GLOSSARY BC Real Estate Licensing

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GLOSSARY

Glossary.1
GLOSSARY
We do not represent the following definitions to be complete or legally exact, but offer them only to facilitate a better
understanding of certain terms and concepts as they relate to real estate. We urge students not to attempt to memorize
the definitions.
Accelerated Biweekly Constant payments that are equal to ½ of the regular monthly payment and paid every two weeks.
Payments
Acceleration Clause A term in the contract which brings the maturity date of the loan forward if the borrower defaults, so
that the Outstanding Balance is immediately due and payable.
Accessibility The level of ease with which customers can reach the property.
Accounting The systematic recording, reporting, and analysis of financial transactions.
Accrual Basis Accounting procedure which recognizes revenue at the time it is earned, as opposed to when it is
actually received. This method ties in with the Revenue Principle. Contrast with Cash Basis.
Actual Value Actual value as determined by the assessor. This value, in thousands of dollars, when multiplied by
the tax rate equals the amount of real property taxes payable.
Adjacent In law, implies that two or more properties are not widely separated, though they may not
physically touch.
Adjoining In law, implies that two properties are contiguous or touching each other as opposed to adjacent to
one another.
Adjustment Date Date agreed to by both parties to a real property transaction for the adjustment of property taxes,
rent, interest, and other items.
Advisory Planning A committee made up of volunteer members of the public who advise the local government on
Commission planning and land use related matters.
Affidavit A written statement of facts, the contents of which are sworn under oath to be true by the person
making the statement. An affidavit is sometimes used in court proceedings as evidence in place of
oral testimony.
Agency A relationship in which one person (the agent) is granted the authority to represent and act for
another person (the principal) in dealings with others.
Agency by Estoppel A legal principle that applies where the principal’s actions lead a third party to believe that the agent
has authority to act on behalf of the principal and prevents someone from denying the existence of
the agency relationship.
Agency by Implication An agency relationship that is established by the actions and conduct of the parties, rather than by
express contract between the principal and the agent.
Agency Contract An agreement under which the agent is given authority to perform actions on behalf of the principal
in return for remuneration.
Agent At common law, an agent is any person who contracts to act for or on behalf of another, who in
turn, is known as the principal. The common law principles of agency apply to all levels of licensee,
including brokerages, managing brokers, associate brokers and representatives, as defined by the
Real Estate Services Act, when they are acting on behalf of a vendor or purchaser.
Agreement For Sale A contract by which the owner of land (vendor) agrees to sell land to another (purchaser) who agrees
to purchase it. The purchaser’s interest is registered in the Land Title Office as a charge against the
vendor’s certificate of title. The contract provides that the purchase price will be paid by instalments.
Airspace Historically, one owned the airspace above a parcel of land “to the heavens”. Today, airspace refers to
the legal concept that a person who owns land also owns as much of the airspace above the land as
they can effectively use.
Alternative Dispute The processes and techniques that parties to a dispute may voluntarily undertake as an alternative
Resolution (ADR) to traditional litigation, such as mediation or arbitration.

Glossary.2 Real Estate Trading Services – Licensing Course Manual
Amendment A change to an existing regulation, such as a zoning bylaw, authorized by a majority vote of an
elected council or board.
Amperage A measure of the rate of current flow or quantity of electricity per unit of time. The service capacity of
a house is measured in amperes (amps).
Amortization The process of paying off a loan by periodic payments of blended principal and interest.
Amperage A measure of the rate of current flow or quantity of electricity per unit of time. The service capacity of
a house is measured in amperes (amps).
Annual Percentage The contractual interest rate plus any non-interest finance charges. This rate is used for disclosure
Rate (APR) purposes as required by the Business Practices and Consumer Protection Act.
Appraisal The estimation of the value of a legal interest in land.
Appraiser One who is expected to perform valuation services competently and in a manner that is independent,
impartial, and objective.
Appreciation The amount by which real property (or any other Asset) has increased in value.
Arbitration A dispute resolution process wherein the disagreeing parties authorize a neutral third party (or parties)
to decide the outcome of their dispute. The decision is typically binding on the parties.
Arm’s-Length A transaction in which both parties are unrelated and act independently and in their own self-interest.
Transaction These transactions are more likely to be completed at a fair market value.
Assessment Appraisal, usually for real property taxation purposes.
Asset Item of value owned by a business. Contrast to Liability.
Assign To transfer over to another e.g., “I assign all right, title and interest in Blackacre to my wife, Elaine.”
Associate Broker A licensee who meets the educational and experience requirements to be a managing broker, but
who is providing real estate services under the supervision of a managing broker (formerly known as
an “Agent 9.15” under the now repealed Real Estate Act).
Assumable Mortgage A mortgage that allows a purchaser to assume or take over the responsibilities and liabilities under
the mortgage from the vendor.
Assurance Fund A fund established by the British Columbia provincial government to compensate any person who
is deprived of land because of the operation of the Land Title Act in certain cases where fraud has
been committed, a mistake has been made, or an improper act was performed by the Registrar of
Titles or their employees.
Authority In the context of agency law, the granting by a principal to an agent of the power to act on their
behalf in certain specified ways.
Automated Valuation A computer program that analyzes large volumes of data using an automated process to estimate a
Models (AVMs) market value.
Bad Debt Allowance An estimate of the amount of rent that may become uncollectible from the tenants of occupied units
(also known as collection loss allowance).
Balance Due on The amount of money the purchaser will be required to pay to the vendor to complete the purchase,
Completion after all adjustments have been made.
Balance Sheet A financial statement listing Assets, Liabilities, and Owner’s Equity at a specific point in time. Also
known as a Statement of Financial Position or Statement of Assets and Liabilities.
Balloon Payment Any payment of principal over and above the regular payment.
BC Financial Services A Crown regulatory agency that has the regulatory responsibility over various industries in British
Authority (BCFSA) Columbia’s financial services sector, including real estate services, real estate development
marketing, mortgage brokerage, credit units, pension plans, and trust and insurance companies.

Glossary.3
Beneficial owner Individual or entity who enjoys the benefits of ownership of property even though the property is
(general) registered in the name of another person or entity sometimes referred to as a nominee.
Beneficial owner For the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, a
(PCMLTFA) beneficial owner means any individual who directly or indirectly owns or controls 25% or more of a
corporation or other entity.
Biweekly Payments Constant payments that are paid every two weeks.
Blanket Mortgage A single mortgage registered against two or more individual parcels of real property.
Blended Payments See Constant Payment Loan.
Blog A discussion or informational website that is regularly updated with posts sharing opinions, news,
links, and other types of content.
Bonus Where an offer to purchase is sold for more than the face value of the loan; the portion of the face
value of a mortgage loan that exceeds the funds actually received by the borrower and is intended
as additional compensation for the lender.
Book Value The original cost of a noncurrent asset less all depreciation claimed to date.
Book Value The original face value of the mortgage less the amount of principal repayment, or the mortgage
(of a mortgage) amount outstanding at a particular point in time. At origination, the book value and face value are
the same.
Borrower Qualification The process of determining the maximum amount that can be lent to a potential borrower, given their
income and the lending value of the property to be purchased.
Borrowing Incurring an obligation to repay a debt in order to invest or consume more than one currently owns.
Breach of Contract Failure, without legal excuse, to perform any promise which forms the whole or part of a contract.
Break Even Point The square footage of floor space (or number of units) which must be rented in order for revenues to
exactly equal expenses.
Brokerage A licensee (often corporate) on behalf of which other licensees must provide real estate services.
Brokerage Agency A model of agency where the brokerage acts as the agent for the client, and as such, all of the
brokerage’s licensees are considered at law to be agents for the client.
Brokerage Fee A fee charged by a mortgage broker for arranging a loan.
Builder (GST) A party who holds an interest in real property while it is being constructed, including anyone who
holds an interest in newly constructed property after construction is completed but before it is first
occupied as a place of residence.
Builders Lien A claim registered against the title to land by a contractor, subcontractor, or worker with respect to a
debt arising from labour, services, or materials supplied to that land.
Building Plan A drawing of the intended arrangement of rooms and zones within a building.
Building Scheme Refers to a scheme of development which comes into existence where defined land is laid out in
parcels and intended to be sold to different purchasers or leased or subleased to different tenants,
each of whom enters into a restrictive covenant with the common vendor or landlord agreeing that
their particular parcel should be subject to certain restrictions as to use.
Business Income Money earned from any activity that is carried on for the purpose of making a profit.
Bylaw A law of local or limited application, typically regulatory in nature.
Capital Cost Allowance The amount that an owner of an income producing asset is allowed to deduct as an expense
(CCA) for Income Tax purposes as a result of ownership of that depreciable asset. Only one-half of the
ordinary CCA may be claimed in the first year of the holding period; no CCA may be claimed in the
year of sale.
Capital Gain Profit earned from the sale of a property or other investment.

Capital Risk The risk of losing all or part of an Investment (Capital at risk is the estimate).
Capitalization Changing a stream of income to a capital market value (current market value) using a required rate
of return.
Capitalization Rate The return an investor requires for investing in a property to receive the annual net operating income
flows. It can be estimated from similar properties by dividing their estimated net operating incomes
by the prices at which the properties sell.
Cash Basis Accounting procedure which recognizes revenue at the time it is actually received in cash form.
Contrast to Accrual Basis.
Cash-Equivalent Price See Market Value (of an offer).

(of an offer)
Cash Proceeds of Sale The amount of cash the seller will receive from the conveyancer (from the buyer) upon completion of
the transaction.
Cash Reconciliation A calculation of the cash available at any point in time. The old cash balance plus all receipts less all
Statement disbursements will compute the current cash at hand.
Caveat A registered charge against land filed by a person claiming an estate or interest in that land to
prevent all dealings inconsistent with that claim and warn third parties of that claim.
CCA Abbreviation of Capital Cost Allowance.
Ceiling Price The maximum price that a purchaser is willing to pay for a property. Compare to Floor Price.
Certificate of Payment A document that informs a buyer of a strata lot whether there is any money owing to the strata
corporation in respect of a strata lot.
Certificate of A notice of a pending court action registered against the title to property for the purpose of
Pending Litigation warning all persons that the title to the property is in litigation and preventing dealings with respect
to the property.
Charge An estate or interest in land less than a fee simple that can be registered under the Land Title
Act. Charges include all encumbrances, such as judgments, mortgages, statutory rights of way,
easements, covenants, leases, and liens.
Chattel Mortgage A document evidencing a debt owed by the borrower (mortgagor) to the lender (mortgagee). The
mortgage is secured by the lender against personal property owned by the borrower as collateral
to ensure the repayment of the debt. These mortgages are governed by the Personal Property
Security Act.
Chattels Articles of personal property (i.e., a car, stereo, television, etc.) as opposed to real property.
Civil Law A system whereby the law of a nation is set out in a comprehensive set of writings. An example of
these writings or codes would be a Criminal Code for a country.
Cladding A covering or coating on a structure or material intended to protect against weather infiltration.
Closed Mortgage A mortgage which cannot be fully paid out before expiry of its term.
Closing Date Date on which the purchaser’s solicitor undertakes to the vendor (or their solicitor) that they will pay
(Completion Date) the balance owing to the vendor upon the transfer of title being accepted for registration.
Closing Statement A statement prepared for a purchaser or vendor, showing the amounts to be received and paid out.
The difference between these amounts represents either the balance payable (by the purchaser)
or the cash proceeds from sale (to the vendor) upon completion of the transaction. See also
Purchaser’s Statement of Adjustment and Vendor’s Statement of Adjustment.
Cloud Storage A model of networked enterprise storage where data is stored in virtualized pools of storage,
generally hosted by third parties.
Cognitive Dissonance The awareness of a disharmony caused by conflicting thoughts.

