FAQ & Glossary of Terms

This page is broken into two main sections, Common or Frequently Asked Questions and a Glossary of Common Property Related Terms.

There will no doubt be many more questions that you will want answered, but these should help your understanding to begin with, and if you can't find an answer then make sure you contact us directly.

Frequently Asked Questions

Why use my services rather than a solicitor?

You get a friendly professional service from a specialist in the field, for a smaller fee than a solicitor would charge!!

What is Conveyancing? 

Conveyancing is the legal process of transferring the legal title to property from one owner to another, including the preparation of all necessary documentation to make that change. The types of documentation include both paper and online documents.

Do I have to use a NZ based Conveyancer or Lawyer to act for me if buying or selling property?

Yes as not only do they protect your personal interests, they also ensure that financiers interests are protected by either registering the mortgage against the title or releasing it and repaying the amount you owe back to the bank.

How much do your Conveyancing services cost?

Costs obviously vary depending on the complexity of the job. However, the overall costs you can expect are generally made up of my conveyancing fee, GST plus Disbursements. Disbursements are expenses that conveyancers have to pay out to third parties to effect the transaction and can include Registration fees paid to the Government, Council Fees, fees paid to Banks to release a mortgage, and fees paid to search titles and other such fees.

Should I get a LIM Report?

As a rule I would say yes, you should get a LIM report, but I would discuss it with me first as there are times when it may not be necessary. This can happen when you are buying a section or where a LIM report had recently been obtained by another party and your conveyancer, the agent and you are comfortable relying on that report.

More information about this can be obtained from your local council websites with many having online forms enabling you to order a LIM report.

How much do LIM Reports cost?

Depending on your local council it can cost anywhere between $60 incl GST and $300 incl GST.

Glossary of Property Transaction Related Terms

 

A & I Form (Client Authority and Instruction)

The authority the conveyancer will ask you to sign to transfer the property and to register any interest electronically against your title. The conveyancer will need to sight your photo identification and take a copy of that to attach to the form.

Body Corporate

A group to which all apartment or flats owners of a unit title property automatically belong. A common example of a unit title is an apartment block but body corporates are used in other situations such as a managed complex. The body corporate is responsible for the management of the property including maintenance and the insurance of the building. A secretary or body corporate committee normally manages the Body Corporate and an annual levy is payable by all owners to the body corporate to cover its expenses.

Body Corporate Levy

An annual levy often payable by instalments during the year, payable to the body corporate, to cover the costs incurred by the body corporate in managing the property. Levies do not include local council rates.

Body Corporate Rules

The rules that the unit owners have to comply with. The rules could include restrictions such as whether you are permitted to have pets. You should always review these rules before purchasing to ensure you are happy with them.

Cash Out Clause (Escape Clause)

A clause in a conditional contract that allows the seller to continue to market the property and receive offers. If another offer is received, the seller can give the first buyer a specified number of days to confirm the contract. If not confirmed within that time, the contract can be cancelled.

Certificate of Title

The legal document recording the owner of the property, the legal description of the land and its area and any other interests in the land such as mortgages, land covenants, fencing covenants.

Chattels

The items that will remain in the property when sold, usually the light fittings, fixed floor coverings, drapes, stove. If there are additional items included in the sale they must be recorded in the contract.

Clear Title

A conveyancer acting for the seller must be in a position to give clear title to the buyer on settlement. This means that any items noted on the title that are specific to the seller, for example, mortgages, caveats, statutory land charges, must be removed.

Conditional Agreement

An agreement for sale and purchase (contract) is commonly signed with conditions that need to be satisfied within a specified time. The most common conditions include the buyer obtaining satisfactory finance, arranging a builders report and/or valuation report, or an unconditional contract for the sale of their current property.

Company Share Flat

A form of ownership where you own shares in a flat owning company. The company owns the land and buildings. Ownership of the shares entitles you to occupy the flat (and garage or carport, if any). The owner must also pay a levy towards the running costs of the company. Your rights and obligations are contained in an occupation licence.

Covenants

This is sometimes called a land covenant or restrictive covenant. Covenants are binding on subsequent owners and may restrict how you can use the land or what you can build on it. Typically, developers who want to control the use of land in a subdivision impose covenants that pertain to the quality of houses erected on a section in a subdivision.

Cross Lease

A type of ownership of a unit on what is known as a cross lease title. The buyer is purchasing a share in land in common with other unit owner/s plus the leasehold title to a specific unit for a period of 999 years from the date of the lease. The buyer has exclusive occupation of the unit and the area of land allocated to it, but with joint responsibility with other unit owners for any common areas.

Deposit

The initial payment you make in part payment of the purchase price. This is paid either when the offer is accepted by the seller or when all the conditions have been confirmed. The amount of the deposit is usually between 5 – 10% of the total purchase price, but is negotiable between the buyer and seller. If a real estate agent is involved in the transaction, the deposit is usually paid to the real estate firm.

Disbursements

These are additional costs that your conveyancer incurs on your behalf such as toll calls, photocopying, and search and registration fees on land title documents.

Discharge of Mortgage

When a property is sold, the mortgage must be removed to give the buyer clear title. Usually this will require the seller to repay the loan to the lender and in return the lender will provide the seller with a discharge of its mortgage. A mortgage is not automatically discharged when a loan is repaid but will remain in place until a discharge is requested.

