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A-Grade Office Space
T
his is essentially high quality office space that has air-conditioning, parking, etc and is generally not older than 15 years or has had a major renovation. The rentals are near the top the rental range.

Ab Initio
From the beginning, at the outset.

Ab Intestato
O
f someone who dies without a valid will.

Abandonment
T
he voluntary relinquishment of rights of ownership or interest by failure to use the property; couples with intent to abandon or give up interest.

Abandonment Value
The value of a project or asset if it were immediately liquidated. Also referred to as the liquidation value.

Abatement
A decrease or reduction in the price of a property (or in rent chargeable to a tenant). Usually occurs as a result of the discovery of a negative fact about the property which decreases its value from the price originally agreed upon by the parties.

Absentee Bid
An absentee bid is a procedure which allows a bidder to participate in the auction bidding process without being physically present. An absentee bidder submits an offer prior to the auction.

Absentee Owner
An owner of property who does not occupy the said property.

Absolute Auction
An absolute auction is an auction where the item on auction is sold to the highest bidder, with no limiting conditions or reserve amount.

Absorption Rate
Absorption rate is a ratio used to enumerate the number of properties in an area that have been sold, as compared against the number of properties available for sale. The absorption rate is used to get a better understanding of the volatility of a certain real estate market.

Abstract
A synopsis of the legal history of ownership of real property. A summary of recorded instruments, which affect title, arranged in the order of recording.

Abstraction Method
An abstraction method is a method used for estimating the value of property. Properties that are alike and available in the same real estate market are used to determine the value of a specific parcel of land.

Accelerated Depreciation
Depreciation is the reduction of the value of a property as a result of the passing of time. Usually used for tax purposes, the depreciation in the value of a property may be used as a tax deduction. If a property loses its value quickly, this depreciation rate may be accelerated so that most of the value is lost in the first few years and then the depreciation rate decreases later in the property's life span. Also known as “Writing down” the value of a property.

Acceleration Clause
A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender. Access Bond
This facility allows you to draw funds up to a predetermined loan amount.

Accessory Building
An accessory building is a building that stands separate from the main structure on a parcel of land. An accessory building is very often used for a specific purpose, such as a store room, a workshop, tool shed or garage.

Accredited Assessment Evaluator (AAE)
A professional designation. A property evaluator who has achieved the requirements of the International Association of Assessing Officers.

Accretion
The gradual build up of soil by water.

Accrued
An adjective describing something that has come into existence but has not yet been claimed by or distributed to its rightful owner.

Accrued Interest
The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date.

Acknowledgment
A declaration before a Notary Public, Justice of the Peace or other officer by a party executing a legal document that the execution is his free and voluntary act and deed.

Acquisition
The process of taking title to or ownership of some form or type of property asset.

Acquisition Costs
C
osts of acquiring ownership and title of a property other than the purchase price, conveyancing fees, insurance, tender fees, etc.

Acre
A measure of land equalling 43,560 square feet.

Act
A form of legislation passed by the courts for the government.

Active Income
Income from salary, wages, tips, commissions and other activities in which the taxpayer participates.

Ad Hoc
For a specific purpose or event

Ad Idem
When parties are in agreement, have consensus.

Ad Infinitum
Forever.

Ad Valorem
According to the value.

Addendum
This is a supplementary or separately attached agreement to an original sale contract which specifies agreed terms which are in the attached contract. A supplementary and separate agreement to an original sale contract, and should it contradict the original contract, it is presumed to overrule it.

Additional Principal Payment
An additional principal payment is an amount, paid by a borrower, of more than the scheduled principal amount due. Additional principal payments reduce the remaining loan balance and shorten the term of the loan. An additional principal payment is also called a 'principal curtailment'.

Adiate or Adiation
T
o accept the benefits under a will, as opposed to repudiate or repudiation which is to reject the benefits in terms of a joint will.

Adjusted Cost Base
For the purposes of determining capital gains or losses. The acquisition cost of a property, plus the cost of any improvements to the property.

Adjustable-Rate Mortgage (ARM)An adjustable-rate mortgage is a mortgage that permits the lender to periodically adjust the interest rate over the life of the loan on the basis of changes in a specified index. An adjustable-rate mortgage therefore regularly changes its interest rate, according to changes in the linked index.
In South Africa, adjustable-rate mortgages are usually linked to the Reserve Bank Repo Rate.
Adjustable-rate mortgages are also called 'variable-rate mortgages'.

Adjusted Cost Basis
For accounting purposes, the original cost plus improvements minus depreciation or cost recovery taken.

Adjustment Date
The date the interest rate changes on an adjustable-rate mortgage.

Adjustment Interval
A specified period between changes in the interest rate or monthly payment on an adjustable rate mortgage.

Adjustment Period
For an adjustable rate mortgage, the adjustment period is the time period between interest rate change dates, as stated in the mortgage note.

