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Glossary of Terms

Includes terms used in the real estate auction industry.

  • Absentee Bidder - A bidder at a sale who did not attend the auction event in person, but submitted their bid in written or oral form prior to the sale. The rules and procedures for absentee bids are unique to each auction sales business.
  • Abutting Land - A land adjoining or sharing a common boundary, or share even a small portion of a boundary.
  • Acceleration Clause - A clause included in a note or mortgage that requires the entire outstanding balance to be paid if the borrower defaults.
  • Accessory Building - A structure on a property that serves a specific purpose, complementing the home or main building. Such as a garage or storage shed.
  • Acquisition - The process of taking title to or ownership of something.
  • Acquisition Cost - The cost to the purchaser of obtaining title to anything, including real property. Acquisition cost includes the cost of the transaction of obtaining title, including legal fees and expenses, interest charges on mortgages, land transfer tax, etc.
  • Acre - An imperial measure for land. Equals 43,560 square feet; 4,047 square meters; or 0.047 hectares.
  • Adaptive Re-use - The improvement or alteration of a property in order to use it for a different purpose than before.
  • Addendum - An addition to a document that forms part of it. Similar to a Schedule to an Agreement of Purchase and Sale. May be used to add specific and detailed information material to the contract or upon which contractual terms are based.
  • Adjacent Land - An inexact term used to described any property which is situated near or abutting a certain piece of property. Note, an abutting property will always be adjacent but an adjacent property may not be abutting.
  • Advanced Bid - Also called a Sealed Bid. A way of bidding without attending the sale. Bids are entered by the auctioneer or the assistant on behalf of the prospective buyer. A maximum bid from the buyer is established before the sale.
  • Affidavit - A sworn statement setting out facts which the affiant states are true. Sworn before a Commissioner for swearing Oaths, Notary Public or other public official.
  • Affidavit of Title - A Vendor's statement to the effect that title is good and marketable and subject to no defects other than those set out in the Agreement of Purchase and Sale or the Vendor's Deed.
  • Agency - The relationship between an agent, also known as a broker, and the real estate owner.
  • Agent - A person authorized by the owner to conduct business transactions with potential purchasers.
  • Agreement of Purchase and Sale - The written contract between the purchaser and the vendor for the sale of property.
  • Alienation Clause - A term of a mortgage which allows the creditor to demand payment in full of principal and interest due upon the sale of the property.
  • Amenities - Positive features of a particular property (such as a pool, central air conditioning, etc.) or attractions located near a particular property (highways, school, shopping, etc.) which have the effect of enhancing the property's value.
  • Amortization Period - The amount of time it takes to gradually pay back the entire mortgage amount.
  • Amortize - The settlement of debt by making partial, regular payments.
  • Anchor Tenant - Description of a tenant in a shopping mall or center. A "name" store that will draw shoppers to the mall and, therefore, benefit the other mall stores.
  • Annual Percentage Rate (A.P.R) - A rate designed to allow for the comparison of one type of loan to another. The annual cost of borrowing under a given form of loan (includes in the calculation compounded interest, cost of borrowing etc.). Required to be disclosed by the lender.
  • Application Fee - The fees the lender charges the applicant. May include costs of a property appraisal and a credit report on the applicant. May be payable by applicant even if loan is not approved.
  • Appraisal Report - A written document containing an estimate of value as of a specified date with supporting analysis and material data.
  • Appraiser - A person with special qualifications for giving an estimate of value on property.
  • Appreciation - A property's value increases.
  • AS IS - Implied in most Agreements of Purchase and Sale, suggests the Purchaser is accepting the property in its current condition and releases the Vendor from any liability for problems found before or after closing.
  • Asking Price - The price at which the Vendor advertises a property. When used in the advertisement, may suggest flexibility on the part of the Vendor regarding the price.
  • Assessed Value - The value attributable to real estate shown on the municipal tax rolls for taxation purposes.
  • Assignment - The transfer of any right, claim or interest to another person or corporation. Often used to refer to the transfer of a mortgage from one lender to another.
  • Associate Broker - A qualified real estate broker who works with or for another broker.
  • Assumable Mortgage - A mortgage that can be taken over ("assumed") by the buyer when a home is sold. If interest rates have risen, an assumable mortgage at a low rate may prove a selling point for the property.
  • Assumption of Mortgage - Where the purchaser assumes liability for an existing mortgage against the vendor's property and becomes personally liable for payment of the mortgage debt.
  • Attached Housing - Duplex, triplex, row housing, or townhouses. Two or more dwellings that are attached physically but are owned and/or occupied by different people.