Glossary.5
Commercial Mortgage Occurs with residential property that is not owner-occupied (income-producing residential), and all
Underwriting non-residential property (which is predominantly income-producing).
Common Law A system of law made up of principles and rules of action based upon the ancient customs and
usages of the people of a nation which have been recognized, affirmed or enforced by the courts.
Common Property Any part of a strata plan that is not a strata lot, and a variety of service facilities, depending on their
location and use.
Comparative Market A short-form narrative style report prepared by a registrant for the seller of a property to establish an
Analysis (CMA) estimated market value and recommended listing price.
Comparative Method An appraisal method which bases the value of the subject property on the price of similar properties
which have sold recently. Also named the Market Method.
Compound Interest Interest which, during the life of the loan, is charged or calculated at regular intervals and if not
immediately paid (as in an interest only loan) will, in subsequent periods, earn interest itself (as in an
interest accruing loan).
Compounding Indicates the number of times compound interest is charged or calculated per year (for example,
Frequency semi-annually or monthly).
Condition A fundamental term of a contract, a breach of which allows the injured party to terminate the contract
and/or sue for damages or Specific Performance.
Condition Precedent Legal term for a “subject to” clause. In contract law, a condition precedent calls for the happening of
some event or the performance of some act before the contract shall be binding upon the parties.
Condition Subsequent A condition or event, the occurrence of which will discharge the principal obligations of a party to
the contract.
Conduct Unbecoming A type of misconduct under the Real Estate Services Act that is contrary to the best interests of the
a Licensee public, undermines public confidence in the real estate industry, or brings the real estate industry
into disrepute.
Consideration The legal term for the reason which induces a party to enter into a contract. Consideration may be
in the form of a right, interest, profit or benefit accruing to one party. It may also be in the form of an
agreement not to do something, or loss suffered by the other.
Consistency Principle The accounting rule which states that once a firm has selected a method of recording financial
transactions from a number of alternative options, all of which are acceptable under generally
accepted accounting principles, it will apply those principles over subsequent accounting periods.
Constant Payment A mortgage loan that is repaid by equal and consecutive instalments that include principal
Mortgage and interest.
Consumption The act of spending money on goods which decrease in value after the time of purchase (for
example, the purchase of bread or a refrigerator). Contrast to Investment.
Contingency Reserve A fund maintained by a strata corporation for common expenses that usually occur less often than
Fund once a year or that do not usually occur. The Strata Property Act requires both developers and the
strata corporation to make contributions to the fund.
Contract An agreement between two or more persons which creates a legal obligation to do or not to do a
particular thing.
Contract of Purchase A contract of purchase or sale of land which contains the rights and obligations of the vendor and
and Sale purchaser with respect to the purchase and sale.
Consent Order An order made by BC Financial Services Authority against a licensee in cases of professional
misconduct or conduct unbecoming a licensee where the licensee has consented to the order rather
than disputed the notice of hearing.
Convenience Goods In the Shopping Behaviour Model, products and services that the consumer purchases frequently
and uses immediately.

Conversion A project in which the developer stratifies a building by subdividing it into strata lots.
(of a building)
Conversion The process of changing an interest rate with one compounding frequency to an equivalent rate with
(of an interest rate) a different compounding frequency.
Conveyance The process of transferring an interest in land from one person to another by way of a transfer
document. Conveyancing usually refers to the transfer of title to land but also includes dealings such
as assignments, leases, and mortgages.
Cooperative Ownership A form of property ownership whereby owners possess shares in a non-profit corporation that holds
title to the land, including any building, and whereby owners of these shares are entitled to lease a
unit of the building from the non-profit corporation.
Co-Ownership A real estate syndicate organization in which two or more investors are owners of an undivided
Syndicate interest in real property.
Copy Strategy Platform The plan that guides an advertisement, also called the creative strategy.
Corporate Veil In law, this refers to the distinct status of a corporation as a separate entity from its shareholders and
corporate officers. Because a corporation is a separate entity, a person dealing with the corporation
may not know the identities of the shareholders or officers. For example, the names of the owners of
an incorporated business are not shown on its financial statements.
Corporation A business entity which is owned by shareholders who decide on the general policies of the
company through their elected Board of Directors. A corporation is a separate legal entity and
therefore has the rights and liabilities of an individual.
Cost Method A method of appraisal which determines the value of a property by adding the market value of the
site to the cost of replacing the existing building.
Cost of Goods Sold The cost to the business of manufacturing or purchasing the items actually sold.
Cost Principle A generally accepted accounting principle which states that the historical cost of an asset must be
reflected in a company’s Financial Statements.
Counter-Offer A statement by the recipient of the offer which has the legal effect of rejecting the offer and of
proposing a new offer to the offeror (who then becomes the recipient of the “new” offer).
Covenant For the purposes of this course a covenant is a promise contained within an agreement. The
person making the covenant is called the covenantor and the person in whose favour it is made is
called the covenantee.
Covenant of A guarantee to the tenant that the landlord will not substantially deprive them of the benefit conferred
Non-Derogation by the tenancy agreement.
from the Grant
Covenant of A guarantee to the tenant that they will be able to possess and enjoy the premises without
Quiet Enjoyment significant interference.
Credit Analysis An investigation of a loan applicant’s ability to repay.
Credit Report A record identifying an applicant’s habits regarding their financial commitments.
Creditor A person to whom a debt is owed. Contrast to Debtor.
Curable Depreciation Wear and tear or outmoded design which can be corrected at a cost that is economically feasible
(e.g., worn carpeting). Contrast to Incurable Depreciation.
Current Assets Those assets which will be converted into cash, sold, or consumed within one year or the normal
operating cycle of a business, whichever is longer. Current Assets may include Cash, Marketable
Securities, Accounts Receivable, Inventories, and Prepaid Expenses. Compare to Noncurrent Assets.
Current Cost The amount of money that would be necessary to spend today to reconstruct existing improvements.
See also Historic Cost.

Glossary.7
Current Liabilities Those Liabilities which are expected to be paid within one year. Current Liabilities may include
Accounts Payable, Property Taxes Payable, Wages Payable, and Income Taxes Payable.
Customer Relationship A database application that manages the user’s contacts, controlling and organizing the information
Management (CRM) pertaining to each contact.
Software
Damproofing A black coating applied to the outside of a foundation below grade to prevent the entry of water by
sealing minor capillary pores that would otherwise suck in ground moisture.
Date of Valuation In appraisal, the date for which the value of the subject property is established, not to be confused
with the date at which the appraisal takes place.
Debt Coverage Ratio The number of times net operating income must cover the annual mortgage payments (principal and
interest). See also Ratio.
Debt Financing Incurring an obligation to repay a debt in order to invest or consume more than one currently owns.
Debt Service The making of mortgage payments by the borrower, as arranged with the lender.
Debtor One who owes a debt. Contrast to Creditor.
Deceit A fraudulent or deceptive misrepresentation used by one person to deceive or trick another person
ignorant of the true facts.
Deed A document used to transfer an interest in land from one party to another.
Demise The legal term for the granting of a Lease.
Deposit An amount deposited with the brokerage by the purchaser when an offer to purchase is made.
Depreciation The amount by which the value of improvements has decreased over time as a result of wear and
tear or changes in taste. Depreciation can be classified as physical or functional and curable or
incurable. See also Depreciation Expense and compare to Capital Cost Allowance.
Depreciation Expense The periodic cost of owning depreciable assets which are subject to wear and tear, such as buildings
and equipment. No depreciation expense can be taken on land. Depreciation expense is a method of
accounting for the initial cost of an asset in its subsequent periods of use.
Depreciation Report An estimation of the repair and replacement cost for major items owned by the strata corporation
and the expected life of those items.
Designated Agency A model of agency whereby the brokerage appoints one or more specific licensees to act as the sole
agent(s) of the buyer or seller, and it is the designated agent who owes the fundamental agency
duties to the buyer or seller, while the brokerage and its other licensees, do not.
Differentiated Numerous similar products are marketed to different market segments using different
Marketing marketing programs.
Differentiated Product A product or service that is seen as being different from the viewpoint of the consumer.
or Services
Direct Comparison A property valuation method that is based on the principle that the price paid for a commodity will be
Approach equal to the cost of acquiring a substitute under the same market conditions.
Disclosure Statement A document prepared by the developer of a subdivision to ensure that investors or purchasers have
(in development) adequate information upon which to base a purchasing decision.
Disclosure Statement A statement that must be given to a borrower incurring an obligation under a credit agreement as
(in mortgage required by Section 84 in the Business Practices and Consumer Protection Act.
brokerage)
Discount Where an offer to purchase is sold for less than the face value of the loan.
Discounting The process of expressing expected future income in terms of a present value.
Distress A legal term for a landlord’s right to seize and sell a tenant’s personal property in order to recover
arrears of rent.

Diversification The process of investing funds in more than one project or industry in order to reduce the risk of
incurring unexpected losses. The opposite of “putting all your eggs in one basket.”
Divided Ownership A real estate syndicate organization in which the investors are the individual owners of the
Syndicate (condominium) units.
Dividends That part of a corporation’s after-tax income that is distributed to the shareholders.
Dominant Tenement Land to which the benefit of a right (i.e., an easement or restrictive covenant) is attached.
Duress A situation where a person is forced to enter into a contractual relationship against their will by the
threat of imprisonment either to themselves or their family, or the threat of actual physical force.
Easement A right to use a neighbouring property in a specific way (without possessing it) for the benefit of the
holder’s land. The land that benefits from the easement is called the dominant tenement and the land
over which the easement is exercised is called the servient tenement.
Economic Life The time span over which a property is employed in its Highest and Best Use.
Edge Curl When asphalt shingles have curved up at each edge.
Effective Annual Rate An annual interest rate which is compounded once a year.
Effective Date The specific date an evaluation is made, considering the prevailing market forces and conditions at
that date.
Enabling Legislation A statute that grants an entity authorization or legitimacy of power to take certain actions.
Encroachment A fixture, such as a wall or fence, which illegally intrudes into or invades on public or private property.
Encumbrance A judgment, mortgage, lien, Crown debt, or other claim to or on land less than a fee simple. An
encumbrance functions to encumber (i.e., restrict or burden) title to the property against which it
is registered.
Equitable Mortgage The transfer of equity in property as security for a debt. Technically, any mortgage registered on title
subsequent to the first mortgage (i.e., second or third mortgage).
Equity The concept of justice being administered by the courts according to fairness as contrasted with
(in common law) the strictly formulated rules of common law. In law the term “equity” denotes the spirit and habit of
fairness, justness, and right dealing that would regulate interaction of person with person.
Equity The difference between a property’s market value or purchase price and the debt incurred to
(in mortgage finance) purchase the property.
Equity of Redemption The mortgagor’s right to repay the mortgage.
Equivalent Interest Different interest rates that result in the same effective annual interest rate, i.e., they accumulate the
Rates same amount of interest for the same loan amount over the same period of time.
Escalator Clause A term in a commercial lease which allows the landlord to charge the tenant for any increases in
specified operating expenses.
Estate A right to possess and use land for a period of time. The period of time could be indefinite (e.g., a
fee simple estate) or predetermined (e.g., a life estate or a leasehold estate).
Estoppel A legal principle that prevents someone from denying or contradicting a set of facts that they have
previously expressly or impliedly asserted to be true.
Execution The process of commencing proceedings to collect an amount owing by reason of a judgment.
Exempt Supply Property or services, included in Schedule V of the Excise Tax Act, that are not subject to the Goods
and Services Tax.
Expropriation The act of taking away a private owner’s interest in land without consent, typically carried out by the
government or a party authorized by the government.
Externalities External influences that influence the value of real property
Face Value of a Loan The loan amount that must be repaid at a stated rate of interest according to the contract terms.