Administration Fee
Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, or other closing costs incurred during the process or the fee may be in addition to these charges.
In an auction, this is an additional fee charged to the Buyer. This is added to the winning bid and constitutes the purchase price. Applicable state sales taxes are computed on this figure and the total becomes the final purchase price.

Administrator
A party appointed by a court to administer the estate of a person who has died without leaving a will.

Ad Valorem
Means "according to value" and is a method of taxation using the value of the thing taxed to determine the amount of tax. Taxes can either be "Ad valorem" or "specific'.

Advocate
An advocate is a lawyer who takes instructions from attorneys and who generally appears in court.

Aesthetic Value
T
his is the value of a property attributable to the beauty of the improvements or surroundings.

Affidavit
T
his is a written statement or declaration, sworn to before an officer who has authority to sign under oath.

Affordability Analysis
The bank needs to assess whether you can afford the monthly instalments on the home loan. Your monthly income must be of a permanent nature and joint income may be taken into account where appropriate. The general rule of thumb is that your monthly instalment should not exceed 30% of your gross monthly income. This calculation is referred to as the Affordability factor. Affordability factor (AF) = {monthly loan instalment divided by gross monthly income} x 100.

Affordable Housing
A
lso known as 'Inclusionary Housing 'which essentially is low-cost social housing aimed at the lower­ income sector of the market.

After-Tax Cash Flow
The net proceeds from an income-producing property, after all costs (taxes, mortgage interest, maintenance costs etc.) of owning and operating the property have been deducted.

Agency
A relationship of trust whereby one party, the principal, entrusts another party, the agent, to act in their behalf and to represent them in doing business with other parties.

Agency with Mandate
Agency with mandate is an Estate Agency that has been given the authority to sell a property by its owner.

Agent
One who acts or who has power to act for another. A licensed real estate broker authorized to act under a listing or management agreement executed by a property owner (the Principal); this creates a fiduciary relationship under the law of agency.

Agent’s Commission
Payable by the Seller. It is also used as part of the negotiating tool(much to the dislike of the agent of course) should a buyer come in with a lower offer for a particular property.

Agreement of Loan
T
his is the contract which is drawn up between the bank and the owner until a bond is granted. Details include interest rate, bank charges, insurance and monthly instalments.

Agreement of Sale
Also referred to as the Offer to Purchase. It is a legally binding document signed by the buyer and seller, whereby the buyer agrees to buy a property from the seller, who agrees to sell the property to the buyer for a proposed purchase price and conditions on which the sale will take place.

Air Handling Light Fixture
A light fixture into which air is introduced by means of an air diffuser for quiet, draft-free air distribution.

Air Rights
A saleable commodity, the right to occupy or use the air space above a specific property.

Alienate
The Alienation of Land Act 68 of 1981 governs the alienation of immovable property. In terms of this Act, 'alienate' means “sell, exchange or donate” the property.

Alienation of Land Act
This law describes a property sale whereby the property is transferred into the buyer’s name at a later date. It is used mainly for customers who do not qualify for a home loan.

All-Inclusive Trust Deed
The borrower obtains a new mortgage, which is structured to include the old mortgage. The borrower makes payments on the new mortgage directly to the lender, who makes payments on the old first mortgage.

Alligator
A property that has a negative cash flow.

Allocation (Abstraction) Method
Estimating the value of land only by deducting the value of the buildings etc. on the land from the actual market value of the property as a whole.

Amenities
Positive features of a particular property (such as a pool, central air conditioning, etc.) or attractions located near a particular property (highways, school, shopping, etc.) which have the effect of enhancing the property's value.

Amortization

The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

Amortized Mortgage
A mortgage loan in which the principal, as well as the interest, is payable in monthly or periodic instalments during the term of the loan.

Amortization Schedule
A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

Amortization Term
The length of time required to repay the mortgage loan, expressed as a number of months.

Amount Limit
This is the limit up to which you may transfer funds from your home loan account to another linked account via electronic facilities.

Anchor Tenant
This is usually the largest and most reliable tenant in a shopping centre. The strength of the anchor tenant normally draws the shoppers, gets a favourable lease and greatly affects the availability for financing of the shopping centre.

Annual Debt Service
The total amount of principal and interest to be paid each year to satisfy the obligations of a loan contract.

Annual Loan Constant
The principal and interest of a loan expressed as the constant annual payment required to retire a debt at a certain rate of interest over a certain period of time.


Annual Mortgagor Statement

A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year. 

Annual Percentage Rate (APR)
This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual note rate on your loan.

Annual Premium
This is the premium payable once a year in respect of a life assurance or a home owner's insurance policy

Annual Return
the Annual return is the percentage change in the average (median) price of property on a yearly basis.

Annuity
An investment that pays out an amount at regular intervals (paid weekly, monthly, yearly or another regular interval), often at a guaranteed minimum amount. Also, a type of insurance policy in which the policy holder makes payments for a fixed period or up to a stated age, and then receives annuity payments from the insurance company.