  • Auction - A sale held to sell goods or property to the highest bidder.
  • Auctioneer - A licensed or bonded person employed by the seller of the goods or properties to conduct the auction.
  • Auction Clerk - A person who records the amounts of final bids for merchandise or property at an auction sale, and receives money from final bidders at auction.
  • Auction Listing Agreement - A contract executed by the auctioneer and the seller, which authorizes the auctioneer to conduct the auction and sets out the terms of the agreement and the rights and responsibilities of each party.
  • Auction Marketing - The method of marketing real property utilizing the auction method of sale.
  • Bank Letter of Credit - A letter that is issued by a bank, which guarantees that the holder is eligible for a specified amount of credit.
  • Bankruptcy - The state of being unable to pay your debts such that you submit yourself to the protection of the state. A person or business may voluntarily assign himself into bankruptcy or may be petitioned into bankruptcy by his creditors. Once in bankruptcy, the person surrenders his assets to a trustee in bankruptcy who sells the assets for the benefit of the bankrupt's creditors, first secured creditors then unsecured creditors.
  • Bid - A prospective buyer's indication or offer of a price he or she will pay to purchase the property or item at an auction. Bids are usually in standardized increments established by an auctioneer.
  • Bidder Number - A number assigned to each person who registers at an auction.
  • Bidder's Package - A publication advertising and describing the property(s) for sale at public auction, often including photographs, property descriptions, and the terms and conditions of the sale.
  • Blanket Mortgage - Where one loan is secured against more than one parcel of land.
  • Bona Fide - Made in good faith, at fair market value, without deceit or fraud.
  • Breach of Contract - A failure to meet one's obligations, whether under a contract or otherwise. A breach of contract allows the innocent party to enforce the contract, rescind the contract or sue for damages
  • Broker - A person who arranges a deal for a fee or percentage - one who acts as an intermediary between parties to a transaction.
  • Brokerage - An agency or the act of bringing together parties to a agreement for a fee or percentage of the deal. Brokers are generally thought of as representatives of real estate owners who sell property; however, in recent years they have moved in into the field of site selection as real estate consultants representing buyers. It is a conflict of interest and unethical for a location/site selection consultant or real estate consultant to be in a situation where her or she benefits, or his or her employer benefits, from the sale of property while representing its buyer for a fee.
  • Buyer's Broker - A real estate broker who represents the buyer and, as the agent of the buyer, is normally paid for his/her services by the buyer.
  • Buyer's Premium - The percentage of the high bid, or a flat fee added to the high bid to determine the total contract price to be paid by the buyer.
  • Bylaws - Rules enacted by a governing body of general application.
  • Cancellation Clause - Provision in a contract that gives one or more parties the right to terminate the contract if a specific event occurs.
  • Carrying Charges - The costs involved in holding a property which is intended to produce income (either by sale or rent) but has not yet done so, i.e., insurance, taxes, maintenance, management.
  • Catalog or Brochure - See Bidder's Package.
  • Caveat Emptor - A Latin term meaning "Let the Buyer beware". This means that the buyer takes the risk regarding the quality or condition of the property purchased unless it is protected by a warranty.
  • Certificate of Title - A written opinion of the quality of a person's ownership of property, issued by a lawyer or a title insurance company after a search of the title records has been conducted. May contain qualifications to the certification regarding defects found or potential defects not investigated.
  • Certified Copy - A copy of a document which bears some form of declaration (usually by the holder of the original document) that it is a true copy of the original.
  • Chattel - An article of tangible movable personal property that is not included in the purchase price of a property.
  • Claim - A right asserted against another party. One might register a claim on title to the property to which the claim applies, file a claim under an insurance policy or file a Statement of Claim in court to assert one's rights.
  • Clear Title - Ownership of land which is marketable and free of competing claims, liens, mortgages or other encumbrances.
  • Closing - The date the purchaser and vendor agree to complete the transfer of title.
  • Code of Ethics - A set of rules governing the behavior of members of the organization that has established the Code. Lawyers and real estate brokers/agents both have their own Codes.
  • Collateral - Property (real or personal) which is pledged to secure a loan or mortgage. If the debt is not paid, the lender has the right to sell the collateral to recoup the outstanding principal and interest on the loan.
  • Commercial Property - Property zoned, designed or intended for retail use, office, or similar users.
  • Commission - The remuneration paid to an agent or an auction company on the sale of property usually based on a percentage of the selling price.
  • Compound Interest - Interest paid on the principal loan as well as on all interest accrued against the principal.
  • Concessions - Sacrifices made by a party to convince another party to enter a contract.
