B
Bidding war: A competitive scenario where multiple buyers submit offers on the same property, which may drive the final sale price above the asking price. Bidding wars typically occur in hot markets and may lead buyers to waive conditions like home inspections to make their offers more attractive to sellers.
Bridge financing: A temporary loan that provide buyers with the money required to purchase a new property before they are able to access the money from the sale of their current property. This type of loan relies upon the equity in your current property (that is, the difference between your property’s appraised value and how much you own on your mortgage or other loans secured by your home) to secure money for a down payment on the next property. This allows you to complete the purchase while waiting for your sale to close.
Broker: A real estate agent who has completed additional educational requirements to qualify them to own, manage, or operate a real estate brokerage, and to act independently (without supervision from another broker). Brokers in Ontario must be registered and employed as a real estate salesperson for at least two of the prior three years to qualify for the designation.
Brokerage: A real estate company that employs and supervises real estate agents. The brokerage officially represents buyers and sellers through signed agreements. All real estate agents in Ontario must be employed by a registered brokerage. The brokerage is responsible for ensuring its agents comply with the Trust In Real Estate Act, 2002 (TRESA).
Broker of record: The broker who manages and oversees all operations of a real estate brokerage. They are legally responsible for ensuring that all agents at the brokerage follow proper procedures and regulations. The broker of record doesn't necessarily own the brokerage, but they are accountable for everyone who works there.
Brokerage representation: Everyone at the brokerage shares the same legal responsibility to represent you and your best interests. If the brokerage’s duties change, those changes apply to everyone at the company working on your behalf. For more information on brokerage representation, refer to the RECO Information Guide. See also: Designated representation [link].
Brokerage representation agreement: This is a contract between you and the brokerage for real estate services and representation which means the entire brokerage [link], including all its agents, are working for you. See: Brokerage representation [link].
C
Cancellation right: A provision in a contract or agreement that gives you the ability to cancel it. Any cancellation rights must be clearly set out in a written representation agreement, an offer to purchase, or in an agreement of purchase and sale.
Client: A person who hires a real estate agent and brokerage to help buy or sell a property. Before an agent can begin working on their behalf, the client must sign a formal agreement with the brokerage. This contract legally requires the brokerage to represent the client’s best interests and outlines the specific services the client can expect to receive.
Closing costs: Fees and expenses that both buyers and sellers must pay when completing a real estate transaction. These costs typically include title transfer fees, legal fees, and other administrative expenses required to finalize the sale.
Closing date: On this day, the buyer receives the keys, the seller receives payment, and all legal documents including mortgages or loans are registered. This is the final step in a real estate transaction once the property title officially transfers to its new owner.
Commission: The fee paid to a real estate brokerage for their services, typically calculated as a percentage of the property’s sale price or less commonly as a flat fee. This payment is usually made when a property successfully sells or is purchased. Real estate fees or commissions are negotiable and should be specified in the representation agreement. They are not fixed by the government, RECO, or any real estate association or board. In Ontario, sales tax (Harmonized Sales Tax or HST) applies to real estate commissions.
Competing offers: When more than one buyer puts forward an offer for a property. Buyers and sellers need to consider how to respond when presented with competing offers. Your real estate agent will ensure you understand the process.
Condominium (condo): A type of property where you can own an individual unit within a larger building or community through a condominium corporation. As a condo owner, you will pay monthly fees that cover the maintenance of shared spaces like lobbies, gyms, pools, and other common areas. The Condominium Authority of Ontario (CAO) offers resources for buyers, owners and others.
Conflict of interest: A scenario where a real estate agent has competing loyalties and therefore cannot act in your best interests. This happens when an agent might be tempted to prioritize someone else's needs over yours, whether it's their own interests, or those of another client, friend, relative or business associate. In Ontario, your agent is required to disclose any conflicts of interest to you, recommend you seek independent advice, take steps to make sure you understand the conflict, and get your permission before proceeding with providing services.
Confidential information: Private details about your real estate transaction that are not to be disclosed to anyone unless you specifically give permission to share them – and then, only shared in certain circumstances. Your brokerage should provide you with details on what information may be shared at meetings as well as within the brokerage, and for what purpose. Federal privacy legislation also applies, and you can find more information on the Government of Canada website.
Consent: A voluntary agreement to participate in or allow a specific action to take place. In real estate, this means you willingly agree to decisions affecting your property transaction. More information can be found in RECO’s bulletin on Disclosures, consents, and acknowledgements.
Consumer deposit insurance: A type of insurance which offers protection for consumer deposits, subject to the terms and conditions of the policy. In Ontario, all real estate agents are required by law to participate in an insurance program that includes consumer deposit insurance. So, this coverage is paid for by the agent, and not the client. For more information, visit Consumer deposit insurance.
