Glossary

A - C

Acceptance
Consent by the person receiving the offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes an agreement.

Act of God
Any act of nature such as rain, lightning, floods or earthquakes. Many insurance policies do not cover losses resulting from an ‘Act of God’.

Agreement
The written contract for the sale and purchase of property between the seller (vendor) and the buyer (purchaser).

Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appreciation
An increase in the value of a property due to changes in market conditions or supply and demand, etc.

Asking Price
The listed price of the property buy may not always be the selling price. The owner may be willing to negotiate.

Asset
Anything of monetary value that is owned by a person, eg: personal property, bank accounts.

Auction
A public sale of a property or real estate that is sold to the highest bidder when the owner’s reserve is reached

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Balloon Payment
A large loan payment to clear a debt.

BBO
A pricing method used by some Real Estate companies, meaning Buyer budget over.

Beneficiary
The person designated to receive the income from a trust, estate, or a deed of trust.

BEO
A pricing method used by some Real Estate companies, meaning Buyer enquiry over.

Body Corporate
An administrative body made up of all the owners within a group of units or apartments of a strata building. The owners elect a committee, which handles administration and upkeep of the site.

Bond
A sum of money paid by a tenant and held by the Tenancy Services to ensure against defaulting on payment and damage to the property.

Boundary
The lines that define the perimeter of a property.

Bridging Loan
A short term loan (usually at a higher rate) taken out to cover the financial gap between buying a new property and selling an existing property.

Building Code
Local Council regulations that control design, construction and materials used in construction.

Business Day
A standard day for conducting business. 9.00am – 5.00pm. Excludes weekends and public holidays.

Buyers Market
When the demand for property is less than supply so the advantages shift to the buyer.

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Capital
Money used to create income, either as an investment in a business or an income property
The money or property comprising the wealth owned or used by a person or business.
The accumulated wealth of a person or business.
The net worth of a business represented by the amount its assets exceed its.

Capital Expenditure
The cost of an improvement made to extend the useful life of a property or added to its value.

Capital Gain
The gain on the sale of a capital asset.

Capital Improvement
Any structure or addition to a property erected as a permanent improvement that adds to its value and useful life.

Cash Flow
A measure of cash inflow and outflow from the business. Positive cash flow means more money is coming into the business than is leaving it. Negative cash flow is the converse.

Caveat
A warning on a title to a purchaser that a third party might have some interest or right in the property.

Caveat Emptor
A Latin phrase for “Let the buyer beware”, i.e.: the onus is on the buyer to be satisfied with any item before purchasing.

Certificated Salesperson
All Salespeople in real estate who have not qualified by exam to be an Associate (AREINZ), who are employed by a licensed Real Estate Agent.

Certificate of Title
A description of a property with the name of the registered owner, encumbrances, i.e.: mortgages or easements on the property. It must be produced by the vendor before the sale of the property.

Chattels
Moveable and removable items of personal property. In real estate transactions, chattels included in the sale usually include the stove, television aerial, carpets, blinds, curtains, drapes and light fittings. However, unless chattels are specified in the agreement, they are not sold as part of the property.

Clear Title
A title that is free of or legal questions as to ownership of the property.

Commission
A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction.

Common Law
An unwritten body of law based on general custom in England and used to an extent in Australia.

Common Property
Area of building, land or amenities within a strata title property that are shared by all owners, eg: a driveway.

Company Title
A company owner has a certificate of title and the owner automatically becomes a member of a company that administers, manages and maintains the property in which the owner’s flat is registered. The Directors of that company are elected each year at the Annual General Meeting from owners involved only with that company, i.e. owners in that block.

Conditional Agreement
This is a legally binding contract, but it is subject to conditions being satisfied, usually by the purchaser. The conditions will be detailed in the agreement and may, for example, require that you are able to sell your existing home by a set date or to arrange finance by a certain date. Conditions can also be included by the purchaser that require the seller to do something by a specified date – for example, that settlement will take place only on the conditions that the house is painted, the windows repaired or that rubbish around the section is removed. Note: Purchasers’ conditions usually do not prevent the sale-taking place, but may allow the purchaser to delay settlement without penalty or claim damages if the conditions are not met in time.

Construction Loan
Also called Building Loan. A short-term, interim loan (only paid to registered builders) for financing the cost of construction. The lender makes payments to the builder at periodic intervals as work progresses.

Contract of Sale
An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property. It is the purchase document signed at auction.

Covenant
Terms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.

Credit History
A record of an individual’s current and repaid debts which is usually used by a lender to assess the risk of a potential borrower.

Credit Report
A report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.

