Glossary

Here are some of the terms you’ll come across when buying or selling property.

Search by clicking on the first letter of the term below.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

  • A

    Advertised price sale

    Selling at an advertised price means that the seller has declared the amount that they expect to be paid for it.

    Agency agreement

    If you are using a licensed real estate agent to sell your property, you’ll need to sign an agency agreement. This is a legal contract between the seller and the agent that sets out what the agent will do and what they will be paid. Remember you can negotiate the conditions, such as who pays for marketing and how much the commission is. Make sure you get legal advice before you sign.

    Agency Agreement Guide

    This guide contains the key things you need to know about agency agreements.  The real estate agent must give you a copy of this guide before you sign an agency agreement.

    Agent or real estate agent

    This is the general term for a real estate agent, agency branch manager or salesperson (these are different types of real estate licences). In New Zealand, real estate agents are licensed by the Real Estate Authority (REA).

    Amenity

    A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction, eg: scenic views, proximity to public transport or recreational facilities.

    Appraisal

    An assessment of a property’s likely sale price.  An agent must give the seller a written appraisal that is realistic and based on market conditions and information from recent sales of similar properties.

    Asking price

    The listed price of the property but may not always be the final price the property sells for.

    Assignment

    The transfer of a mortgage or lease from one person to another.

    Auction

    An auction is a sale method where buyers publicly bid until the highest price is reached.

  • B

    Beneficiary

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

    Body corporate

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

    Boundary

    The lines that define the borders of a property.

    Branch manager

    This person is licensed to carry out real estate agency work on behalf of an agent and may supervise salespersons carrying out real estate agency work.

    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 report

    This is an expert assessment of a building’s condition and identifies any current or future problems. It’s very useful to get one of these if you’re thinking of putting in an offer. REA recommends getting a building report done by a qualified building inspector who has professional indemnity insurance, understands the legal requirements and carries out their work in accordance with the New Zealand Property Inspection Standard.

    Building code

    Local council regulations that control how buildings are designed and built.

    Buyer budget over (BBO) or buyer enquiry over (BEO)

    If either of these terms are used it means that the price listed on the advertisement is the minimum that the seller will accept. The seller must seriously consider any offer over the BEO, so this figure needs to be chosen carefully.

  • C

    Caveat

    A notice on a title that a third party might have some interest or right in the property.

    Certificate of Title (Title)

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

    Commission

    Real estate agents are usually paid a commission by the seller when a property sells. This is their fee for selling the property and it is detailed in the Agency Agreement the seller signs with the agent. Commission rates vary and can be negotiated.

    Common property

    Area of building, land or amenities within a unit title property that is shared by all owners, for example a driveway.

    Company title

    This is a type of ownership more common when properties are grouped together. An owner automatically becomes an owner 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.

    Complaints Assessment Committee (CAC)

    This is the preliminary panel who determine complaints about agents. They can make determinations and orders under the Real Estate Agents Act 2008 and can file disciplinary charges in the READT.  

    Conditional offer

    An offer to buy a property subject to stated conditions being met.

    Covenant

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

    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. 

  • D

    Deadline sale

    This sale method is when a property is marketed for a set period with an advertised end date. The seller isn’t obliged to accept any offers and can choose to accept an offer at any point during the listing period.

    Default

    Failure to make mortgage payments on time or to comply with other requirements of the mortgage.

    Deposit

    A percentage of the purchase price paid in advance to secure the sale of real estate. (This is not the same as the bank deposit a bank requires before it will lend money to buy a property).

  • E

    Easement

    A right to use land belonging to someone else, for example, a water authority may have a sewerage easement across part of your property.

    Encroachment

    Part of a house or structure 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, ie. 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.

    Executor

    A person named in a will to administer a deceased estate. 

  • F

    Fee simple (or freehold)

    The exclusive ownership of the land and any associated buildings, subject to any interests registered on the title. 

    Fittings

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

    Fixtures

    Fixed items that cannot be removed without damaging either the property or the fixture itself, for example built-in cupboards.

    Freehold (or fee simple)

    The exclusive ownership of the land and any associated buildings, subject to any interests registered on the title.   

  • G-H

    Guarantor

    A person who agrees to pay a loan, or a portion of the unpaid principal balance, in case of default by the borrower.

  • I

    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 loan amount is repaid at the end of the term of the loan, rolled over by the same bank or the owner re-mortgages.

    Investment property

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

  • J-K

    Joint tenancy

    A form of co-ownership that gives each tenant equal shares and rights in the property including the right of survivorship, for example, in the event of death of one of the owners, ownership passes to the surviving owners automatically.

  • L

    Leasehold

    An interest in land that includes ownership of the buildings and a lease of 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.

    Life estate

    Also called tenancy for life. A freehold interest (in real property) that expires upon the death of the owner or some other specified person.

    LIM (Land Information Memorandum)

    A LIM contains relevant information that the local council knows about a property, such as any issues with drainage and plumbing, erosion or permits. A LIM will also record any unpaid rates.  For a fuller explanation of the contents of a LIM you should contact your local council.

    Listing agreement

    Another term for agency agreement. A written contract between an owner and an agent, authorising the agent to perform services for the owner.

    Loan

    A sum of borrowed money.

    Loan to valuation ratio (LVR)

    The amount of the loan financed as a proportion of the property value, expressed as a percentage.

