Real estate vocabulary cheat sheet
It’s easy get tangled up in a web of real estate jargon! What’s the difference between a divided co-ownership and an undivided co-ownership? An offer to purchase and a promise to purchase? An appraisal and an inspection? A duplex and a semi? To help you make sense of it all, we’ve put together a handy guide to some easily confused real estate terms.
Divided co-ownership vs. undivided co-ownership
Condo buildings are the most common type of divided co-ownership. In this arrangement, every owner has exclusive property rights to a private unit in the building (their condo) and shared property rights to common spaces. Common spaces include the land the building sits on, structural features like exterior walls and the roof, parking spaces, basement storage space, etc.
To avoid potential disputes, every co-owner has to sign a notarized declaration of co-ownership.
In an undivided co-ownership, two or more people share property rights to the entire building, rather than holding exclusive rights to a private dwelling within the building. When purchasing an undivided co-ownership, it’s a good idea for the co-owners to sign an undivided ownership agreement that sets out rules that must be followed while the property is in their possession. Agreements can address topics like building management and upkeep, shared expenses, restrictions on the sale of the property, etc.
Offer to purchase vs. promise to purchase
Offer to purchase
Unless it is subject to a time limit, an offer to purchase may be revoked as long as it has not been accepted by the seller.
Promise to purchase
Once the offer to purchase has been accepted unconditionally by the seller, it becomes a promise to purchase (on the buyer’s side) and a promise of sale (on the seller’s side). This mutual agreement becomes a “pre-contract” binding the two parties to buy and sell, respectively. To make it official and transfer ownership, a sales contract must be signed.
Real estate appraisal vs. pre-purchase inspection
Real estate appraisal
During a real estate appraisal, an accredited appraiser objectively determines the value of a building and its annexes as at a given date. While an appraiser will factor in the condition of buildings when determining their value, they will not examine them as closely as an inspector would.
During an inspection, a building inspector will examine all the visible components of a building and its annexes (if applicable) to determine their condition. The inspector will give the person who ordered the inspection (usually, the buyer) a detailed inspection report that flags any major issues. The inspector does not estimate the value of the building(s).
DID YOU KNOW?
Replacing your windows and doors can drive up your home’s value (and attract buyers!). It can seem like a major investment, but you could net returns of up to 75%!
Source: Appraisal Institute of Canada
Duplex vs. Semi-detached home
A duplex is a building made up of two dwellings spread over two floors. As an owner, you could rent out both units or live in one and rent out the other. That makes these properties a smart buy for investors! Be aware, however, that owners have certain responsibilities to their tenants (maintaining the dwelling, etc.).
Unlike a duplex, a semi-detached home (or semi) is not an income property. A semi combines two homes side by side, connected by a shared wall. Each side sits on its own plot of land and has its own owners. Semis make great homes for first-time buyers!