Real Estate Definitions
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Back Title Letter A letter or document from the title insurance company that specifies the condition of the title. The letter is generally given to the lawyer involved in the real estate transaction. Backup Offer Another offer or bid for a property to be considered by the property seller if the current offer falls through. Bad Debts Money that cannot be collected is considered bad debt. Businesses can deduct bad debts under certain circumstances. If a bad debt is personal, it can also be deducted in some instances as a short-term capital loss. Balance The amount of money in your account. Balance Sheet A report of financial standing which includes assets, liabilities, and net worth of an individual. Balance Transfer Transferring or moving an unpaid credit card debt from one credit card company to another. Credit card companies will sometimes offer lower interest rates to encourage balance transfers to their company, but they will also charge transfer fees to discourage their customers from leaving. Balance Transfer Fee A fee charged to customers when transferring outstanding balances from one credit card to another credit card. Customers generally transfer outstanding balances to obtain better interest rates. Balloon Loan This type of loan is not designed to be repaid in full through periodic payments at the end of the loan term. When the term ends, a balloon payments is due. This means that one larger payment is made to pay off the remaining principal. Balloon Mortgage This type of loan requires the borrower to make regular monthly payments which amortize over a specified term, but at the end of that term a final payment or large lump sum (balloon payment) must be made to pay off the remaining principal. The typical term for a balloon loan is 10 year. Balloon Payment A payment or installment that is made at the end of a specified loan term to pay off the remaining principal. This payment is larger than the regular payments that are made throughout the term of the loan. Bank A financial institution in which money is kept for saving or commercial purposes or is invested, supplied for loans, or exchanged. Bank Holding Company A company that owns or controls one or more banks or companies associated with banking activities. Holding companies can include leasing companies or credit companies and are often identified by having either Bancorp or Bancshares in the company name. All bank holding companies are regulated by the Federal Reserve Board of Governors. Bank Rate The minimum rate charged by the Bank of Canada for one-day loans to chartered banks, trust and loan companies and other members of the Canadian Payments Association. The bank rate affects the Prime Lending Rate that these financial institutions give to their most credit-worthy borrowers. Bank Spread Bank spread refers to the difference between the interest rate in which a bank charges a borrower and the interest rate the bank pays a depositor. Bank Wire An electronic money transfer system used to move funds between banks. Bankruptcy The financial status of an individual or firm that has been legally judged either to have debts that exceed assets or to be unable to pay bills. The individual or firm can declare bankruptcy voluntarily or be pressed by creditors to do so. The debtor's remaining property and assets are then administered for the creditors or distributed among them. Bankruptcy Trustee A private third party or company that is appointed to initiate bankruptcy proceedings for an individual or firm that is subject to a bankruptcy. Bargain Sale A bargain sale refers to purchasing a property or an item for less than the market value. Base Price The cost of a vehcile without any extra options such as power windows, air conditioning, etc. The base price simply includes standard equipment and the manufacturer's warranty. Basis Also referred to as cost basis. Cost basis is the monetary value assigned to an asset from which a taxpayer determines capital gain or loss. For assets purchased, the basis is the price paid by the purchaser. Special rules apply to assets acquired through gift or inheritance, as well as to the value of stock funds held for a period during which earnings are reinvested. Basis Point A basis point is a measurement of a percentage: 1/100th of one percent. For example, the difference between a 9.0% loan and a 9.5% loan is 50 basis points. Bearing Wall A wall or the side of a structure that supports a roof or offers integrity to other parts of the structure. Bedroom Community A suburb in which most residents live, but do not work. These people commute to the city to work. Before-tax Income A person's income or earnings before income taxes are paid. Beneficiary A person who is legally named to benefit from an insurance policy, will, deed, or trust. Betterment An improvement, addition, or replacement to a property that increases the value. Bidding War A bidding war can occur when multiple buyers are interested in purchasing a single property. Competing offers will likely cause the price of the property to escalate resulting in larger profits for the seller. Bilateral Contract A legal agreement or contract where both parties involved agree to give each other something. For example, in a property purchase agreement the buyer pays money to the seller and the seller then transfers the property to the buyer. This is a bilateral contract. Bill of Sale Written proof in the form of a receipt or document that serves as confirmation for the transfer of title to personal property. Bill Presentment An online system that allows customers to receive and view bills electronically via computer. Customers can then pay the bills electronically by transfering funds from their accounts to the creditors seeking payment. Billing Cycle The amount of time between the last statement date and the current statement date. Billing Statement A monthly bill that is sent by a creditor to the customer that provides a summary of the activity on an account. This can include balances, purchases, payments, credits, and finance charges. Binder An agreement with the seller from a potential buyer to consider the purchase of a property. The agreement is secured and backed by a cash deposit as a declaration of good faith on the part of the buyer. Biweekly Mortgage A mortgage loan that requires payments every two weeks instead of one standard monthly payment. Each 26 biweekly payment is equal to one-half of the standard monthly payment. Making biweekly mortgage payments is advantageous to the buyer because it results in a substantial reduction in interest payments because the mortgage is paid off quicker. Blank Cheque The account holder has filled out the cheque with all the required information (including a signature), except for a dollar amount. Blanket Insurance An insurance policy that covers common areas of a co-op, condominium, or neighborhood governed by a homeowner's association. This type of policy does not cover the actual structures or their contents. The policy only covers areas that are owned in common by the individual owners. Blanket