  • M

    Mortgage

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

    Mortgage broker

    An individual or company that brings borrowers and lenders together. Mortgage brokers typically require a fee or a commission for their services, which is usually paid by the lender.

    Mortgagee

    The lender in a mortgage agreement.

    Mortgagor

    The borrower in a mortgage agreement.

    Multi-offer process

    This is a method of sale where prospective buyers are encouraged to submit their best offer and the seller can choose whichever one looks most attractive. There has to be more than one offer in writing (real estate agents aren’t allowed to pretend there are genuine competing offers if they don’t exist). 

  • N

    Nominee

    A person who, in a limited sense, acts for or represents another. In a sale and purchase agreement it could mean the person who the buyer appoints to take over the buyer’s right to buy the property on settlement.

      

  • O

    Off the plan

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

    Offer

    A proposal to purchase a property. To make an offer, the agent will usually draw up a sale and purchase agreement and ask you to sign it. You can make your offer subject to certain conditions, such as finance, the sale of your current property or a satisfactory building report.

  • P-Q

    Passed in

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

    Project information memorandum (PIM)

    This is a report that tells you relevant information that a council knows about a piece of land, such as the location of underground pipes, natural hazards, soil types and other ground conditions, and whether any building project on it will be subject to any resource consents or bylaws.

    Price on application (POA)

    A pricing method used by some agencies. Prospective buyers can find out the asking price by enquiring.

    Power of attorney

    A legal document which authorises a person (the attorney) to act on another person’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 loan 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.

  • R

    Rateable value (RV)

    This is a value used to calculate local body rates (formerly known as Government Value or GV). This is not a market value for a property for sale, because it may be several years old. An RV doesn’t reflect local market changes and may not reflect any recent renovations to a property.

    Real estate agency

    A company performing real estate work through its agents, branch managers and salespersons. 

    Real estate agent

    A person 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.

    Real Estate Agents Act 2008 (REAA 2008)

    This is the Act that provides for the regulation of the real estate industry in New Zealand. 

    Real Estate Authority (REA)

    The Real Estate Authority, the Government regulator of the New Zealand real estate industry.

    Real Estate Institute of New Zealand (REINZ)

    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

    At an auction, a ‘reserve’ is the lowest price the seller is willing to sell the property for.

    Resource consents

    Resource consents are necessary when a group or individual wishes to carry out an activity or development that is not permitted by the district or regional plans. 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 first refusal

    A provision in an agreement that gives a party the first opportunity to purchase or lease the property before it is offered for sale or lease to others.

    Right of way

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

  • S

    Sale and purchase agreement

    This is a legal contract between the buyer and seller for the sale/purchase of a property that sets out all the agreed terms and conditions in writing.  It’s important to get legal advice before you sign an agreement – and that you read and understand what it means.

    Sale and Purchase Agreement Approved Guide

    This guide contains the key things that buyers and sellers should know about sale and purchase agreements. If there is a licensed real estate agent involved in a sale, they must give this guide to the seller and prospective buyers before any agreement is signed.

    Salesperson

    A person who is licensed to carry out real estate agency work on behalf of an agent. 

    Second mortgage

    A mortgage that, on the sale of a property, is paid off only when the first mortgage is paid.

    Semi-detached

    A type of construction where two buildings are attached together by a common wall.

    Settlement

    This is the end goal in a property transaction, when the sale and purchase is completed by the exchange of property and payment.

    Settlement statement

    A breakdown of the payments involved in the property transaction, prepared by the lawyer/conveyancer. It will include payments such as the deposit, agent’s commission, outstanding rates, loan payments.

    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.

    Subdivision

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

    Survey plan

    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.  Once a subdivision is completed, a survey plan will become a deposited plan and will become part of the certificate of title for the property.

  • T

    Tenants in common

    A type of joint ownership in a property where two or more purchasers own a property separately in specified shares. If one dies, his or her share of the property forms part of their estate. Shares can be sold without consulting the other owner(s).

    Tender

    A tender is a sale method where prospective buyers submit confidential written offers by a deadline. Usually there is no minimum price, but properties are often listed with a BEO or BBO price. The seller can then choose the offer that is most acceptable to them, based on the price and any attached conditions. The most attractive tender is likely to be one that combines a good price with few conditions. Sellers are allowed to negotiate with any one or more of the tenderers received after tenders close.

    Title search

    A title search will help you find out all the facts about the property’s ownership, boundary and access. This information is held by Land Information New Zealand (LINZ).

    Townhouse

    A dwelling unit, generally having two or more floors and attached to other similar units via party walls.

    Trust account

    A bank account administered by a law firm or real estate agency to hold funds on behalf of others. When a buyer pays a deposit, it’s held in a trust account by the real estate agent until the sale and purchase agreement becomes unconditional.

    Trustee

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

  • U

    Unconditional agreement

    Where a buyer and seller agree to buy and sell a property without including any conditions. A conditional sale becomes unconditional when all conditions are met.

    Unconditional offer

    This is when someone offers to buy a property without attaching any conditions to the sale.

    Unit Title (stratum estate)

    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.

    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.

  • V

    Valuation report

    An estimate of a property’s worth on the current market which can be provided by a registered valuer.

    Valuer

    A person qualified by education, training, and experience to estimate the value of real property and personal property.

    Vendor

    The person or entity legally authorised to sell a property.

  • W-Z

    Zoning

    Local authority guidelines that indicate the permitted use of land.