term known as Conditional Purchase Commitment, which is entered into the MLS system after both parties must have reached an agreement but with some conditions are still to be fulfilled.

Credit check

An inquiry carried out with the assistance of the Credit bureau on various financial institutions and credit in general.

D

Deal

It is an English term referring to a bargain. A purchase made well below market value and/or that offers excellent potential in terms of profits.

Debt cover factor

The factor used by a financial institution in order to reduce the amount available for making mortgage payments.

Debt-Service Coverage Ratio

The Ratio used by a financial institution to reduce the amount available for making mortgage payments.

Discharge

Authentic deed written before a notary which halts the effects of a mortgage.

Docket

A register containing rulings and proceedings of every case tabled before courts.

Down payment

The amount of money that accompanies the purchase commitment for a building and which will be deducted from the balance to be paid when the sale is being made.

E

Economic value

Value determined by an accredited appraiser and used by a financial institution to determine the loan amount that will be granted to the purchaser.

Equity

It is the difference between the market value of a building and the sum of the mortgage balances encumbering the building.

Exemplary damages

A monetary compensation given to the victim of damages, regardless of the harm actually suffered. This compensation that is granted in the event of gross or intentional misconduct is punitive and provided for in the Quebec Charter of Human Rights and Freedoms.

F

Farming

It refers to a process that consists of exploring a chosen sector with the aim of becoming a specialist in it and finding bargains there.

File 13

A synonym for trash can

FSBO

Property “For Sale By Owner”.

G

Gross income

It is the total amount of income generated by a building for a given period of time. It is the total expected income given that all the apartments are occupied.

Gross income multiplier (GIM)

Price paid divided by gross income.

Guarantee

A scheme that binds a lender to a borrower and makes it possible for the lender to obtain a partial or full refund of the amount lent in the event of a failure to pay by the borrower.

I

Index of immovables

It is a register found at the Registry which has a page for each lot number on which all transfers of property and other documents required by law and parties concerned are recorded. The indexes of the buildings therefore show all deeds concerning the same lot on the same page: the sale, exchange, donation, etc…

L

Land register

A public register containing technical information relating to every building in a given region. Each property listed in the land register has a lot number that is used to register the related rights.

Land surveyor

The land surveyor is the only person authorised by law to delineate public and private property in Quebec. The contractor uses him to register lots, while the owner may use his services to determine the boundaries of his land by picketing or to prepare a location certificate. The Association of Quebec Lands Surveyors, (418) 656-0730, comprises all members in the profession.

Lease

A contract wherein the owner of a building undertakes to let a third party be entitled to a building for a period of time on payment of a rent.

Leverage

Means used to buy a building with a modicum of cash.

Listing

It is a sheet on which detailed information on a property for sale is found.

Loan capitalisation

Part of a payment that is directly allocated to the mortgage balance.

Location certificate

A document containing a report and a plan, in which the land surveyor gives his opinion on the current situation and condition of a building in relation to the titles, land register, and laws and regulations which may have an impact on it.

M

Market similarities

Buildings that have been sold within the last six months in the same area, which are similar to the subject matter.

MLS

This is an acronym that stands for Multi Level System. It is the website where properties sold by brokers are listed, when their being published was preapproved by the seller.

Mortgage

A property right granted to a creditor on a building as collateral for the payment of the debt. This right creates an obligation for the borrower to comply with the reimbursement terms of the loan by tying the building to the agreement.

Mortgage broker

A intermediary who practices mortgage brokerage. He represents several financial institutions and is paid through service fees.

Mortgage loan

Funding method in which the building stands as a security for payment of the debt.

Mortgage representative

An intermediary representing a single financial institution. He or she is generally paid a fee by the financial institution.

N

Net income multiplier (NIM)

Price paid divided by net operating income

Net operating income

It is the annual net income after the payment of all operating costs but before the deduction of financial costs such as capital recovery or debt servicing.