Cross Lease
This type of ownership is common where there is more than one home on a block of land. You are all owners of the land and you each lease your home. The lease will usually provide for an exclusive use area for each cross-lessee. It’s like owning a freehold property but there are some restrictions. Another form of ownership for more than one home on a block of land is a unit title.

 

D - N

Deed
A legal document conveying title to a property.

Default
Failure to make mortgage payments regularly or to comply with other requirements of the mortgage.

Deposit
A percentage of the purchase price given to bind the sale of real estate.

Depreciation
A decline in the value of property due to changes in market conditions or other clauses.

Disposable Income
Money left over after all expenses have been met.

Drawdown
The disbursement of mortgage funds provided by the Bank.

Easement
A right that someone has to use the land belonging to another, eg: a water authority may have a sewerage easement across part of your property.

Encroachment
Part of a house or establishment illegally overhanging the street or a neighbour’s property.

Encumbrance
An impediment to the use or transfer of the property in the form of an interest or right in the property.

Equity
The amount of an asset actually owned, Equity is the difference between the market value of the property and the amount still owed on its mortgage.

Estate
The total of all the real estate and personal property owned by an individual at the time of death.

Eviction
The lawful expulsion of an occupant or tenant from real property.

Exclusive Listing/Sole Listing
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

Executor
A person named in a will to administer an. ‘Executrix’ is the feminine form.

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Fee Simple
The greatest possible interest a person can have in real estate.

First Mortgage
A mortgage that is the primary lien against a property.

Fittings
Objects that can be removed from a property without causing damage to it.

Fixed Instalment
The monthly payment due on a mortgage loan. The fixed instalment includes payment of both principal and interest.

Fixed Rate Mortgage
A mortgage in which the interest rate does not change during the term of the loan.

Fixtures
Fixed items that cannot be removed without damaging either the property or the fixture itself, eg: cupboards.

Freehold
An estate in real property which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates which are created by acts of parties, such as an ordinary life estate, or by operation of law.

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Gross Income
Income before taxes are deducted.

Guarantor
A person who agrees to indemnify the holder of a loan all or a portion of the unpaid principal balance in case of default by the borrower.

Home Inspection.
A thorough inspection that evaluates the structural and mechanical condition of a property.

Interest
The fee charged for borrowing money.

Interest Only Loan
A loan where only the interest is repaid throughout the course of the loan. The original amount is repaid at the end of the term of the loan, rolled over by the same bank or the owner re-mortgages.

Interest Rate
The rate of interest in effect for the monthly payment due.

Investment Property
A property that is not occupied by the owner, but provides a return to the owner through letting or leasing to a tenant.

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Joint Tenancy
A form of co-ownership that gives each tenant equal shares and rights in the property including the right of survivorship, eg: ownership of a property passes to the surviving owners.

Landlord
A person who rents property to another, a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.

Leasehold
You buy the right to own the home and lease the land for a certain time. You pay rent to the landlord for the land. You can sell the lease if you want to move on. There may be restrictions on your use of the property.

Lessee
A person leasing a property.

Lessor
The owner of a property that is leased to another person.

Liabilities
A list of debts owed.

Lien
A legal claim against a property that must be paid off when the property is sold.

LIM Report (Land Information Memorandum)
A LIM is a report prepared by the local Council at your request. It provides a summary of all property information held by the Council as at the day the LIM was produced.

Listing
A written contract between an owner and a real estate, authorizing the agent to perform services for the principal involving the owner’s property. The property so listed.

Loan Application Fee
Also called Establishment Fee. A fee paid to a lender for processing a loan.

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Market Value
The price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price. Establishing the market value is the objective of an appraisal.

Mortgage
A legal document that pledges a property to the lender as security for payment of a debit.

Mortgage Broker
An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. Usually paid by the Lender.

Mortgage Insurance
A policy that insures the lender against the borrower on a loan. Most lenders generally require insurance when borrowing more than 80% of the property value.

Mortgagee
The lender in a mortgage agreement.

Mortgagor
The borrower in a mortgage agreement.

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Negative Gearing
Where the return on an investment is not sufficient to cover the costs on the investment, eg: property maintenance and interest on the loan against income from letting/leasing.

Negotiation
Make an offer and we will attempt to negotiate a concluded contract between the parties.

Net Income
Income after taxes are deducted.

Net Worth
The value of a person’s assets minus liabilities.

Nominee
A person who, in a limited sense, acts for or represents another.

Notice of Default
A formal written notice to a borrower that has occurred and that legal action may be taken.

Notice to Quit
A notice to a tenant to vacate the property.