Cooperating brokerage: A real estate brokerage that represents the buyer in a property transaction. This brokerage works alongside the listing brokerage (which represents the seller) to help complete the sale.
D
Defects: Any imperfection, damage, or inadequacy which affects the quality and/or safety of a property. In real estate, defects are usually categorized as either “patent” (visible) or “latent” (non-visible).
Delayed offer presentation: A selling strategy where the seller chooses not to review any purchase offers until a specific date and time. Also known as "holding offers," this approach allows multiple buyers to submit offers, which are all considered together.
Designated representation agreement: An arrangement in which a brokerage assigns one specific real estate agent to represent you exclusively, while all other agents at that brokerage remain neutral. Only your designated agent has access to your confidential information.
Disbursement: A payment made to cover necessary expenses during a real estate transaction. In the case of property purchase and sale, it will include registration fees and other necessary costs.
Disclosure: The act of sharing important details about a property or transaction, or possible conflicts of interest with the real estate agent or brokerage, that could affect the buyer or seller's decision.
Down payment: A lump sum of money you pay upfront when purchasing a property, representing a portion of the total purchase price.
E
Easement: A legal right that allows one property owner to enter or access another’s property without permission – generally for a specific purpose. This could allow a utility company to access a portion of your land to make repairs, or to permit access to a waterfront. An easement may involve compensation to the property owner, and is typically registered on the property title. It is important to understand any easements that apply to a property before purchasing.
Expiry date: The deadline after which an agreement or offer is no longer valid or binding. Once this date passes, the terms of a given agreement can no longer be accepted or enforced.
F
Financing: The process of obtaining the money required to purchase a property, typically through a loan from a financial institution or mortgage. The lender provides the money up front and you repay it over a set period of time. Payments generally include a portion designated as “principal” – or the original amount borrowed – as well as “interest” – or a percentage amount that the lender charges for borrowing money. For more information, visit Navigating the mortgage market.
Financial benefits: A scenario where your real estate agent may receive additional payments beyond their standard commission from other parties involved in your transaction. Agents must follow strict rules regarding financial benefits.
Freehold: A type of condominium ownership where you own both, your individual unit and a share of the land it sits on. One of two condominium types, freehold condominiums themselves are classified in three categories: standard condominium corporations, common elements condominium corporations, and vacant land condominium corporations.
- Standard condominium corporations: The most common type of condo ownership where you own your individual unit plus a shared interest in common areas like hallways, lobbies, and amenities. You will pay monthly fees to maintain these shared spaces and building assets.
- Common elements condominium corporations: A type of condo ownership where you own a piece of land but share responsibility for maintaining common areas and amenities with other owners. Unlike standard condos, there are no individual units to purchase in this arrangement.
- Vacant land condominium corporations: A condo corporation that's registered before any buildings are actually constructed on the land. This flexible arrangement allows developers to build different types of structures within the same development project.
H
Holdover clause: A contract provision that protects your real estate brokerage by requiring you to pay commission even after your agreement expires. For example, if you purchase a home that your real estate agent showed, you may be required to pay commission. This clause can last for a specified time after your contract ends. So, make sure your agent explains it clearly before you sign.
Holdover period: The specified amount of time during which a holdover clause will be in effect.
Home (property) insurance: This is a type of insurance that protects your property and its contents from damage, theft, or loss. Property insurance is likely a mandatory requirement by your financial institution to secure a loan or mortgage to purchase your property. For more information, visit the Financial Services Regulatory Authority of Ontario’s website.
Housing co-operative: A type of housing where residents collectively own and manage the property together as a corporation. Members share responsibility for maintenance costs, decision-making, and setting rules for how the property is used and maintained.
I
Inducement: A benefit or incentive offered by a real estate brokerage to encourage someone to buy a particular property. This could include reduced fees or other perks that make the purchase more appealing.
Implied agreements: An unofficial agreement that can form when a real estate agent provides services or advice without a signed contract. Even without paperwork, an agent may become legally responsible as your representative if they act on your behalf.
Interested parties: Anyone who has shown genuine interest in buying a property by booking viewings, attending showings, or indicating they plan to make an offer.
L
Land transfer tax: This is a mandatory tax in Ontario when you buy a property. Land transfer tax is normally calculated based on the purchase price of the property, as well as any mortgage or debt you take on as part of the purchase. It is paid when the transaction closes. First-time homebuyers may be eligible for a refund for all or a portion of the land transfer tax. For more information, visit Land Transfer Tax Refunds for First-Time Homebuyers. Some municipalities also require the payment of a land transfer tax. For more information, visit Municipal Land Transfer Tax & Municipal Non-Resident Speculation Tax.
Landlord: The owner of a rental property who leases it to tenants in exchange for rent payments. The landlord is responsible for maintaining the property and following provincial rental laws, while tenants pay rent and follow the terms of their lease agreement.
