Here is a schedule defining common terms used in real estate transactions.
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Appraisal: A written analysis of the estimated value of a property prepared by a qualified sales consultant.
Agreement: The written contract for the sale and purchase of property.
Bridging Loan: A short-term loan (usually at a higher rate) taken out to cover the financial commitment between buying a new property and selling an existing one.
Business / Working Day: A standard day for conduction of business: 9am – 5pm. Excludes weekends and Public Holidays.
Buyer’s Market: When the demand for property is less than supply so the advantages shift to the buyers.
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.
Certificate of Title: A description of a property with the name of the registered owner, encumbrance. i.e. mortgages and / or easements on the property.
Chattels: Moveable and removable items of personal property. In real estate transactions for the sale of homes this usually includes the stove, television aerial, carpets, blinds, curtains, drapes and light fittings. Unless chattels are specified in the agreement, they are not sold as part of the property.
Conditions: (Further Conditions in a Sale And Purchase Agreement): requirements that must be satisfied before the agreement is confirmed unconditional, for example:
Conditional upon a specialist report
Conditional upon the sale of the purchasers property
Conditional upon an existing agreement being confirmed unconditional
Conditional upon a LIM report
Conditional upon finance
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.
Deposit: A percentage of the purchase price given to bind the sale of real estate. Held in a real estate Trust account for a minimum of 10 days.
Easement: A right that someone has to use the land belonging to another eg: a water sewage easement across part of your property.
Exclusive Listing / Sole Agency: A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
Fee Simple: The greatest possible interest a person can have in real estate.
Freehold: An estate in fee simple, which continues for an indefinite period of time.
Leasehold: You buy the right to own the home and lease the land for a certain time, usually set in perpetuity for 999 years with renewal rights every 21 years. Some leases vary and each should be investigated separately.
LIM Report (Land Information Memorandum): A report from the council regarding a specific property including special land features or characteristics and details of building consents and any work done to improvements over the years.
Listing: A written contract between an owner and a real estate company authorising the agent to market and sell the property.
Registered Valuation: A written analysis of the estimated value of a property prepared by a qualified and registered valuer. The bank often requires a Registered Valuation as a condition of granting a loan to a buyer.
Seller’s Market: When demand for property is greater than supply. The result is greater opportunity for sellers to find multiple buyers or someone willing to offer the asking price or even a figure greater than asked.
Settlement Date: The day the sale of a property is finalised by the legal representatives of the vendor and buyer and mortgage documents come into effect, costs are paid and the new owner takes possession of the property.
Special Condition: A condition that must be met before the contract is legally binding. For example the purchaser may specify that the contract is not legally binding until the purchaser has seen a builder’s report and is satisfied by that report.
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 there are no other claims or outstanding permits.
Unconditional Agreement: The legal contract that binds both the purchaser and the seller to settle on the specified date and for the specified price. It is either not subject to any conditions or those conditions have been satisfied.
Vendor: The person selling their home.