Important Real Estate Terms To Know

Buying or selling your home is an important process, so it’s always smart to understand the terms and concepts involved in a real estate transaction. Below are some key terms and definitions that are most common in the real estate market.

Deposit

A deposit is an agreed upon amount that is held in trust by the buyer’s brokerage. The deposit acts as a show of good faith to the seller and forms part of the purchase price. Generally, a larger deposit makes a stronger offer to purchase. If an accepted offer were to collapse because of a subject clause, the buyer and seller would need to sign a mutual release form in order to release the deposit from trust.

Chattels and Fixtures

Chattels are items that can be picked up and taken from a house. Examples include a fridge, stove, washer, dryer or furniture. Fixtures are items that are attached to a house, becoming a part of it. Examples include built-in shelves, wall-to-wall carpet, light fixtures and TV brackets. Any chattel being left behind must be included in the contract and any fixtures being taken must be excluded in the contract.

Closing Costs

Closing costs are the additional costs included in the process of buying a home, besides the sale price of a property. These costs can include a home inspection, title insurance, legal fees, property transfer tax, and other moving costs.

Completion

Completion is the day that the money and title of the property change hands, this is handled by the lawyer. A few days before completion the buyer will be contacted by their lawyer’s office with an appointment date to sign transfer documents.

Condition of the Home

The condition of the home at the time of possession should be the same as when the buyer first viewed the home unless there are additional requests in the contract.

GST

Most resale homes are exempt from GST, but there should be a clause in the contract of purchase and sale to address it just in case.

Home Inspection

A home inspection is done by a licensed professional prior to the purchase of a home. It is a thorough review of the entire house, including areas such as the roof, foundation, electrical, plumbing, heating and construction. This review and the resulting detailed report are important for both the seller and potential buyer, especially if there are any possible concerns about the property.

Multiple Offers

When two or more buyers submit offers on a property at the same time it becomes a multiple offer situation. The seller can counter one offer at a time or accept one offer.

Possession

Possession is the day that the seller needs to vacate and the buyer takes physical possession of the property. The date and time of possession is set out in the sales contract.

Property Assessment

The assessed value of a property is determined by BC Assessments in order to calculate property taxes, but it does not necessarily reflect the market value.

Title

The title of a property is the document registered at the land title office showing proof of ownership. Charges to the title such as mortgages, easements, covenants and building schemes are registered on this document. Non-financial charges on the title stay registered when ownership is transferred.