Latent defects: Hidden issues with a property that are not easily spotted during a regular viewing or inspection. Issues such as mould, discreet structural issues, or hidden flaws in a property’s systems may all be considered latent defects.
Listing agreement: A contract between a property owner and a real estate brokerage that gives the brokerage permission to sell the property. This agreement outlines how long the listing will be active, what services the brokerage will provide, and how much commission the brokerage will receive when the property sells. A listing agreement should also include property details (including address and features), listing price, termination clause, responsibilities of each party and a holdover clause if applicable.
Loan: A sum of money that is borrowed, typically from a financial institution, with the expectation that the full amount will be paid back with interest.
Lockbox: A secure container attached to a property that holds the keys, allowing real estate agents access for showings. Lockboxes can be standard (with a set code to open) or electronic, where a user may need to use Bluetooth or an app to access the lockbox. Having a lockbox and providing authorized access to agents can make it convenient for buyers to view the property without the owner needing to be present. It is important to note that agents must not allow potential buyers to visit a home unaccompanied unless they have written permission from the seller.
M
Mortgage: A mortgage is a loan used to purchase property. The lender provides you the full amount of money to purchase the property, and you repay it over a set period of time. The property itself serves as security for the loan, meaning the lender can take possession of the property if the borrower fails to make payments. The borrower is called the mortgagor, and the lending institution is the mortgagee. Payments generally include a portion designated as “principal” or the original amount borrowed, as well as “interest” or a percentage amount that the lender charges for borrowing money. Mortgages can be secured directly through a financial institution or mortgage broker. For more information on mortgages: Navigating the mortgage market. For more information about mortgage brokers in Ontario: Mortgage Brokering.
Mortgage loan insurance: A type of insurance that protects the lender when a purchaser makes a down payment of less than 20% of the purchase price. This insurance covers the lender's losses if the borrower cannot make their mortgage payments. The cost is typically paid by the borrower and added to their monthly mortgage payment. For more information: FAQs — mortgage loan insurance.
Multiple representation: When the same real estate agent or brokerage represents both, the buyer and seller in a single transaction. As a client, you do not have to agree to multiple representation. This can occur in brokerage representation (where a brokerage is representing more than one client in a transaction), or in designated representation (where the same agent is representing more than one client in a transaction). See Brokerage representation [link] and Designated representation [link] for more information.
Material fact: Any important information about a property or transaction that could reasonably influence someone's decision to buy or sell.
Multiple Listing Service (MLS): An online system operated by local real estate boards that hosts property listings across Canada. The information available to real estate agents through the MLS system is more detailed than what is available on the consumer-focused advertising website, realtor.ca.
N
Non-revocable: Something that cannot be changed or undone. In real estate, non-revocable is used to refer to a clause or condition in an agreement or contract that cannot be cancelled or altered. In some cases, it may be suspended upon the agreement of both parties.
Non-resident speculation tax: A tax applied to the purchase of a property when the buyer is a foreign national (not a Canadian citizen or permanent resident of Canada). For more information, visit the Government of Ontario website.
O
Obligation: A legal responsibility which must be fulfilled as agreed upon.
Offer: A formal proposal to buy or sell a property that includes the price and conditions of the transaction. Once the seller accepts the offer, it becomes a legally binding contract that both parties must honour.
Open offer process: An approach to bidding transparent bidding system where potential buyers know exactly how many other offers have been submitted and their dollar amounts. This allows buyers to make informed decisions about their competing bids.
Open house: A scheduled time when a property for sale is open for viewing by potential buyers without requiring an individual appointment. Anyone interested in the property can walk through and explore it during these designated hours. A real estate agent representing the seller will be at the event to provide information and may ask those attending to provide their name and contact information. Important: If you attend an open house and interact with the agent, remember that they represent the seller.
Ownership: The legal right to control a property or asset. Ownership can belong entirely to one person or organization or be shared among multiple parties.
P
Patent defects: Patent defects are those which are obvious to anyone conducting an inspection. These are visible issues like cracked walls, broken fixtures, or damaged flooring that a buyer or home inspector would reasonably notice when viewing the property.
Pre-approved mortgage: A confirmation from a lender on how much money you could borrow for a home purchase at a specific interest rate. A lender will determine the pre-approval amount based on personal and financial information you provide. Buyers will generally secure pre-approval for the cost of buying a property prior to looking at any homes. This includes both, the purchase price and related taxes, and other expenses. Even after securing a pre-approved amount for a mortgage or loan, final approval still depends on meeting all lending conditions. For more information: Getting preapproved for a mortgage.
Pre-emptive offer: An offer from a buyer made before the seller's stated deadline for receiving offers. This is often called a "bully offer" as it is designed to pressure sellers into accepting immediately by creating a "take it or leave it" situation that bypasses competition from other potential buyers.
