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Virtual Realty Glossary of REAL ESTATE Terms | |
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Terms in Alphabetical Order
- Allotment: An area of land subdivided into smaller pieces, also referred to as a "building block".
- Amortization Period: This is the amount of years that it would take to completely payoff your mortgage assuming that you did not miss any payments, make any prepayments and assuming that you kept the same interest rate, and payment amount throughout the life of the mortgage. For example, a 15 year amortized mortgage would be paid off in 15 years if you took out a 15 year mortgage and made every payment on time for exactly the amount shown on the mortgage. To be safe, pick an amortization period that results in a monthly payment that is affordable and make periodic prepayments when you have additional funds whenever you are allowed to under the terms of your mortgage.
- Appreciation: An increase in property value, caused by economic factors such as inflation, supply and demand, etc.
- Auction: Property sold at public sale - to the highest bidder.
- Body Corporate: A legal entity created under the Unit Titles Act 1972 consisting of all the unit owners within a unit-titled property and controlled, where there are more than three, by an elected committee. The Body Corporate essentially has an overall management and administrative function.
- Boundary: The dividing line that separates adjoining properties.
- Breach of Contract: Breaking the conditions as outlined in the contract.
- Bridging Finance: Short term finance used when your buying or selling a house to bridge the gap between receiving your funds from the sale of an existing property and the purchasing of the new property.
- Building Consent: A local authority permit issued to an owner or occupier undertaking building work to ensure all work complies with relevant codes.
- Caveat: This indicates the rights or interests of a third party in the property. A caveat is a legal document which, when lodged in the Land Registry Office, gives the caveator the opportunity of protecting an existing right or of establishing an existing claim in property. The most common form of caveat is the caveat against dealings with the land concerned. In effect, while the caveat is in place, it forbids any dealings in the land from being registered.
- Caveat Emptor: Let the buyer beware'. Examine the goods before buying.
- Certificate of Title: The document of title to the land held under the Torrens System of land registration. It consists of duplicate deeds stating the fact and extent of the interest held in the land. One copy is held by the Land Transfer Office and the other by the registered proprietor.
- Code Compliance Certificate: A certificate issued when building work is finished, confirming that the building complies with the New Zealand Building Code.
- Commission: Payment made to the Real Estate Agent for services rendered.
- Compliance Schedule: Under the Building Act 1991 any new or existing buildings that contain safety mechanisms such as sprinkler systems, lifts or escalators must have a compliance schedule. The schedule details inspection, maintenance and reporting procedures.
- Conditional: The status of an agreement for sale and purchase which is subject to specified conditions to be satisfied to make it binding.
- Contract of Sale: A legal document setting out terms/conditions the seller & buyer enter into when a sale takes place.
- Controlled Activity: Those activities where a Resource consent will be granted but may or may not be subject to conditions imposed by the consenting authority.
- Conveyance: The transferring of property ownership from the seller to the buyer's name.
- Cooling Off Period: Five business days are allowed after exchanging contracts, during which time the contract can be cancelled or rescinded.
- Covenant: An agreement or promise by deed by which one party pledges to another that something will be done or has been done, and relates generally to the relationship between vendor and purchaser or lessor and lessee. It is commonly used to control the quality and type of building or tenants within new developments.
- Cover Note: Temporary insurance cover - till the policy is issued.
- Cross Lease: A hybrid form of multi-unit tenure in which each owner has an undivided share of the underlying freehold as tenants in common, as well as a long term (usually 999 years) registered leasehold estate of the particular unit occupied. More common in a residential context.
- Deposit: Normally 10% of the purchase price, paid at the time of exchanging contracts, any initial or part deposit usually form part of the 10%.
- Disbursements: Fees/miscellaneous charges incurred during the conveyancing process.
- Disability Insurance: You should make sure that you have insurance coverage to protect you in the event that you become disabled through accident or illness and are unable to make your mortgage payments. These policies will provide replacement income until you are able to return to work. You should check you policy at work to see if you already have adequate insurance.
- Discretionary Activity: Those activities where Resource consent may or may not be granted.
- Down Payment: This is the amount of money that you have available to be applied against the purchase price of the home. Normally, the minimum down payment is a standard percentage unless your are a first time home buyer in which case the percentage is often lowered.
- Due Diligence: The process by which careful consideration of every aspect of a proposed asset purchase or lease is reviewed including in-depth financial, legal and physical investigation. Because the purchase or lease of an investment property can be complex, sale and purchase agreements and lease agreements are often conditional upon the completion of due diligence within a specified period to the satisfaction of the purchaser or prospective lessee.
- Easement: A right which a person has to use land belonging to another in a particular manner without the right of possession of the land, or to take any part of the soil or its produce, or to prevent a landowner from using their land in a particular way. A common form of easement is the right of access over another's property.
- Equity: The equity in your home is the difference between the selling price of the home and the total debts owing against it.
- Fixtures: Items that cannot be removed from a property without causing damage, such as built-in wardrobes, cupboards, stove, sink, toilets, basins, baths, etc.
- Floating Rate Mortgage: This is a mortgage that usually has a fixed payment, but where the interest rate charged may change based on market conditions. As a result of the changing interest rate, the amount applied against the principal can vary dramatically.
- Freehold: Property held as Freehold is often referred to as an estate in Fee Simple. It is the interest in land having the greatest rights of use and enjoyment allowed by law and the widest power of disposal or alienation. All other forms of tenure are created out of a freehold or fee simple.
