A-C | D-G | H-N | O-Z

O

Occupancy Inspection/ New Home Orientation
A meeting between the Purchaser and the Developer /Builder to review and confirm that work on the home is satisfactory and complete and to note any outstanding items that will require correction after the Purchaser moves in. Typically, this meeting is also used to orient the Purchaser to the new home and to provide demonstrations and information on the use, maintenance and upkeep of the home’s components.

Occupancy Permit
At the time of taking possession of the unit, the Purchaser should receive from the Developer a copy of the Occupancy Permit issued by the municipality. The permit gives permission for the unit to be occupied as a residence.

Offer to Purchase (see also “Purchase Agreement”)
A written contract setting out the terms and conditions under which the Purchaser agrees to buy. If accepted by the Developer, it forms a legally binding contract subject to the terms and conditions stated in the document and the laws governing condominium purchases.

Officers (Condominium Corporation)
A Condominium Corporation’s Officers — the minimum being a President, a Secretary and a
Treasurer — are elected by unit owners and/or mortgage lenders or selected from and by the members of the Corporation’s Board of Directors in accordance with procedures set out in the bylaws of the Condominium Corporation. The President chairs meetings of the Board or General Meetings of the Condominium Corporation membership and may cast a vote in Board decisions. The Secretary keeps the minutes of Board and General Meetings. The Treasurer ensures that proper financial records are maintained for the Corporation. See the Condominium Corporation’s bylaws for details on the titles and duties of the Officers.

P

P.I.T.
Principal, Interest, Taxes. Payments due regularly under the terms of the mortgage agreement
typically include a component to pay the estimated annual property and school taxes on the property. If, for example, regular payments are to be paid monthly, then one-twelfth of the estimated annual taxes are added to the monthly mortgage payment amount. Since the tax amount is an estimate and since these taxes can change annually, the portion of the mortgage payment attributable to taxes may also change. Moreover, upon issuance of the annual tax notice by a municipality, the lender may determine that the amount of funds held in your tax account is insufficient. Therefore, the lender will require you to “top up” your tax account with an additional amount. Funds retained in your tax account typically earn a small rate of interest from the lender.

P.I.T.H.
Principal, Interest, Taxes and Heating. Monthly costs used to calculate your Gross Debt Service Ratio (GDSR) in determining whether you qualify to borrow a specific mortgage loan amount.

Principal
The amount of money actually borrowed, excluding interest but including any mortgage insurance
premiums and fees that are payable if the mortgage is a high ratio mortgage for over 75% of the unit’s lending value.

Progress Payments/Mortgage Draws
It’s important to note that there should be no Progress Payments or Mortgage Draws involved in the purchase of a condominium unit. These types of payments typically apply to conventional homes. They’re made during construction from the mortgage funds approved for a purchase and in advance of the home being completed. These payments are timed to correspond with the completion of stages of construction and should closely match the value of the completed work in place. A 10% Builders’ Lien Holdback may be deducted from each payment to the Developer/Builder, with that amount being held in trust by the Developer’s lawyer until such time as Title to the property is legally free and clear of potential Builders’ Liens (claims for non payment by suppliers or subcontracted building trades) against the property.

Property & Education Taxes
As with non-condominium homeowners, condominium unit owners are landowners. So they must pay municipal property taxes and provincial education taxes assessed on the value of their land plus the value of their homes. For assessment purposes, each unit and its share of the common
property represents a separate parcel of land and improvements to the land. Improvements include the owner’s unit and the owner’s share of common property buildings.

Proxy
By written authorization, a condominium unit owner may authorize another person to act for the
owner and exercise a unit’s voting share at a general or special meeting of the Condominium Corporation.

Purchase Agreement
A contract between a Purchaser and a Developer for the construction of a unit (and common property) at a specified purchase price.

Purchase Price
The agreed upon price of your new condominium home, as set out in the Purchase Agreement. The purchase price may list GST as extra or it may indicate that it is included. The purchase price also includes the added or deducted costs for any

R

Real Property Report
A legal document that clearly indicates the location of all visible public or private improvements on a property, relative to the property‘s boundaries. It can be relied upon as an accurate representation of the improvements on a property. A Real Property Report is normally required when the boundaries of the unit are set in relation to the land, as with a Bare Land condominium, rather than in relation to the buildings, as with a conventional condominium.

