Buying a property, especially your first home, can feel overwhelming. This guide goes a little deeper into some common terms you'll encounter during the process, giving you an explanation of what they mean.
What is a Property Title?
Think of this as the land's official identification document. It confirms who legally owns the property, its size (including measurements), and any restrictions that apply to how you can use it. These restrictions might be things like building height limitations or shared access agreements with neighbours.
What does Subject to Title mean?
This situation arises when you agree to buy a piece of land that hasn't yet received its official title. This often happens in new subdivisions where the council is still finalising approvals. You can still purchase the land, but you won't be the legal owner until the title is issued.
What are Covenants?
These are essentially a set of rules established by the developer who created the subdivision. They dictate how you can use your property to maintain a consistent look and feel for the entire neighbourhood. Examples of covenants might be restrictions on fence height, types of materials allowed for external structures, or limitations on the number of dwellings permitted on a single section. These rules are typically enforced by the developer, not the council.
What is Settlement?
This is the big day! It's when you officially become the owner of the property and make the final payment to the seller. Your lawyer usually handles the settlement process, ensuring all the paperwork is completed correctly and the funds are transferred smoothly.
What is a Conditional Offer?
When you make a conditional offer on a property, it means your offer to buy is contingent on something else happening first. This could be securing a loan approval from a bank, selling your existing property, or even getting a building inspection completed to your satisfaction. The seller will consider your offer along with any conditions attached.
What is an Unconditional Offer?
This is a stronger offer from your perspective because it demonstrates you're a serious buyer, ready to proceed without any contingencies. Sellers generally prefer unconditional offers as they provide more certainty that the sale will go through smoothly.
What is a Deposit?
This is a good faith payment you make upfront to the seller (through their real estate agent) to show your commitment to buying the property. The deposit amount is deducted from the final purchase price and is held securely in your lawyer's trust account until settlement day.
What is a LIM Report?
This stands for Land Information Memorandum. It's a report obtained from the local council that details any past building consents issued for the property and any communications between the council and the previous owner regarding the property. A LIM report is valuable because it helps you identify any potential issues, such as unpermitted building work done on the property.
What are Agent's Fees?
This is the commission the real estate agent who is selling the property earns. The agent's fee is deducted from the money the seller receives after the sale is finalised.
What is a Sale and Purchase Agreement?
This is a formal contract that outlines the terms and conditions of buying a property. It sets out the agreed-upon purchase price, the settlement date (when ownership is transferred), and the obligations of both the buyer and seller. The sale and purchase agreement will also specify any chattels (belongings) that are included in the sale, and may include details about conditions (like obtaining finance) that must be met before the sale becomes final. Your lawyer will carefully review the sale and purchase agreement to ensure you understand all the terms before you sign it.
What is a Lawyer/Solicitor?
A lawyer or solicitor plays a crucial role in the property buying process. They are legally required to handle the transfer of ownership documents between you and the seller. Your lawyer will also review all the paperwork associated with the sale, explain the terms of the agreement in a way you can easily understand, manage the transfer of funds on your behalf, and ensure everything is completed correctly according to legal requirements. They will also liaise with Land Information New Zealand (LINZ) and the local council to finalize the ownership change.
What is a Lawyer's Trust Account?
This is a special bank account that your lawyer uses to hold your deposit and any other funds related to the property purchase until they are distributed to the appropriate parties. The agent's fees are typically paid from this account, and on settlement day, the remaining funds are used to pay the seller for the property.
Here are some helpful resources:
Still have questions?
The friendly team at Manor Build can help! We are experts in transportable homes, but we also have a lot of knowledge about buying and selling property.
