Awkward and Confusing Terminolgy

Reproduced below is an advertisement used by some Ontario based real estate Brokerages. The problem is that the set out 10 words and go on to define them, but they don’t have relevance, they are not commonly used, or they are simply incorrect in Ontario.

My comments appear in Italics.

“Real estate terminology can be confusing—but it doesn’t have to be. If you’re selling your home soon, here are the top ten terms you should know to feel confident during the process.


These aren’t close to the top 10.

1. Buyer’s agent vs. listing agent

Let’s start with an easy one! Typically, buyers and sellers have different real estate agents. A real estate agent who works with the home shopper or buyer is called the buyer’s agent. A real estate agent who works with the home seller is called the listing agent because they are listing your home for sale.

It’s possible to have one agent representing both sides, which is called “dual agency,” but it’s not very common. Why? There is a potential conflict of interest in the case of dual agency, because real estate agents should always negotiate in their client’s best interest—which is hard to do when you’re representing both parties. For this reason, dual agency is actually prohibited or highly regulated in some provinces.


We never call anyone a “home shopper”. Dual agency applies in jurisdictions other than Ontario. Here, the reference is “multiple representation” and there are some special rules which will apply.

2. Contingency

A contingency is a clause in a real estate contract that allows one or both parties to back out of the deal if certain conditions are not met. Some common contingencies include:

  • Appraisal contingency: allows the buyer to back out of the deal if the property appraises for less than the agreed-upon purchase price.
  • Home inspection contingency: allows the buyer to back out of the deal if the home inspection reveals major problems.
  • Mortgage contingency: allows either party out of the deal if the buyer is unable to obtain financing.
  • Home sale contingency: allows the buyer to back out of the deal if they are unable to sell their current home.
  • Seller’s purchase of replacement property contingency: allows the seller to back out of the deal if they are unable to find a suitable replacement property in time.

Contingency clauses can be a valuable tool for both buyers and sellers, but they can also slow down your real estate transaction. By their nature, contingencies make it easier for either party to leave the deal—which can leave you back at square one. But that doesn’t mean you should turn down all offers that include a contingency. Instead, talk to your real estate agent about the offer, and they can offer expert advice based on your market and your specific situation.


While the reference is technically true, “contingency” is not a commonly used real estate term in Ontario.

The references to “backing out of the deal” really do not apply. In Canada, the law is set out by the Supreme Court of Canada and there is a “good faith obligation to complete the contract”. You cannot simply have a “weasel clause”.

3. Due diligence period

This is the period between when you accept an offer and when the deal closes. During this time, the buyer is to do their “due diligence” and investigate the property thoroughly. This includes the home inspections, appraisal, title search, and property survey—and it’s also a good time for buyers to start comparing homeowners insurance quotes. This period is meant to allow the buyer to find out everything they need to know about the property to make an educated decision about the purchase.


No, that is not the due diligence period. That runs up to the title search dates: 1) for title matters, and 2) for non-title matters. Both expire before closing. This really gives the consumer the wrong impression.

4. Equity

Equity is the difference between your property’s current market value and how much you still owe on the mortgage. For example, if your property is worth $500,000 and you owe $300,000, then you have $200,000 in equity.

Typically, the more equity you have, the better, because this is the amount of cash you’ll make from your sale (minus any transaction fees). More equity will make it easier to purchase your next home, or you can use it for saving, investing, retirement, education, and more.


Municipal taxes, execution creditors and construction liens and various Court Orders all would affect the amount of equity, not just mortgages.

5. Seller concession

A seller concession is something offered by the home seller to the buyer to incentivize the purchase. These can encompass a variety of closing costs typically paid by the buyer, including appraisal fees, origination fees, interest rate buydowns or points, real estate tax service fees, and more—but they can’t include other purchase costs like the buyer’s downpayment.