Glossary.9
Fair Market Value The amount that would have been paid for a property had it been sold in an open market by a willing
buyer free of any mortgage or other charge.
Fee Simple The legal term for the maximum interest in land available to a person, or the maximum of legal
ownership. Equivalent in many ways, for practical purposes, to absolute ownership.
Felt Need In the Process Model of Buying Behavior, the initial need or trigger that starts the buying process.
Fiduciary A person who holds a position of trust with respect to someone else and is obliged, by virtue of the
relationship of trust, to act solely in the other person’s benefit.
Final Payment The last instalment that is made on a fully amortized loan. It is usually smaller than the preceding
periodic payments.
Financial Statement A numerical presentation of particular aspects of a business. Common financial statements include
the Balance Sheet and the Income Statement.
Firewall An integrated collection of security measures designed to prevent unauthorized electronic access to
a networked computer system.
First-Year In the year an asset is purchased, only one-half the maximum allowable CCA may be claimed.
Half-Rate Rule
Fiscal Year Any period of 12 consecutive months chosen by a business as its accounting period.
Fixed Expenses Those costs which will be incurred irrespective of the extent to which a property is occupied.
Fixture A chattel attached to real property; anything which has become so attached to the land as to form, in
law, part of the land.
Floor Price The minimum price that a vendor is willing to accept for a property. Compare to Ceiling Price.
Floor Space Ratio A measure of density commonly used to regulate building on lands. A floor space ratio of 0.5 applied
to a lot with an area of 1,000 square metres would mean that a total floor area of 500 square metres
could be built on the property, regardless of the number of storeys of the building.
Foreclosure A legal action taken by a mortgagee to obtain possession of a property, by reason of the mortgagor’s
default in payment of the principal and/or interest of the mortgage debt.
Foundation The lowest part of a building or structure, serving as support for the building or structure as a whole
and typically placed below ground level.
Frustration A legal doctrine that provides that where the existence of a specific thing is necessary for
performance of the contract, the duty to perform is discharged if the thing, for reasons beyond
anyone’s control, is no longer in existence at the time for performance.
Fully Amortized Loan that is repaid completely by a series of payments over the full duration of the
Mortgage amortization period.
Functional The loss in value caused by outmoded or inadequate design (e.g., small closets in a residential
Depreciation property) which may be curable or incurable. See Curable Depreciation and Incurable Depreciation.
Compare to Physical Depreciation.
Future Value Any lump sum that is payable or will have been accumulated some time from now.
General Partnership A form of organization in which two or more persons carry on a business with a view to profit. Each
general partner assumes unlimited liability. The partnership is not a taxable entity; net income is
distributed to the partners who, in turn, must report this income on their personal income tax return.
Compare to Limited Partnership.
Generally Accepted The rules and guidelines followed in the preparation of Financial Statements. They include the
Accounting Principles Cost Principle, the Revenue Principle, the Matching Principle, the Consistency Principle and the
(GAAP) Fiscal Year.
Geographic A mapping system that provides several layers of data and information, beyond what a traditional
Information System map can offer.
(GIS) Mapping

Goods and Services A federal tax paid on goods and services sold or provided in Canada.
Tax (GST)
Goodwill The amount by which the purchase price of a business exceeds the fair market value of its net
assets. This extra amount could be attributed to factors such as the value of good customer
relations, high employee morale, a well-respected business name, or other intangible attributes of
the business which are not quantifiable, but contribute to purchasers’ expectations for the income
potential of the business.
Graduated Payment An innovative loan arrangement in which the periodic payments made by the borrower increase in
Mortgage size over all, or a portion of, the term of the mortgage contract.
Gross Debt Service The percentage of gross income, which is the maximum amount a mortgagor is allowed to pay
Ratio annually in principal, interest, and property taxes. This ratio is usually expressed as a percentage i.e.,
P.I.T. payments can be 27% of gross income. Compare to Loan-to-Value Ratio. See also Ratio and
Total Debt Service Ratio.
Gross Income The amount earned through employment or investment before taking taxes or other deductions into
consideration. This amount may or may not be the same as gross income for purposes of mortgage
lending.
Gross Lease A lease in which the landlord pays for all the operating expenses. Contrast to Net Lease.
Gross Potential Rent The rent that would be collected if all units were leased at market rents.
Gross Potential Similar to Gross Potential Rent, except it also includes income from other sources such as parking
Revenue income or laundry income (in the case of an apartment building, for example).
Gross Realized Rent Gross Potential Rent less Vacancy Allowance and Bad Debt Allowance.
Gross Realized Gross Potential Revenue less an allowance for Vacancy and Bad Debt. Note that different rates
Revenue may be used for the different income sources (i.e., 5% vacancy rate for units, 2% vacancy rate for
parking spaces).
Ground Lease A lease document (for a term of at least 50 years) that sets out the terms and conditions of a
developer’s lease of land from a leasehold landlord
Guarantor One who becomes contingently or secondarily liable for another’s debt or performance.
Guerrilla Marketing Unconventional ways of pursuing conventional goals, relying on low-budget approaches based on
ingenuity, cleverness, and surprise.
Highest and Best Use That use of land which, within all constraints (for example, zoning bylaws), will provide the maximum
net return during the foreseeable future.
Historic Cost The actual amount of money spent at the time the asset was purchased or the improvements were
built. See also Current Cost.
Home Owner Grant A type of tax relief from property taxes for an owner of an eligible property, if they occupy it as a
principal residence.
Hot Desking When desks are assigned to workers as needed, rather than assigning a permanent desk to
each worker.
Howey Test One of two tests which determines whether an investment unit is a security. The other test is called
the Risk Capital Test.
Imperfect Market A market in which (similar) properties are traded for either more or less than actual Market Value.
Improvement A structural addition to the land which can be considered to be a fixture.
Income Method An appraisal method, also called the Investment Method, which is typically used for income
producing properties. It converts the income stream produced by the property into a market value for
the property by using a Capitalization Rate.
Income Statement A financial statement which lists the revenues and expenses of a business organization for a stated
period of time. Also called a profit and loss statement.

Glossary.11
Income Tax That part of taxable income which a person or corporation is required to forward to Canada Revenue
Agency periodically.
Incurable Depreciation Wear and tear or outmoded design which can only be corrected at considerable expense and, in
fact, correction may be cost-prohibitive (e.g., narrow hallways). Contrast with Curable Depreciation.
Indefeasibility A legal principle in British Columbia which states that subject to certain statutory exceptions, the Title
Register is conclusive evidence that the person named as holding an estate in land is in fact entitled
to that interest, and their holding is not subject to any condition or encumbrance other than those
shown on the Title Register.
Indenture A document or deed, expressing certain objects between two or more parties.
Infant In British Columbia, a person under 19 years of age which, generally speaking, is the age of
legal competence.
Inflation A rise in the average price level.
Injunction A court order which either restrains a party from doing something or requires a party to
do something.
Input Tax Credit A GST deduction a person can claim in their GST return for the amount of GST paid by that person
on the acquisition of property or services.
Insurable Value The estimated value of a property for insurance purposes.
Interest The dollar value that represents the cost of borrowing or the benefit of lending money.
Interest Accruing Loan Debt that is paid off as one lump sum, including principal plus accumulated compound interest.
Interest Adjustment The process of calculating compound interest payable on the amount borrowed between the day the
monies are advanced and the day the amortization period starts.
Interest Adjustment The period of time between the date the funds are advanced and the beginning of the first
Period payment period.
Interest Only Loan A loan that is serviced by interest only payments. At the end of the term the full principal plus interest
for the last payment period of the loan is still owing.
Interest Rate The percentage rate that represents the cost of borrowing or the benefit of lending money.
Interest Rate A mathematical process that changes a stated interest rate (and its associated compounding
Conversion frequency) into an equivalent rate with a different compounding frequency.
Interest Rate The difference between the contract rate of interest and the current rate of interest over the
Differential (IRD) remaining term, which the borrower may have to pay the lender when fully prepaying an
outstanding balance.
Interim Budget In the context of a strata corporation, the budget created by the owner developer that governs the
finances of the strata corporation until the first annual general meeting.
Investment The spending of capital today in order to receive benefits in the future (e.g., the purchase of a
Canada Savings Bond which pays interest periodically). Contrast to Consumption.
Investment Value The value that is specific to a particular investor.
Invitation to Treat A type of advertisement used by one to induce the public or some individual to submit their own
offers. An invitation to treat is not an offer capable of acceptance to form a contract.
Joint Tenancy Where two or more persons acquire an equal undivided interest in a property. When one person
dies, that person’s share automatically goes to the survivor or survivors.
Joint Venture A type of business where two or more business organizations cooperate in a particular undertaking.
Profits or losses are shared by the participants and taxed in their hands.
Judgment An award granted to a successful party to litigation by the court. The award may include a specific
amount of money to be paid to the successful party by the unsuccessful party to the litigation.

Jurisdiction A particular level of government’s general power to exercise authority over persons and things
located within its territory.
Jurisprudence The collection of legal decisions out of which legal principles or rules emerge.
Latent Defect A hidden or concealed defect that would not be discovered during the course of a
reasonable inspection.
Latent Value The value possessed by a property which has potential for redevelopment because it is currently not
employed at its Highest and Best Use.
Lateral Support The support provided to one piece of land by the land which lies next to it.
Lease An instrument granting exclusive possession of land to another for a specified term, usually at a rent.
The one who grants the lease is called the Landlord (or Lessor) and the one to whom it is granted is
called the Tenant (or Lessee).
Leasehold Landlord The government, municipality, regional district, First Nation, or other public authority from whom a
developer leases land in order to develop a leasehold strata.
Leasehold Strata Plan A strata plan submitted by a developer over land covered by a ground lease, that converts the land
into individual strata lots and common property.
Leasehold Tenant A person registered under a strata lot lease as a tenant of the leasehold landlord, and informally
referred to as the “owner” of a leasehold strata lot.
Legal Interests in The legal rights of ownership vested in a particular piece of real estate.
Real Estate
Legal Non-Conforming Land use that is impermissible under current zoning restrictions, but is nevertheless lawful because
Use the use existed lawfully before the restrictions took effect.
Lending Value The estimated value of a property for lending purposes. It is a long-term, conservative estimate of
the value of the security as determined by the lender and, therefore, does not necessarily equal
Market Value or Sale Price.
Leverage The partial use of debt to finance investments. The use of debt can magnify the potential variations
of yields on the equity portion of the investment.
Liability Monies owed by a business. Contrast to Asset.
Licence With respect to real property, a privilege to enter onto premises for a certain purpose. However,
this privilege does not confer upon the licensee any title, interest or estate in such property (e.g.,
exclusive right to possession of the property). Examples of a licence include a hotel suite where
monthly rates may be available but the innkeeper has the right to enter the suite at their pleasure.
Lien A claim or charge on real or personal property for payment of some debt, lien obligation or duty.
Life Estate An interest in land to be enjoyed during a person’s life, and which ends on that person’s death.
Life Estate The form of life estate where the measuring life is that of some other person. (e.g., A person may
Pur Autre Vie grant a life estate pur autre vie to their deceased son’s wife [their daughter-in-law] for the life of their
grandchild. If the grandchild dies, the daughter-in-law loses her interest.)
Limited Common Common property designated for the exclusive use of the owners of one or more strata lots.
Property
Limited Dual Agency An agency relationship where a brokerage or licensee acts for multiple parties in a single trade
in real estate (e.g., a buyer and a seller or two buyers), but because the duty of loyalty cannot be
fulfilled to both clients, the clients agree to a limited form of agency representation.
Limited Liability The principle that a shareholder or limited partner cannot be held liable for more than they have paid
into (or agreed to pay into) the firm. Contrast to Unlimited Liability.
Limited Partnership A form of organization in which two or more persons conduct a business. It consists of one or more
limited partners and one or more general partners. A general partner assumes unlimited liability but
a limited partner has limited liability. Compare to General Partnership.

Glossary.13
Liquidated Damages A specific sum of money expressly stipulated by the parties to a contract as a pre-estimate of the
amount of damages to be recovered by either party for a breach of the contract by the other.
Liquidity The degree of ease and certainty with which an asset can be converted into cash.
Listing Agent The individual licensee working for the listing brokerage that carries out most of the duties of the
brokerage to list and sell the property for the owner/seller.
Listing Agreement A contract between an owner (vendor) and a real estate licensee whereby the licensee agrees to
try to find a purchaser for the listed property in return for the vendor paying a stipulated amount of
commission should the licensee be successful.
Listing Brokerage The brokerage hired by an owner/seller of a property to list the property for sale and represent the
seller in the sale.
Listing Contract A written service agreement where the brokerage contracts to provide trading services to an owner
of real estate in relation to the offering of the real estate for sale.
Listing Price The value at which a property is advertised for sale.
Loan-to-Value Ratio The percentage of lending value that determines the maximum loan available. See Ratio. Compare
to Gross Debt Service Ratio or Total Debt Service Ratio (for residential underwriting) and Debt
Coverage Ratio (for commercial underwriting).
Local Government Includes regional districts, municipalities, and improvement districts.
Malware A computer program designed specifically to damage or disrupt a system.
Management Survey A study of a property and the factors which affect it. The survey includes an analysis of the region,
the market, the neighbourhood, and the property and also presents a study of the economics of
alternatives, a financial analysis, and a management plan.
Managing Broker The licensee responsible for a brokerage, and who is responsible for exercising the rights conferred
on the brokerage as well as for the performance of the duties imposed on the brokerage by its
licence. In addition, the managing broker is responsible for the control and conduct of the brokerage’s
real estate business, including the supervision of its related licensees. Sometimes also meaning
the human representative of a corporate real estate brokerage. See the Real Estate Services Act,
sections 5 and 6.
Market Method See Comparative Method.
Market Rate The prevailing interest rate, at any given point in time, at which financing or refinancing can
be expected.
Market Value An estimate of what a property is likely to sell for in an arm’s-length transaction between a willing,
informed, and rational average buyer and seller, if the property is on the market for a reasonable
period of time when market conditions are unchanged.
Market Value The present value of future mortgage payments (and outstanding balance, if applicable) calculated at
(of a mortgage) the market rate of interest.
Market Value The cash down payment plus the present value of the mortgage loan discounted at the market rate,
(of an offer) i.e., the market value of the mortgage.
Market Value In appraisal, the expected or forecasted sale price.

