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Real Estate Dictionary — Real Estate Agent Toronto

Real Estate Dictionary


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Abstract

A written history of the title to a parcel of real estate as recorded in a land registry office.

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Adjustable-rate mortgage (ARM)

A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexed, in Toronto they are usually tied up to a prime rate.

Adjustment date

The date the interest rate changes on an adjustable-rate mortgage

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Adverse possession

When an individual, not the owner, takes actual possession of the property, hostile to, and without the consent of the owner.

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Agent

One who legally represents a person or company in business transactions.

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Agreement of sale

A contract by which one party agrees to sell and another agrees to purchase.

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Agreement to lease

A contract by one party agrees to rent real estate to another party for rental or other compensation.

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Amortization of mortgage

Agreements for the paying off a mortgage by installments or periodic payments to a sinking fund.

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Amortization schedule

A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

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Annual percentage rate (APR)

This describes the rate on your loan. You have to be careful in examining whether the bank is telling you stated APR or real APR. The difference is following: even though banks tell you that an annual rate 5% for example, they accrue interest daily. That means that every day there is a little bit more principal to accumulate percentage on. So in reality your rate is approximately 5.4%.

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Appraisal

A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

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Appraiser

An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.

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Appreciation

The increase in the value of a property due to changes in market conditions, inflation, or other causes.

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Appurtenances

All the rights that go with the property although not within the limits of the deed.

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Assessed value

The valuation placed on property by a public tax assessor for purposes of taxation.

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Assignment

When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.

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Assumable mortgage

A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must “qualify” in order to assume the loan.

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Biweekly mortgage

A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty year mortgage.

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Broker

Most Realtors are “agents” who work under a “broker.” Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors.

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Cap

Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan.

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Cash-out refinance

When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use.

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Chattel

Articles of personal property such as household goods, furnishings, and fixtures that are not permanently affixed to the house (generally items that may removed without injury to the freehold estate).

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Clear title

A title that is free of liens or legal questions as to ownership of the property.

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Closing

A meeting where all documents are signed and money changes hands.

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Cloud on title

Any encumbrance or claim that affects title to real property.

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CMHC

Canada Mortgage and Housing Corporation, a Crown Corporation which administers the National Housing Act.

CMHC insurance

If your down payment is less than 25% , you must have mortgage insurance. It insures the lender against the possibility of you defaulting on your mortgage. Canada Mortgage and Housing Corporation is the principal source of mortgage insurance. G.E. Capital also provides mortgage insurance to many of Canada’s financial institutions.

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Co-borrower

An additional individual who is both responsible for the mortgage and is on title for the property

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Collateral

In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.

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Commission

Remuneration paid to an agent on sale or lease of property, usually as a percentage of the amount involved.

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Commitment letter

A letter outlining the amount, terms and conditions under which a lender is willing to offer a mortgage.

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Common areas

Lands or improvements on land that are designated for common use and enjoyment by all occupants, tenants or owners. The lobby, a pool, tennis court or common hallways would all be Common Areas in a condominium or townhouse complex.

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Common element condominium

A condominium corporation containing only common elements with no units.

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Common elements

All property owned by the condominium corporation over and above the units.

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Common expenses

Amounts contributed by unit owners to the operation of a condominium, typically on a monthly basis.

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Common law

The part of the law formulated, developed, and administrated by the common law courts, based originally on common customs.

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Completion date

Date set for transfer of title.

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Condominium hotel

A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned. These are often found in resort areas like Hawaii.

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Consideration

Compensation, payment.

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Construction lien

A claim filed in the land registry office by an individual or company for labor or material, or both, supplied for the improvement of property.

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Contingency

A condition that must be met before a contract is legally binding.

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Contract

An agreement between two or more parties upon lawful consideration, to do or retain from doing some act (if affecting real estate, it must be in writing).

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Convertible ARM

An adjustable-rate mortgage (ARM) that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.

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Cost

The amount actually paid for a property plus any capital improvements made since the purchase.

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Deed

A written instrument that has been signed, sealed and delivered.

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Deposit

Payment of money or other valuable consideration as pledge for fulfillment of a contract.

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Depreciation

A decline in the value of property; the opposite of appreciation. (Amount by which property over a period of time has decreased in value).

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Discharge of charge/mortgage

A form used for the release from further obligation or performance concerning a Charge/Mortgage of land.

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Down payment

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

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Easement

A right of way giving persons other than the owner access to or over a property. ( A right to some use of adjoining land or buildings, for example, a right away or a right to light).

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Eminent domain

The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.

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Encroachment

An improvement that intrudes illegally on another’s property.

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Encumbrance

Outstanding claim or lien recorded against property or any legal right to use of the property by another person who is not the owner.

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Equity

A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

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Examination of title

The report on the title of a property from the public records or an abstract of the title.

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Exclusive listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

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Fair market value

The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

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Fee simple

The highest estate or absolute right in real property.

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Feng  Shui

Way of decorating home considering spiritual energies that comes from Ancient China. In modern day, just a way to feel good about your home. Feng Shui Articles

Fixed-rate mortgage

A mortgage in which the interest rate does not change during the entire term of the loan.

