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Glossary of Terms Used in Real Estate

August 17, 2017

 

AGENT | A registered or licensed person who facilitates the sale, purchase, letting or management of a property on behalf of the owner(s).

 

ALLOTMENT | A section of land subdivided from a larger portion generally referred to as a lot or section.

 

APPRAISAL | An opinion of your property’s saleability and estimated market value based on current conditions and individual property attributes. It should NOT to be confused with a registered valuation.

 

ASSETS | The items of value that you own.

 

AUCTION | The sale of a property via a bidding process. Usually a minimum or reserve price is set, and only sells if the price is met or exceeded.

 

BODY CORPORATE | A legal entity and management structure set up for and by the owners of a building or complex responsible for administering and maintaining the building and surrounds including common areas, gardens, pools, parking etc.

 

BREACH OF CONTRACT | When one or more terms of a contract are not fulfilled.

 

BRIDGING FINANCE | A short-term loan, usually at a higher rate of interest which assists to cover the purchase of a property while waiting to sell another. The security is secured over both properties.

 

BUILDING REGULATIONS | These are designed to uphold the standards of public safety, construction and health. They are developed by local authorities to control the quality of buildings.

 

CAVEAT | A document lodged by a person with a legal interest in a property to ensure the property is not sold without their knowledge and consent.

 

CAVEAT EMPTOR | A Latin term meaning, “let the buyer beware”. In some instances it puts the responsibility on the buyer to be satisfied before buying the property.

 

CERTFICATE OF TITLE | A document which details the ownership of land along with dimensions and other details. It is held by the lender as security for the loan.

 

CHATTELS | These are the items generally fixed on the property such as light fittings, carpets, stove, dishwasher, blinds etc.

 

CMA | Comparable Market Analysis is the price comparison of your home with other that are currently on the market and those recently on the market in your general location of a similar size.

 

COMMISSION | The fee payable by the seller to the real estate agent for the professional services provided in the sale of your property.

 

COMMON PROPERTY | The areas on a title which have joint ownership with another property, often common with cross leased, strata title and unit title properties.

 

COMPANY TITLE | Title of ownership often associated with older apartment buildings.

 

CONDITIONAL CONTRACT | A contract that is agreed to by the seller and the buyer where one or more conditions need to be met, usually within a specified time frame, by either the buyer or the seller, and example would be “subject to finance”, or “subject to sale of another property”.

 

CONTRACT OF SALE | A written document that sets out the terms and conditions for the sale or purchase of land and all improvements to it.

 

CONTRACT FOR SALE OF LAND OR STRATA TITLE BY OFFER AND ACCEPTANCE | The contracts between the buyer and the seller.

 

CONVEYANCING | The legal process of transferring the ownership of property and money making sure that everything is legally correct as the property transfers from one owner to another. This is most commonly performed by a solicitor or settlement agent.

 

COOLING–OFF PERIOD | The time when a buyer can withdraw from the contract, subject to a penalty.

 

COVENANTS | Special rules and regulations which might apply to a property regarding its use.

 

CERTIFICATE OF TITLE (CT) | The document that shows the legal owner of a property.

 

DEPOSIT | A defined percentage or agreed amount of the purchase price paid by the buyer which is held in trust as a confirmation of intention to pay the balance.

 

EASEMENT | A right held by someone to use land belonging to someone else for a specific purpose. Drains, footpaths, water pipes and mains electrical are usually covered by an easement.

 

ENCUMBRANCE | An easement, mortgage or other liability on a property which impedes its use or transfer.

 

EQUITY | The value you hold in your home. The total value less your mortgage and any other liabilities on your property.

 

ESCAPE CLAUSE | This allows the owner/s to issue notice to a conditional buyer that unless that buyer confirms the sale as unconditional within a short stipulated time, then the owner can proceed with another offer from another party.

 

EXCLUSIVE LISTING / EXCLUSIVE AGENCY | Only the agency appointed as the right to sell the property.

 

FSBN | For Sale by Negotiation. This is an undisclosed price marketing strategy where often a price guide is used to advertise the property.

 

GENERAL AGENCY | A listing that is open for any agent in any company holding a real estate licence to work.

 

INTEREST ONLY LOANS | A loan on which only the interest is payable with the principal payable at the end of the loan.

 

INVESTMENT | The purchase with the ultimate goal of generating income and or capital gain on the resale of the property at a later date.

 

JOINT TENANTS | The equal holding of property by more than two people.

 

LAND TRANSFER OFFICE | The government department where all property records are held and any changes are registered. These are public records and can be viewed by anyone.

 

LEASE | A document granting possession of a property for a specified period without transferring ownership. The lease document specifies the terms and conditions of occupancy by the tenant including the period and the compensation (rent) payable.

 

LICENSED REAL ESTATE AGENT | All New Zealand Real Estate agents are required to be licensed under the Real Estate Agents Act 2008 (REAA). All Harcourts agents carry current licenses.

 

LIABILITIES | The outstanding debts that you owe to others.

