Agreement - The written contract for the sale and purchase of property between the vendor and the buyer. |
Amortise - To repay a mortgage with regular payments that cover both principal and interest. |
Appraisal - A non-binding verbal assessment of a property by a real estate sales person. |
Appreciation - An increase in the value of a property over a period of time. |
Asking price - The price the owner would like to get for their property, but which is normally negotiable. |
Auction - A public sale of a property or real estate that is sold to the highest bidder when the owner’s reserve is reached. |
Balloon payment - A large lump-sum payment to clear a debt. |
Beneficiary - The person designated to receive benefits from a trust, estate, or a deed of trust. |
Body corporate - An administrative body comprising all of the owners within a group of units or apartments of a strata building. Usually, a committee is elected by the owners to handle the administration and upkeep of the entire property. |
Bond - Upon signing a tenancy agreement a sum of money is paid by the tenant, and held by the Tenancy Services, to ensure against defaulting on payment or damage to the property. |
Boundary - The perimeter lines of a property. |
BRANZ - An independent body which carries out research and testing for the building industry. |
Bridging loan - A short term loan to cover the cost of purchasing a new property before an existing property has been sold. |
Building code - Regulations that control design, construction and materials used in construction, as set out under the Building Act 1991. |
Buyers’ market - When there is more property on the market than buyers. |
Capital expenditure - The cost of making an improvement to a property to increase it’s value or extend its useful life. |
Capital gain - The profit you make when an asset increases in value. |
Capital improvement - Any permanent structure or addition to a property to increase it’s value or extend its useful life. |
Capital valuation - A valuation of your property by your local authority, used to set your rates, and split into land value and value of improvements (ie, the house etc). |
Capped interest rate - Where the interest rate can go up or down, but can’t go over a certain level for a set time. |
Caveat - A warning or caution on a title that a third party might have some interest or right in the property. |
Caveat emptor - A Latin phrase for “Let the buyer beware.” |
Certificate of occupancy - A document issued by council to a developer permitting a structure to be occupied. |
Certificate of title - A description of a property with the name of the registered owner and any mortgages or easements. It must be produced by the vendor before the sale of the property. |
Chattels - Moveable and removable items in a property, eg, the stove, television aerial, carpets, curtains and light fittings. Chattels must be specified in the sales and purchase agreement to be part of the property. |
Clear title - A title that is free of legal doubts as to ownership of the property. |
Code of Compliance - Issued by the local council to say the building complies with the Building Act. |
Collateral - An asset that guarantees the repayment of a loan. |
Commission - A proportion (usually a percentage) of the sale price of a property paid to a real estate agent by the vendor for negotiating the sale. |
Common property - An area which is owned by all tenants of a strata property, eg, a driveway. |
Conditional agreement - A sales and purchase agreement that is subject to conditions being satisfied by a set date, eg, arranging finance, a satisfactory builder’s report, etc. |
Contract of sale - Used at auctions, to set out the terms and conditions of sale. |
Covenant - Terms, conditions and restrictions noted on the title. |
Cover note - Temporary insurance, issued by an insurance company, until a formal policy is issued. |
Credit history/report - A record of an individual’s current and repaid debts, used by a lender to assess the risk of a potential borrower. |
Crosslease - A type of ownership where there is more than one home on a block of land. Everyone owns the land but each leases their home. The lease usually specifies exclusive-use area for each cross-lessee as well as common areas, and may restrict alterations. |
Cul-de-sac - A dead-end street with only one entrance. Often seen as desirable in real estate terms because there’s no through-traffic. |
Deed - A legal document conveying title to a property. |
Default - Failure to comply with other conditions of the mortgage. |
Deposit - A percentage of the purchase price paid once the price has been agreed but before settlement. |
Depreciation - A decline in the value of property. |
Disposable income - Money left over after all expenses have been met. |
Drawdown - The disbursement of mortgage funds from the lender. |
Duplex - See semi-detached and terrace house. |
Easement - A right that someone has to use the land belonging to another, eg: a utility provider may have an easement across part of your property or neighbours may hold easement over a shared drive. |
Encroachment - Part of a house illegally overhanging the street or a neighbour’s property. |
Equity - The amount of an asset actually owned, the difference between the market value of the property and the amount still owed on its mortgage. |
Estate - All assets owned by an individual at the time of death. |
Exclusive listing/sole listing - When the real estate agency has the exclusive right to sell a property for a specified time. |
Fee simple - The greatest possible interest a person can have in real estate. |
Fidelity fund - A fund set up by a professional body, such as lawyers and real estate agents, to reimburse clients who lose money due to fraud or misconduct by one of the fund’s members. |
Fiduciary - Real estate agents and salespersons are considered by law to be fiduciaries, and have a duty to act primarily for the benefit of the person who employed them. A fiduciary must act with the highest degree of care and good faith in relations with the principal and on the principal’s business. |
Fixtures and fittings - The first is fixed items that cannot be removed without damaging either the property or the fixture itself. The second are objects that can be removed from a property without causing damage to it. |
Fixed interest rate - Where the interest rate does not change during the term of the loan, usually taken out up to five years. |
Floating interest rate - Where the interest rate goes up and down according to market forces. Also called a variable interest rate. |
Foreclosure - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in a mortgagee auction, the proceeds of which are used to pay back the mortgage. |
Freehold - The most common type of ownership where you own the land and house with virtually no restrictions. Freehold is also used to describe a debt-free property. |
Gearing - The ratio of your own money and borrowed funds for investment. |
Guarantor - A person who guarantees the holder of a loan in case of they default. |
Home inspection - An inspection that evaluates the condition of a property. |
Interest rate - The fee charged for borrowing money. |