Law, academia, government, and, yes, real estate are all areas that have their share of vague jargon. The real estate world, especially, can be a maze of confusing words, each one leading to a confusing definition replete with even more mumbo jumbo than those of us on the "inside" care to admit. Below you'll find definitions for some common, yet confusing, terms that will hopefully help you navigate your next real estate deal with ease.
- Easement. An easement is an agreement stating a certain right to access or use the property of another for a specific reason. There are many different kinds of easements, from public to private, and can be implied or express. Some problems can arise in situations where, for example, there are two lots sharing a driveway and both are owned by the same person. When/if this person sells the lot with driveway access/parking, the other lot is left without access to a driveway. In cases like these, easements by necessity are usually created. Bottom line: easements are usually not a problem unless they encroach on your property's space or privacy.
- Emphyteusis Although not very common, an emphyteutic lease is a lot like the serfdom agreements of yore. Fundamentally, the lessee agrees to pay taxes of the land/property and invests resources into the upkeep of the property over the duration of the lease. The lease, to be considered a true emphyteutic one, must be for a longer duration than nine years.
- Estoppel Certificate Status certificate is another word for an estoppel certificate, which comes into play when the property up for sale is occupied by a tenant. Buyers usually get estoppel certificates (also called estoppel letters) as part of the "due diligence" component of the property review. These documents disclose to a buyer the status of a lease and the fiscal relationship between the tenant and the owner.
- Freehold This is just what it sounds like. A freehold property belongs to the owner in perpetuity as long as taxes, mortgage, and other fees are paid. Leasehold land can be reposessed by the government if need be.
- Gazumping Completely unrelated to spelunking, someone who gazumps a buyer has made a verbal agreement to sell to them, then ends up selling the property to another buyer who is willing to pay more. Gazumping doesn't happen often, but it's important to get all contracts in writing and get the seller to take the property off the market ASAP, no matter how water-tight your agreement seems to be, so that you don't become the unfortunate victim of a greedy gazumper. This term is used primarily in Australia and UK, but there's no reason to bring it across the pond and into your next Calgary real estate conversation!
- Liens Last but not least is the lovely lien. A lien is a legal claim that allows another party (usually a lender) to seize an asset if specified conditions are not met. Perhaps the most common lien is a mortgage. Until your mortgage is paid off, your lender has a lien on your property and can repossess it if you fail to make payments. Liens can also be used if, say, a contractor is not paid for a job that has been completed. Their business will place a lien on the home in question until the debt is paid.
With any luck, you'll make it through your next sale or purchase smoothly. If a deal isn't in your near future, trying pulling out a couple of these terms at your next cocktail party. You're sure to be a hit or, at the very least, a good source of information!