Glossary - B

Balloon loans: This terminology denotes long-term loans, most often like a 15 or 30 year mortgage, which include a hefty payment, usually called the 'balloon payment', when they are mature. Normally, a balloon loan, also known as a balloon note or bullet loan, offers the benefit of very low interest payments and hence requires very little capital expenditure during the loan term. As most of the loan repayment is put off till the end of the payment period, an individual securing a balloon loan has considerable suppleness to make use of the accessible funds during the loan term. As this type of loan does not involve any interim payment, it is essential for the borrower to be self-disciplined as he or she has to prepare them for the single large payment due on the maturity of the credit. Despite the low rate of interest, balloon loans are dangerous as the borrower is never certain if he or she will secure a refinance.
Bankruptcy: The term bankruptcy refers to a legal procedure undertaken to liquidate a business or property when the owner is unable to pay their debts fully. In other words, the expression denotes a legal proceeding in a federal court whereby an insolvent debtor's assets are expunged to relieve him or her of any further liability. While Chapter 7 of the Bankruptcy Reform Act deals with liquidation, Chapter 11 of the Act is related to reorganization. There are two types of bankruptcy - voluntary and involuntary. When an insolvent debtor brings bankruptcy upon him or her, it is called voluntary bankruptcy, while when it is forced on court orders following creditors' petition, it is known as involuntary bankruptcy. Explicitly speaking, in fact, an insolvent debtor may seek the protection of bankruptcy laws, while, alternatively, the creditors of that debtor may also sue a debtor in court, to obtain a ruling, and seek to satisfy the judgment by having the debtor's assets confiscated. There are two purposes for bankruptcy - settlement of legal claims of the creditors by means of an equitable distribution of the debtor's assets and present the debtor with a prospect to begin afresh.
Bilateral contract: A bilateral contract denotes a mutual understanding or a legal agreement between two parties whereby both parties pledge to execute an action or deed in exchange of an act by the other party. In this case, each party is an obligator on its own pledge and is obligated on the other party's promise. For instance, in an agreement relating to the purchase of a real estate, the buyer pays cash to the seller, who, in turn, transfers the ownership of the property in the name of the buyer.
Blanket mortgage: A blanket mortgage, also known as a blanket loan, is one that produces a lien on two or more pieces of property. In other words, a blanket mortgage or loan is utilized to finance the purchase of more than one piece of real estate. Blanket mortgages are usually in style with builders and developers who desire to take out a mortgage or second mortgage on the shared value of their properties. For instance, a real estate developer having a number of undeveloped plots may possibly mortgage those plots in order to build homes on them. Thus, instead of taking a mortgage on individual properties or obtaining a new mortgage every time a part of the development is sold, the real estate developer takes out one mortgage on the collective worth of the properties. In this case, the real estate developer sells one piece of property to release a part of the mortgage with the remaining part of the mortgage remaining as usual.
Blended payments: In short, a blended payment denotes a mortgage payment comprising both the principal and the interest. In this case, a part of the made at regular intervals to clear the loan comprises a payment towards the principal amount, while another is for the interest accrued on the principal. Considering the fact that a blended payment is always more than the interest due on the loan, with the passage of time, successive regular payments made by the borrower to pay off the loan becomes slightly lesser. This is because with each payment, the balance loan amount diminishes.
Bill of sale: The bill of sale denotes a document that effects the change of possession of a title of a real estate asset from the seller to the buyer. This is a written contract by which one may also assign or transfer the right to a property. Usually, a bill or sale is recorded as per the applicable provincial statutory laws as a proof of a contract or agreement. In the case of real estate transaction, a bill of sale may be used for registering the transfer of individual property as catalogued in an agreement, such as the sale of domestic devices, furnishings and any additional personal belongings.
