Knowledge Centre

Glossary of Real Estate Terms

Plain-language definitions — no jargon explaining jargon — for the terms that come up buying, selling or investing across BC, Alberta, Mexico and Belize.

A C D E F G H L M N P Q R S T U V

Financing & mortgagesLegal & closingProperty types & ownershipThe transaction processInvestment & income propertyBuying internationally

A

Amortization periodFinancing & mortgages: The total length of time it would take to pay off a mortgage in full at a given payment schedule — typically 25 to 30 years in Canada. Not the same as the mortgage term: you renew (and can renegotiate) your rate every term, but the amortization keeps counting down across renewals.
AppraisalThe transaction process: An independent professional's estimate of a property's market value, usually ordered by the lender to confirm the home is actually worth what's being financed. If the appraisal comes in below the purchase price, the buyer may need to cover the gap or renegotiate.

C

Capitalization (cap) rateInvestment & income property: A property's annual net operating income divided by its purchase price or current value, expressed as a percentage — a quick way to compare the income return of different investment properties independent of financing. A higher cap rate generally signals higher income relative to price, but often also higher risk or a less desirable market.
Cash-on-cash returnInvestment & income property: Annual pre-tax cash flow (income minus ALL expenses, including the mortgage payment) divided by the actual cash you put in (down payment plus closing costs), expressed as a percentage. Unlike cap rate, this accounts for financing — it's the number that tells you the real return on the money you personally invested.
Closing costsLegal & closing: The costs beyond the purchase price and down payment needed to actually complete a purchase — legal/notary fees, property transfer tax, title insurance, adjustments for prepaid property tax or utilities, and the appraisal/inspection fees. In BC and Alberta, budgeting 1.5–4% of the purchase price for closing costs is a reasonable rule of thumb, largely driven by whether property transfer tax applies.
CMHC / mortgage default insuranceFinancing & mortgages: Insurance required on Canadian mortgages with a down payment under 20% (a "high-ratio" mortgage), protecting the lender — not the borrower — if the loan defaults. The premium is a percentage of the mortgage amount that rises as the down payment shrinks, and it's usually added to the mortgage rather than paid up front. CMHC is the best-known insurer; Sagen and Canada Guaranty offer the same product.
Completion dateThe transaction process: The legal date ownership actually transfers — funds are exchanged and the new title is registered. It's usually a few days before the possession date (when the buyer gets keys), giving the paperwork time to finalize.
ConveyancingLegal & closing: The legal process of transferring property ownership from seller to buyer — title searches, drafting and reviewing documents, handling funds in trust, and registering the new title. In BC this work is done by a lawyer or notary public; the buyer's and seller's conveyancers coordinate to close on the agreed date.

D

DepositThe transaction process: A sum the buyer pays shortly after an offer is accepted, held in the brokerage's or lawyer's trust account as a show of good faith. It's credited toward the purchase price at completion — it is not a separate fee on top of the price.
Depreciation reportProperty types & ownership: A required, periodically updated report estimating the remaining life and future repair/replacement cost of a strata building's major common-property components (roof, elevators, building envelope). It's the single best document for judging whether a strata's contingency reserve fund is actually adequate, or a special assessment is likely coming.
Down paymentFinancing & mortgages: The portion of the purchase price a buyer pays up front rather than financing. In Canada the legal minimum is 5% on the first $500,000, 10% on the portion from $500,000–$1.5 million, and 20% above $1.5 million (properties $1.5M+ don't qualify for high-ratio insurance at all).

E

EasementLegal & closing: A registered right for someone other than the owner to use part of a property for a specific purpose — a utility company's right to access buried lines, a neighbour's right-of-way over a shared driveway. Easements run with the land, meaning they bind future owners too, not just whoever agreed to them originally.

