Chapter 7 Key Terms & Definitions Flashcards
Approved Lender
A lender approved by CMHC
Beneficiary
The person who receives the payment of the amount of insurance after the death of the insured. Creditor insurance names the lender as the beneficiary.
Business for self
Another term for an individual who is self-employed
Capitalization
The act of adding mortgage arrears or other costs associated with a mortgage to the principal amount. For example, capitalizing a lender’s fee means that this fee would be added to the mortgage principal and amortized.
Chattel loan/mortgage
A purchaser borrows funds for the purpose of movable personal property (the chattel) from the lender. The lender then secures the loan with a mortgage against the chattel.
Claim
A legal action to obtain money, property or the enforcement of a right protected by law against another party. An insurance claim is a claim made under the terms of the insurance contract.
CMHC
Canada Mortgage and Housing Corporation (CMHC), created through the National Housing Act, 1954 (NHA, 1954) established mortgage default insurance in Canada in 1954 and is the largest provider of default insurance in Canada.
Common areas
Common areas are the areas of a condominium building that are common to all unit owners, but not owned by them. For example, a swimming pool, gym, etc. Each unit owner pays a monthly fee to maintain these areas.
Condominium
The whole collection of individual home units along with the land upon which they sit. Individual home ownership is composed only of the air-space within the boundaries of the home, as defined by a document known as the Declaration, filed on record with the local governing authority.
Condominium corporation
A corporation without share capital, created under the Condominium Act for the purposes of administering the operation, maintenance and repair of the common elements and assets of the condominium. The Corporation is guided by the Board of Directors consisting of the building’s unit owners.
Condominium status certificate
A document containing information regarding the operational, legal, and financial status of the condominium corporation. This document can contain the declaration, by-laws, rules and regulations, insurance information, reserve fund balance, other financial disclosures, legal description of the unit and management contract (if applicable). It may also include information about any legal filings or judgments against the condominium. A buyer should always review the status certificate.
Deductible
In relation to an insurance contract, the insured’s share of the claim. The insured pays the deductible and the insurance company pays the remainder of the claim.
Default management
Programs in place by mortgage default insurers that allow the lender to assist the borrower in resolving mortgage arrears
Depreciation
Depreciation refers to the fact that certain assets, normally physical assets, can lose value over time. The amount of depreciation is calculated based on an item’s original purchase price or economic value, its anticipated life expectancy and its residual value at a future point in time.
Disbarment
A revocation of a lawyer’s ability to practice law
Disbursements
Amounts payable. In mortgage financing, disbursements typically relate to amounts paid from the mortgage proceeds.
Down payment
An amount of a purchaser’s money provided to the vendor from his or her own resources (not included in a mortgage loan). Under certain programs this amount may be borrowed.
E&O (Errors & omissions insurance)
Insurance that provides coverage for errors and omissions made by a brokerage, broker, agent or Administrator. This insurance must contain a provision for fraud.
Easement
A right for the benefit of the dominant tenement over that of the servient tenement that is normally registered on title. Easements have several legal requirements and will “run with the land,” or be passed from owner to owner.
Encroachments
When a piece of real property hangs from one property over the property line of another’s. The structure that encroaches might be a tree, garage, fence, part of a building, or other fixture.
Environmental hazards
Any situation or state of events which poses a threat to the surrounding environment. This may be caused by chemicals leaking into the soil, ruptured gas tanks at a gas station, etc.
Execution
A “Writ of Execution” filed with the sheriff in the district in which the debtor lives and owns land. This allows a plaintiff who has successfully obtained a judgment against a debtor in court to enforce the judgment.
Extended amortization period
An amortization that exceeds the standard amortization of 25 years
Fire retrofit
The Municipal Act and Planning Act permit one apartment in most detached houses, semi-detached houses and some types of row houses as long as minimum health and safety requirements can be met. The requirements for fire safety in such units are regulated under one of two provincial regulations, either the Building Code or Section 9.8 of the Fire Code. The requirements for a legal second unit can be summed up with these four points: there must be a fire separation between each unit; there has to be a way for occupants to escape from each unit; each unit must have smoke alarms; the units must meet electrical safety standards
Grossing up taxable income
The process of adding deductions originally taken from an individual’s income back to that income
Group policy
An insurance policy that groups together certain policyholders based on general criteria
Home Buyers’ Plan (HBP)
A program that allows a first-time home buyer to withdraw up to $35,000 in a calendar year from his or her registered retirement savings plans (RRSPs) to buy or build a qualifying home. A first-time home buyer is considered to be an individual who has not owned real property within four years prior to purchasing the current property.