Early Release

A real estate agent is required by law to hold a deposit for 10 working days from receipt. Both the seller and buyer can waive this requirement if they agree to an early release of the deposit funds. The seller and buyer or their conveyancers sign an early release authority. This authorises the real estate firm to release the deposit prior to the expiry of the 10 working days.

Easement

An entry on a Certificate of Title showing the land has certain rights over other adjoining land or is subject to certain rights in favour of adjoining land. This could be a right-of-way, right to the supply of water, electricity or other services. There can also be easements in favour of local Councils or supply authorities providing for the laying of pipelines or cables over the land for council or other services.

eDealing

This is the electronic registration of documents affecting the title.

Encumbrance

Generally, an easement, covenant or some other restriction recorded on the title to a property, such as fencing covenant, building line restriction, or building covenant.

Equity

The market value of your home less the amount owed on the mortgage.

Fixtures and fittings

Items that are considered fixed to a building such as shelving, bathroom vanity, door handles. These are assumed to transfer with the sale of the property unless specifically excluded in the agreement for sale and purchase.

Freehold/Fee Simple

This is a type of ownership of the title. It means the entire interest in the land as distinct from say, leasehold where you do not own the land itself. Many people use the word freehold to describe land that they own without a mortgage.

GST (Goods and Services Tax)

A residential property transaction will more than likely include GST (if any) in the purchase price. If you are selling or purchasing a commercial property or investment property subject to a lease, you will need to contact your conveyancer and accountant to ascertain whether the transaction will incur GST.

Leasehold

You do not own the land but have a lease with the owner of the land giving you a right to occupy the land. Often leases are for the land only and give the lessee the right to build. Such leases are for a lengthy term of may be perpetually renewable with rental set at a percentage of the market value of the land. This is not to be confused with a short-term residential lease of a house covered by the Residential Tenancy Act.

LIM

A Land Information Memorandum (LIM) is a report from the local Council setting out all information held by it in relation to a property. It provides information on building consents, zoning, location of drains and any other information held. The costs of a LIM vary depending on which local Council you are dealing with.

Mortgage

The security registered against a property's title to secure the lender's loan to you. The title will show that the lender has a mortgage over the land. A mortgage allows the lender to sell your property if you default under the mortgage.

Notices of Sale

The document sent to the local Council to inform it that the property has been sold. It includes the name and address of the buyers.

Possession

The right to move into the property, not to be confused with settlement, which normally occurs on the same day.

Occupation Licence

An occupation licence sets out the rights of a shareholder in a flat owning company to occupy the flat and common areas of the building, the rules of how the flats can be used, and the obligations between the company and the shareholder.

Power of Attorney

A document that gives someone the right to act on your behalf.

Project Information Memorandum (PIM)

A report that a local Council can provide disclosing information likely to be relevant to proposed building work on a property. Examples of the type of information provided is, the heritage status of any existing building, any special features of the land and details of any existing stormwater or sewage pipes.

Pre-Settlement Inspection

Under a contract, a buyer is entitled to carry out an inspection of the property before settlement (no later than the day before settlement). The buyer should make sure the property is in the same condition as it was on the day the contract was signed. If any damage has occurred since signing the contract, the buyer can ask for compensation or for the problem to be remedied.

Penalty Interest

If a buyer cannot settle their purchase by 4:00pm on the nominated date of settlement, the seller is permitted to charge penalty interest, which is at the rate set out on the front page of the agreement for sale and purchase, or double the 90 day bank bill rate if no other rate is set.

Security

The collateral that a lender takes in case of a default on your loan. The security is usually a mortgage registered over the title to a property. The mortgage agreement will give the lender the powers it needs to sell a property if the borrower fails to pay the mortgage.

Settlement

The date specified in the contract for the buyer to pay for the property and take ownership and (normally) possession of it.

Settlement Statement

A statement prepared by the seller's conveyancer. It sets out how the amount to be paid to the seller is calculated and includes an apportionment of Council rates and a credit to the purchaser for any deposit paid.

Sinking Fund

A fund collected from owners of unit title or company share flats towards payment of future works in relation to the units/flats.

Tender

The process by which a seller calls for offers on a property. In closed tenders, offers need to be in by a certain date and may have to be in a particular format. An open tender is a more informal process with, normally no set deadline. An offer by tender can contain conditions but if you are in a competitive situation the inclusion of conditions may make your offer less attractive to the seller.

Whenua/Maori Land

"Whenua" is the Maori word for land, among other things. In New Zealand, land is generally divided into two types - General land and Maori land. About 1.3 million hectares in New Zealand is designated as Maori freehold land - just under five percent of the total 26.4 million hectares in the country. Maori land is governed by the Maori Land Act 1993/Te Ture Whenua Maori Act 1993 and administered by the Maori Land Court (Te Kooti Whenua Maori) and Maori Appellate Court, quite separately from General land. As a generalisation, Maori land is characterised by multiple ownership by family groups, and is therefore difficult to sell or mortgage. It is possible for Maori land to be converted into General land, and vice-versa, though this can be costly and difficult to achieve.