(of a property)
Marketing Concept Focusing on the client’s needs and using need satisfaction as the starting point for the development
of a marketing program.
Marketing Mix The details of the product or service that is being offered; its price; the place where it can be found;
and the promotion techniques that will be used to reach the relevant audience.
Marketing Program A licensee’s marketing strategy that involves getting the client, keeping the client, and getting referrals.
Matching Principle A generally accepted accounting principle that states that expenses should be recognized in the
same period as the revenues with which they are associated.

Maturity The date on which the balance owing on a mortgage becomes due; the final day of the term of
a mortgage.
Mediation A dispute resolution process wherein the disagreeing parties attempt to resolve their dispute by
agreement, through negotiations that are facilitated by a neutral third party.
Metes and Bounds A system of land description whereby all boundary lines are set forth by use of terminal
points, directors, and angles – mete referring to a limit or limiting mark, the bounds referring to
boundary lines.
Misconduct Unacceptable or improper behaviour.
Misrepresentation A false assertion of fact which, if accepted, leads one to an incorrect belief about a given situation.
Mistake A legal term which describes the situation where a person, under some erroneous conviction of law
or fact, does, or omits to do, some act which but for the erroneous conviction, they would not have
done or omitted doing.
Mitigate The legal doctrine of “mitigation” imposes upon an injured party a duty to exercise reasonable
diligence and ordinary care in attempting to minimize their damages after injury has been inflicted.
Mortgage A document evidencing a debt owed by the borrower (mortgagor) to the lender (mortgagee).
Registration of the mortgage in the Land Title Office transfers the mortgagor’s interest in land to the
mortgagee as security for the repayment of the debt.
Mortgagee The lender.
Mortgagor The borrower.
Municipality A city, town, or other political entity to whom authority over local affairs has been delegated by a
higher level of government.
Necessaries Generally, a necessary is an article indispensable or proper and useful, for the sustenance of human
life (i.e., food, drink, clothing, medical attention).
Negligence A legal term for the failure to use such care as a reasonably prudent and careful person would use
under similar circumstances; it is the doing of some act which a person of ordinary prudence would
not have done under similar circumstances or failure to do what a person of ordinary prudence would
have done under similar circumstances.
Negligent A legal principle which provides that if, in the ordinary course of business, a person seeks
Misrepresentation information or advice from another who possesses special skills in circumstances in which a
reasonable person would know that their special skills were being relied upon, and the person
asked chooses to give the advice without clearly qualifying their answer so as to show that they do
not accept responsibility if it is incorrect, then they accept a legal duty to exercise such care as the
circumstances require. If they are incorrect they may be liable for their negligent misrepresentation.
Neighbourhood A geographic area of relatively similar residences and physical surroundings.
Net Income The amount by which revenues exceed expenses in any given time period. Contrast to Net Loss.
Net Lease A Lease in which the tenant pays some or all of the operating expenses. See also Triple Net Lease.
Contrast to Gross Lease.
Net Loss The amount by which expenses exceed revenues in any given time period. Contrast to Net Income.
Net Operating Income Gross Potential Revenue less Vacancy Allowance, Bad Debt Allowance, and total Operating
(in appraisal) Expenses. This amount is calculated excluding Income Tax, Mortgage Payments, and Depreciation
Expense or Capital Cost Allowance.
Net Proceeds The face value of a loan less all brokerage fees, legal fees, appraisal costs and other charges.
Net Taxable Value The actual value of the real property, as determined by the assessor, less any exemptions which apply.
This value, when multiplied by the tax rate, produces the amount of real property taxes payable.
Niche Marketing Marketing effort is focused on a relatively small, but active and growing, target market.

Glossary.15
Nominal Rate An interest rate quoted as a rate per annum; it is equal to the interest rate per compounding period
of Interest multiplied by the number of compounding periods. (For example, j2 = 10%; j4 = 12%; j12 = 11.5%).
Nominee An individual or entity that is legally registered as the owner of property, with true control and
ownership belonging to one or more other unregistered persons or entities (also known as a “bare
trust” arrangement).
Non-Current Assets Those assets that will not be sold within one year or the normal operation cycle of a business. Non-
current Assets may include property, plant, and equipment. Compare to Current Assets.
Non-Current Liabilities Those liabilities which are not expected to be paid within one year.
Novation A novation refers to a creditor’s acceptance of a 3rd party in place of the debtor so that the 3rd party
becomes the debtor and the original debtor is released by the creditor from having to pay off the debt.
Objection A document, filed by an assessed party with the CRA, setting out the facts and reasons for which an
assessment is being disputed.
Objectivity Principle A generally accepted accounting principle which states that all recorded financial information is
based upon objective and verifiable data.
Occupier’s Liability The duty that an occupier of land owes to persons entering onto that land.
Offer A proposal to do or refrain from doing some specified thing usually followed by an expected
acceptance, counter-offer, return promise or act. The person who makes the offer is called the offeror.
The recipient of the offer is called the offeree.
Offering Memorandum A condensed version of a prospectus.
Official Community A high level, long-term plan intended to guide the direction of development and growth of a
Plan local government.
Open Listing A listing given to any number of licensees without liability to compensate any except the licensee
who first acquires a buyer ready, willing and able to meet the terms of the listing; the sale of the
property automatically terminates the listing.
Operating Expenses Those costs that have to be incurred to keep any business going, including the business of renting
real property. See also Fixed Expenses and Variable Expenses.
Option to Purchase A right conferred by a contract to accept or reject an offer to buy property within a certain time.
Outstanding Balance The amount owing to the lender at any specified time, whether it is to be repaid over an amortization
period or in a lump sum at the end of the term.
Owner’s Equity A classification on the balance sheet. Equal to Total Assets less Total Liabilities.
Partial Amortization A loan repayment scheme in which the term is shorter than the amortization period. Whereas the
loan payments will be calculated as if the loan will be paid back over the full amortization period, at
the end of a specified term the outstanding balance is due and payable.
Partnership See General Partnership and Limited Partnership.
Patent Defect A defect which is plainly visible or which can be discovered during the course of a
reasonable inspection.
Payment A periodic instalment that is made to service a debt. For an interest only loan, the payment consists
of interest; for a constant payment loan, the payment consists of interest and principal.
Percentage Lease A lease agreement which specifies that the tenant will pay the Landlord: (i) a basic rent plus a
percentage of gross sales; or (ii) a basic rent or a percentage of gross sales, whichever is greater.
Periodic Rate The interest rate which is charged per compounding period (for example, per month or per day).
Periodic Tenancy A tenancy which automatically renews itself on the last day of the term for a further term of the same
duration until terminated by either party.
Personal Brand The theme of a personal business, encompassing a variety of attributes, that distinguishes the
business from its competitors.

Personal Real Estate A corporation licensed under the Real Estate Services Act that may be used by a licensee through
Corporation which they provide real estate services.
Physical Depreciation The loss in value due to wear and tear (e.g., peeling paint) which may be curable or incurable. See
Curable Depreciation and Incurable Depreciation. Compare to Functional Depreciation.
Pooling Agreement An agreement between investors who have a direct ownership in real property to share revenues and
expenses generated by individual rental units.
Portable Mortgage A borrower can transfer the terms, conditions and interest rate of their current mortgage to the home
the borrower would like to purchase.
Possession Date Date on which the purchaser is entitled to possession of the property.
Post-Purchase In the Process Model of Buying Behaviour, the stage where consumers may experience feelings of
Activity Stage anxiety, regret, and doubt regarding their decision.
Power of Attorney A document conferring authority to one person to act as another’s agent on their behalf.
Power of Sale A clause inserted into a mortgage giving the mortgagee the right and power, on default in the
payment of the debt secured, to advertise and sell the mortgaged property at public auction to
satisfy the mortgage debt, without the necessity of foreclosure proceedings.
Pre-Purchase In the Process Model of Buying Behaviour, the period during which the consumer is gathering
Activity Stage information and becoming knowledgeable about the product or service.
Prepayment The act of fully or partially paying off the outstanding balance of a loan at any point during the term
of the loan at a time earlier than set out in the contract.
Prepayment Penalty A fee that a lender may charge a borrower under the mortgage agreement in exchange for allowing
the borrower to prepay their mortgage prior to the expiration of the mortgage term.
Prepayment Privileges Mortgage terms that allow the borrower to make partial prepayments on the mortgage prior to
the expiry of the mortgage term, without penalty (e.g., “borrower may prepay up to 10% of the
outstanding balance per calendar year, without penalty”).
Present Value The current equivalent of a future dollar amount.
Principal That portion of the original amount borrowed which still has to be paid back to the lender.
Principle of Approach to appraisal stating that a property’s value should not exceed the cost of purchasing an
Substitution alternate property that can provide similar utility.
Private Law The law that deals with disputes between two or more individuals.
Private Nuisance A legal term for wrongfully allowing the escape of injurious things onto another person’s land or the
wrongful disturbance of an easement or other interest granted over land.
Procedural Law The part of law which sets out the methods of determining and enforcing rights as between parties.
Professional A type of misconduct under the Real Estate Services Act that focuses on competency in practice and
Misconduct technical breaches of the Real Estate Services Act, the Real Estate Services Regulation, the Home
Buyer Rescission Period Regulation, and the Real Estate Services Rules.
Professionalism The overall competence of a professional, considering their skills, judgment, and behaviour.
Profit à Prendre A right to take the produce or part of the soil from the lands of another. For example: minerals, oil,
stones, gravel, etc.
Profit and Loss See Income Statement.

Statement
Pro Forma Statement A financial statement that shows expected future revenues and expenses.
Property Insurance A guarantee to the registered owner or mortgagee of an interest in land that after a specified hazard
(for example, a fire) the value of the interest in land can be restored.

Glossary.17
Proprietorship A business enterprise that is owned by a single owner who assumed unlimited liability. The
proprietorship is not a taxable entity; the profits or losses of the business are reported on the owner’s
personal income tax return.
Public Law The law that regulates disputes between individuals and the public as a whole (i.e., the state).
The term “public” may be: (i) general (applying to all persons within the jurisdiction); (ii) local
(applying to a geographical area); (iii) special (relating to an organization or authority charged with a
public interest).
Public Relations A business’s communications with employees, stockholders, clients, and general public, with the aim
of enhancing the business’s image, recognition, and reputation.
Publicity A form of public relations that focuses on receiving media coverage and exposure.
Purchase Activity In the Process Model of Buying Behaviour, the stage that involves the negotiation and signing of the
Stage listing agreement.
Purchase Cost The total costs of purchasing a property, consisting of the purchase price plus all additional fees
and bonuses.
Purchase Price The specific amount that the property will trade for, as negotiated between the vendor and purchaser.
Purchaser’s Statement A closing statement in a real property transaction which indicates the balance of cash required from
of Adjustment the purchaser to complete the transaction. See also Closing Statement.
Quantum Meruit Literally, “as much as they deserve”. A doctrine that no one who benefits by the labour and materials
of another should be unjustly enriched thereby; under those circumstances, the law implies a
promise to pay a reasonable amount for the labour and materials furnished, even though a specific
contract price may not have been agreed to.
Rating Grid A matrix that is used to make adjustments to comparable properties in order to derive the value of
the subject property when using the market comparison method of appraisal.
Ratio A ratio expresses one value in terms of another value; e.g., one out of every four houses is painted
white. It can be stated as a fraction, one-quarter (1/4) of the houses are white; as a percentage,
twenty-five percent (25%) of the houses are white; or as a ratio, one out of four (1:4) houses is white.
Real Estate Security Any security whose principal or major assets consist of real property and/or buildings attached
to land.
Real Estate Syndicate Any form of organization in which two or more investors share in the ownership of an interest in
real estate.
Rebates A form of tax recovery that allows non-businesses to recover GST paid with respect to
certain transactions.
Recent In appraisal, that time period just prior to the date of valuation over which demand and supply
conditions have remained relatively stable.
Register As a noun, the term refers to the books in which certificates of indefeasible title are entered or kept
and, as a verb, the term refers to registering documentation pursuant to the provisions of the Land
Title Act.
Reinvestment The act of investing the funds generated by one investment into another investment.
Rent A sum that a tenant promises to pay to the landlord in return for possession of the premises during
the term of the lease.
Replacement Cost The expense that has to be incurred to build a modern equivalent of the subject property. Contrast to
Reproduction Cost.
Replacement Reserve The amount of funds set aside for periodic replacement of building components that wear out more
rapidly than the building itself and must be replaced during the building’s economic life (also referred
to as replacement allowance).
Representative A licensee providing real estate services under the supervision of a managing broker.