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Fixture

Personal property that becomes real property when attached in a permanent manner to real estate.

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Foreclosure

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property.

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Fraud

A false representation of fact knowingly made by an individual that induces another person to act upon representation.

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Freehold estate

Ownership for an indefinite period of time.

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Grantee

The person who receives the legal transfer of property from another.\

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Grantor

The person who conveys or legally assigns property to another.

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Grow house

A residential property used for the illegal growing of marijuana.

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Hazard insurance

Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.

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Heritage property

Property designated under the Ontario Heritage Act affecting renovations/changes to structures.

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Home equity line of credit

A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.

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Home inspection

A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

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Irrevocable

Incapable of being recalled or revoked.

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Joint tenancy

Ownership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.

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Judgment

The decision of court.

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Landlord

The person from whom another holds tenancy.

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Latent defect

A defect that is not readily observable by the untrained eye during the reasonable inspection of a property.

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Lease to Purchase Option

Buying a piece of property by renting for a specified period, usually one year, with the provision that you will purchase the property at the end of that period for a predetermined sale price.

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Lessee

Tenant under a lease.

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Lender

A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as “lenders.”

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Lessor

The person who grants use of property under lease to a tenant.

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Liabilities

A person’s financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

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Lien

A legal claim against a property that must be paid off when the property is sold. A mortgage is considered a lien.

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Liquid asset

A cash asset or an asset that is easily converted into cash.

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Listing price

The price at which a property is offered for sale in the marketplace.

Loan origination

How a lender refers to the process of obtaining new loans.

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Lock-in

An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.

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LTV (Loan to value)

The ratio between the mortgage loan amount and the value of the property usually expressed as a percentage, i.e. 75% LTV. The value of the property for lending purposes is the purchase price or appraised value, whichever is lower.

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Margin

The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.

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Market value

The amount that will bring a sale between a willing buyer and a willing seller. It is based on the history of similar properties recently sold in the area.

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Matrimonial home

A home designated as the family residence pursuant to the Family Law Act.

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Maturity

The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable

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Minor

A person who is under the age of legal competence.

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MLS listing

An exclusive listing with extended authority to co-operating brokers within an MLS system.

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Mortgage

A conveyance of property to a creditor as security for the payment of a debt with the right of redemption at a specified date.

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Mortgage broker

A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.

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Mortgagee

The one to whom property is conveyed as security for the payment of a debt; the lender or creditor.

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Mortgagor

The one who makes the mortgage; the borrower or debtor.

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Multi-dwelling units

Properties that provide separate housing units for more than one family, although they secure only a single mortgage.

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No cash-out refinance

A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage.

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Option

A right given by the owner of property to another (for a valuable consideration) to buy certain property within a limited time at an agreed price.

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Original principal balance

The total amount of principal owed on a mortgage before any payments are made.

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Personal property

Any property that is not real property. (All property, except land and the improvements thereon.)

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Power of attorney

A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

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Power of sale

The right of a mortgagee to force the sale of the property without judicial proceedings should default occurs.

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Pre-approval

Means that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved.

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Prepayment penalty

A fee that may be charged to a borrower who pays off a loan before it is due.

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Price

The stated amount an owner is willing to accept for the property.

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Prime rate

The interest rate that banks charge to their preferred customers. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.

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Principal

The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

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Purchase agreement

A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

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Real estate agent

A person licensed to negotiate and transact the sale of real estate.

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Real estate trust account

An account separate and apart from one’s personal monies, as required by law.  Real estate brokers are required to have a statutory trust account pursuant to the Real Estate and Business Brokers Act.

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Real property

Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

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Refinance transaction

The process of paying off one loan with the proceeds from a new loan using the same property as security.

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Remaining term

The original amortization term minus the number of payments that have been applied.

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Right of first refusal

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

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Second mortgage

A mortgage that has a lien position subordinate to the first mortgage.

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Secondary market

The buying and selling of existing mortgages, usually as part of a “pool” of mortgages.

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Status certificate

A condominium document setting out operational, legal, and financial aspects of the corporation.

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Subdivision

A housing development that is created by dividing a tract of land into individual lots for sale or lease.

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Survey

The accurate mathematical measurements of land and buildings thereon, made with the aid of instruments.

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Tenant

One who occupies land or tenement under a landlord.

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Tenants-in-common

Ownership of land by two or more persons; unlike joint tenancy in that interest of deceased does not pass to the survivor, but is treated as an asset of the deceased’s estate.

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Title

A legal document evidencing a person’s right to or ownership of a property.

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Title insurance

Insurance relating to defects and/or invalidity of title.

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Title search

A review of title documents in registry of land titles.

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Tort

A breach of duty involving a civil wrong (other than a breach of contract) that can lead to common law action for damages.

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Transfer of ownership

Any means by which the ownership of a property changes hands.

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UFFI

Insulation product blown into place under pressure and banned in 1980 due to health concerns.

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Void

Of no legal effect; a nullity.

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Waiver

The relinquishment of some right. More specifically, a wording within an agreement providing that the party may waive a condition at his/her sole option.

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