Bridge loan: This term means a funding taken for a brief period and is expected to be returned comparatively expeditiously. A bridge loan is also known as bridge financing or a swing loan. A bridge loan enables an individual to borrow against his or her equity in their old residential building till it is eventually sold. In fact, a bridge loan may often be dangerous as one may close on a new property even before selling his or her old home. In addition, compared to other alternatives like borrowing from one's family, utilizing a cash reserve or making use of the amount received from the sale of the existing home, bridge loans cost the borrower more. In majority of instances, people require a bridge loan for a temporary phase with a view to help them tide over their monetary crisis till they have received the proceeds from the sale of their current home. As the loan is for a very short duration, the interest rates of a bridge loan are often very high, sometimes as much as 10 per cent of the principal amount taken on credit.
Brokers: In real estate business, a broker is an authorized or accredited realty professional or agent hired by a buyer or seller to help them in their effort to purchase or sell a property. The responsibilities of a real estate broker usually comprises finding out the market values, publicizing the properties listed for sale, showing real estate assets to potential buyers, helping clients in preparing contracts or agreements, advising the clients on whether to accept or reject any offer or counteroffer as well as handling an assortment of issues related to real estate transactions. Traditionally, it is the sellers who have employed brokers with the hope of getting the best price for their real estate assets, but they can also be engaged by the buyers to aid them in finding the appropriate property at affordable prices. When real estate buyers hire a broker, the idea is known as 'buyer brokerage'. Usually, the word broker is used in a broad capacity, while the usage of the terms 'broker' or 'agent' may be suitable in specific conditions.
Building code: In the context of real estate, the term building code, also called building control, refers to a cluster of rules that spells out the least tolerable level of safety for construction, including buildings as well as non-building structures. The primary objective of the building codes is to safeguard public health, safety, sanitation, provision of ventilation and light and common welfare as they are associated with the construction and occupancy of buildings. In other words, the expression building code denotes a group of rules and guidelines approved by the authorities who have applicable jurisdiction to regulate the design as well as construction of building, repair, modifications, quality of materials used in the construction, use and occupancy and all other associated aspects of buildings within their respective command areas.
Building inspector: The term building inspection denotes an authorized individual who is in charge of inspecting buildings during the course of their construction and also completed buildings to make sure that they have been erected in compliance with the approved plans as well as the rules and regulations adopted by the local competent authorities, such as municipalities. It may be noted here that the building inspectors are authorized to halt construction work on a site if they find that it does not fulfill the recommended guidelines. In a number of jurisdictions building inspectors are not liable for legal responsibilities arising from errors and lapses.
Building permit: In matters pertaining to real estate, the term building permit refers to a document that ought to be got from the municipality by the owner of a real estate property owner, or contractor, prior to constructing or repairing a building. In other words the building permit is a certificate issued by the local municipal authority endorsing the drawings and specifications for the construction and also approving the commencement of the work. In fact, a building permit is one factor in a general regulatory plan regarding the nature and quality of construction undertaken in the jurisdiction of the municipality. All property sellers and buyers may be contemplating any sort of construction on a particular real estate asset ought to seek help from the neighbourhood building department and/ or the building inspector before undertaking any construction work. In case a permit is essential, one needs to submit an application with the building department detailing the intended construction, inclusive of the plans, drawings and other associated papers.
Bundle of rights: The phrase bundle of rights refers to an ownership perception defining all the legal rights attached to the ownership of a real estate asset, such as the privilege to sell, lease, encumber, use, enjoy, will, exclude and others. The bundle of rights also includes the right to refuse to exercise any of these rights. The fundamental concept of the bundle of rights maintains that the ownership of any real estate can be measured up to a bundle of sticks - each stick symbolizing an individual and detached right or privilege of ownership. These rights are actually an intrinsic part of an ownership of real estate and are secured by the law.
Buydown: In brief, the term buydown denotes a cash disbursement made by any party to lessen the monthly loan reimbursement of a borrower. This is basically a mortgage funding method which a buyer uses to secure a loan at the lowest interest rate at best for the initial few years of the mortgage term. However, at times, adopting this approach may also help the buyer to secure a low interest loan for the total term of the mortgage. Normally, the real estate builder, seller or the property owner offers disbursements of the institutions engaged in mortgage funding. In turn, the mortgage-lending institutions reduce the monthly interest rate for the buyer thereby lowering the monthly payments. However, the seller of a home raises the purchase price of the property with a view to recompense the expenses incurred towards the buydown contract.