Glossary of Canadian real estate terms

Whether you’re new to Canada, looking to buy a home for sale in Canada, or looking to buy property in Canada, you may be confused by some of the most common Canadian real estate terms used in Canada.
To help ease your frustration, we’ve compiled a list of 31 important Canadian real estate terms you need to know when buying new homes for sale in Canada and Canadian real estate.
We wish you the best of luck with your Canadian real estate purchase and hope you don’t make any mistakes.

1. Pre-Approval

– The process of getting pre-approved for a line of credit from a bank or financial institution before buying a Canadian property or home. It allows buyers to know in advance what price range they can afford to purchase.

It is common to receive it before the first Deposit.

2. Deposit

–  A deposit paid by a buyer when signing a contract to purchase a home for sale in Vancouver. It is usually a percentage of the total purchase price, for example, 10-20%.

3. Purchase Agreement

– The formal contract that a buyer enters into with a developer to purchase a home. It sets out the terms of the purchase, including price, terms, and timeline.

This is usually done with the first Deposit.

4. Floor Plan

– A drawing representing the internal structure of a house, showing the location, size, and layout of each room.

5. Disclosure Statement

– This is an important document that you should receive from the developer before you decide to buy a home. It spells out the details, contract terms, development timeline, and more.

6. click Additional Deposit

– Additional deposits that are due when certain conditions are met. For example, you might be required to pay an additional deposit when a building permit is issued.

7. Building Permit

– An official permit from the city government before you start building. You can’t proceed with construction until you have this permit.

Once the building process is completed to a certain level (for example, when 60-70% of the units are sold), the developer applies for a building permit.

In Vancouver, it is common to apply for a building permit within 3-6 months of the start of sales.

From application to approval can take 3-12 months, depending on complexity and the city’s processing speed.

The probability of a building permit application not being approved is relatively low, but this can vary depending on the developer’s experience.

Many presale contracts include a “conditional approval” clause, which states that if the building permit is not approved, the contract is void and the buyer will receive a full refund of their deposit.

8. Completion Date

– The date that construction is complete and the buyer can move into the home. By this date, all balances are paid and ownership is transferred.

9. Home Warranty

– A warranty program offered on new homes. It usually includes a repair warranty for construction defects and is valid for a set period of time.

It typically begins when construction is complete and an Occupancy Permit is obtained.

Warranty periods are typically broken down as follows

• 1-year materials and labor warranty

• 2-year major system warranty

• 5-year external component warranty

• 10-year structural defect warranty

10. Closing Costs

– Additional costs incurred when buying a home. Includes attorney fees, recording fees, taxes, and more.

11. Conveyancing (transfer of ownership)

– The legal process of formally transferring ownership of a home to a buyer. A lawyer or notary public is in charge of this process.

12. Occupancy Date (Move-in date)

– The date that the buyer can actually move into their new home. You need to be ready to move in by this date.

13. Strata Fees

– A monthly fee paid to maintain and operate a multifamily property (condo, townhouse). HOA fees include common area maintenance, cleaning, repairs, and more.

14. Inspection

– The process of having a professional check the condition of your home. They check for structural problems, plumbing, electrical systems, and more.

15. Appraisal

– The process of assessing the market value of a property. It is often required by lenders when purchasing a home. It is done after the purchase contract is signed, in order to get final approval of the loan.

16. Interest Rate

– The interest rate that applies to your home loan. There are fixed and variable rates, and they have a big impact on the cost of your loan.

17. Mortgage Approval

– The process of getting approved for a loan from a bank or financial institution to buy a home. After the loan is approved, the buyer has the funds they need.

18. Financing Condition

– In a home purchase contract, the terms under which the contract becomes effective, contingent on loan approval. If you are not approved for a loan, you can cancel the contract.

19. Title Insurance

– Insurance to protect against legal issues related to home ownership. Covers issues like previous owners or unpaid taxes.

Acquired after the purchase agreement is signed, but before the ownership transfer process is completed.

As long as you own your home, you’re protected by title insurance.

20. Property Transfer Tax

– Taxes that you pay when you transfer ownership of real estate. BC charges a percentage tax based on the purchase price.

21. Goods and Services Tax (GST)

– A tax levied on the purchase of a new home in Canada. You must pay a percentage of the purchase price (currently 5%).

22. Holdback

– A system whereby a certain amount of money is set aside for possible deficiencies in a construction project. It is usually kept for the cost of repairing construction defects.

It’s usually set as a percentage of the total purchase price (usually 5-10%) and is held for a period of time after construction is complete. This period is usually between 30 and 90 days.

During the pending period, the buyer can inspect the home and notify the developer if they find any defects or unfinished work. If defects are found, the retainer can be used to fix them. After all defects are repaired and unfinished work is completed, the developer is paid.

23. Deficiency List

– A list of defects or deficiencies found after the home is completed. The developer follows this list to make repairs and completions.

24. Certificate of Completion

– An official document proving that the building is complete. You can’t legally use the home until you have this certificate.

25. Mortgage Broker

– A specialist who compares different loan products and finds the right loan for the buyer. Works with multiple lenders to find the best loan terms.

26. Fixed-Rate Mortgage

– A loan product where the interest rate doesn’t change over the life of the loan. You pay the same amount over the life of the loan.

27. Variable-Rate Mortgage

– A loan product with an interest rate that fluctuates with market interest rates. When interest rates are low, you benefit, but when they rise, you pay more interest.

28. Principal

– The principal portion of a loan. This is the actual amount of the loan, separate from the interest.

29. Amortization Period

– The total number of years it will take to pay off your home loan. This is usually set at 20 or 25 years, for example.

30. Equity (Asset value)

– The current market value of the property minus the remaining loan amount. The value of the property that the homeowner actually owns.

31. Occupancy Permit

– A permit issued after the building is complete and meets legal requirements. Residents can only move into the home after this permit is issued.

We hope this information helps buyers of Vancouver real estate and Vancouver homes for sale better understand the sales process and make an informed decision 🙂

Consult with an expert when reviewing utilization and contracts for the specifics of each term.

Thank you.