Ante Nuptial Contract
T
his is an agreement made by a couple prior to getting married, setting forth their rights, both during and after the marriage and in the event if death or divorce. The parties involved here will be married out of community of property.


Application

The form used to apply for a mortgage loan, containing information about a borrower's income, savings, assets, debts, and more.

Application Fee
A fee payable to the lender for the initial expenditures of processing a loan application, which may include the expense of a property valuation, credit report, or other administrative expenses.

Appraisal
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

Appraisal Fee
Fee charged by a certified appraiser to give an estimate or opinion of market value for a property, at a certain moment in time.

Appraised Value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.

Appraiser
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.

Appreciation
The increase in the value of a property due to changes in market conditions, inflation, or other causes.

Appreciation from Year-to-Date
The Appreciation from year-to-date is the % increase in the median sale price from that particular year to the current year.

Appreciation Potential
The possibility that real estate investment or probability will increase in value during the holding period.

Approaches to Value
T
hese relate to different methods used to estimate the value gathering of a property. Some of the approaches include cost, comparison and income approaches.

Appurtenance
Anything attached to the land, which becomes a part of the property.

Arbitration
The procedure whereby parties to a dispute appoint an arbitrator to settle the dispute. The arbitrator’s decision is final and the parties are bound by it.


Arbitration Clause
T
his is a clause in a lease calling for the decision of a third party regarding disputes over future rents based on negotiation.

Arbitration Tribunal
Body (or even a single person) appointed to settle a dispute by way of arbitration.

Architect
A person who normally functions as a creator, coordinator, author of the drawings and specifications and the general administrator of construction.

Architectural Drawing
This includes all architectural contracts and drawings such as plot plans, floor plans, elevations, sections, details, schedules, etc., and any architectural drawing that forms a part of the contract documents. Exceptions include mechanical, electrical and structural drawings, as well as specialized data that are normally handled by specialists in those fields.

Area
T
his is the surface space of in square metres of land and/or building which can be work area, living area and play area.

ARM (Convertible Adjustable-Rate Mortgage)
An adjustable-rate mortgage that allows the borrower the option to convert the loan to a fixed-rate mortgage under specified conditions and during a given time frame.

Arrears
The payment of money after the fact. Interest and taxes paid in arrears would represent money paid for a period of time gone by.

Asking Price
T
his is the price at which the seller is offering property for sale. The eventual selling price may be less after negotiation with a buyer.

Assemblage
The combining of two or more parcels, usually but not necessarily contiguous, into one ownership or use.

Assessed Value
The valuation placed on property by a public tax assessor for purposes of taxation.

Assessment
The placing of a value on property for the purpose of taxation. The bank's assessed value of the property.

Assessment Fee
This fee pays for the administration work associated with a property assessment.

Assessor
A public official who establishes the value of a property for taxation purposes.

Assets
Items of value owned by an individual. Assets that can be quickly converted into cash are considered "liquid assets." These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.

Assets and Liabilities
What you own and what you owe.

Assignment
The transfer in writing of an interest in a lease, mortgage or other instrument. The assignor, or lessee, transfers the entire remainder of the term created by the lease, and the assignee becomes liable to the original lessor for rent. Assignor may or may not retain secondary liability for performance under the lease, depending upon the terms of the lease pertaining to assignment.

Association Agreement
An agreement concluded between the members of a close corporation, which states the contractual capacities of the members.

Assumable Mortgage
A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must "qualify" in order to assume the loan.

Assumption
The term applied when a buyer assumes the seller's mortgage.

Assumption Fee
A fee a lender charges a buyer who will assume the seller's existing mortgage.

Attorneys
The attorneys involved in a home loan transaction have three roles to play. They:
1. Obtain the cancellation figures from the bank where the seller had a mortgage loan
2. Transfer the property out of the name of the seller
3. Register the property in the name of the buyer
4. One, two, or three attorneys may be involved in any one mortgage loan transaction.


Attorney Allocation
This is when banks appoint a specific attorney firm who are then allocated to handle transfer registrations on behalf of the bank.

Auction
Method of selling a property to a person that makes the highest bid.

Auction Clerk
The person employed by the principal auctioneer or auction firm to record what is sold, to whom, and for what price.

Auction Plan
The pan for pre-auction, auction day and post auction activities, which the seller and auctioneer discuss and agree to implement.

Auction Price
The price of a property obtained through the auction method of marketing.

Auctioneer
The person whom the seller appoints to direct, conduct, or be responsible for a sale by auction.

Auditor
A person registered in terms of the Public Accountants and Auditors Act 51 of 1951 and whose function in an estate agency context is to ascertain whether or not an estate agent’s trust account has been properly managed.

Authority Forms
T
hese are forms signed by the borrower to authorise payments of the proceeds of a loan where the transfer of the property takes place.  Guarantees are issued and authority forms are signed by the borrower before any guarantees can be funded.