Refinance
To pay off a mortgage or other registered encumbrance and to arrange a new mortgage with
the same or a different lender.

Rescission
The Condominium Property Act provides condominium unit Purchasers with the Right of Rescission in order to cancel (rescind) a Purchase Agreement. When you sign the Purchase Agreement and once you have received all the required disclosure schedules (documents), you have 10 days to back out of the Purchase Agreement. If you have the Purchase Agreement and all the disclosure schedules in your possession for at least 10 days, you have no rescission rights when you sign the contract.

Reserve Fund
A fund created from a portion of the Condominium Fees paid by all unit owners, set aside and managed by the Condominium Corporation to pay for major repairs or the replacement of common property elements, where such repair or replacement is not part of the regular ongoing annual maintenance program. Properly called a Capital Replacement Reserve Fund, it is usually held in secure liquid investments such as guaranteed investment certificates, bonds, mortgage investment funds or money market funds and is not intended for regular or annually recurring maintenance expenses such as trash disposal or snow removal.

Reserve Fund Study
A study conducted on behalf of the Condominium Corporation Board to identify the depreciating
common property that will need to be repaired or replaced over the next 25 years. The study determines when such work will need to take place, and at what cost, and sets out the amounts of funds that need to be set aside monthly in order to meet all such costs over the 25 year time frame. The first study must be conducted within two years of a condominium plan being registered. Subsequent studies must be done every five years after that.

Reserve Fund Report
A written report prepared for the Condominium Corporation Board by the person undertaking the
Reserve Fund Study. The Report covers the qualifications of the person conducting the Study, the independent nature of the Report, the findings of the Reserve Fund Study, and makes recommendations for creating a Reserve Fund Plan or for amending an existing Reserve Fund Plan.

Reserve Fund Plan
After receiving and reviewing the Reserve Fund Report, the Condominium Board must approve a
Reserve Fund Plan to create and manage a Reserve Fund if one has not been established already. A Condominium Corporation has two years from when the condominium is completed to establish the Reserve Fund. The Reserve Fund Plan sets forth the amount of funding needed for creating and maintaining the Fund. It also details the Reserve Fund contribution amounts needed from each unit owner, a timetable for collecting the funds, and the manner in which the funds are to be collected — either by adding to regular Condo Fees or through a Special Assessment or both. The Condominium Corporation must provide the unit owners with a copy of the approved Reserve Fund Plan before collecting monies for the Reserve Fund.

S

Seasonal Deficiencies
Exterior items that are a part of the condominium unit owner’s property and which, at the time of
possession, are incomplete as a result of weather or climate conditions such as rain or extreme cold. Such seasonal deficiencies might include stucco or trim paint that require manufacturer specified minimum temperatures and dry conditions for successful application.

Second Mortgage
An additional mortgage on a property that already has a mortgage loan to the property owner registered on Title. The Second Mortgage ranks behind the First Mortgage in terms of priority of security.

Special Assessment
If significant or urgent repair or replacement expenses for the common property need to be
funded and sufficient sums are not in the Reserve Fund, the Condominium Corporation Board must levy a Special Assessment so that all the unit owners contribute their fair share of the funds needed to deal with the situation.

Special Resolution
Important condominium decisions such as enacting or amending bylaws, or selling or leasing common property require that a Special Resolution be adopted by a majority vote of the unit owners at a properly convened General Meeting. A majority constitutes not less than 75% of all unit owners entitled to vote and the votes must also represent at least 75% of the total unit factors.

Specifications
A list (or lists) of the general construction and finishing components of a new home. Specifications typically include information on the Developer’s Warranty and policies for handling legal arrangements and Title transfer. Detailed lists of the interior and exterior finishing details are called Interior and Exterior Finish Schedules. Specifications are an important part of the Purchase Agreement and take precedence over Working Drawings in the event of a discrepancy between the Specification and the Working Drawings.

Statement of Adjustments
A final statement of account presented to the Purchaser by the Developer’s lawyer at the Closing of the transaction. It details any extra charges that are the result of changes to the plans or specifications made by the Purchaser and agreed to by the Developer after the initial Purchase Agreement was made. It also lists other normal Closing costs and adjustments such as for GST, legal fees, mortgage and mortgage insurance application fees, interest adjustments and tax adjustments. These adjustments are due and payable, together with the balance of
the purchase price, at the Closing of the transaction.