Q
Quality representation: The requirement that real estate agents registered with the Real Estate Council of Ontario (RECO) must be reliable, thorough and assume responsibility for the quality of their work. This comes from a commitment to professionalism, training and education. It also means being aware of limitations and being willing to recommend alternative services if the agent cannot provide them.
R
Real estate agent: A real estate salesperson or broker in Ontario who must be registered with the Real Estate Council of Ontario (RECO) to help people buy, sell, or rent properties. Real estate agents can also be known as realtors, listing agents, selling agents, or buying agents. Note that REALTOR® is an official designation that requires registration with the Canadian Real Estate Association (CREA). See Realtor [link] for more information.
Real estate salesperson: This is the legal term for a real estate agent under the law in Ontario. See Real estate agent [link] for more information.
Real estate services sector: This sector includes real estate agents and brokerages who directly assist clients with buying, selling, or renting properties.
Realtor: A registered trademark, referring to members of the Canadian Real Estate Association (CREA). All REALTORS® in Ontario must be registered by the Real Estate Council of Ontario. Not all real estate agents in Ontario are members of CREA using the REALTORS® designation.
Realtor.ca: An online advertising website [link] owned and operated by a subsidiary of the Canadian Real Estate Association (crea.ca) [link] that offers access to sale listings for residential and commercial properties across Canada.
Reasonable efforts: When someone has done everything legally and ethically possible to complete a task or obligation that is within practical limits.
Registrant: A registrant refers to a real estate agent or brokerage registered with RECO. They are permitted to help buyers, sellers, landlords, or renters. Only agents or brokerages registered with RECO can trade in real estate in Ontario.
Remuneration: The total payment owed to a real estate agent or brokerage for their services under a contract – often referred to as a commission. This can be a fixed dollar amount, a percentage of the sale price, or a combination of both.
Remuneration clause: An agreement that the seller will pay some or all of the buyer’s brokerage fees.
Remuneration rebate: A cash incentive offered by a real estate agent or brokerage to the buyer of a property. This rebate is paid directly to the buyer.
Rental transaction: A transaction to establish the leasing of a property between a landlord and a tenant. In Ontario, many rental transactions are concluded without the services of a real estate agent for either renter or landlord. However, agents can take on tenants or landlords as clients – in which case a representation agreement [link] should be completed. For more information about leases: Guide to Ontario’s standard lease. For more information about resolving disputes between landlords and tenants: Landlord and Tenant Board.
Rental agreement: A legal contract between a landlord and tenant that outlines the terms of renting a property. This document establishes the legal relationship between landlord [link] and tenant [link], including monthly rent, lease duration, and the responsibilities of both parties. In Ontario, a standard lease issued by the government is required for most residential tenancy agreements. For more information visit: Guide to Ontario’s standard lease.
Representation agreement: An agreement outlining the terms of the working relationship between a client and real estate agent/brokerage. A representation agreement should include compensation structure, roles and responsibilities, contract duration, any holdover clauses, termination provisions, and a list of services the client can expect to receive.
S
Salesperson: The legal term for a registered real estate agent in Ontario. A salesperson may also be called a real estate agent, registrant, real estate salesperson or sales representative. If a member of the Canadian Real Estate Association (CREA), a salesperson may use the REALTOR® [link] trademark.
Self-representation: The act of buying or selling a home without hiring a real estate agent to represent you. In Ontario, very few people opt to represent themselves. While you may still talk to real estate agents during the process, you won't have a formal agreement with any brokerage and will handle your own interests in the transaction. For more information, consult the RECO Information Guide [link].
Status certificate: A document provided to buyers of a condo by a condominium corporation which contains relevant information about the unit and the corporation itself.
T
Tenant: A person who rents a property owned by a landlord [link]. The tenant must pay rent and follow the terms of their rental agreement [link] in exchange for the right to occupy the property.
Termination provisions: The section of your real estate agreement that outlines all the situations where either you or your brokerage can end the contract early. It is important to review these conditions carefully so you are sure you are aware of any penalties or costs that might apply in each case.
Trust in Real Estate Act, 2002 (TRESA): Consumer protection legislation and regulations governing the conduct of real estate agents and brokerages in Ontario. It came into force on December 1, 2023, following updates and amendments to the previous legislation, which was knows as the Real Estate Business Brokers Act (REBBA).
U
Undivided loyalty: Your best interests are promoted and protected by the real estate agent and brokerage representing you. As a client, your interests take priority over the interests of the brokerage, its agents and any other party.
Unauthorized access: Entering a property without the consent of the seller. It is a serious breach of the seller’s trust, and may create risk to personal property, privacy, and the safety and security of both, buyers and sellers. This could include attempting to access a property outside of scheduled appointment times or for purposes other than what was agreed to by the seller.