Reproduction Cost The expense that has to be incurred to build an exact replica of the subject property. Contrast to
Replacement Cost.
Rescission In the law of contracts, a rescission amounts to the unmaking, or an undoing of it from the beginning,
as opposed to a termination.
Residual Method This appraisal method is used for properties with redevelopment potential. To employ this method,
another appraisal method is used to derive the property’s value assuming it were employed in its
highest and best use. Then, depending on whether the residual value of the land or the building is to
be found, the cost of the building or the market value of the land is subtracted.
Restrictive Covenant A covenant restricting the use of the land of the covenantor (the Servient Tenement) for the benefit
of land belonging to the covenantee (the Dominant Tenement). An example would be a restriction
on the height of a building on one piece of land so that adjacent or adjoining lands are not put
in shadow.
Retained Earnings The net income of current and prior periods less dividends paid, belonging to the shareholders of
a corporation.
Return See Yield.
Revenue Principle A generally accepted accounting principle which states that revenue is the value received from the
sale of goods and services, interest, rent, and the gain or loss on the sale of assets. According to this
principle, revenue is recognized on an accrual basis.
Reverse Annuity An innovative loan arrangement in which the lender makes periodic payments to the borrower
Mortgage during the loan term. At the end of the term, the borrower will have to repay the balance owing by
refinancing or selling the property.
Revocation The term for the cancellation of an offer communicated by the offeror to the offeree prior
to acceptance.
Right to Purchase A right conferred by an Agreement for Sale of land.
Risk See Capital Risk.
Rules In the context of a strata, optional, informal regulations made by strata councils to govern the use,
safety, and condition of the common property and common assets.
Safety Margin Ensures that the Net Operating Income (NOI) can cover the mortgage payments by expressing the
margin between the NOI and mortgage payments as a percentage of NOI.
Sale/Leaseback Situation in which the vendor will lease the subject property from the purchaser.
Sales Price Value in exchange; the price obtained in an actual transaction.
Sales Promotion Any form of non-personal selling that does not fall under the heading of advertising, public relations,
or publicity.
Salesperson The term used in the now repealed Real Estate Act, to refer to the licensee level equivalent of
a representative.
Salvage Value An estimate of the amount that can be realized from the sale of an asset at the end of its useful life.
Saving The process of consuming less than what can be afforded in order to increase consumption in
the future.
Schedule of A list of restrictions, registered at the land title office with the leasehold strata plan, that imposes
Restrictions further leasing, assignment, or occupancy of strata lots in a leasehold strata plan
Schedule of Unit A table that sets out each owner’s proportionate interest in the common property. It is often used to
Entitlement calculate a strata lot owner’s share of a strata corporation’s expenses.
Scope of Work The amount and type of information researched and the analysis applied in the valuation assignment.
Search Engine The process that affects how easily a website can be found in organic results on search engines.
Optimization (SEO)

Glossary.19
Security Deposit A sum of money paid to the landlord as collateral in case the tenant damages the premises or
otherwise violates a term of the tenancy agreement.
Servient Tenement Land bearing the burden of an easement or other right (i.e., restrictive covenant).
Shareholder Individual who has purchased the rights and obligations associated with (part of) the equity of
a corporation.
Short-Term Exclusive A special privilege granted to owners and tenants to exclusively use common property that is not
Use designated limited common property.
Similar In appraisal, two properties are similar if the actual differences between the properties will not have
a material effect on their selling price.
Simple Interest Interest which is charged only once on the sum originally borrowed, and paid at the end of the term
along with the full amount of the principal. Contrast to Compound Interest.
Site Plan A drawing of the plan for the development and intended use of a particular piece of land, including
the building outline, landscape elements, work areas, and property boundaries.
SMART An acronym used to develop goals that are specific, measurable, achievable, relevant, and timely.
Social Media Virtual communities and networks that allow participants to communicate, interact, share, and
exchange information and ideas.
Soffit The area on the underside of the roof overhang that extends from the gutter back to the wall surface.
Soft Costs Large outlays beyond the basic costs of land acquisition and construction of buildings.
Software The applications (programs) that the computer runs to enable the user to accomplish tasks.
Special Levy An additional contribution applied against owners by the strata corporation, usually for unexpected
expenses. Depending on how the special levy is proportioned between strata lots, approval will
require either a ¾ vote or a unanimous vote.
Specialty Goods In the Shopping Behaviour Model, products and services that possess some characteristic causing
the consumer to want that particular product or service and no other substitute.
Specific Performance The court, rather than granting damages in lieu of performance, orders that the terms of the contract
be carried out by the party in default.
Split Classification A division of a property’s value between two or more property classes, by an assessor, following a
consideration of its use and satisfaction of certain criteria prescribed by regulation.
Stakeholder Generally, a stakeholder is a third party chosen by two or more persons to keep money on deposit,
the right to the money which may be contested between them.
Stare Decisis Literally, “let the former decision stand” – to abide by prior decisions and not to disturb the doctrine of
the courts that, when the court has once laid down a principle of law applicable to a certain state of
facts, it will adhere to that principle, and apply it to all future cases, where the facts are substantially
the same; regardless of whether the parties and property are the same.
Statement of A closing statement in a real property transaction whose format is structured by Debits and Credits.
Adjustment See also Closing Statements.
Statutory Declaration A written statement of facts signed by the maker and sworn to be true, usually before a lawyer or
notary. A statutory declaration is similar to an affidavit.
Straight-Line One possible method used to calculate depreciation expense for accounting purposes. The expected
Depreciation Method salvage value is subtracted from the purchase price of the depreciable item and the result is divided
by the expected economic life to find the periodic depreciation expense.
Straight Line Principal A mortgage that is paid off with periodic payments, which always include the same amount of
Reduction Loan principal and an amount of interest based on the balance still owing.
Strata Corporation A legal entity created by the deposit of a strata plan in the Land Title Office. The corporation’s
responsibilities are set out in the Strata Property Act and include the duty to manage, repair,
maintain, and insure common property and common assets.

Strata Council An executive body elected by the strata lot owners to carry out the duties of the strata corporation
and oversee its affairs. Generally speaking, only strata lot owners are eligible to sit on the council.
Strata Fees Money that each owner is required to contribute to cover their strata lot’s share of the strata
corporation’s budget. Generally speaking, the exact amount is determined by the Schedule of
Unit Entitlement.
Strata Lot The parts shown on the strata plan that are created for individual ownership.
Subdivision This is a defined term in various statutes. Basically, a subdivision is the division of land into two or
more parcels.
Subject Property The property to be appraised.
Substantive Law The part of law which creates, defines, and regulates legal rights and obligations.
Sub-Mortgage Broker A defined term in the Mortgage Brokers Act. Basically, an individual employed by a mortgage broker
who satisfies any one of the following requirements:
(a) carries on a business of lending money secured in whole or in part by mortgages, whether the
money is their own or that of another person;
(b) holds themselves out as, or by an advertisement, notice or sign indicates that they are, a
mortgage broker;
(c) carries on a business of buying and selling mortgages or agreements for sale;
(d) in any one year, receives an amount of $1,000 or more in fees or other consideration,
excluding legal fees for arranging mortgages for other persons;
(e) during any one year, lends money on the security of 10 or more mortgages; or
(f) carries on a business of collecting money secured by mortgages.
Superintendent of the chief executive officer of BC Financial Services Authority who possesses certain powers, and
Real Estate must fulfill specific duties, under the Real Estate Services Act.
Superstructure The walls, floors, and roof of a building.
Support The term for the right to have one’s ground supported so that it will not cave in when an adjoining
owner makes an excavation. Support is of two kinds, lateral and vertical.
Syndicator The promoter who sets up a syndicate investment package.
Target Market A segment of the market sharing a common need.
Tax Notice A statement distributed to each property owner within a municipality requesting the payment of taxes
based on the net taxable value of their property.
Tax Rate The number of dollars per $1,000 worth of actual value, which is payable in property taxes.
Tax Sheltering The process of creating a taxable loss on an investment property, and applying such a loss to offset
taxable income generated by another source.
Taxable Income (Loss) Income (loss) reported for tax purposes. It is not to be confused with net income (loss). Net income
(loss) is arrived at by the deduction of Depreciation Expense, whereas taxable income (loss) is
calculated after the deduction of Capital Cost Allowance.
Taxable Supply A provision of property or services in any matter that is made in the course of a commercial activity,
which includes the transfer of real property, unless it is an exempt supply.
Taxable Value Actual value as determined by the Assessor. This value, in thousands of dollars, when multiplied by
the Tax Rate equals the amount of real property taxes payable.
Telemarketing Any method of lead generation or sales of goods or services that uses telephone or fax technology.
Tenancy Agreement Contract between the landlord and the tenant, pertaining to the letting of residential premises.
Tenancy at Will A tenancy where the tenant, with the consent of the landlord, occupies land as a tenant for a term
which can be terminated by either party at any time.
Tenants in Common Where two or more persons acquire interests in a single property. Each may sell or bequeath their
interest and in the event of death, their interest becomes a part of their estate.

Glossary.21
Term With respect to mortgages, a time period at the end of which the outstanding balance of a mortgage
is due and payable; it represents the duration of the mortgage contract.
Terminal Value The value upon destruction of an asset.
Time Clause A clause contained in a contract for purchase or resale of land which allows a party to invoke a time
period in which a condition precedent must be removed. A failure to remove the condition precedent
within the time period would result in the termination of the contract.
Time Share Plan A plan providing for the recurring use, occupation, or possession of real property to circulate on a
periodic basis among persons in the plan.
Title Insurance An insurance policy that protects the insured (either an owner or a lender) against certain losses
associated with title defects or related problems with the insured property.
Torrens Land A system for registration of the actual title to land in order to provide security to those holding
Registration System interests in land and to remove the need for retrospective investigation of titles to land.
Tort A private wrong or injury, other than breach of contract, for which the court will provide a remedy in
the form of damages.
Total Debt Service The percentage of gross income that is the maximum amount that a mortgagor is allowed to pay
Ratio annually in principal, interest and property taxes on all debts. Compare to Loan-to-Value Ratio. See
also Ratio and Gross Debt Service Ratio.
Trade Record Sheet A form which contains certain required information in respect to trades in real estate in relation to
which a brokerage provides trading services.
Trading services Activities related to the purchase and sale of real estate, including transactions for the leasing of real
estate and assignments of contracts for purchase, sale, and lease of real estate.
Trend A series of related changes brought about by a chain of cause and effect.
Trespass A legal term for wrongfully entering, remaining on, or placing something on another’s land.
Triple Net Lease A lease in which the tenant pays all operating expenses. See Net Lease.
Trust Account An account where money is deposited by one for the benefit of another. The money is devoted to a
particular purpose and cannot or should not be diverted for other purposes.
Trust Syndicate Syndicate organization in which the investors hold real estate indirectly as beneficiaries under a trust
agreement. Such a trust may be referred to as a Real Estate Investment Trust (REIT).
Trustee Individual or business entity in whose name a trust is held.
Undepreciated Capital An account which includes the purchase price of all assets belonging to the same class less all CCA
Cost (UCC) accrued over time for that class.
Undertaking A promise given in the course of legal proceedings by a party or their lawyer, generally as a
condition to obtaining some concession from the opposite party.
Undifferentiated One single product or service is marketed to all potential consumers with a single marketing program.
Marketing
Undue Influence Any improper or wrongful constraint, manipulation, or persuasion whereby the will of a person is
overpowered and they are induced to do or refrains from doing an act which they would not do or
would do if left to act freely.
Unit Entitlement The number assigned to a strata lot that is used to determine the owner’s proportionate ownership in
the common property and the strata expenses and liabilities for which the owner is responsible.
Unlicensed Assistant A person who is not licensed under the Real Estate Services Act but who is nevertheless permitted
to provide certain support and administrative services to licensees.
Unlimited Liability The obligation of an owner to pay their creditors from their personal assets if their company cannot
pay its debts. Contrast to Limited Liability.