  • Concurrent Ownership - When ownership of a property is in the name of more than one person.
  • Condemnation - When a building or structure is considered unfit for use.
  • Conditions - Clauses in the Agreement which must be fulfilled before the Agreement becomes firm and binding. If the condition is not fulfilled, the Agreement will usually become null and void and any deposit paid returned to the Purchaser.
  • Conditions of Sale - The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.
  • Contract - A legally binding agreement (oral or written) between two or more persons regarding an exchange of some sort. A legally binding contract must include consideration passing between the parties, an intention on the part of all parties to be bound to the contract, a meeting of the minds of the parties as to the contents of the contract, and an element of clarity such that the terms of the contract may be interpreted, understood and enforced by a court.
  • Conveyance - The transfer of an interest in property usually from the vendor to the purchaser.
  • Cooperating Broker - A real estate broker who registers a prospective buyer with the auction company, in accordance with the terms and conditions for that auction. The broker is paid a commission only if his prospect is the high bidder and successfully closes on the property. Also known as a participating broker.
  • Credit Limit - The maximum amount available to a person under a loan, credit card or other borrowing arrangement.
  • Credit Rating - Based on an analysis of a person's credit history, an evaluation of that person's ability to manage a new debt or debts overall.
  • Credit Risk - The potential for a borrower to fail to live up to her obligations under a loan arrangement.
  • Creditor - Any person to whom money is owed. May be secured (the debt has been registered against the property of the debtor) or unsecured.
  • Date of Completion (Closing Date) - The date in the agreement of purchase and sale when the purchaser delivers money and or other security in exchange for the vendor delivering a properly executed deed or transfer in a form acceptable for registration, keys, and vacant possession of the property (unless otherwise agreed).
  • Deed - A proof of ownership to a property.
  • Default - The unsuccessful fulfillment of one's debt or promises.
  • Deposit - Payment of money or other valuable consideration given by the purchaser as a pledge for good faith to fulfill the contract.
  • Depreciation - A property's value decreases.
  • Down Payment - The amount of money the purchaser has to put towards the purchase price after satisfying all of the costs associated with purchasing the property (apart from mortgages arranged).
  • Dual Agency - The representation of opposing parties (buyers and sellers) at the same time.
  • Due Date - This refers to the date when mortgages must be either paid in full or another term negotiated through a renewal agreement.
  • Due Diligence - The process of gathering information about the condition and legal status of properties to be sold.
  • Easement - A right enjoyed by one land owner over all or part of an adjoining owner's land.
  • Encumbrance - An outstanding lien, claim, or charge registered by a person against the property owned by another. Full title of property is restricted until the encumbrance is removed.
  • Equity - The owner's net value left after payment of all mortgages, liens, and claims.
  • Escrow - A financial deposit put down as a sign of faith until an agreement is fulfilled.
  • Estate Sale - The sale of property left by a person at his or her death.
  • Estimate - The probable value of an item.
  • Execute - To do or to complete.
  • Exhibition - The presentation of a sale item or property for inspection before the auction sale occurs.
  • Fall of the Hammer - An auction phrase often referred to when the auctioneer announces "SOLD". At the "Fall of the Hammer", the buyer and the seller is legally entered into an irrevocable contract.
  • Fixtures - An item attached to or forming part of the property that is included in the purchase price of a property. Fixtures include lighting, carpeting, built-in appliances, and any item negotiated as being a part of the property.
  • Floor - The place where the auction sale occurs. Also a term used for the lowest price a seller is willing to part with his or her property.
  • Foreclosure - When an item or property which was used as collateral for a loan is sold to pay off the borrower's debt.
  • Hammer - Also referred to as the gavel. The Auctioneer will drop the hammer to signify the closing of the deal between the seller and the buyer.
  • Hammer Price - The price established by the last bidder and acknowledged by the auctioneer before dropping the hammer, fall of the hammer, or gavel.
  • Interim Financing - A loan made available to improve a property that is being financed some other way.
  • Legal Description - A written description definitely describing the property and acceptable for registration.
  • Lien - The claim held by the lender on the assets of a loan.
  • Liquidity - The value of assets if they were to be reverted to cash.
  • Listing Agreement - A written document where the property owner agrees to remunerate an agent (broker) for successfully marketing the owner's property.
  • Listing Broker - A real estate broker who has a listing on a property and cooperates with the auction company by allowing the auction agreement to supersede his/her listing agreement.
  • Lot - An item or number of items sold at an auction at one time.
  • Mail and Telephone Bid - A maximum bid entered to the clerk or auctioneer by telephone or mail.