 

LIM | Land Information Memorandum is a report available from your local authority (council) which contains information regarding a property and includes such elements as rates owing, drainage and building plans.

 

LISTING AUTHORITY | A contract between an owner and the real estate company selling the property. It is normally set for 90 days and details the commission rate and additional costs such as agreed marketing and promotional costs. This authority includes whether the authority is an exclusive, general, tender or auction.

 

LOAN PERIOD | The term (months and years) that a loan covers.

 

MATURITY DATE | The day when the loan is required to be paid in full.

 

MORTGAGE | The security over a property given to the lender for the repayment of the loan. The lender (mortgagee) has the right to take the property if the borrower (mortgagor) does not repay the loan.

 

MORTGAGEE | The person who lends the money for the property.

 

MORTGAGOR | The person who borrows money to purchase a property.

 

NEGATIVE GEARING | Where the mortgage repayments exceed the income received from a rental property.

 

NEGOTIATING THE OFFER | As an owner, your Harcourts sales agent will negotiate your offer with potential buyer/s on your behalf. The key to securing the best possible price rests with the negotiating skill of your Harcourts agent. The difference between an effective agent and others can simply mean more money for you as the seller.

 

OFFER TO PURCHASE | A formal offer for a specified price for a property. At Harcourts, these are made on a Harcourts sale and purchase agreement.

 

PASSED IN | A property is passed in at auction if the highest bid fails to meet the seller’s reserve price.

 

PLAN | This shows the house design, elevation of the house, number and sizes of the rooms, kitchen, bathroom and general layout plus the position of the house on the land.

 

POSITIVE GEARING | Where the rental income received is greater than the property mortgage and expenses.

 

POSSESSION DATE | The day when the buyers take occupancy of the house. This is normally when the ownership of the property transfers and the balance of the purchase price is paid to the seller.

 

PRINCIPAL | The amount of money that has been borrowed against the property, excluding interest

 

PRINCIPAL | The licensed owner of a real estate business.

 

PRIVATE TREATY SALE | The sale of a property by a real estate agent through private negotiation and contract.

 

PRIVATE SALE | The owner does not engage a licensed real estate agent to sell their property, but acts on their own behalf, dealing directly with all potential buyers, managing the marketing and dealing with all paperwork and offers (see Harcourts’ Private Sellers kit).

 

PROPERTY FILE | Your local authority (council) has a file on every property which contains potentially important information that is not contained within a LIM.

 

PURCHASER | The buyer of the property.

 

REAA | The Real Estate Agents Authority. They are an independent government regulatory body for the real estate industry in New Zealand.

 

REAL PROPERTY | Land with or without improvements.

 

RESERVE PRICE | The amount below which a home owner will not sell on the day of auction.

 

RIGHT OF WAY | A legal right of access across a property.

 

SALE AND PURCHASE AGREEMENT | The legal contract between the buyer and the seller.

 

SECURITY | Property offered as backing for a loan.

 

SECTION | A section of land subdivided from a larger portion of land generally referred to as a lot or allotment.

 

SEMI-DETACHED | Two buildings joined by a common boundary wall.

 

SETTLEMENT | Completion of a sale when the balance of the contract price is paid to the owner and the buyer is legally entitled to take possession of the property.

 

SOLE AGENCY | When only one real estate company has the right to sell the property (e.g. Harcourts).

 

STRATA MANAGEMENT | A legal entity and management organisation established for and by the owners of a complex or building who are responsible for administrating and maintaining the building and its surrounds including common areas such as gardens, pools etc. Also referred to as body corporate.

 

STRATA / COMMUNITY/UNIT TITLE | Most commonly used for flats and units, this title gives you ownership in a small piece of a larger property and does include air space. You have the selling rights to a particular unit and can lease, sell, or dispose of your units as you desire. You also have an undivided share of the common land and become a member of the body corporate.

 

STRATUM TITLE | This title gives you legal ownership over a piece of property and also a share in the common land of the area of flats or units. Air space is not included.

 

SUBJECT TO FINANCE | A condition inserted into a contract for the benefit of the buyer. This makes the contract conditional or subject to the buyer being able to raise finance in an agreed period of time.

 

SURVEY | Confirmation of where the property boundaries and improvements are.

 

TENDER | A tender involves potential purchasers placing confidential bids for a property by a specific time and date. The bids can include conditions and can be accepted or declined by the vendor/owner.

 

TITLE SEARCH | The process of examining the land title to ensure that the owner has the right to sell and therefore transfer ownership. It details the names of the owners and other information about the property such as caveats or other encumbrances on the title.

 

UNCONDITIONAL CONTRACT | A contract for the sale of a specific property that the owner and buyer have agreed upon has no conditions or all of the conditions have now been met.

 

VACANT POSSESSION | When ownership is transferred by the sale of a property it is required to be empty. No tenants or leases.

 

VALUATION | The assessment of the value of a property provided in a written report by a licensed/registered valuer.

 

VENDOR | The person who owns the property for sale. The owner. ZONING | Control of the use of land exercised by the local authorities.

 

Source: Harcourts 

 

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