Null and Void
That which cannot be legally enforced, as with a contract provision that is not in conformance with the law.

O - Z

Off The Plan

To purchase a property before it is completed after having only seen the plans.

Offer
Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.

Offers
A process of calling for offers on the property, usually required by a certain date.

Passed In
The highest bid fails to meet the reserve price of a property at an auction and consequently does not sell.

PIM (Project Information Memorandum)
A report giving information on items such as potential erosion, subsidence, hazardous contaminants, stormwater. It may also include classifications under organisations such as the Dept. of Conservation or Historic Places Trust, as well as authorisations required by the Resource Management Act.

POA
A pricing method used by some Real Estate companies, meaning Price On Application.

Power-of Attorney
The person who has authority to execute documents on behalf of the grantor of the power. Also a legal document which authorises another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Principal
The amount borrowed or still to be repaid. The part of the monthly payment that reduces the balance of the mortgage.

Private Sale
The sale of property by the owner without the services of a real estate agent.

Private Treaty Sale
The sale of property, through a real estate agent, by negotiation.

Proxy
A person who represents another, particularly, in some meeting. Also, the document giving to another, the authority to represent.

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Qualified Buyer
A buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender as part of the loan process.

Real Estate Agent
A person or Company licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner.

Refinance
The process of paying off one loan with the proceeds from a new loan using the same property as security.

REINZ
Real Estate Institute of New Zealand. National representation body of real estate agents.

Requisitions on Title
A process where the buyer requests additional information about the title of the property from the vendor.

Reserve Price
The minimum price which a seller will accept at auction.

Resource Consents
Resource consents are necessary when a group or individual wishes to carry out an activity or development that may have some effect on the environment. Resource consents relate directly to the rules set out in the District or Regional Plans and the Resource Management Act and are different to Building Consents.

Right of Way
A right of one property or the general public for access to or across another property.

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Security
The property that is pledged as collateral.

Seller’s Market
When demand for property is greater than supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price.

Semi-detached
Also called Duplex. A type of construction where two buildings are attached together by a common wall.

Settlement
The sale of a property is finalized by the legal representatives of the vendor and the purchaser, mortgage documents come into effect, costs are paid and the new owner takes possession of the property and receives the keys.

Sole/Exclusive Agency
A sole or exclusive agency precludes all other agents from working on the disposal of the property, although another agent may approach the sole agent if the former has a suitable client. But even then the sole agent would finalise the deal.

Special Condition
A condition that must be met before the contract is legally binding. For example, if buying a home the purchaser may specify that the contract is not legally binding until the purchaser has obtained a building inspection and been satisfied by the report.

Strata Title
A title to a unit or lot on a plan of subdivision associated with townhouses, units and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.

Subdivision
A tract of land divided into individual lots for a housing development.

Survey
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

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Tenancy
The right to occupy a property under agreed terms and conditions.

Tenants in Common
A type of joint tenancy in a property where two or more purchasers own a property in unequal shares. If one dies, his or her shares pass to his or her beneficiaries under the terms of the will. The shares can be sold without consultation of the other owners.

Tender
A process of selling, calling for purchasers to make their best offers in writing for that property by a given date.

Title
A legal document evidencing a person’s right to or ownership of a property.

Title Search
A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or outstanding.

Townhouse
A dwelling unit, generally having two or more floors and attached to other similar units via party walls. Can be Strata or Cross lease titled.

Transfer
A document registered at the Land Titles Office and noted on the Certificate of Title which verifies the change of ownership of a property.

Trustee
A person who holds or controls property for the benefit of another.

Unconditional Agreement
The legal contract that binds both the purchaser and the seller to settle on the agreed date at the agreed price. It is either not subject to any conditions or those conditions have already been satisfied. You should only consider entering an unconditional agreement if and when you are absolutely sure you want to buy a particular property and you already have the full purchase price or ‘pre-approved’ loan finance from a lender. You should also be confident that there are no other issues or requirements that must be satisfied before you are committed to purchase the property. An unconditional agreement commits you to purchasing the property.

Utilities
The private or public service facilities such as gas, electricity, telephone, water and sewer that are provided as part of the development of the land.

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Valuation
A written analysis of the estimated value of a property prepared by a qualified valuer.

Valuer
A person qualified by education, training, and experience to estimate the value of real property and personal property. You can tell someone is accredited in NZ with the “B Prop” or “Dip Valuation” after their name

Vendor
The person or entity legally authorised to sell a property.

Water Course
A natural stream of running water being fed by a natural source such as a stream or river.

Zoning
Local authority guidelines for the permitted use of land.

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