Authority to Pay
This is a document whereby you authorise the bank to make payments out of your home loan account. It forms the basis from which guarantees are issued.

Available Balance
This is the difference between the balance and the ATM limit, or the balance and the balance limit.

Average
The average is the total sum of a set of numbers divided by the amount of numbers that were added together.

Average Sales
The average sales is the sum of all property prices greater than zero divided by the count of those sales. In this case the average property sale price is the sum of the median price for all particular years divided by the count of those property sales.

B-Grade Office Space
T
his tends to be older buildings and finishes which are close to modern standards with refurbishment with air-conditioning and parking on the premises.

BA Linked Rate
Rate linked to 3 month BA SAFEX rate which can be monitored on an ongoing basis. This option guarantees a fixed rate for three months. The rate will change every three months in line with the cost of short term funding rates. This type of product normally has a minimum loan size and a maximum loan to value qualification criteria.

Balance
This is the balance reflected on the statement when the enquiry is taken and excludes accrued interest.

Balance Sheet
Used for the recording of the financial positions of private individuals, companies, cc's and trusts.

Balloon Mortgage

A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.

Balloon Payment
The final lump sum payment that is due at the termination of a balloon mortgage.

Bank
A financial institution registered in terms of the Bank Act 94 of 1990. Home loan finance is a major part of a bank’s business.

Bank Letter Of Credit
A letter from a bank certifying that a named person is worthy of a given level of credit. Often requested from prospective bidders or buyers who are not paying with currency at auctions.

Banked Lifts
A group of lifts adjacent to each other with a specific demised enclosure.

Bankruptcy
A legal proceeding that allows a debtor (person or business) to eliminate or restructure debts when they have financial difficulties.

Base Rent
T
his is a specific amount which is used as a minimum rent in a lease which uses a percentage for additional rent.

Base Year
The year of a lease term that is used as the standard when implementing an escalator clause. Operating costs are judged higher or lower during the next year when compared to the base year.

Basis Point
Basis point refers to a one-hundredth of a percent. Generally, interest rate fluctuations are quoted in basis points.

Bay
An unfinished area or space between a row of columns and the bearing wall. Usually the smallest area into which a building floor can be partitioned.

Bearer / Seller
The legal owner of a property.


Beetle Certificate
Legally required in some coastal provinces before transfer of a property can take place, confirming that its structure is free of wood borer or termite infestation.

 Before-Tax Cash Flow
Gross amount of money available for the use of the owner before taking into consideration taxes.

Before-Tax Income
Income before taxes are deducted. Also known as gross income.

Below-Market Interest Rate (BMIR)
A subsidised interest rate on a mortgage or loan, often provided by a government to allow for acquisition of property or reduction in rents charged to tenants.

Beneficiary
T
his is the recipient of specific benefits or proceeds or for one whose benefit a Trust is created in a Deed of Trust.

Bequeath
To transfer personal property through a will.

Betterment
The improvement of real estate that results in a rise in market value.

Bid
A competitive system in which each bidder submits a sealed proposal to execute construction work for a specified sum. The list of bidders (bid list) is controlled by the client and architect. Also refers to offers to purchase at an auction.

Bid Rigging
The illegal practice whereby two or more people agree not to bid against one another so as to deflate value. Also known as collusion.

Bidder Card
At an auction, this is the card with your bidder number on when you register. When you want to place a bid, you simply raise your card until the auctioneer acknowledges you. If you are the highest bidder on a lot, your number is recorded alongside your bid.

Bidder Number
The identifying number issued to each person who registers at an auction.

Bidder's Pack
The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at an auction. Sometimes called a buyer's pack or due diligence pack.


Bill of Sale

A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.

Binder
A preliminary agreement evidencing a meeting of the minds and effective until the principal agreement can be executed.

Bird Dog
People who are on the lookout for properties that are for sale.

Biweekly Mortgage
A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty year mortgage. Note: there are independent companies that encourage you to set up bi-weekly payment schedules with them on your thirty year mortgage. They charge a set-up fee and a transfer fee for every payment. Your funds are deposited into a trust account from which your monthly payment is then made, and the excess funds then remain in the trust account until enough has accrued to make the additional payment which will then be paid to reduce your principle. You could save money by doing the same thing yourself, plus you have to have faith that once you transfer money to them that they will actually transfer your funds to your lender.

Blanket Mortgage
One mortgage that covers several different parcels of real property.

Blended Interest Rate
A blended rate is created when an old loan is refinanced and extended at an interest rate which is different from the original rate. The old debt is still payable at the old rate and the new debt is payable at the new rate, the total amount of the debt is payable at a rate of interest that is somewhere between the two rates.

Board
The Estate Agency Affairs Board.

