These are just some of the terms and phrases you’ll hear when buying a home.

1. Agreement of Purchase and Sale (APS): A legal document outlining the terms and conditions under which a property is bought and sold.
2. Appraisal: A professional assessment of a property’s market value, often necessary for mortgage approval.
3. Canadian Home Mortgage Corporation (CMHC): see below for more information on the CMHC mortgage insurance program.
4. Closing Costs: Expenses incurred in closing a real estate transaction, which may include legal fees, land transfer tax, and other related costs.
5. Closing: This is the final step in a real estate transaction, during which the title of the property is transferred from the seller to the buyer, financial transactions are completed, and legal documents are reviewed and signed, often with the assistance of a real estate lawyer.
6. Conditional Offer: A purchase offer includes specific conditions that must be met before the sale proceeds. These conditions can vary but often include securing financing, completing a home inspection, or selling the buyer’s current property.
7. Deposit: An upfront payment made by the buyer to demonstrate serious intent to purchase the property, held in trust until closing.
8. Equity: The difference between the market value of a property and the amount owed on any mortgages secured by that property.
9. For Sale By Owner (FSBO): A property sold directly by the owner without the representation of a real estate agent.
10. Home Inspection: A condition examination of a property, typically conducted by a certified inspector, to assess its structure, systems, and overall safety.
11. Home Systems and Appliance Warranty: This is a type of insurance that covers repairing or replacing certain home systems and appliances, often provided by builders or sellers under specific terms and conditions. It does not include warranty protections covered under Ontario’s Tarion Home Warranty Program (see below for more details).
12. Land Transfer Tax: A tax the buyer pays when the property is transferred, calculated based on the purchase price. The Royal LePage® Binder website conveniently includes a Land Transfer Tax calculator on all listings.
13. Lease Agreement: A contract between a landlord and tenant outlining the terms of renting a property.
14. MLS (Multiple Listing Service): A database real estate professionals use to share information about properties for sale. The database also supports the Royal LePage® Binder website and the popular Realtor.ca website.
15. Offer: A formal proposal made by a buyer to purchase a property at a specified price.
16. Possession Date: The date on which the buyer is entitled to take physical possession of the property.
17. Pre-approval: A lender’s assessment of a buyer’s creditworthiness determines how much they are willing to lend before the buyer finds a property.
18. Real Estate Investment Trust (REIT): A company that owns, operates, or finances income-producing real estate and allows investors to buy shares in the portfolio.
19. REALTOR®: A licensed real estate professional member of the Canadian Real Estate Association (CREA), abiding by its ethical standards. Their role guides you through the process, providing reassurance and confidence in your real estate decisions.
20. TARION Home Warranty Program: see below for more information.
21. Title: The legal right of ownership over a property, often verified through a title search. A title search is when a professional examines public records to ensure no claims or liens against the property, providing a clear title for the buyer.
22. Title Insurance: in Ontario is a type of insurance that protects property owners and lenders against financial losses related to defects in the title of a property. This can include issues such as unpaid property taxes, liens, fraud, or errors in the public records that could affect ownership rights. The insurance policy provides coverage for legal costs associated with resolving these issues and ensures that the property owner has clear and marketable title to the property. It is often recommended during real estate transactions to provide peace of mind and financial protection against unforeseen title disputes.
23. Zoning: Regulations that dictate how land can be used, including restrictions on activities or buildings permitted in certain areas.

Tarion Home Warranty Program

The Tarion Home Warranty Program is designed to protect Ontario homeowners, by providing warranty coverage for new homes. Established in 1976, Tarion is a not-for-profit organization that administers the Ontario New Home Warranties Plan Act. This program covers builders and homeowners in various aspects, including:

Coverage: Tarion offers several types of warranty coverage, including:

• One-Year Warranty: Covers defects in workmanship and materials.
• Two-Year Warranty: Covers major mechanical systems, such as plumbing, electrical, and heating.
• Seven-Year Warranty: Covers major structural defects.

Builder Licensing: Builders in Ontario must be licensed by Tarion to ensure they meet specific standards and are financially viable. This helps protect consumers by ensuring only qualified builders are constructing homes.

Dispute Resolution: Tarion facilitates the resolution of disputes between homeowners and builders, providing a structured process for addressing warranty claims.

Consumer Education: Tarion offers educational resources for homeowners about their rights and responsibilities, the warranty process, and what to expect when buying a new home.

The Tarion Home Warranty Program helps protect homeowners against issues that may arise with newly constructed homes, promoting accountability and quality in the homebuilding industry.

CMHC Mortgage Insurance Program

The Canada Mortgage and Housing Corporation (CMHC) offers mortgage insurance programs that help Canadian homebuyers obtain financing, particularly if they have a smaller down payment.

Royal LePage® Binder’s mortgage calculator includes an option to calculate and add the cost of CMHC Mortgage Insurance to its results.

In Ontario and across Canada, the CMHC Mortgage Insurance program includes:

1. Insurance for High-Ratio Mortgages: If a buyer makes a down payment of less than 20% of the home’s purchase price, they must obtain mortgage insurance. This protects lenders in case of default, making it easier for buyers to secure a mortgage.
2. Lower Borrowing Costs: Borrowers who have mortgage insurance can often qualify for better interest rates because the lender’s risk is reduced, enabling them to save money throughout the life of the loan.
3. Access to More Financing Options: CMHC Mortgage Insurance can enable buyers to purchase homes they might not afford otherwise, promoting homeownership and access to the housing market for a broader range of individuals.
4. Flexible Eligibility Criteria: The CMHC Mortgage Insurance program has specific guidelines regarding income, employment, and credit that allow various buyers, including first-time homeowners, to qualify.
5. Home Buyer Assistance: CMHC also provides resources and tools to help buyers understand the mortgage process, affordability, and budgeting, making homeownership more accessible.

In summary, the Tarion Home Warranty Program and CMHC Mortgage Insurance programs are crucial components of Ontario’s housing framework, ensuring that homeowners are protected and supported throughout their home purchase and maintenance.

This glossary should give you a solid understanding of some key terms in the Ontario real estate market! Don’t hesitate to ask if you have any specific terms in mind. The REALTORS® of Royal LePage® Binder are here to support and guide you through your real estate journey!