- Free Standing: A structure standing independently of others.
- Home Insurance: Most lenders will require you to put home insurance equal to at lesser of the principal of the mortgage or the loan amount. It is important to make sure that you have adequate insurance so that in the event of a fire, that you are fully covered. Your insurance broker will explain this to you in detail.
- Inventory: A listing of all items included with the property, such as furniture and other movable items.
- Job Loss Mortgage Insurance: This is insurance that will cover your premiums in the event that you involuntarily loose your job. This is a fairly new type of insurance but it can add additional comfort to your family if you are concerned about your employment.
- Leasehold: An estate or interest in the land defined by a lease contract for a specific period and usually for the payment of rent. The lease transfers the rights of occupation of the property to the lessee who is often subject to covenants as to use, term and rental etc.
- Land Information Memorandum (LIM): A report provided by a Local Territorial Authority on request. It provides details on any matters affecting the land including:
Compliance with resource management issues such as use, zoning, designations and building consents.
Details on utilities such as water, sewerage, stormwater and any possible hazards on the site.
Any outstanding charges and arrears
Compliance with the Building Act
- Maturity Date: This is the date at the end of the term of the mortgage, at which time you can either pay it off completely, or refinance the balance that is outstanding. For example, if you take out a three year mortgage, the maturity date is three years from receipt of the mortgage funds.
- Mortgage: A legal document containing the exact terms/conditions applying to the lending of the money (usually) secured over the property.
- Mortgagee: This is the lending institution who holds the mortgage or the person or person's who lends you the money..
- Mortgagor: (YOU) This is the person that is registered as borrowing the money.
- Notification: Notification of a resource consent application involves the placement of a public notice in the newspaper, notification of people most likely to be affected by the activity, including adjoining owners, and a sign at or near the property to indicate what is proposed.
In general terms, an application for a resource consent need not be notified if the activity to which it relates is a controlled activity and all affected parties provide written consent. Discretionary activities need not be notified if they are expressly permitted as such by a district plan, or a district authority is satisfied any adverse effects will be minor and written consent is obtained from adversely affected parties.
- Payment Options: The typical payments are weekly, biweekly or monthly. It is best to pick a payment option that follows your income flow. For example, if you are paid weekly, take out a weekly payment option. The more frequently that you pay, the quicker you pay off the mortgage and the less interest that you pay over the life of the mortgage.
- Permitted Activity: Those activities that are permitted as of right under a District Plan and for which no consent is required.
- Portability: This is a mortgage option that allows the borrower to transfer the mortgage to their new home, provided that it has the same value or more, without paying a discharge penalty to the lender.
- Principal: This is the original amount being borrowed or the amount that is still outstanding on refinancing.
- Private Sale: This is when the seller deals directly with a buyer.
- Prohibited Activity: Those activities that are prohibited under a district plan and for which no Resource consent can be granted.
- Project Information Memorandum (PIM): A Project Information Memorandum (PIM) can be obtained from a Local Territorial Authority and serves to alert prospective builders and developers of issues relating to the location of buildings and how the use of those buildings may affect services to them. A PIM is provided for under the Building Act 1991 and includes all information or requirements that could affect the construction of a proposed building including:
Location of services
Permitted footpath crossing points
Geological history
History of flooding
Other approvals required from the local authority
- Property: Refers to land with or without improvements.
- Renewal: This is when the mortgage is re-negotiate at the end of the initial term.
- Reserve Price: The minimum price the seller will accept at auction.
- Resource Consent: A local authority permit issued to enable a property owner or occupier to carry out an activity on the property that is not permitted as of right under a local District Plan.
- Riparian Rights: Rights of access to and use of natural waterways, rivers, streams and coastline etc.
- Second Mortgage: This is a mortgage that is in second line to the first or primary mortgage. If there is a default, the first mortgage will be paid off in priority and the remaining funds, if available, will be paid to the second mortgagee.
- Seller: A person or person's offering property for sale.
- Stamp Duty: A Government tax levied on non-residential property transactions at the time of registration at a sliding scale of 1% for the first $50,000 of the sale price, 1.5% between $50,000 and $100,000, and 2% thereafter.
- Term: This is the length of time that your mortgage is in place. This can vary from fully open, to 6 months and as high as 10 years depending on the lending institutions.
- Title: This is the person's name that the home is legally registered to.
- Title Search: Investigating or examining the title to land to determine if the seller has the right to transfer ownership. This type of search reveals the owners names and any other details relating to the existence of any restrictive covenant, mortgage or caveat on the property title.
- Torrens Title: is the name given to the Government system of recording ownership of land, by far the most common land title, and the cheapest to buy and sell.
- Transfer: Documents registered in the Land Titles Office acknowledging the change of property ownership.
- Unconditional: The point at which all conditional clauses within a sale and purchase or lease agreement have been satisfied or dispensed and the transaction is contractually binding on both parties.
- Unencumbered: Relates to a property being free of mortgages, covenants, restrictions, etc.
- Unit Title: A unit title, under the Unit Titles Act 1972, provides individual ownership or freehold title in multi unit developments. The main unit, such as an apartment or office is known as the Principal Unit, while other associated units such as car parks are known as Accessory Units. There will also generally be areas of common ownership such as foyers, lifts and driveways etc, termed common property.
- Vendor: A person who is offering property for sale.
- Warrant of Fitness: An annual certificate that confirms the requirements of a compliance schedule have been met.
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