Body Corporate
The body corporate of a sectional title scheme is made up of all the owners of units in the sectional title complex. The body corporate is the community of unit owners in a specific sectional title scheme.
As soon as a unit in a sectional title scheme gets registered in the name of a new owner, that owner automatically becomes a member of the body corporate for the scheme.
When a member of the body corporate sells his/her unit, and ownership of the unit gets transferred to the buyer, he/she ceases to be a member of the body corporate, while the purchaser takes his/her place as a new member of the body corporate.
An owner of a sectional title unit cannot refuse to become a member of the body corporate, or resign from the body corporate while owning a unit in the sectional title scheme.
A body corporate has a legal identity of its own. The body corporate can therefore legally act as a separate person from the individual members that make up the body corporate.
The body corporate comes into existence as soon as the first unit in a sectional title scheme gets registered in the name of an owner other than the sectional title developer.
The controlling body of a sectional title scheme is known as the body corporate. Every owner of a unit in the scheme belongs to the body corporate and participates in every major decision regarding the scheme. The developer remains a member of the body corporate until the last unit is sold.

Boiler Plate
P
re-printed sections of a contract.

Bona Fides
In good faith.

Bond / Mortgage
A legal document that pledges a property to the lender as security for payment of a debt. An agreement between you and the bank, stating that the bank will lend you a certain amount of money in the form of a home loan, and that you will pay the bank back over a certain period, on a monthly basis, and at a certain interest rate.

Bond Assurance
T
his is also referred to as home loan insurance or mortgage protection insurance taken out on the life of the borrower to cover the amount owing on the home loan in the event of death or disability.

Bond Cancellation Cost
These are the various costs involved in the cancelling of a bond; they are all a flat rate so do not vary with the size of the bond. They include;
Attorneys' registration fee
VAT Deeds Office levy
Post and others
+ VAT
In some circumstances the bank supplying the new mortgage may pay for the Bond cancellation costs.

Bond Costs
These are the conveyancers fees, stamp duty and VAT. They are payable by the buyer to the attorney attending to the registration of the bond on behalf of the bank. Conveyancing fees and stamp duty are calculated on a sliding scale based on the bond registered.


Bond Market

Usually refers to the daily buying and selling of thirty year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing. The same factors that affect the Treasury Bond market also affect mortgage rates at the same time. That is why rates change daily, and in a volatile market can and do change during the day as well.

Bond Registration Fees
The fees charged by the attorneys appointed by the bank to register the new bond at the Deeds office. The fee is dependent on the size of the bond. Please use the bond calculator to establish what the fee will be for a particular size of bond.

Bond Term
This is the original term of the loan, normally 20 or 30 years.

Bondholder
Also known as a Mortgagee - see ‘Mortgagee’.

 Book Value
T
his is the value of the property as a capital asset (cost plus additions to value less any depreciation).

 Boom
T
his is the upswing of a property cycle which means growing demand, increasing investments, rising prices and high confidence levels.

 Borehole Certificate
This is a certificate issued by a specialist borehole contractor stating that the borehole yields a certain amount of litres per hour. These certificates are usually only required on agricultural holdings.

Borrowed Light
A partition containing glass or plastic panels between an interior dark space and a space illuminated by daylight or high-intensity artificial light.

Borrower (Mortgagor)
An individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan.

Boundary
The lines that define the perimeter of a property, as defined on a diagram.

Bounds
Boundaries that are natural or artificial, i.e.-roads, trees, rocks, railroad tracks, etc.

Breach Clause
This is a condition in a contract which obliges a seller to give a defaulting buyer written notice to remedy his breach of contract within a specific period (usually 7 days) before he can cancel the sale.

Breach of Contract
This is a failure to perform a contract in whole or part without a legal excuse.

Breakeven Point
T
his is when the income from property is neutral and is neither in a positive or negative cash flow situation.

 Bridge Loan
Not used much anymore, bridge loans are obtained by those who have not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment. One reason for their fall from favour is that there are more and more second mortgage lenders now that will lend at a high loan to value. In addition, sellers often prefer to accept offers from buyers who have already sold their property.

Bridging Finance
This is a short term interim loan made between a short-term and a long-term loan and the proceeds of the sale are taken out upfront to procure emergency funding.

 Broker
Broker has several meanings in different situations. Most Realtors are "agents" who work under a "broker." Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.

Broker Participation
An arrangement for third-party brokers to register potential bidders for properties being sold at auction for a commission paid by the owner of the property or the auction firm.

Bubble
This is when the market demand pushes beyond the usual fundamentals.

Budget Plan
Budget plans are additional credit facilities made available to credit cardholders. They enable cardholders to repay larger purchases over an agreed period of time, at a somewhat higher interest rate than normal.

Build To Suit
An offer by a landowner to develop the land in a manner dictated by a potential tenant, in return for a long-term lease from the tenant for the developed land.

Building Code
Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings. The codes are designed to provide for the safety, health and welfare of the public.

