Glossary - M
- Management agreement
- In real estate, the term management agreement refers to an agreement between a property owner and a firm managing property whereby the property owner appoints the property management firm to supervise the affairs of his or her real estate assets in return for periodic payments. In this case, the agreement, which spells out the privileges and duties of both the parties, may be between the property owner and an individual too. In the context of a brokerage, the term management agreement generally denotes a contract between a broker or property owner and a real estate office manager regarding the management of the head office or a branch office.
- Management diary
- A brokerage diary, also called deal diary, denotes a record that offers a follow through arrangement for important dates relating to listing and selling of real estate assets. On the other hand, a management diary is an essential orientation file meant for the manager and/ or executive employees to maintain records of events or things such as expiry dates on listing, prerequisites that need to be conformed, additional trust deposits as well as closings. Quite a number of administrators also use the diary to incorporate expiration dates on registrations made by salespersons and dates concerning the brokerage, such as termination of insurance policies. In addition to the incorporated components that connect to the accounting method, contemporary computer software packages intended for real estate brokerages are usually operational with management aspects comprising listing and facilities to follow deals.
- Marginal tax rate
- The term marginal tax rate may be simply defined as the tax rate that is applicable to any supplementary dollar of income. In other words, this expression denotes a combined tax rate that is charged to individuals on their last dollar of earnings and it also specifies the amount of tax an individual would save on every dollar of income that is not required to be reported on his or her tax return.
In the context of real estate, the jargon marginal tax rate denotes a combined tax rate, comprising the provincial as well as federal taxes associated with income from real property and is applicable on cash flows from any investment property. Normally, the marginal tax rate mentions the subsequently higher tax rate that any taxpayer is required to pay on extra income earned. While analyzing a real estate investment, practitioners also deem the marginal tax rate to be the estimated rate derived from average tax rates with a view to make the approximate cash flows after taxation available to their clients. It may be noted here that the correctness of the marginal tax rate largely hinges on the date made available by the client to his or her accountant and also on the category of investment property concerned.
The relevance of marginal tax rates is imperative in after tax computations relating to real estate investment property. In fact, it is possible to use the approximates of after tax cash flows to obtain more precise contrast as well as assessment of investment alternatives for particular depositors or financers.
- Market price
- Generally speaking, the term market price, also called sale price and/ or purchase price refers to the unique price at which a buyer and a seller agree to trade in an open market at a given time. In formal markets, such as the stock exchanges, there are two market prices - the offer (selling) price and the bid (buying) price. The offer price is generally higher compared to the bid price and the difference between the two prices is known as the margin or spread.
In the context of real estate, the expression market price denotes to the real amount for which a real is sold or the money paid for acquiring a property. It needs to be mentioned that while the market price is an established fact, the market value of an item is not. The market value continues to be an approximation till it is proved otherwise. In other words, the market value of an item becomes a reality only when a transaction takes place at that particular amount. The market price does not entail any supposition of cautious action by the seller and/ or buyer. At the same time, market price does not involve any assumption regarding the absence of unnecessary influences, realistic exposure of the listed property to the marketplace or any other stipulation that is fundamental to the concept of market value. In an well-organized market system in which a real property is openly offered for sale and promoted to knowledgeable and competent buyers, the market price and market value of the property are very similar to each other.
- Marketable title
- In the context of real estate, the term marketable title refers to the ownership of a land/ real property that a court of equity deems to be so free from defects, claims and liens that it will be sold without any complication. In other words, it denotes a real estate without any encumbrances and hence will be accepted to the buyers easily. It may be mentioned here that a marketable title does not take it for granted that the property is entirely without defects or claims, but an ownership of a real property that a sensible and knowledgeable buyer will not hesitate to accept in the practical course of dealing. It may be noted here that the commercial real estate practitioners will generally find the all inclusive testimonial regarding ownership issues in the pre-printed phrasing included in a contract or agreement.
- Marketing period
- In the context of real estate, the term marketing period refers to the duration of time consumed in marketing a real property. As far as the real estate brokerages are concerned, the marketing period commences with the listing of a real property and ends with its sale. It needs to be mentioned here that the average length of time taken for marketing different categories of real properties are considered to be a significant sign of the general state of affairs in the real estate market and they are usually followed keenly by the Multiple Listing Services (MLS) and real estate brokerages alike.
- Market value
- Broadly speaking, the term market value, also known as the market price, refers to the last reported sale price of a security (in the instance of an exchange) or the existing bid and ask prices (when sold over-the-counter). In other words, market value denotes the price as established by the buyers and sellers in an open market.
In the real estate context, market value denotes the value of an asset or the total rent it can yield vis-à-vis a particular time or the real estate marketplace. Market value is also referred to as the highest sum that an informed, levelheaded and unburdened purchaser or tenant would pay for a specific property in an open and aggressive real estate market. By way of explanation, market value is the worth of a property that an individual is willing to pay either to purchase or rent it. In effect, the market value centers on the purchaser's or tenant's actions and not on the requirements, costs or desires of the property owner. It may be noted here that the lending value or the value of property utilized by mortgage lenders to ascertain the amount of money that a consumer may borrow, is an old school method to approximate the market value of a property. However, the market value established by this method is a lot less than the actual market value.