F

FideicomisoBuying internationally: A Mexican bank trust that allows a foreign buyer to hold full beneficial rights — use, rent, sell, will to heirs — over property inside the Restricted Zone, with a Mexican bank as the legal trustee holding title on the buyer's behalf. It's a well-established, government-regulated structure, not a workaround, and is renewable indefinitely.
Firm (unconditional) dealThe transaction process: A purchase contract where every subject condition has been satisfied or waived — both parties are now legally committed to close. Backing out of a firm deal without a valid legal reason can expose a party to real financial and legal consequences.
Fixed-rate vs. variable-rate mortgageFinancing & mortgages: A fixed rate stays the same for the whole term, so your payment never changes — you trade flexibility for certainty. A variable rate moves with the lender's prime rate, so your payment (or the interest/principal split, depending on the product) can rise or fall through the term — you're betting on where rates go in exchange for a typically lower starting rate.
FreeholdProperty types & ownership: Full, outright ownership of both a structure and the land it sits on, for an indefinite duration — the standard form of ownership for a typical detached house. Contrast with leasehold, strata, or a Mexican fideicomiso, where ownership is more limited or time-bound.

G

Gross debt service (GDS) ratioFinancing & mortgages: The share of your gross income that would go toward housing costs — mortgage payment, property tax and heating, plus half of any condo fees — expressed as a percentage. Lenders generally want this at or below 39%. It's one of the two ratios (with TDS) used to determine how much you actually qualify to borrow.

H

High-ratio mortgageFinancing & mortgages: A mortgage where the down payment is less than 20% of the purchase price, requiring mortgage default insurance. The alternative — 20% or more down — is a "conventional" mortgage, which skips the insurance premium but obviously requires a much larger down payment.
Home inspectionThe transaction process: A professional's visual assessment of a property's condition — structure, roof, electrical, plumbing, heating/cooling, signs of water damage or pest issues — typically done during the subject-removal period so the buyer can negotiate repairs, a price adjustment, or walk away if something serious turns up.

L

LeaseholdProperty types & ownership: Ownership of a structure for a fixed term (often 99 years) on land the owner doesn't actually own — a government, First Nation, or private landholder does. The lease term steadily shrinks the property's remaining value and its financing options, which is why leasehold typically sells for less than an equivalent freehold property.

M

Mortgage pre-approvalFinancing & mortgages: A lender's written estimate of how much they'd lend you and at what rate, based on a review of your income, credit and debts — not yet tied to a specific property. It's not a guarantee (the property itself still has to appraise and qualify), but it tells you your real price ceiling before you start touring homes.
Mortgage stress testFinancing & mortgages: A federal qualification rule requiring borrowers to prove they could still afford their payments at a higher "qualifying rate" — the greater of their contract rate plus 2%, or a federally set minimum — even though they'll actually pay the lower contract rate. It deliberately shrinks the amount most buyers qualify for versus what the advertised rate alone would suggest.
Mortgage termFinancing & mortgages: The length of your current mortgage contract — commonly 1 to 5 years in Canada — during which your rate and conditions are locked in. At the end of the term you renew, usually with a new rate, without needing to fully requalify unless you're switching lenders.

N

Net operating income (NOI)Investment & income property: A rental property's income after operating expenses (property tax, insurance, maintenance, management, vacancy allowance) but BEFORE mortgage payments and income tax. NOI is the number cap rate and most other income-property math is actually built on — get it wrong and every downstream calculation is wrong too.
Notario PúblicoBuying internationally: A Mexican legal official appointed by the state — not the same thing as a Canadian or US notary public. A notario público is typically a senior, specially licensed attorney with authority to certify and formalize real estate transactions, and plays a central role (closer to a Canadian real estate lawyer than a document-witnessing notary) in every Mexican property closing.

P

Possession dateThe transaction process: The date the buyer actually gets the keys and can move in — set out in the purchase contract, and typically a day or two after the completion date to give the registry time to process.
PredialBuying internationally: Mexico's annual municipal property tax — notably low by Canadian standards, calculated on the government-assessed (not market) value of the property.
Property transfer tax (PTT)Legal & closing: A one-time provincial tax paid on the transfer of real estate, calculated on a tiered scale of the purchase price. BC levies PTT (with exemptions for qualifying first-time buyers and some new builds); Alberta has no equivalent tax at all — Alberta buyers instead pay much smaller Land Titles Office registration fees.

