Construction Terminology

Construction Terms

C
Cap
A limit. In variable rate mortgages, a limit as to how high periodic payments may go or how much the interest may
change within a given time period or over the life of the mortgage.

Capital Gain
Increase in value of a capital property (a property other than a principal residence) upon which tax is payable, either
upon disposition of the property or the deemed disposition of the property under tax rules.

Capital Loss
Decrease in value of a capital property (a property other than a principal residence). May be set off against capital
gains or against regular income according to the tax rules.

Capped Rate
A Capped Rate is a limit that is put on the interest rate on mortgage payments over the life of the mortgage. In an
Adjustable Rate Mortgage the rate can change but cannot exceed the capped rate.

Cash Out Finance
When an owner renegotiates or negotiates a new mortgage and the proceeds of the new financing exceed the money
required to pay out the old mortgage and any other costs, liens or expenses, leaving money for the borrower.

Ceiling Rate
The limit over which the interest rate on a variable rate mortgage may not rise over the life of the loan

Certificate Of Occupancy
Document issued by the local municipality indicating that a new dwelling is suitable for occupation. Generally confirms
that the dwelling complies with local building, safety and health by-laws.

Closing Date
The date set in the Agreement of Purchase and Sale upon which the transaction is to be completed, the purchase
price paid and the transfer of title registered.

Closing Statement
A document which sets out the financial agreement between the parties, the costs each must pay, and all other similar
information regarding a transaction (may be joint or separate for each party).

Collateral
Property (real or personal) which is pledged to secure a loan or mortgage. If the debt is not paid, the lender has the
right to sell the collateral to recoup the outstanding principal and interest on the loan.

Collateral mortgage
A loan which is secured by some sort of written note of indebtedness (such as a Promissory Note) which is secondarily
secured by a mortgage registered against a property.

Conditional Offer
An offer to purchase a property which is contingent on the fulfillment of certain conditions before it becomes firm and
binding. Also known as "Conditional Sales Contract".

Construction Loan
A short term loan that is for the purpose of new home construction. The term of the loan depends on the size of the
house and the magnitude of the construction. Progress disbursements are made at different stages as the house is
completed.

Contract
A legally binding agreement (oral or written) between two or more persons regarding an exchange of some sort. A
legally binding contract must include consideration passing between the parties, an intention on the part of all parties
to be bound to the contract, a meeting of the minds of the parties as to the contents of the contract, and an element of
clarity such that the terms of the contract may be interpreted, understood and enforced by a court

Conventional Loan
A mortgage loan that is not insured by a government agency. There are loans that are insured by the government
agencies such as Federal Housing Association (FHA) and Veteran's Administration (VA).

Convertibilty
Convertibility allows an individual to change an Adjustable Rate Mortgage to a Fixed rate Mortgage at a later date.

Cost Plus
An agreement with a contractor or builder which sets the contractor's compensation for the project as a percentage of
the total cost of all labor and materials.

Creative Finance
An arrangement for the financing of the purchase of a property which is outside the normal practice of residential
financing

Creator
Any person to whom money is owed. May be secured (the debt has been registered against the property of the
debtor) or unsecured.

Credit Life
A form of insurance which is designed specifically to pay out the debts of the insured person in case of their death

Credit Limit
The maximum amount available to a person under a loan, credit card or other borrowing arrangement.

Credit Rating
Based on an analysis of a person's credit history, an evaluation of that person's ability to manage a new debt or debts
overall

Credit Report
Credit Report is a report of an individual's credit worthiness reported by credit bureaus.

C.O.
Certificate of Occupancy is a document issued by the local municipality indicating that a new dwelling is suitable for
occupancy. Generally confirms that the dwelling complies with local building, safety and health requirements.

Changer Order
A written document which modifies the plans and specifications and/or the price of the construction Contract.

Clear Title
A title that is free of liens and legal questions as to ownership of the property. A requirement for the sale of real estate.
also called just title or good title or free and clear.

Closing Statement
A document which sets out the financial agreement between the parties, the costs each must pay, and all other similar
information regarding a transaction (may be joint or separate for each party).

Contract
A legally binding agreement (oral or written) between two or more persons regarding an exchange of some sort. A
legally binding contract must include consideration passing between the parties, an intention on the part of all parties
to be bound to the contract, a meeting of the minds of the parties as to the contents of the contract, and an element of
clarity such that the terms of the contract may be interpreted, understood and enforced by a court

Cost Plus
Cost Plus is a term referring to how the contractor will be compensated for his work. In a cost plus contract the
contractor is paid for the material and labor costs plus a flat fee or a percentage of the total cost.

Covenants
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified
acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts
for deed.
 
Category Construction Glossary