- The term maturity is defined as the date or time when a debt or loan becomes due for payment or repayment.
- Generally speaking, the expression merge denotes combining or uniting two or more entities into one. It is different from the term consolidation as no new entity is created from a merger. In matters pertaining to real estate, merge refers to absorbing or fusing one deed or right into another. In effect, this denotes that the sales agreement is combined into or turns out to be a part of a deed. The terms or stipulations of a real estate agreement are no longer in force when such a merger takes place. Nevertheless, in the event a real estate agreement states that a segment of the document or the complete document is to endure or 'survive', then that particular matter will not be combined into the deed.
- Broadly speaking, misrepresentation refers to providing an inaccurate or intentionally fake account regarding the nature of something or someone. It also denotes a fraudulent, slipshod or an innocent misstatement of a material fact. If a party enters into an agreement on the basis of an explicit misrepresentation, the later will have the legal entitlement to annul the contract or claim compensation for the damages. It may be noted that at times, it is difficult to differentiate a representation from a mere hyperbole or account of intention or opinion. For instance, when one makes a statement like 'This is the best deal in town', it may be dealt with as a simple overstatement that may not lead to any legal rights. However, the Competition Act could turn this statement into a federal offense or misdemeanor.
In the context of real estate, a statement is regarded as a precise account regarding a property. For instance, the statement may be an affirmation that a particular property may be made use of in a definite manner. Now, if this statement proves to be fake it is considered to be a misrepresentation and is usually labeled as either an innocent, deceitful or negligent report. In fact, false representations may also be dealt with in the appropriate provincial real estate Act or regulations.
- Generally speaking, the term mistake refers to a guiltless error, while, in law, the expression mistake denotes a misinterpretation or incorrect conviction regarding a material fact that may put off the development of a valid contract. A mistake in preparing an agreement or contract can be rectified by mutual permission of all the concerned parties without rendering a contract null and void. Legally, there are three basic categories of mistakes - common mistake, unilateral mistake and mutual mistake.
- Money history
- Money market
- In general, the expression money market refers to a network of financial institutions, including banks, institutional investors, money dealers and discount houses, which lend and borrow money among them for a short duration, usually 90 days. Contrary to the capital or organized markets, such as the stock exchanges, money markets are basically informal and unregulated where majority of the deals are conducted over telephone, fax on over the Internet. Money markets are also expressed as supply and demand markets where individuals deal in interim financial instruments. In Canada, short-term monetary instruments like the Treasury bills or T-bills and short-term guaranteed investment certificates (GICs) ought to be distinguished from the more enduring market instruments, including stocks, bonds and mortgages, which are related to the capital market.
- Generally speaking, the term moratorium refers to a temporary ban or stop to a particular action. In the context of real estate, the expression denotes a legal endorsement concerning mortgages to delay payment of outstanding money because of any precise condition thereby postponing the mortgagor or the borrower's liabilities specified in the mortgage contract. In addition, the term moratorium is also used in accordance with the tangible time period for the holdup. It may be mentioned here that a moratorium postpones the right of property owners to get development authorizations while the local administration buys time to mull over, draft and adopt land use rules to act in response to new or varying conditions that have not been dealt with sufficiently by the present laws pertaining to the issue. There are occasions when a community uses a moratorium just before taking up a broad plan or zoning law or any amendment to them.
- The term mortgage refers to a loan or cash advance that is secured against a real property. In other words, a mortgage refers to the real estate collateral provided by an individual (borrower) to assure another individual (lender) that the money taken as loan will be reimbursed. The most widespread variety of mortgage is the one taken out by a home owner and granted to the lender that facilitates them to buy a property and in such an event, the mortgage will be on the property purchased by the borrower. In this case, as a rule, the mortgage will be shaped by a mortgage deed which is later registered against the title to the land subject to it. In such an event, the mortgaged property can then only be sold if the mortgage is first paid off or, as typically happens, an undertaking is given by a solicitor that the mortgage will be paid off from the earnings of the property sale. Usually, all mortgages are registered with the pertinent provincial land registration offices.
The two parties involved in a mortgage agreement are called the mortgagor (borrower) and the mortgagee (lender). In simple terms, the lender provides the cash advance and then lists the mortgage against the borrower's real property. In response, the mortgagor offers the mortgage as collateral for the loan, acquires the funds, pays the necessary sums and also preserves the possession of the property. Once the loan is paid off in full, the mortgagor has the right to get the mortgage released from the title.