  • Market Price - The amount actually paid or to be paid for the sale of the property.
  • Market Value - The probable price a property should bring in a competitive and open market under conditions of a fair sale.
  • Minimum Bid - This is the lowest acceptable amount at which bidding must start.
  • Moratorium - A legal delay of payment on a note or mortgage.
  • Mortgage - A conveyance of a property right to a lender or creditor as security for payment of a debt.
  • Mortgage Banker - A lender who makes loan agreements, than sells the loans to third parties, but continues to handle the loans.
  • Mortgage Broker - Someone who manages financing opportunities for both the lender and the borrower.
  • Mortgagee - The person or company who receives the property interest as security for payment of the debt.
  • Mortgagor - The owner who gives the property interest to a lender or creditor as security for payment of the debt.
  • Multiple Listing Service (MLS) - The distribution of listings by a real estate board to all of its participating members. The vendor usually pays a higher commission rate for this service.
  • No Sale Fee - A charge paid by the owner of the property offered at a reserve auction when the property does not sell.
  • On-site Auction - An auction conducted on the premises of the property being sold.
  • Opening Bid - The first offer made at an auction.
  • Option Agreement - The right to take charge of a property and sell it or buy it within a period of time. This right is acquired through a payment to the original owner.
  • Null and Void - A phrase used in agreements to signify that certain actions constitute the agreement as having no validity or legal effect.
  • Preview or Viewing or Inspection - Specified date, time and place the property or item is available for prospective buyer viewing and evaluation.
  • Property Lines - The borders of an owner's property that are accurately defined on a survey.
  • Real Estate Agent - A real estate agent is a person who buys, sells, and leases land and/or property on behalf of someone else.
  • Real Estate Broker - A person certified or licensed by an authority to operate an agency and has the primary responsibility for transactions.
  • Real Property Report - Also known as RPR and Surveyor's Real Property Report. A legal document that clearly illustrates permanent above ground structures, location of all buildings, registered easements, physical improvements, and encroachments in relation to property boundaries. It also shows the registered owner, certificate of title, legal description, and the date.
  • Receiver - An agent hired to recover money or to liquidate assets on behalf of a principal, lawyer, sherriff, bailiff, financial institution or leasing company.
  • Referring Broker - A real estate broker who does not have a listing on a property, but refers the auction company to a potential seller for an auction. Usually earns a flat fee commission for referring product to an auction company.
  • Refinance - Financial restructuring; such as paying off an existing loan with a new loan.
  • Reserve - The minimum price a seller will accept for the auctioned item. If no one bids that amount or more the item will not be sold.
  • Reserved Auction - An auction in which the seller reserves the right to establish a reserve price, to accept or decline any and all bids or to withdraw the property at any time prior to the announcement of the completion of the sale by the auctioneer.
  • Right-of-Way - The right of one property owner to pass over the lands of another property owner which is established by an easement or a licence agreement.
  • Ringman - Those employed to assist the auctioneer in acknowledging bids on the auction floor. See Spotters.
  • Spotters - Persons employed by the auctioneer to help "spot" or "catch" bids. Also referred to as the ringman.
  • Sweat Equity - Equity produced through the work an owner has done to a property.
  • Tax Sale - Public sale of property at auction by municipal authority, due to nonpayment of property taxes.
  • Term - This refers to the space of time mortgage funds are borrowed, on the expiry date the debt obligation is either paid in full or a new term negotiated.
  • Terms and Conditions - The printed rules of the auction and certain aspects of the Purchase & Sale Agreement that are read and/or distributed to potential bidders prior to an auction sale.
  • Tie Bids - When the same amount is bid at the same time by separate people. The auctioneer will either allow a raise of the bid or will reauction the item or property.
  • Time is of the Essence - A phrase used in an agreement of purchase and sale calling for punctual performance on stated dates with failure to comply resulting in a potential breach of contract unless otherwise agreed in writing.
  • Title - Generally means the outward evidence of a person's right to the possession of the property.
  • Transfer - To convey property from one person to another person.
  • Trustee's Sale - A sale at auction on behalf of a trustee.
  • Unreserved Auction - A sale in which the item will be sold, no matter what price, to the highest bidder. Also called Absolute Auction.
  • Vendor - The person who is selling the property.
  • Waiver Form - A document used to waive conditions set out in an agreement of purchase and sale to create an unconditional legal binding agreement.
  • Witness - A person subscribing his or her name for the purpose of attesting to a document's authenticity and proving he or she saw the parties place their signatures on the document.
  • Zoning - The guide to the division and use of land and the situation of buildings in an area.

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