Unsought Goods In the Shopping Behaviour Model, products and services that potential consumers do not necessarily
want or know about, or that are purchased based on fear or as a form of precaution.
Urgent Order An order made by BC Financial Services Authority against a licensee in cases of professional
misconduct or conduct unbecoming a licensee in situations where it would be detrimental to the
public interest to proceed through the traditional route of completing a full investigation or holding a
discipline hearing.
Vacancy Allowance An estimate of the amount of rent that may be foregone because of unoccupied units.
Valuation See Appraisal.
Value Added Tax A form of taxation used to raise funds on the final value created through the production of an item.
Value In Exchange See Sale Price.
Value to the Owner In appraisal, this refers to floor and ceiling prices, where owner includes a prospective owner.
Variable Expenses Those costs which vary according to the extent to which a property is occupied (e.g., janitorial
services in an office building).
Variable Rate Mortgage A loan being repaid by payments which change as the market interest rate changes.
Vendor’s Statement Closing Statement which shows the net amount of proceeds to be received by the vendor upon
of Adjustment completion of the transaction. See also Statement of Adjustment.
Vendor Take-back A mortgage taken back by the vendor from the purchaser to facilitate a sale, whereby the vendor
Mortgage becomes the lender and the purchaser becomes the borrower.
Vertical Support The right of land to be supported by the land which lies under it.
Vicarious Liability A legal principle that holds that where an employee commits a wrongful act in the ordinary course of
employment, the injured party can sue both the employee and the employer for damages caused by
the employee’s act.
Virus A segment of self-replicating code planted illegally in a computer program, often to damage or shut
down a system or network.
Void Contract A contract which never had any legal existence or effect and which is not capable of being enforced.
Voidable Contract One which exists until repudiated by a party entitled to do so at which time it becomes void.
Voltage A measure of electrical potential or pressure of current flow.
Warranty A subsidiary term of a contract, a breach of which allows the injured party to sue for damages but
does not allow them to terminate the contract.
Warranty of Authority An agent’s promise or guarantee to third parties that their actions fall within the scope of authority
given by the principal. An agent acting outside of the scope of authority breaches the warranty
of authority.
Web Analytics The measurement, collection, analysis, and reporting of data pertaining to how visitors are using
a website.
Wrap-Around Mortgage A second mortgage, registered on title, which includes a prior existing mortgage. It may be written
for an amount equal to the outstanding balance of the first mortgage or may also add additional
funds for a larger loan balance than currently exists. Payments under the new mortgage include the
payments under the original mortgage and the new mortgagee undertakes the responsibilities as
mortgagor under the original mortgage.
Yield The income and/or value appreciation of an investment expressed in terms of the purchase price of
that investment. For example, if a property that has sold for $100,000 is worth $2,000 more one year
later and has generated an income of $5,000 during the year, the yield to the investor is ($2,000 +
$5,000) ÷ $100,000 = .07 or 7%. See Return.
Zoning The legislative division of a region into separate districts with different regulations for land use.

INDEX

Index.1
A Borrowers, 13.2-4, 13.7, 13.9-13

Aboriginal title, 4.2-3 Borrowing, 13.1-4, 13.15, 13.26
Accelerated payments, 13.22-23 Breach of contract, 10.24
accelerated biweekly payments, 14.21 Bridge financing, 15.10
calculation of, 14.21 British Columbia Real Estate Association (BCREA), 2.13
Acceleration on default, 15.5 Brokerage agency, 12.4-5
Acceptance of offer, 10.6-7 Brokerage fee, 16.27
Accounting Builders liens, 4.23, 11.29-30
principles, 8.7 Building
Accrual basis, 8.7 envelope systems, 20.17
Actual authority, 12.14 materials, 20.9
Actual value, 19.18 schemes, 3.8
Advertising, 25.10 standards, 20.1
Agency, 2.8 Business
fiduciary duties, 2.8 forms of, 8.1
Agency contract, 12.10-12 Business Practices and Consumer Protection Act, 15.14-15, 16.27, 16.29
Agent, 12.1 Bylaws
capacity to act as, 12.10 building, 18.22
Agent’s authority, 12.10-17 licensing, 18.23
creation of, 12.10-13 zoning, 18.12-13
ratification, 12.14-15
C
scope of, 12.13-14
Calculator, 13.12, 13.28-30, 13.33-37, 13.40-43
termination of, 12.15-17
interest rate conversions, 14.3
Agreements for sale, 15.29-30
no solution message, 14.15
Agricultural land reserve, 18.2
orientation tips, 13.29-30
Air space strata developments, 4.6
positive and negative cash flows, 14.8
Airspace rights, 3.11
Canada Mortgage and Housing Corporation (CMHC), 13.2, 13.7-8,
Amortization, 13.5, 13.9-11, 13.13, 13.20-25, 13.27, 14.14
13.10-14, 13.27
Annual percentage rate (APR), 16.29
Canada mortgage bonds, 13.8
Annuities, 13.42
Canadian Electrical Code, 20.30, 20.38
Appeal, 1.6
Canadian Real Estate Association (CREA), 2.13, 9.22
Appellate Courts, 1.5
standards of business practice and interpretation, 9.22
Appraisal
Capacity, 10.10-14
comparative or market method, 22.1
adult guardianship and committees, 10.12
cost approach, 21.23, 22.16
advanced directive, 10.13
definition, 21.1
foreigners and illiterates, 10.13
direct comparison approach, 21.23
incorporated companies, 10.13
income approach, 21.23
infancy, 10.10
legal consideration for appraisers, 21.26
mental incapacity, 10.10-11
process, 21.2
power of attorney, 10.11-12
residual method (hybrid), 21.24
representation agreement, 10.13
Appraiser, 21.1
Capital cost allowance, 8.3, 8.14, 8.16, 8.20-22
Appreciation, 13.1, 13.12
Capital gain, 19.14-15
Arbitration, 1.9
Capital market, 13.2-6
Architectural information, 20.7
basis, 13.2
Arm’s-length transaction, 17.7, 17.17
Capitalization, 23.10
Artificial intelligence, 21.33
rate, 23.10, 23.18
Assessment, 19.5
Cash flows, 13.29, 13.36, 13.42
appeal, 19.22-23
Cash-equivalent price, 16.2-4, 16.6-7, 16.10, 16.18, 16.23
Assessment Notice, 19.19
Caveat, 4.22
Assessment Roll, 19.19
Caveat emptor, 10.16
Assets, 8.9
Ceiling price, 21.4
current, 8.10
Charges, 4.13-14, 4.19
noncurrent, 8.10
Chattel or fixture, 4.29
Assignment, 6.19-20, 10.26-27
Chattels, 3.13
Associate broker, 2.17
Civil Resolution Tribunal, 1.4
responsibilities, 2.18
Climate change, 5.28-29
Assumable mortgage, 16.1, 16.17-25
Clog on equity of redemption, 15.3
Assumption of mortgage, 15.17-18
Closing balance sheet, 8.13, 8.17-18, 8.21
Assurance principle, 4.16
Closing procedures, 24.6
Automated valuation models, 21.31
application for registration, 24.8
B conveyance, 24.6
Backup, 26.21 mortgage interest adjustment, 24.8
Bad debt allowance, 23.2 preparation of documents, 24.7
Balance sheet, 8.9 undertaking, 24.7
Bare land strata developments, 4.5 Code of Ethics (REALTOR® Code), 9.22
BC Financial Services Authority (BCFSA), 2.9 Collateral advantage, 15.3
Bilateral contract, 10.1 Common law, 1.1
Biweekly payments, 14.21 Common property, 7.2-3
Blockchain, 21.33 limited common property, 7.3
Board of variance, 18.18-19 Community Amenity Contributions (CACs), 18.22
Bonus, 16.2 Comparative market analysis, 21.26
Bonused mortgage, 16.27, 16.35 Comparative or market method of appraisal, 22.1

Index.2 Real Estate Trading Services – Licensing Course Manual
Competition Act, 11.8-11, 25.32 Defects, 10.16-19

civil provisions, 11.10 contaminated property, 10.17
criminal provisions, 11.8 latent defect, 10.17-19
Compound interest, 13.30, 13.32, 13.36, 13.45 patent defect, 10.17
Compounding versus stigmas, 10.19
frequency, 13.28, 13.31, 13.35-45 Deposit, 11.21-24
periods, 13.28, 13.31-42 Depreciation, 22.19-20
Computer expense, 8.14, 8.16, 8.19-20
hardware, 26.26 Depreciation report, 7.16
software, 26.3 Derogation from grant, 6.17, 6.20
Condition precedent, 10.23 Designated agency, 12.5-6
waiver, 10.23 Development cost charges, 18.22
Conditions precedent and subsequent, 11.31-38 Digital camera, 26.8
Condo and Strata Assignment Integrity Register (CSAIR), 11.40-42 Direct comparison approach, 21.23
Conflicts of interest, 9.12-14, 12.20-25, 12.37 Direct mail, 25.20
Consideration, 10.8-9, 11.21 Discipline, 9.3
seal, 10.8 Discipline and enforcement, 2.31
Consistency principle, 8.8 Disclosure, 9.16, 12.34-49
Constant payment mortgages, 13.20-22, 14.8 forms, 12.66-82
Construction financing, 13.16, 13.26 for Residential Tenancies, 12.36-37
Contaminated sites, 4.25 in a dual agency relationship, 12.37
Contract drafting errors, 5.7-8 of Interest in Trade, 12.41-43
Contract elements, 10.1 of Material Latent Defects, 12.44
Contract of purchase and sale, 10.1, 11.13-42, 24.1-2 of Remuneration, 12.38-39
adjustment date, 24.3 of Representation in Trading Services, 12.35
amendment, 11.38-39 of Risks to Unrepresented Parties, 12.36
assignment of, 11.39-42 summary table of categories of, 12.47-49
closing date (completion date), 24.3 to Sellers of Expected Remuneration, 12.40-41
condition, 24.3 Discount, 16.2
deposit, 11.21-24 Discounting, 16.3
possession date, 24.3 Discovery, 1.7
protection of personal information, 11.20 Distress, 6.14, 6.20
requirements for enforceability, 11.14-17 Diversification, 13.7, 13.10
sample, 11.67-76 Dividends, 8.3-4, 8.12-13, 8.16
terms and conditions, 11.20-21 Domain name, 26.9
Convenience goods, 25.3 Doors, 20.21-22, 20.37
Conversion (interest rates), 14.3 Dry rot, 20.32
Cooperative ownership, 7.28 Dual agency relationship, 12.34
Co-ownership of land, 3.15 Duplicate certificate of title, 4.21-22
joint tenancy, 3.15 Duress, 10.22
tenancy in common, 3.16 Duties to clients, 9.7
termination of a joint tenancy, 3.16 Duties to third parties, 9.15
Copyright, 26.23 Duty (agency), 12.18-30
Corporate veil, 8.13 fiduciary duties, 12.19-29
Corporation, 8.3 of confidentiality, 12.27-29
Cost of full disclosure, 12.25-26
current, 22.16 of loyalty, 12.20
historic, 8.6, 22.16 of the brokerage and licensee, 12.29-30
Cost approach, 21.23, 22.16 of the principal to the agent, 12.31-33
Cost of funds advanced, 16.27, 16.29-37 to avoid conflicts of interest, 12.20-25
Cost principle, 8.7, 21.4 to obey lawful instructions, 12.29
Counter-offer, 10.4-6 Duty of honest performance, 15.3-4
Court costs, 1.8 Duty to report, 9.16-19
Covenantor vs. Guarantor, 15.8
E
Credit
Easement, 3.5
analysis, 17.1, 17.4-8, 17.13, 17.25
dominant tenement, 3.5
rating, 13.5, 17.6
servient tenement, 3.5
report, 17.1, 17.4-5
Economic life, 8.14
Crown land, 4.1
Effective (annual) rate, 14.1
Curable depreciation, 22.18-19
Electrical service, 20.30, 20.38-39
Current assets, 8.10
Elements of the real estate market, Pref.2
Current liabilities, 8.11
Email, 26.13-14, 26.16, 26.20-21
D Empty Homes Tax (EHT), 19.27-28
Damages, 10.27-28 Environmental Management Act, 15.16
Data protection, 26.21 Equity
Debt coverage ratio, 17.23-25 in common law, 1.1
design, 20.43 owner’s, 8.16
housing, 20.43 shareholders’, 8.16
invisible, 20.43 Equivalent interest rates, 14.1
visible, 20.43 application of, 14.7
Debt financing, 13.1-4, 13.27 Errors in drafting agreements, 5.7-8
Deceit, 5.5-6 Estates, 3.1
Deed, 4.10-11, 4.18 pur autre vie, 3.2
Ethics, 9.2

