Industry Terms

The areas of a building that are above the ground surface.

Every part of a floor (space) must be on or over the ground surface for that floor to be considered above grade.

A building design concept that relates to individuals with disabilities. It refers to building features that facilitate entry or use by individuals with physical and/or sensory impairments.

A designation granted by the Appraisal Institute of Canada.

A mortgage where the interest rate and payments are increased or decreased at predetermined intervals based on a lender’s rate market review. The interest rate charged on the mortgage may be linked to the lender’s prime rate or a pre-selected index rate.

A person or company authorized to act on the behalf of another person.

The length of time for you to pay off a mortgage, with interest, by making regular, equal payments.

An individual who holds the basic licence class required for dealing in real estate or brokering mortgages.

An individual who holds the in-depth licence qualifications of a real estate broker but does not operate the brokerage they are registered under.

The areas of a building that are below the ground surface.

If any part of a floor (space) is below ground level, that entire floor is considered below grade.

The administrative body created by the Real Estate Act to oversee the Real Estate Council of Alberta. RECA’s Board ensures RECA’s work aligns with the purpose that’s set out in the Real Estate Act.

An individual with the highest class of licence who is responsible for the operation of their brokerage and the supervision of all its employees. There can only be one broker for each brokerage.

An open house for buyer agents to attend without any clients. A broker’s open house allows agents to assess a property’s fit for multiple buyer clients.

 A national member association that represents real estate licensees. The Canadian Real Estate Association (CREA) supports its members through local boards and associations. CREA owns the trademarks and logos for: MLS®, Multiple Listing Service®, REALTOR®, and REALTORS®.

The chief administrative officer of the Real Estate Council of Alberta. The CEO reports to the Board of Directors. They provide leadership for RECA to meet its strategic goals, objectives, and priorities. The CEO holds the powers and responsibilities prescribed to the Executive Director in the Real Estate Act.

A person who has entered into a service agreement with a licensee. Service agreements may or may not be in writing. Licensees must act in the best interests of their client.

Fees paid to finalize a real estate purchase. Closing costs are separate from the deposit and down payment. Typical closing costs for buying a home include legal fees, property tax adjustments, and the title transfer fee. Most closing costs will be due on the date the property ownership changes from the seller to the buyer.

Real property that’s primarily used to generate income.

Commercial real estate properties include:

• retail spaces
• office buildings
• industrial properties like factories and warehouses
• institutional properties that are used or zoned for schools and hospitals
• income-generating farms and ranches (sometimes called agri-business)
• residential buildings with more than four units

An estimate of a home’s price based on similar properties recently sold in the immediate area. Real estate agents perform a comparative market analysis (CMA) to help:

• sellers set their listing price
• buyers submit competitive offers

Condominium documents provide information about a condominium corporation. Important condominium documents include:

• reserve fund plan and report
• approved operating budget
• audited financial statements
• minutes from condo board meetings
• minutes from the most recent annual general meeting
• bylaws and rules
• estoppel certificate

A monthly fee condo owners pay for the upkeep of the condominium property. Condo fees are set by the board of directors and approved by the condo owners at the annual general meeting (AGM). Condo fees are typically paid to a condominium management brokerage.

A situation where the needs or wants of the licensee clash with the needs or wants of the client.

A trust account that protects consumers from financial loss from fraud, breach of trust, or neglect by a real estate or mortgage licensee.

The money in the Consumer Protection Fund comes from a one-time fee paid by real estate and mortgage licensees. Interest and profit from investments of the money from the Fund gets put back into the Fund.

A portion of the down payment that the buyer provides with their offer to purchase. It shows the seller the buyer is serious about buying the property.

Laws in Alberta that set the rights for the legal spouse of a registered homeowner.

Alberta’s Dower Act protects the spouse’s rights to:

• live in the home indefinitely after the death of their homeowner spouse
• continue to use the personal property of their homeowner spouse
• payment if the homeowner spouse sells, leases, or mortgages the home without their consent

Dower rights do not apply to common law partners.

An upfront cash payment toward the purchase price of the home.

The Government of Canada requires the down payment be at least 5–20%, depending on the purchase price of the home.

Example Definition

A visual assessment of the physical condition of the home. Home inspectors look for issues like leaks, electrical problems, and structural damage. If the home inspector sees signs of a problem, they may suggest you contact an expert before you finalize your purchase.

TBD

Administrative bodies that are created by the Real Estate Act. Industry Councils create and oversee the rules and licensing requirements for their industry. RECA has four industry councils: Residential Real Estate Broker Industry Council, Commercial Real Estate Broker and Commercial Property Manager Industry Council (includes rural/agri-business), Residential Property Manager Industry Council (includes condominium management), Mortgage Broker Industry Council. 