Q

Qualified Retired Persons (QRP) ProgramBuying internationally: A Belizean government incentive program offering qualifying retirees (and, under current rules, working-age applicants with sufficient passive income) a renewable residency status and duty-free import allowances, in exchange for meeting a minimum monthly income requirement sourced from outside Belize.

R

Restricted Zone (Mexico)Buying internationally: Under Article 27 of the Mexican Constitution, a band of land 50km from any coastline and 100km from any land border where foreign nationals cannot hold direct freehold title to residential real estate. Foreign buyers acquire property in this zone instead through a fideicomiso (bank trust) or a Mexican corporation. Almost every well-known coastal destination in Mexico — the Riviera Maya, Puerto Vallarta, Los Cabos — sits inside this zone.
Restrictive covenantLegal & closing: A registered condition on a title that limits what an owner can do with the property — a height restriction, a rule against short-term rentals, a design guideline in a planned community. Unlike a rule in a strata bylaw, a restrictive covenant is registered directly on title and can be harder to change.

S

Second mortgage / home equity line of credit (HELOC)Financing & mortgages: A loan secured against the equity you've already built in your home, registered behind your primary mortgage. A HELOC is the revolving-credit version — draw and repay as needed, up to a limit tied to your equity — commonly used to fund renovations, a down payment on a second property, or to help an adult child buy.
Secondary suite / laneway homeProperty types & ownership: A self-contained additional dwelling on a single-family lot — a basement suite within the main house, or a separate laneway/garden home at the back of the lot. Legal secondary suites can materially help mortgage qualification (via rental income) and are a common way BC and Alberta homeowners add income or multigenerational space; permitting rules vary significantly by municipality.
Speculation and vacancy tax (BC)Investment & income property: An annual BC provincial tax on residential property left vacant more than 6 months a year in specific taxable areas, aimed at bringing empty homes into the rental or ownership market. Most owner-occupied and long-term-rented homes qualify for an exemption; the tax mainly targets vacant investment property and applies at a materially higher rate to foreign owners and satellite families.
Stamp duty (Belize)Buying internationally: Belize's property transfer tax, paid on the transfer of real estate. Unlike Mexico, Belize places no restriction on foreign freehold ownership at all — foreign buyers pay the same stamp duty and hold the same freehold title as Belizean citizens.
Strata (condominium)Property types & ownership: BC's term for condominium ownership: you own your specific unit outright and share ownership of common property (halls, elevators, grounds) with every other owner, governed by an elected strata council and a set of bylaws. Alberta uses the term "condominium" for the same structure. Monthly strata/condo fees fund shared maintenance and a contingency reserve fund.
Subject conditions (subjects)The transaction process: Conditions written into an accepted offer that must be satisfied — or waived — before the deal becomes firm and binding. Common subjects: financing approval, a satisfactory home inspection, and reviewing strata documents. An offer with subjects protects the buyer; a "subject-free" offer is riskier but can be more competitive in a hot market.

T

Title searchLegal & closing: Checking the public land title registry to confirm exactly who owns a property, and whether anything is registered against it — mortgages, liens, easements, restrictive covenants, unpaid taxes. It's standard due diligence before completion, done by the buyer's lawyer or notary.
Total debt service (TDS) ratioFinancing & mortgages: Like GDS, but including ALL of your debt payments — car loans, credit cards, lines of credit — not just housing costs. Lenders generally want this at or below 44%. Carrying other debt lowers how much mortgage you'll qualify for even if your income alone would support a bigger loan.

U

Underused Housing Tax (UHT)Investment & income property: A federal annual tax (currently 1% of assessed value) on vacant or underused residential property owned by non-resident, non-Canadian owners — distinct from and in addition to BC's own speculation and vacancy tax where both can apply. Most Canadian citizens and permanent residents are exempt or simply not subject to it at all.

V

Vacancy rateInvestment & income property: The percentage of rental units in a given market sitting empty at a point in time. A low vacancy rate (roughly under 3%) generally signals a landlord-favourable market with room to raise rents; a higher rate signals more competition for tenants.

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