Index.3
Execution, 1.10 Hot water

Expenses, 8.13 heating, 20.23-26, 20.28, 20.30, 20.48
Expropriation, 3.1 supply, 20.28, 20.30
Extending the amortization period, 17.13-14 House plan, 20.44
Externalities, 21.1, 21.20 Housing defects, 20.43
HP 10bII+ calculator, 13.29
F
Fair market value, 19.9 I
Federal government control of land, 18.1 Illegal contract, 10.2, 10.14-15
Fee simple estate, 3.2 Illiquidity
Felt need, 25.4 of mortgages, 13.6
Fiduciary duties Imperfect market, 21.21
breach of, 5.8 Improvement districts, 18.7-8
Final payment, 14.20 Income approach, 21.23
Financial statements, 8.8 Income statement, 8.13
balance sheet, 8.9 Income tax, 8.14, 8.16, 8.18, 8.20-21
profit and loss statement, 8.13 Incurable depreciation, 22.18-20
Financial Transactions and Reports Analysis Centre of Indefeasibility, 4.12-15
Canada (“FINTRAC”), 5.14 exceptions, 4.12-13
Financing registered charges are not indefeasible, 4.13
role of, 13.1 Information certificate, 7.7
Finishes, 20.30 Form B, 7.31
Firewall, 26.25 Injunction, 10.28
First Nations Land, Pref.1 Input tax credit, 19.4
First Time Home Buyers’ Program, 19.10 Insulation, 20.22, 20.36
Fixed term tenancy, 6.3, 6.13, 6.20 Insurable value, 17.20
Fixtures and chattels, 3.13 Integrated marketing, 25.8
Floor construction, 20.27 Interesse termini, 6.17, 6.20
Floor price, 21.4 Interest
Floor space ratio, 18.13 expense, 8.13
Flooring, 20.31, 20.35-36 Interest accruing loans, 13.18
in-floor radiant heat, 20.27 Interest Act, 13.9, 13.21-22, 13.25, 13.28, 14.3-4, 14.10, 15.10-13
Foreclosure, 15.21, 15.23-29 Interest rate
Foreign Buyers’ Tax, 19.11-13 adjustment, 17.20-21
Foundations, 20.9 basis of calculations, 13.30
Fraud detection, 17.8 capital market, 13.2-5
Frustration, 10.23-24 compound interest calculations, 13.32-36
Fully amortized, 13.21 compounding periods, 14.4
Future value, 13.28, 13.31, 13.33, 13.35-40 conversion, HP 10bII+, 14.3
effective annual interest rates, 14.5
G
equivalent interest rates, 14.1
Garnishing order, 1.11
nominal, 14.3
General partner, 8.1
nominal and periodic interest rates, 13.30
Generally accepted accounting principles (GAAP), 8.6-8, 8.14
variable and fixed mortgage interest rates, 13.24
Good faith performance, 15.3-4
Interest-only loans, 13.19, 13.44-45
Goods and Services Tax (GST), 19.2-9
Interests in land less than estates, 3.5
builder, 19.6
licenses, 3.10
exempt supply, 19.3
Interim blanket mortgage, 15.9
rebates, 19.5
Internet, 26.2, 26.9, 26.18, 26.25
taxable supply, 19.3
blog, 26.12
Goodwill, 8.18-19
email newsletters, 26.14, 26.20
Government
social networking, 26.16-17
as source of mortgage funds, 13.16
Inventory, 8.9-10, 8.14, 8.22
mortgage lending restrictions, 13.13
Investment yield, 16.41-42
Green construction, 20.1, 20.48
Gross debt service ratio, 17.9-19 J
Gross income, 17.1, 17.5, 17.9-14, 17.18 Joint tenancy, 3.15
Guarantor, 15.8 termination of, 3.16
Judgment, 4.23
H
Judicial sale, 15.27
Heating systems, 20.23-24, 20.26
comparison of systems, 20.26 K
convective, 20.25 Know Your Client (KYC), 5.15-19
domestic, 20.24
L
HVAC, 20.23-24, 20.50
Land Owner Transparency Act, 5.19-20
Heritage designation, 4.24
Land Title Act, 15.4
Highest and best use, 21.21
Land use contract, 18.17
Historic cost, 8.6
Latent value, 21.22
Home Buyer Rescission Period, 11.18-20
Lease, 6.1
Home equity line of credit, 13.26
difference between lease and licence, 6.1
Home equity loan, 13.26
Leasehold estates, 3.4
Home owner grant, 19.21-22
Leasehold stratas, 7.26, 7.28
Honesty, 9.5
Legal entity, 8.1, 8.3-4, 8.21
The Headline Test, 9.6
Legal intention, 10.10

Lender bonus, 16.27 Marketing program

Lending integrated, 25.8
motivations for, 13.1 listing, 25.30
Lending value, 17.1, 17.6-10, 17.15, 17.18, 17.22-23, 21.4 Matching principle, 8.7
Liability Measurement practices, 20.61-62
business, 8.4 Mediation, 1.9
current, 8.11 Merger, doctrine of, 11.25-28
limited, 8.2 Mill rate, 19.16
noncurrent, 8.11 Misrepresentation, 10.15-16
unlimited, 8.1 fraudulent, 5.5-6
of an occupier, 3.18 negligent, 5.5
common law, 3.18 Mistake, 10.20-21
Occupiers Liability Act, 3.19 common, 10.20-21
License, 6.1 mutual, 10.21
Licensing, 2.2 unilateral, 10.21
applying for, 2.21 Mitigation, 6.20
categories, 2.21 “ML/TF” indicators, 5.24-25
inoperative, 2.24 Money laundering, 5.9-14
levels, 2.15 methods in real estate, 5.11-13
associate broker, 2.17 Monoline lender, 13.15
brokerage, 2.15-17 Mortgage, 15.1
managing broker, 2.17 as investments, 13.6
personal real estate corporations, 2.19 book value, 13.17
representative, 2.18 borrower qualification, 17.1, 17.3, 17.22, 17.25
teams, 2.19-20 classification of mortgage loans, 13.13
names, 2.23 closed, 13.25
qualifications, 2.21 combination, 13.26
refusal to issue or renew, 2.24 constant payment, 13.20-23
renewal, 2.23 conventional, 13.14
voluntary surrender, 2.24 credit analysis, 17.4
Lien, 7.17 debt coverage ratio, 17.23, 17.25
Life estate, 3.2 default insurance, 13.6, 13.9-10, 13.13-14
Limitation period, 1.11 extending the amortization period, 17.13
Limited dual agency, 12.4-8 face value, 13.17
exception, 12.8 financial covenants of the borrower, 17.19
prohibition, 12.6 fully amortized, 13.9, 13.20
Limited liability, 8.2-4 future value, calculation of, 13.37
Limited partnership, 8.2 graduated payment, 13.25
Line of credit, 13.26 gross debt service ratio, 17.9-10
Liquidity, 8.4, 8.10 gross income, 17.1, 17.5
Listing agent, 12.2 hybrid, 13.27
Listing brokerage, 12.2 improvement, 13.27
Listing contract, 11.4-12 information collection, 17.3
information required for, 11.5 innovative options, 13.22
sample, 11.58-66 insured, 13.14
Living area interest accruing loans, 13.18
calculation of, 20.8, 20.56-60 interest adjustment, 17.20, 17.21
Loan-to-value ratio, 17.8-19, 17.22, 17.25 lending
Local government control of land, 18.5-6 constraints, 17.1, 17.10-11, 17.15, 17.22, 17.25
Community Charter, 18.5 value, 17.1
Local Government Act, 18.5-6 loan application, 17.1, 17.8, 17.25
Vancouver Charter, 18.5 loan-to-value ratio, 17.8, 17.22
Lump sums market, 13.5
future and present value, 13.36-41 open, 13.25
partially amortized, 13.9-10, 13.15, 13.21
M
participation, 13.27
Management contract, 7.12
payment of property taxes, 17.19
Managing broker, 2.17
present value, 13.40
responsibilities, 2.17
primary mortgage market, 13.2
Manufactured homes, 4.26-30
private lenders, 13.16, 17.7-8, 17.20-21
assignment of manufactured home pad tenancy agreements, 4.28
property insurance, 17.20
defined, 20.46
property maintenance, 17.20
Mapping, 26.20
reducing the contractual term, 17.14
Margin of error, 21.26
repayment plans, 13.17, 13.25, 13.45
Market rate, 16.1
residential, 17.1-4, 17.7, 17.12, 17.19, 17.22, 17.25
Market value, 21.4, 21.6
adding a second mortgage, 17.14
mortgage, 16.3-17
arrears control, 17.21
mortgage assumption, 16.17-25
collection of payments, 17.20
offer, 16.2-17
reverse annuity (RAM), 13.26
Marketable securities, 8.10
secondary mortgage market, 13.2
Marketing
self-employed, 17.6
buying behaviour, 25.3
shared appreciation (SAM), 13.27-28
communication process, 25.12
significance of, 13.2
concept, 25.1
stress test, 17.15, 17.17
sales promotion, 25.10, 25.26