Notary

The notary’s services are indispensable in a real estate transaction. He is the only one who has the right to draft a mortgage deed. Furthermore, he deals with the drafting of the deed of sale and looks through titles to ensure that the property purchased is free of any obligation. Notaries are members of the Notary Chamber of Quebec, (514) 879-1793.

O

Open mandate

It is a mandate that makes it possible for an owner to sell his or her property without having to pay a fee, except in the case where a bid is made through an agency. This type of mandate is not common in the residential market, but is however commonplace in the commercial, industrial, and office space leasing fields.

Operating costs

These are expenses excluding debt servicing, needed for day-to-day transactions of the building.

Overall discount rate

Net operating income divided by the price paid, and then all of that multiplied by 100. Nothing more, nothing less than the opposite of the net income multiplier.

P

Plex

Building of two to five dwellings usually lived in by the owner and whose market value is solely determined by demand and supply.

Pocket Listing

A term implying that a real estate broker has the authorisation to sell a building but which he does not post on the MLS system.

Property title

Official proof of the acquired right from purchasing land and buildings erected therein.

Purchase offer

It is a person’s commitment to purchase a building under certain conditions that he or she shall determine. Also a contract document wherein the seller undertakes to sell the building once the purchase commitment has been accepted by him.

Pyrite

Iron oxide that is found in the backfill material under concrete slabs on the ground and which has moisture or water, expands and causes the slabs to rise.

R

Rat race

A term which implies that people just go from subway to work, and then to bed; that they are chasing their tails like rats after their cheese.

Rate race

A term which implies that people just go from subway to work, and then to bed; that they are chasing their tails like rats after their cheese.

Real Estate Broker

A natural person, company or legal person holding a practising certificate issued by the Association of Quebec Real Estate Brokers and Agents (ACAIQ), authorising them to engage in brokerage operations for the purchase, sale, rental or exchange of immovable property, in exchange for compensation.

Registering of proprietary rights

Registration is a measure which mainly affects real property rights, and incidentally movable property rights as well as some personal rights, and which is intended to notify the whole society of these rights, to establish an order of priority between them and in some cases to put them into effect. Although registration is not a mandatory measure, it is preferable to do it for the protection of the contracting parties and/or the third party.

Rental value

It is income that can reasonably be expected to be withdrawn in exchange for the right to use a building. Generally, competition establishes the value of rents.

S

Seed money

It is the personal contribution of the purchaser at the time a building is being funded. The part of money that is deducted from the selling price, which determines the amount of funding required to make the purchase.

Servitude

It is the restriction of real property rights for reasons of general interest or public utility. The right to access or use land by others for a predetermined purpose (passageway, parking lot, public services, etc.).

T

Tax depreciation

It is a theoretical expenditure that reduces taxable net income. The first year is calculated according to the price paid and with respect to the book value of the building for the following years.

Tenure

It is the right that a tenant or an owner has in using a location without being disturbed

Term

Period covered by the mortgage agreement. The term generally varies from six months to five years. It can reach ten years in some cases.

Thermal imaging

It is a procedure whereby infrared is used to detect varying physical problems related to a building.

Thermography

See thermal imaging (synonym)

Transfer duty

It is a tax levied by municipalities for any transfer of property rights within its territory. It’s also known as “welcome tax”.

Trust

In civil law, it refers to a property disposal method whereby a person transfers his property by giving it as a gift or willing it to another person, a trustee, who shall be in charge of managing them for the benefit of other people, grantees or legatees who will receive them at a time specified in the trust.

V

Valuation

It’s the estimated selling price by a real estate broker.

Variable-rate mortgage

It is a mortgage loan whose interest rate depends on fluctuations in the money market and changes at most once a month. The monthly payment does not vary. However, the portion of payment applied to the principal varies depending on fluctuations in the interest rate (where necessary).

Z

Zoning

It is a land-use control instrument that determines the authorised uses and settlement standards with respect to these uses, for each part of the territory.