Should you make a seller concession? That depends on your market. In a seller’s market where houses move quickly and receive multiple offers, seller concessions are usually unnecessary. But in a buyer’s market where available homes outnumber buyers and take a while to sell, a seller concession is a good way to stand above the competition and attract attention. Ask your real estate agent for their advice on your specific situation.


This is very much an American concept that applies in intense buyer markets. In Ontario, over the last 10 years there would be less than a handful out of more than one million transactions. So, it’s hardly a relevant real estate terminology matter.

6. Agreement of Purchase and Sale

The Agreement of Purchase and Sale is a document that begins with the buyer’s initial offer letter and is adjusted as a buyer and seller negotiate. It includes details like the sale price, closing date, earnest money, and both parties’ contingencies. Once all the terms are agreed upon, contingencies met, and requirements satisfied or waived, this document converts to a legally binding contract.


There is no such thing as a “buyer’s initial offer letter”, so, we hardly need that to rank as #6 on the list. Earnest money in Ontario is referred to as the “deposit”.

Sorry, there’s no “conversion”, The document was already a legally binding agreement.

7. Covenants, conditions & restrictions (CC&Rs)

CC&Rs are a set of rules that govern what you can do with a certain piece of property in a given area. You may be familiar with Homeowner’s Association (HOA) rules in your neighbourhood, which are a type of CC&R, but they’re also common in planned communities, condominium buildings, and industrial parks.

What are the purpose of CC&Rs and what types of things can they govern? These rules can apply the following:

  • Home maintenance like keeping your flower beds weed free, your lawn mowed, and your home in good repair
  • Home appearance like the colour of your exterior paint or the type of trash can or mailbox you can have
  • Parking such as where you’re allowed to park or whether you can add a sunshade or carport for your vehicle
  • Pets such as breed and species restriction
  • And more!

Usually, the idea behind these rules is to keep an area aesthetically pleasing, safe, and to improve and maintain home values. Why is it important for you, a home seller, to understand the CC&Rs in your area? Buyers typically want to know this information before making an offer, and if you live somewhere with HOA rules and fees, you’ll have to disclose those in advance.


In Ontario these may be “restrictive covenants” or “Condominium by-laws”. They may be relevant, but they don’t have to be disclosed. It is the Buyer who must inquire about them.

8. MLS

The Multiple Listing Service or MLS is the database in which all real estate listing information is stored. There are separate MLSs for states, regions, and even individual cities—and they don’t all have the same rules. MLS organizations in different areas require different information to be disclosed in a listing before it can go live in the database. Some basic information required by most MLSs include the number of bedrooms and bathrooms, the square footage, the price, and the name of the listing agent—but there’s a lot more!


Actually, this seems to be the first one they got right.

9. Rent-back

A rent-back is an agreement between a buyer and a seller that allows the seller to stay living in the home after closing in exchange for making rent payments. Why would a seller want a rent-back? In very competitive markets, it can be difficult to find a new home after you’ve sold the old one. In this case, if the buyer is able, they can offer a rent-back to the seller in a written agreement that gives you more time before you have to move out.


In Ontario this is very, very rare. So rare indeed that it would hardly make the top 10, yet here it is.

10. Closing

Closing is when the home sale has been finalized. When does this happen? A sale is considered closed when the contingencies have been met, all the paperwork has been signed, and all the money has exchanged hands—and in some areas, when the deed has been recorded with the county clerk’s office. When these steps are completed, you’ll hand over the keys, and the buyer will be the new homeowner.

At that point, you’ll be on to your next big dream!”


This is a relatively poor explanation of the process of closing a real estate transaction in Ontario, but I would certainly give it a top #10 ranking.


Did you spot the mistakes? How many did you find? Lots of misleading terms! How does this help anyone? If you were doing business in Ontario and had some advertising agency in the US come up with something that may have some application somewhere in the States, would you authorize them to send it to your database? Or would it be embarrassing, just like wishing your Ontario database a “happy Memorial day!”

Brian Madigan LL.B., Broker

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