Index.5
subprime, 17.2 Principal, 12.1

term of a mortgage, 13.17 Principal and interest components of payments, 14.18
underwriting, 17.1-2, 17.7, 17.19, 17.22-25 Printers, 26.3, 26.7, 26.23
commercial, 17.1, 17.22-25 Priorities of mortgages, 15.22-23
income constraint, 17.22-24 Privacy (right to), 6.16-17, 6.20
safety margin, 17.23-24 Privacy legislation (PIPEDA), 11.12
credit analysis, 17.1 Private law, 1.3
variable rate, 13.24-25 Private nuisance, 3.18
vendor take-back, 13.25 Proceeds of Crime (Money Laundering) and Terrorist Financing Act
Mortgage Brokers Act, 15.15-16 (PCMLTFA), 5.13-27
Mortgage fraud, 15.13-14 compliance with, 5.27
Mortgage investment corporations (MICs), 13.8, 13.12, 13.16 large cash transaction, 5.16, 5.22, 5.26
Mortgage-backed securities, 13.2, 13.6-8, 13.10, 13.24 licensee obligations
Mortgagee, 15.1 compliance program, 5.15
Mortgagor, 15.1 know your client, 5.15-21
Multiple Listing Service® (MLS®), 26.3 record-keeping, 5.26
Municipal governments, 18.7 reporting, 5.22-26
Product positioning, 25.6
N
Profit à prendre, 3.9
National Housing Act, 13.6-7, 13.9-10, 13.14
Profit and loss statement, 8.13
Negligence, 5.2-5
Property Disclosure Statement (PDS), 11.51-54
negligent misrepresentation, 5.5
sample, 11.77-81
vicarious liability, 5.4
Property Law Act, 15.18-19
Negotiation, 11.42-50
Property management, 2.25-27
approaches to, 11.43
Property tax, 19.16-23
communication principles, 11.48
exemptions and reliefs, 19.21-22
dirty tactics, 11.49-50
liability, 19.17
exchange principles, 11.47-48
tax base, 19.18
preparation principles, 11.44-47
Property Transfer Tax (PTT), 19.9-13
relationship principles, 11.48-49
Proprietorship, 8.1
Net income, 8.13
Provincial government control of land, 18.2
Net loss, 8.13, 8.16
Public law, 1.3
Net operating income, 23.1
Public relations and publicity, 25.26
Net taxable value, 19.16
“No agency” relationship, 12.34 Q
Non-conforming use, 18.17-18 Quantum meruit, 10.9, 10.27, 10.29
Noncurrent assets, 8.10 Quiet enjoyment, 6.16
Notice of special waste, 4.23
R
Notice to end tenancy by the tenant, 6.10
Rating grid, 22.7, 22.9-10
Novation, 15.20
Real Estate Boards, 2.14
O Real Estate Compensation Fund Corporation, 2.12
Objection, 19.5 Real Estate Development Marketing Act (“REDMA”), 2.37
Objectivity principle, 8.8 development unit, 2.38-39
Offer, 10.2-6 disclosure statement, 2.40-42
compared to invitation to treat, 10.3 marketing requirements, 2.39
expiry, 10.3-6 offences and penalties, 2.42
standing offer, 10.3 rescission rights, 2.41
Official community plans, 18.10 Real Estate Errors and Omissions Insurance Corporation, 2.10-11
Omnibus clause, 15.5 Real Estate Foundation, 2.9
Operating expenses, 23.3 Real Estate Institute of British Columbia (REIBC), 2.15
Operating system, 26.6 Real Estate Institute of Canada (REIC), 2.15
Option agreement, 10.4 Real estate investment trust, 8.4
Order absolute of foreclosure, 15.24, 15.29 Real Estate Services Act (“RESA”), 2.1
Order nisi, 15.24, 15.26 activities requiring a licence, 2.2
Organization Rental Property Management Services, 2.2, 2.27
forms of, 8.1 Strata Management Services, 2.2
Outstanding balance, 13.9-10, 13.17-21, 13.26, 14.15 Trading Services, 2.3, 2.25
Owner’s equity, 8.16 brokerage, 2.15
discipline and enforcement, 2.31
P
administrative penalties, 2.36
Partnership
appeals, 2.35
limited and general, 8.1
appointment of a receiver, 2.35
Periodic tenancy, 6.4, 6.20
available sanctions, 2.33
Permits, 18.19-21
complaints, 2.31, 2.35
development, 18.19-20
discipline process, 2.32
development variance, 18.20
investigations, 2.31, 2.35
temporary use, 18.21
offences, 2.36
Plumbing systems, 20.28, 20.39
undertakings, 2.31
Portable mortgages, 16.26
unlicensed persons, 2.34
Precedent, 1.1
urgent orders, 2.33
Prepaid expenses, 8.10
employee vs. independent contractor, 2.24
Prepayment, 15.11
exemptions from the requirement to be licensed, 2.5
Prepayment penalties, 16.42
purpose of, 2.2
Present value, 13.36, 13.40-41
trust accounts, 2.27
Primary mortgage market, 13.2
unlicensed assistants, 2.7

Real Estate Services Regulation, 2.1 Soffits, 20.34

Real Estate Services Rules, 2.1 Sole agency relationship, 12.34
general organization, 2.29 Sole proprietorship, 8.1
Real property, characteristics, Pref.7 Specialty goods, 25.4
REALTOR® Code, 9.22 Specific performance, 1.2, 10.27-28
Reconciliation of value, 21.25 Speculation and Vacancy Tax, 19.23-26
Redemption, 15.21 taxable areas, 19.24
Regional districts, 18.6-7 tax rate, 19.24-25
Reinvestment problem Split classification, 19.19
of mortgage investments, 13.6-7 Spread lending, 13.15
Remedies, 10.27 Spreadsheets, 26.4
Rent, 6.12 Standard Assignment Terms, 12.45
non-payment, 6.5, 6.10-11 Standards of Business Practice (REALTOR® Code), 9.22
Rental disclosure statement, 7.21 Stare decisis, 1.1
Repairs, 6.18 Statement of adjustments, 24.9
Repairs (strata), 7.23-25 balance due to complete, 24.9
paying for repair, 7.24 brokerage’s commission, 24.12
Repayment clause, 15.4 cash proceeds of sale, 24.9
Replacement, 23.4 conveyancing and legal fees, 24.21
allowance, 23.4 deposit, 24.11
cost, 22.16-20, 22.24 excluded items, 24.21
Residential housing classification, 20.44 Foreign Buyers’ Tax, 24.20
Residential tenancy arbitrations, 6.11 home owner grants, 24.19
Residual method of appraisal, 21.24 mortgages, 24.12-15
Restrictive covenant, 3.7 preparing, 24.22
judicial discharge of, 3.10 property taxes, 24.16-19
Retained earnings, 8.3, 8.12-13, 8.16 property transfer tax, 24.20
Revenue principle, 8.7 rent, 24.20
Revenue, 8.13 Statute law, 1.2
Reverse annuity mortgage (RAM), 15.10 Storm water drainage, 20.42
Revocation, 10.3 Straight line principal reduction loans, 13.19
Rezoning, 18.16 Straight-line depreciation, 8.20, 8.22
Right to purchase, 15.30 Strata
Risk concept, 4.3-4
capital, 17.1-2, 17.9, 17.20 creation of, 4.8
income, 13.19 plan, 4.8
interest rate, 13.9 plan, sample, 4.31-35
Risk management, 11.51-56 principles, 4.6
Roofs, 20.15, 20.22, 20.34 types of strata property, 4.9
Rounding mortgage payments, 14.12 Strata corporation, 7.4-10
Rules and regulations, 9.3 access to records, 7.6
Rural land use bylaws, 18.12 age restrictions, 7.21-22
bylaws and rules, 7.18-23
S
certificate of payment, 7.8, 7.34
Safety margin, 17.23
council, 7.10
Sale price, 21.4
duties, 7.5-6
Salvage value, 8.14, 22.19
interim budget, 7.12-13
Savers, 13.2
pet restrictions, 7.22-23
Scope of work, 21.10
rental restrictions, 7.21-22
Searching title, 4.20
sections, 7.5
common items appearing on title, 4.21
voting procedures, 7.11
sample land title search, 4.36-41
winding up, 7.25
Second mortgage, 17.9, 17.14-15
Strata corporation governance, 7.10-12
Secret profit, 12.26
Strata finances, 7.12-17
Security and computer protection, 26.24
contingency reserve fund, 7.13, 7.15
spam, 26.25
depreciation reports, 7.16
virus, 26.25
interim budget, 7.12-13
Security deposit, 6.13
operating fund, 7.15
Security interests, 4.29
Strata Property Act, 7.1
Self-employed, 17.6
Stress test, 17.15
Self-supply rule, 19.7
Subdivision, 3.8, 4.3-6, 18.21-22
Septic tank, 20.40-41
Subject clause, 10.23, 11.31-38
Service systems of a house, 20.38
Sublet, 6.19-20
Sewage, domestic, 20.40
Subsurface rights, 3.11
Shareholder, 8.3
Superintendent of Real Estate, 2.9
equity, 8.16
Support rights, 3.12
Shopping goods, 25.4
Supreme Court of British Columbia, 1.5
Short-term exclusive use, 7.3
Survey, 24.4
Short-term rentals, 19.8
encroachment, 24.4
Siding, 20.17
Suspicious Transaction Reports, 5.22-26
Similar properties, 22.1, 22.3, 22.7
submission of, 5.25-26
Sinking funds, 13.42
Site plan, 20.7
Small claims court, 1.5

Index.7
T
Target market, 25.2
Tax notice, 19.21
Tenancy agreement, 6.1
Tenancy at will, 6.10, 6.20
Tenancy in common, 3.16-17
Termination of a contract, 10.22
Termination of tenancy by landlord, 6.5-10
Terrorist Property Report, 5.22
Time clause, 11.37-38
Time diagram
defined, 13.31
Title insurance, 4.24-25, 24.5
Title registration
at common law, 4.10
common items appearing on title, 4.21
First Nations Land Registry, 4.25
unregistered interest, 4.16
Title transfer fraud, 4.18-19
Torrens Land Registration System, 4.11
abolition of notice, 4.16
assurance principle, 4.16
effect of registration, 4.15
indefeasibility principle, 4.12-13
notation of trusts, 4.17
Tort, 12.17-18
Tort law, 21.28
Total debt service ratio, 17.9-10, 17.15
Trust, 9.4
Trust account, 24.7, 24.9
U
Undepreciated capital cost, 8.20
Underused Housing Tax (UHT), 19.29-30
Underwriters Laboratories of Canada (ULC), 20.9
Undue influence, 10.22
Unenforceable contract, 10.1-2
Unit cost method of appraisal, 22.17
Unit entitlement, 7.1-2
Unlimited liability, 8.1
V
Vacancy allowance, 23.2
Value to the owner, 21.4, 21.7
Value-added tax, 19.2
Vendor take-back mortgage, 15.9
Vendor take-back (supplied) mortgage, 16.1-3
Vicarious performance, 10.27
Visible defects, 20.43
Void contract, 10.1
Void deeds, 4.10
Voidable contract, 10.2
W
Wall construction, 20.12
Warranty, 10.25, 11.21, 11.24-28
Warranty of authority, 12.1
Waste, 3.3
doctrine of, 3.3
notice of special, 4.23
Waste water, domestic, 20.40
Water
rights, 3.12
supply, 20.28, 20.30, 20.39-40
Website, 26.9
search engine optimization, 26.12
Windows, 20.7, 20.19-20, 20.23, 20.28, 20.32, 20.35, 20.47-53
Withholding taxes, 19.13-14
Writing requirement, 11.1-3
Y
Yield to the lender, 16.37-40
Z
Zoning, 18.12-17, 21.14


GLOSSARY BC Real Estate Licensing

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GLOSSARY BC Real Estate Licensing

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©Copyright 2024 by the UBC Real Estate Division

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Accounting The systematic recording, reporting, and analysis of financial transactions.

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Appraisal The estimation of the value of a legal interest in land.

Assessment Appraisal, usually for real property taxation purposes.

Asset Item of value owned by a business. Contrast to Liability.

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Blended Payments See Constant Payment Loan.

Brokerage Fee A fee charged by a mortgage broker for arranging a loan.

Bylaw A law of local or limited application, typically regulatory in nature.

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Cash-Equivalent Price See Market Value (of an offer).

CCA Abbreviation of Capital Cost Allowance.

Cognitive Dissonance The awareness of a disharmony caused by conflicting thoughts.

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Credit Analysis An investigation of a loan applicant’s ability to repay.

Creditor A person to whom a debt is owed. Contrast to Debtor.

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Debtor One who owes a debt. Contrast to Creditor.

Demise The legal term for the granting of a Lease.

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Edge Curl When asphalt shingles have curved up at each edge.

Equity of Redemption The mortgagor’s right to repay the mortgage.

Externalities External influences that influence the value of real property

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Improvement A structural addition to the land which can be considered to be a fixture.

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Inflation A rise in the average price level.

Insurable Value The estimated value of a property for insurance purposes.

Investment Value The value that is specific to a particular investor.

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Liability Monies owed by a business. Contrast to Asset.

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Listing Price The value at which a property is advertised for sale.

Local Government Includes regional districts, municipalities, and improvement districts.

Malware A computer program designed specifically to damage or disrupt a system.

Market Method See Comparative Method.

Market Value In appraisal, the expected or forecasted sale price.

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Misconduct Unacceptable or improper behaviour.

Mortgagee The lender.

Mortgagor The borrower.

Neighbourhood A geographic area of relatively similar residences and physical surroundings.

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Offering Memorandum A condensed version of a prospectus.

Partnership See General Partnership and Limited Partnership.

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Present Value The current equivalent of a future dollar amount.

Profit and Loss See Income Statement.

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Return See Yield.

Right to Purchase A right conferred by an Agreement for Sale of land.

Risk See Capital Risk.

Sales Price Value in exchange; the price obtained in an actual transaction.

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