The amount a borrower will pay the lender for money borrowed. Interest rates are expressed as a percentage of the loan principal. The interest rate set by the Government of Canada (prime rate), the mortgage term, and a borrower’s personal credit score will affect the interest rate on new loans.

A person who holds any class of real estate, mortgage, property management, or condominium management licence in Alberta.

Physical defects or technical problems that are not visible during a property viewing or inspection.

Material latent defects affect the property’s value and may make it:

• unsafe
• unfit to live in
• unsuitable for the intended or approved use

A listing on a Multiple Listing Service® (MLS®) System where the agent does not provide other services to the seller. The seller is in a client relationship with the agent. Their written service agreement states that the agent’s only role is to create and update the MLS® post.

A loan for the purchase of real property, where the property is used to secure the loan. Under a mortgage, the borrower owns the property, but the lender can seize the property if the terms of the loan are not satisfied.

Insurance that protects lenders if a borrower defaults on their mortgage.

You will need to buy mortgage insurance to get a high ratio mortgage.

How often you make payments on your mortgage. Typical payment schedules are monthly, semi-monthly, bi-weekly, and weekly. Bi-weekly and weekly payments can save you money and pay off your mortgage faster. Monthly and semi-monthly payments are helpful for creating a consistent budget each month.

The amount borrowed from a lender, or the amount still owed to the lender. The principal is the amount on which you pay interest.

An independent person or company who manages residential tenant contracts and money on behalf of the property owner.

In Alberta, property managers must hold the proper licence to act on an owner’s behalf to:

• lease, negotiate, approve, or offer to lease residential real estate
• collect, offer to collect, or attempt to collect, money paid for the use of real estate, including money for:
  • deposits
  • rent
• hold or manage money received for the rental of real estate
• advertise real estate for rent
• perform any actions that directly or indirectly further other licensed activities

Facts about, or features of, the property that may make it less appealing to some buyers, even if they have no effect on the physical condition of the property.

The amount the buyer must reimburse the seller for property taxes paid, based on the date the buyer takes possession of the property.

To determine the property tax adjustment:

1. divide the total amount paid for property taxes that year
    
2. multiply that number by the number of months left in the year

The annual fee property owners pay the municipality for services.

Legislation that sets the framework for regulating Alberta’s real estate industry. This includes real estate, mortgage, property management, and condominium management professionals. The Real Estate Act established the Real Estate Council of Alberta to set and enforce standards of conduct.

The standards of practice set by the four Industry Councils to protect consumers. The Real Estate Act Rules outline what licensees can and cannot do as part of their work.

A market value assessment of a property. A licensed real estate appraiser will review the age, condition, and features of the home. The appraiser calculates the value based on the local housing market.

A high-level diagram of the property based on a land survey. The Real Property Report (RPR) shows the buyer exactly what they are buying. The RPR will include the boundaries, buildings, and structures of the property.

A registered trademark of the Canadian Real Estate Association (CREA). This title can only be used by members of CREA and its provincial and local affiliates.

A consistent way for real estate agents to measure and communicate the size of homes for sale or rent.

Alberta’s Residential Measurement Standard (RMS) helps consumers accurately compare the sizes of different homes.

Laws in Alberta that set the rules for how landlords and tenants should interact. The Residential Tenancies Act outlines:

• standards of conduct for both landlords and tenants
• the rights of both landlords and tenants

Commercial property that is:

• located outside any municipal boundaries
• primarily used to make money by growing crops or raising livestock

Real estate agents must hold a Rural Real Estate licence to buy, sell, or act as a property manager of these commercial properties.

People who work in an industry set the rules for how the industry operates.

The period of time the lender agrees to loan money to the borrower under the mortgage agreement. Typical mortgage terms are between one (1) and five (5) years. At the end of the mortgage term, the borrower may renew or refinance the mortgage without penalty. Otherwise, the borrower must pay the lender the remaining principal and unpaid interest.

There are different title insurance policies for lenders and property owners.

Owner’s title insurance protects the property owner against financial loss from:

• fraud or forgery
• non-title defects
• unknown municipal compliance issues
• hidden deficiencies
• liens to collect on a previous owner’s debt

Lender’s title insurance protects the mortgage lender’s right to the title.

The process of obtaining a current certificate of title for a property. Real estate agents should perform a title search to confirm the property details.

Consumers or their agents can confirm the title details one of two ways:

• online, through the Spatial Information System (SPIN2)
• in person, through a registry agent

To perform a title search, you will need to provide one of the following:

• legal description
• land identification number code (LINC)
• title number

Insert definition of “void” here

A written contract between a consumer and a licensee that outlines the legal responsibilities of each party. The written service agreement should outline all agreed upon services, rates and fees, and deadlines.