Building Contract
A contract between the land buyer and the builder, outlining the specifications of the building.

Building Core
The central or arterial part of a multi-storey building that integrates functions and service needs for established occupants. Such areas are normally composed of toilet facilities, elevator banks, janitors' closets, utilities, mechanical facilities, smoke shafts and stairwells.

Building Cost
T
his is the amount of money needed to construct a building, usually measured by the Quantity Surveyor.

Building Grades or Classifications
Building classifications in most markets refer to "A", "B", "C" and sometimes "D" grade properties.

Building Height
Determines the maximum height of a building in order to fit into the overall urban character.

Building Lines
Building lines are on the one hand defined to keep an area on site clear where services run through or to provide access for service vehicles. On the other hand, building lines are defined to minimise or avoid conflict (e.g. in terms of privacy) between private (plot) and public (street) properties or between different private properties (adjacent plots).

Building Loan
A loan granted to a buyer who purchases a vacant plot of land on which he intends to build.

Building Permit
The approval that must be obtained under national or local regulations. Drawings an specifications must be filed with the legal authorities in control of building operations.

Building Shell
The skeleton of a building to which the finished exterior and interior are applied. It includes the building foundation.

Building Skin
The exterior materials that cover a building's shell (see Building shell).

Building Society
Building societies used to be financial institutions registered in terms of the Building Societies Act 24 of 1965, and were then the main source of finance for home loans. All but two building societies were later converted into banks.

The Building Societies Act (later renamed the Mutual Building Societies Act) was finally repealed in 1993, and the two remaining building societies were then converted into mutual banks registered in terms of the Mutual Banks Act 124 of 1993.

Strictly speaking, therefore, there are no longer any ‘building societies’ in South Africa; only banks registered in terms of the Banks Act 1990, and mutual banks registered in terms of the Mutual Banks Act 1993. The expression ‘building society’ is however, still commonly used in practice and refers generally to a financial institution that can be approached for home loan finance.

Building Standard
The specific construction standards that have been established by the owner and architect to achieve a uniform element of design throughout the building and to establish a cost basis for fitting up charges and/or allowances. Such items may be changed only with the approval of the building owner or the managing representative.

Build-to-Suit
An agreement between a landlord and a new tenant whereby the landlord assumes the obligation of fitting up the demised space to the tenant's specification within the constraints of building standards. The tenant takes possession when the space is completed.

Bundle of Rights
This refers to all rights that apply to a specific property such as the height, bulk and coverage and land use.

Business Risk
The uncertainty associated with the possible profit outcomes for a business venture.

Buy To Let
The investment strategy of buying a residential property, with the intention, to be let for profit.

Buy-Back Agreement
A contract between a purchaser and vendor in which the vendor agrees to repurchase the property from the purchaser if a certain event occurs within a specified period of time. The buy-back price is usually set out in the agreement.

Buydown
Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower's payment is calculated at the note rate. In order to buy down the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower's monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A "lender funded buydown" is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buydown adjustments) will be higher than the current market rate. One reason for doing this is because the borrower may get to "qualify" at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now.

Buyer
The buyer of a property enters into an Agreement of Sale with the seller of the property and could pay the purchase price to the seller in cash or by obtaining a home loan or mortgage through a bank. A buyer is also a person buying a stand and building a dwelling on the stand.

Buyer’s Commission
An advertised percentage of the high bid, or a flat fee added to the highest bid to determine the total contract price to be paid by the buyer at auction. Also known as purchaser's commission.

Buyer’s Market
T
his is when the market favours the buyer and there are more, properties for sale than people are interested in buying them. Buyers have far more choice and less competition for the available properties, resulting in lower prices.

Buy-to-Let
T
his is when the purchase of the property is bought for investment and then rented or let out to a third party or tenant to generate passive income streams and increase capital growth.

Call Option
Similar to the acceleration clause.

Callable Debt
A debt security whose issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.

Cancellation Attorney
This attorney attends to the cancellation of the seller’s bond and is appointed by the bank, which holds the current mortgage bond.

Cancellation Clause
A provision in a lease that confers upon one or both of the parties to the lease the right to terminate the lease upon the occurrence of the condition or contingency set forth in the said clause.

Cancellation Figures
Outstanding amount on the mortgage, interest and any other costs required to settle the mortgage bond.

Canvassing

  1. Canvassing sellers: procedure whereby an estate agent contacts property owners for a mandate to sell their properties.
  2. Canvassing purchasers: procedure whereby an estate agent enquires from a person whether he wishes to buy property, or a particular property.


Cap
Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan, and are referred to as "caps." Some ARMs, although they may have a life cap, allow the interest rate to fluctuate freely, but require a certain minimum payment which can change once a year. There is a limit on how much that payment can change each year, and that limit is also referred to as a cap.

Capital
Money used for investment purposes.

Capital Expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.

Capital Gain
This is the profit that results from the appreciation of a capital asset from its purchase price.