Structural Defect
The failure of a load-bearing component of your home to provide its required and necessary loadbearing weight and function.

Structural Integrity
Warranty Protection
This protection from The Alberta New Home Warranty Program permits the unused portion of
First Year Material & Workmanship Warranty coverage (up to $60,000 per condominium unit and up to $1,500,000 for an entire condominium development including common property) to be used for paying the costs to repair major structural defects in the first five years of the Program’s coverage.

Structural Plans
Working drawings that provide cross-sectional views and details of the structural components of a
building. These include foundation footings, basement walls, roof trusses, floor joists, loadbearing
beams and load-bearing walls.

Substantial Completion
The date upon which the units and the common property are declared to be ready for their intended purpose — that is, for residents to live in and use — and also the date upon which The Alberta New Home Warranty Program’s coverage on the common property begins. The date of Substantial Completion must be verified in writing. This is usually done by the prime consultant responsible for construction of the Condominium (i.e. the Architect or Engineer).

Survey
A document that illustrates a property’s boundaries and measurements and the location of improvements (i.e. buildings), as well as easements and encroachments. (see also “Real Property Report”)

T

Tenancy in Common
Condominium unit owners share ownership in the common property as “tenants in common”. Both owners hold an undivided half interest in the property, but without rights of survivorship. (see also “Joint Tenancy”)

Term
The length of time during which payments are to be made on a mortgage at the rate of interest set out in the mortgage. At the end of the term, the remaining principal is to be paid out unless the lender agrees to renew the debt for a further period of time. The entire mortgage principal is usually not paid off at the end of the term because the amortization period is normally much longer than the term. (see also “Amortization”)

Title (see also “Certificate of Title”)
A document issued by the Alberta Land Titles Office which shows the registered owner(s) of a property subject to any registrations against the Title. In a condominium, the Title gives a unit owner full and exclusive ownership rights to the unit (which may include land within the unit as in the case of a Bare Land Condominium) for an indefinite period of time. The Title also records the unit owner’s share of the common property, stated as a fraction of 10,000.

Total Debt Service Ratio (TDSR)
The percentage of total monthly pre-tax income required to pay all monthly housing costs (Principal, Interest, Property Taxes, Utilities, 50% of Monthly Condominium Fee) plus all other debts such as monthly car payments, line of credit payments and credit card payments.

Transfer of Title
A legal document, signed by both the Developer and Purchaser, which transfers ownership of a unit to the Purchaser.

U

Unit Boundaries
In conventional condominiums such as apartment units and town homes, the unit boundaries are the inside surfaces of ceilings, floors and walls including doors and windows. However, these boundaries may be varied by the Condominium Plan.n In Bare Land condominiums, the boundaries are set in relation to land, not building structures, so that property boundaries are established by survey markers.

Unit Factor
The term used in the Condominium Property Act to define each unit owner’s tenancy-in-common share in the common property. The Unit Factor also determines each unit’s proportionate share of
maintenance and operating costs for the common property and thus each unit’s required condominium fee. Assessments for condominium fees may use another calculation method or formula, other than Unit Factors, as long as the method is agreed upon by the owners through a properly passed bylaw.

Unit Rentals
Since the rental or lease of a condominium unit includes the right of access by the tenants to the common property, the Condominium Property Act ensures that a Condominium Corporation has the authority to protect all owners’ interests. Moreover, the Corporation’s bylaws apply equally to all residents including tenants. If a unit owner rents out a unit, the Condominium Property Act states that the unit owner must provide written notice of intent to the Condominium Corporation. The notice must include the amount of rent to be charged and an ”address for service” — that is, an address and contact information so that the unit owner can be reached during the rental period. The Condominium Corporation may require a security deposit from the unit owner when a unit is rented out. The Condominium Corporation also has the right to terminate a rental agreement at any time if a tenant causes damage or contravenes a bylaw.

W

Working Drawings
A set of scaled down, two dimensional construction plans consisting of exterior elevations, interior floor plans and structural plans. Used for a number of purposes including providing construction directions to sub-trades, identifying materials and quantities of materials to be ordered from suppliers, and receiving municipal building permit approval.

Z

Zoning Bylaws
Municipal or regional laws that specify a use for particular blocks of land; for example, residential
single family or residential multi-family.