- Mortgage banking
- The expression mortgage banking refers to the process of accumulating mortgage loans with the objective of selling them to an enduring investor. Once the mortgage loans are sold, the mortgage banker keeps hold of the servicing of the loan. Most often, one will come across the term mortgage banking in the secondary mortgage market where financial institutions, investor groups and even several private lenders engage in buying a selling of mortgage documents. In effect, big organizations have the capacity to and also acquire the complete portfolios of mortgage endowments. The perception of mortgage bankers has turned out to be a major component of the financial scenario in the United States. These bankers in the United States create mortgage portfolios and later sell them to investors. In most cases, when a bank sells a mortgage portfolio to an investor, it accompanies a long-term management contract whereby the mortgage banker is required to service as well as manage the portfolio by and large.
- Mortgage broker
- In the real estate context, a mortgage broker refers to a financing professional who hunts for securing the most favorable rates and terms on behalf of a borrower, but is not a party to the asset transaction. In other words, a mortgage broker is an agent who helps a property owner in securing a mortgage loan. Usually, the mortgage brokers purchase mortgages indiscriminately or in wholesale from the lenders and enhance the loan rates by 0.5 per cent to one per cent before selling them to the buyers/ home owners. Mortgage brokers are especially helpful for people who do not wish to shop for their mortgages on their own and individuals whose credit reports are imperfect.
- Mortgage commitment
- A mortgage commitment is defined as a written confirmation from the buyer's bank to a property seller stating that the bank will advance the specified amounts or the mortgage loans to enable the buyer to purchase the property. The commitment, usually in the form of a letter, also spells out the terms and conditions of the mortgage loan offered by the bank to the potential borrower or, in this case, the property buyer.
- Mortgage constant
- The term mortgage constant refers to the factor that is used for quick calculation of the yearly payment required to amortize a mortgage loan. Also called 'mortgage capitalization rate', mortgage constant is the capitalization rate for a debt and is normally calculated every month by dividing the monthly payment by the mortgage principal. In other words, the expression mortgage constant denotes the proportion of a mortgage loan that ought to be paid at regular intervals with a view to clear the debt in total. Usually, the mortgage constant is mentioned as an annual percentage. In addition, the mortgage constant is generally denoted as Rm, which is greater than the interest rate for a completely amortized loan as the Rm incorporates taking the mortgage principal as well as the interest into account. In the case of a negatively amortizing loan, the Rm may be less than the interest.
- Mortgage documentation package
- The phrase mortgage documentation package denotes a compliance comprising data that is pertinent to a lender in taking a mortgage funding decision concerning a particular venture or real property. Occasionally, also called the 'mortgage request package', the mortgage documentation package may be used for mortgaging residential as well as commercial properties. However, the term is generally related to office/ retail, industrial and investment real properties.
- In a mortgage agreement, a mortgagee is the creditor or lender who offers a loan to the borrower against the security of a property. A mortgagee may be both - an individual or an institution.
- Mortgage life insurance
- Mortgage life insurance refers to an insurance policy to pay the mortgage balance in the even of the death of the mortgagor or borrower before repaying the mortgage loan in full. In other words, the term is an assurance that the lender or mortgagee will receive his or her money even if the borrower meets an untimely death. In fact, people selling mortgage life insurance policies would try to persuade the prospective clients to buy it saying that it would protect their dependents and loved ones even when they are not around. However, it is advisable not to spend money on such policies that are very expensive vis-à-vis the low-cost, high-quality term life insurance policies.
- Mortgage market
- Broadly speaking, mortgage market refers to both the segment of the market where mortgages are created by various lenders and the part of the market where group investors, financial organization and individuals engage in buying and selling mortgages. In fact, there are two basic segments in any mortgage market - primary mortgage market and the secondary mortgage market. The term primary mortgage market denotes the market where lenders, including banks and financial institutions, create mortgages. Sometimes, when a borrower secures a mortgage in this market, he or she resells them in the secondary mortgage market. In a secondary mortgage market, lenders and group investors collect the mortgages under different categories depending on the risk, volume and structure and sell them as a collateralized debt obligation or mortgage-backed security. In Canada, GE Capital Mortgage Insurance Canada and Canada Mortgage and Housing Corporation operate actively in the primary as well as secondary mortgage markets by means of insuring the loans and also through promotion of activities in these two markets.
- Mortgage pool
- The term mortgage pool refers to the assortment of different mortgage loans depending on the form of mortgage and their maturity period. Actually such mortgages are combined with a view to resell them to permanent investors on a secondary mortgage market. In other words, the expression mortgage pool denotes gathering of mortgages originating in the primary market that are afterward resold in the secondary mortgage market as a collection or portfolio. In fact, the accumulated mortgages are utilized as collateral for insuring mortgage-backed securities in the capital market (a market for medium to long-term financial instruments). Later, the mortgage-backed securities are split into lesser values and sold to investors, who would have otherwise not been in a position to own these portfolios.
- Mortgage verification
- The term mortgage verification refers to the real estate practitioners' job of scrutinizing the mortgage documents possessed by property owners and questioning them regarding the current state of affairs of their existing loans or funding. In effect, mortgage verification is an essential part of the listing process of a property against which a mortgage loan is sought by the owner.
- A mortgagor, sometimes spelt as mortgager, is the borrower in a mortgage agreement. The mortgagor offers a mortgage on his or her property to secure a cash loan.