Capital Gains Tax (CGT)
A capital gains tax (abbreviated CGT) is a tax charged on capital gains; the profit realized on the sale of an asset that was purchased at a lower price (First R1.5million gains on primary residence is no subjected to taxation).

Capital Loss
Decrease in value of a capital property (a property other than a principal residence). May be set off against capital gains or against regular income according to the tax rules. 

Capitalisation in Perpetuity
T
his is the capitalisation procedure used to determine the value of property with an infinite time period.

Capitalization
The process of ascertaining the value of a property by the use of a proper investment rate of return and the net income expected to be produced by the property. The formula of net annual income divided by proper capitalization rate is express: Income/Rate=Value.

Capitalisation Rate
T
his is the ratio that represents the relationship between a particular year's cash flow and the present value of the cash flow. It is the rate at which the net income of the building is capitalised to derive market value of the property.

Capital Redemption
Repaying the capital amount in addition to the monthly bond repayments.

Capped Rate
Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage can change in an adjustment interval and/or over the life of the loan.

Carrying Charges (Costs)
The expense required to maintain a property over a given period of time, including property taxes, maintenance, insurance payments, interest charges on financing, etc.

Cash-on-Cash Return
T
his is the Amount of cash received compared to the amount of cash invested.

Cash-out
Money received when refinancing a property when the new loan is larger than the balance of the current mortgage. To determine whether or not a refinance is a 'cash out' loan, subtract the sum of the current loan amount and the costs of refinancing from the new loan amount.

Cash-out Refinance
When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."

Cash Flow
T
his is the actual cash generated by the investor from the property in terms of rental income. Cash flow can be positive or negative depending on operating expenses and servicing of debt.

Cash Flow after Taxes
The periodic amounts of money received by an investor after taxes from the operations of a real estate investment.

Cash Flow before Taxes
The periodic amounts of money received by an investor before taxes from the operations of a real estate investment.

Cash Proceeds from Sale
The sales price less the sale costs, mortgage balance and tax liability on sale. Also called “the sale proceeds after tax”.

Catalogue
A publication advertising and describing the property available for sale or public auction. Also known as a brochure

Caveat
A warning noted in the Deeds Office against a property or its title deed that a third party might have some interest or right in the property, e.g. a servitude holder or judgement creditor.

Caveat Emptor
T
his means “let the buyer beware” and that the buyer takes all the risks regarding the quality or condition of the item purchased unless protected by warranty or misrepresentation.

Ceiling
The maximum allowable interest rate of a variable rate mortgage.

Ceiling Plenum
A totally enclosed area above the ceiling used for the handling of air.

Central Business District (CBD)
The business and commercial "core" of a municipality or city. Primary, secondary and even tertiary CBDs can develop in a multi nodal urban complex.

Certificate of Deposit
A time deposit held in a bank which pays a certain amount of interest to the depositor.

Certificate of Deposit Index
One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.

Certificate of Insurance
A certificate issued by an insurance company or its agent. It verifies that a certain insurance policy is in effect for stated amounts and coverages and names those insured.

Certificate of Occupancy
T
hese are documents issued by the municipality indicating that the new dwelling is suitable for occupation which must comply with local building, safety and health bylaws.

Certificate of Title
A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.

Cession
A document signed by the borrower, ceding their life policy to the bank, as surety for a mortgage.

Chain of Title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Order
An order issued any time there is a change in the specification, price or time set forth in the building contract as authorized by the owner, architect or engineer.

Charge-Off
The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.

City Improvement District (CID)
T
his is a defined precinct or area where the individual property owners contribute to an additional monthly levy dedicated to providing additional services and marketing for that precinct.

Channelling
Cutting, chipping or routing a prescribed sectional area in a linear pattern on any surface, usually in concrete or plaster.

Chattels
Personal property items.

Circulation Allowance
The space needed to have sufficient access to, from and around workspaces.

Class A Grade
Building classification; defined by SAPOA as buildings competing for a wider range of users with rents in the above average- average range for the area. Building finishes are good for the area and the systems are adequate, but the building does not compete with Class P at the same price.

Class B Grade
Building classification; defined by SAPOA as buildings competing for tenants requiring functional space at rents below the average for the area.

Class P Grade
Building classification system; defined by SAPOA as the most prestigious buildings competing for premier office users with premium rental rates for the area along with highest -quality finishes, state of the art systems, exceptional accessibility and a definite market presence

Clause
T
his is a specific condition in a contract which renders the contract valid on an uncertain future event.

Clear Span
The amount of floor area clear of interference from columns.

Clear Title
A title that is free of liens or legal questions as to ownership of the property.

Clearance Certificate
T
his is issued by the municipality or local authority to confirm that all rates, taxes and levies are paid up to date when a property transfer takes place.

This also relates to a certificate that is required from the engineer where reinforced concrete is being used.