Mortgage A mortgage that covers more than one property owned by the same buyer. blended rate mortgage The new interest rate when an existing property loan is refinanced and extended. The rate becomes a weighted average of the previous and new interest rates. Blighted Area A neighborhood that is run-down and unestetically pleasing. Blue Book This term refers to the Kelley Blue Book which is an industry guide used by dealers to estimate wholesale and retail vehicle prices. The books are issued by many organizations, and are commonly available on the Internet or in the reference sections of public libraries. It is important to note that the books are not always blue in color. Blueprint A contact print of a drawing or other image rendered as white lines on a blue background. A blueprint is generally a print of an architectural plan or technical drawing and is often used for construction purposes or obtaining permits. Board Foot A measurement of lumber that is equal to 1 inch thick, 1 foot long, and 1 foot wide. Boilerplate The standard and routine jargon used in legal documents. Bona Fide Characterized by good faith and lack of fraud or deceit. In real estate, a bona fide purchaser or seller has the legal right to give or receive title. Bond A certificate of debt issued by a government or corporation guaranteeing payment of the original investment plus interest by a specified future date. Book Value The value or monetary worth of a property, item, or company as a capital asset based on its cost plus any additions, subtracting depreciation. Boot A way to make an exchange of property equal. For example, if you trade in a work vehicle for a new model, the cash you pay on top of your trade in is called boot. Property or assets can also be considered boot because it does not always have to be cash to make an exchange equal. Borrow 1. To be approved and obtain a loan of money. 2. Sand, gravel, or other material used for grading. Borrow Pit A hole from which topsoil, gravel, or other material is removed for use in a construction project. Borrower The person who obtains the loan. Boundary The line that divides or acts as a legal border between adjacent properties. Breach of Contract A "breech of contract" refers to a failure to abide by or comply with the terms of a legal agreement without a legal excuse. Breach of Covenant A " breach of covenant" refers to a violation of a promise made in a contract or property deed. Breach of Warranty A certainty that a seller cannot pass clear title of property to a buyer. Break-even Point When a person's expenses match their income or savings then they are said to have reached the break-even point. In home finance, the term can refer to the amount of time it takes to regain the costs of refinancing a loan or paying discount points. bridge financing A short-term, high interest loan that allows a seller to purchase a new property before selling an existing property. Bridge Loan A loan that "bridges" the gap between the purchase of a new home and the sale of a current or existing home. The current home is used as collateral and the bridge loan is used to pay closing on the new home before the current home is sold. Some bridge loans are structured to completely pay off the existing mortgage at the bridge loan's closing, while other variations of the loan add the new debt to the old debt. Bridge loans usually come with six month terms. Broker A person or firm who acts on behalf of another. For example, a mortgage broker works on behalf of a client to find the best mortgage rate possible for the client. Broom Clean This term means that a property is ready to be cleaned and painted, but it does not mean immaculate or spotless. Browser A computer software application used for accessing and viewing Internet Web sites. There are many different types of browsers available and two of the most common include Microsoft Internet Explorer and Netscape Navigator. Buffer Strip This refers to a parcel or stretch of land that separates two pieces of property. Builder Upgrades Refined features or materials that are offered by the builder for an extra charge. These features allow home buyers to upgrade materials or add personal touches to their home instead of using the base (economoical) materials and features chosen by the builder. Building and Loan Association A financial institution that is designed to help members finance property purchases and real-estate transactions. Building Code "Building code" refers to the regulations and guidelines that govern design and all materials used in construction. Building Inspector A local civil servant who enforces the building code as determined by government standards. It is the building inspector's responsibility to ensure that construction and renovations are up to code. Building Moratorium A temporary halt or permanent stop to construction. Building Permit A permit issued by a local government giving authorization to construct a building or repair an existing structure. Building Restrictions Local governments impose certain regulations and restrictions on the size and height, building materials, colours, uses, locations, placement, and other characteristics of commercial and residential buildings or structures. Built-ins Items that are permanently attached to a dwelling or building are considered "built-ins". Such items can include appliances, cupboards, shelving, etc. Bull and Bear Markets When a market is thriving and stock prices are being driven up, this is called a bull market. When stock prices fall and the market turns poor for investors, then it is called a bear market. Bundle of Rights An owner is given a legal set or bundle of rights over their property. Burden of Proof To win a lawsuit, those involved must provide enough evidence to make their case. This is a legal requirement. In civil cases, such as tax court, the burden of proof is decided by the the most evidence. Except in cases of tax fraud, the burden of proof in a tax case generally is on the taxpayer. Business Bankruptcy This type of bankruptcy occurs when business related debts cannot be paid and the business or individual defaults or files for bankruptcy. The debtor can be a business or an individual involved in a business. Business Interest Expense Interest acquired in business operations can be deducted as a business expense. Buy-down Mortgage A type of mortgage loan where the lender charges below-market interest in exchange for discount points. Buy-down or Buydown The option of buying a lower mortgage rate. The borrower "buys down" the interest rate on a mortgage by paying discount points when the loan is first initiated. It can also be a mortgage where an initial lump-sum payment is made to temporarily reduce a borrower's monthly payments during the first few years of the mortgage. Buyer Broker An individual who is paid a commission from a buyer to find a property and to assist with the negotiations involved with closing the real estate transaction. Bylaws Laws or rules that govern the internal affairs of an organization or a city. Bylaws are often considered to be secondary laws. |
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