Client
The person who has given an estate agent a mandate to render an estate agency service for him.

Close Corporation
A business entity registered in terms of the Close Corporations Act 69 of 1984. It may conclude agreements of sale or lease in its own name. Members managing the business of the CC are treated in the same way as directors for taxation purposes.

Closing

The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands, also called settlement. Closing costs usually include an origination fee, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement.

Closing Costs
Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application. 

Closing Statement
See Settlement Statement. 

Cloud on Title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.

Cluster
A freehold property in a development of similar houses, usually with good security and limited access.

CMA
Comparative Market Analysis

Co-Borrower
An additional individual who is both obligated on the loan and is on title to the property.

Code of Conduct
A set of ethical rules drawn up by the Estate Agency Affairs Board to regulate estate agents' ethical conduct. This code is enforceable by law through disciplinary committees appointed by the Board.

Collateral
In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust. Assets (such as your home) pledged as security for a home loan.

Collateral Mortgage
A loan which is secured by some sort of written note of indebtedness (such as a Promissory Note) which is secondarily secured by a mortgage registered against a property.

Collection
When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.

Commercial Property
Is a property which is generally zoned Commercial used for business (restaurants, stores, etc.) or office purposes whose sole objective is to generate income from the premises.

Commission
Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.

Commitment
A pledge, promise or affirmation of agreement.

Commodities
A commodity is any item of trade or commerce that can be processed and sold for commercial gain.

Common Area Assessments
In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a sectional title development and are generally used to maintain the property and common areas.

Common Areas
Those portions of a building, land, and amenities owned (or managed) by a sectional title project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Common Law
The law which applies automatically unless excluded or amended by legislation or unless the parties have enforced an agreement. The South African common law is the Roman Dutch law.

Common Property
It is all the land in a sectional title complex, as well as those parts of the buildings which are not included in a particular section or unit. Common property can include stairwells, lifts or elevators, carports, swimming pools, gardens, etc.

Company
A business entity registered in terms of the Companies Act 61 of 1973. Accompany may enter into agreements for sale or lease in its own name.


Comparables
An abbreviation for comparable properties, which are used as a comparison in determining the current value of a property that is being appraised.

Comparative Market Analysis (CMA)
T
his is the appraising of the value of a property by comparing the prices of similar types of properties that have recently been sold using data derived from statisticians and software programs.  The similarity of locations and physicality of the property and the terms of sale are important considerations.

Competent Party
A person legally able to contract being of legal age and of sound mind.

Compliance Certificate
A
n electrical compliance certificate is issued by an electrician and it is a requirement by law for the property to be transferred to the buyer’s name, and which is for the seller’s account.  Other compliance certificates include a beetle/infestation certificate.

Compound Interest
Interest computed on the original principal and accumulated interest.

Compounding
A type of calculation in which interest earned is reinvested and earns.

Concessions
During negotiations, these are the items that each party is willing to give up in order to get the items each party really wants.

Condemnation
The taking of private property for public use, with adequate compensation to the owner, under the right of eminent domain.

Condition
A clause that renders the operation and consequences of the contract as a whole dependent on an uncertain future event. A suspensive condition suspends the operation of the contract for a period of time, subject to the occurrence of a future event, and only if and when the condition has been fulfilled will an enforceable contract exist. In the case where a resolutive condition is stipulated, the contract is immediately binding and will remain binding unless the condition is not fulfilled.

Conditions of Loan
T
his is when borrowers are required to sign documents which specify loan grant conditions as documented by the banks.

Conditions Of Sale By Auction
The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.

Conditions of Title
Are the restrictive conditions limiting an owner's rights over his/ her property which is recorded on the title deed such as servitudes, building limitations, mineral rights, etc.

Conditional Offer
This is an offer conditional upon an event such as the buyer being dependant on a loan or an appraisal above a certain amount or on some other condition.

Condominium
A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership. This is the American term for sectional title.

Conduct Deserving of Sanction
Unethical or improper conduct on the part of an estate agent is referred to as ‘conduct deserving of sanction’. The grounds constituting conduct deserving of sanction by an estate agent are set out in the Estate Agency Affairs Act 112 of 1976. Disciplinary Steps can be taken by the Estate Agency Affairs Board against an Estate agent found Guilty of conduct deserving of sanction.

Conduct Rules
Conduct rules, in a sectional title scheme, are the hands-on rules for the conduct of occupants of sections in the scheme. The conduct rules deal with the use and enjoyment of the sections and common property in a sectional title scheme, by the owners and occupiers. The conduct rules can be adjusted to suit each sectional title complex perfectly. Conduct rules can, however, not be adjusted at a whim. There are specific procedures that a body corporate must follow to amend conduct rules.

Consideration
Anything of value given by one party to induce another to enter into a contract. It may be money, personal services or even "love and affection."

Consolidation
This occurs where the customer owns two properties next to each other and would like them joined into one property. A new property description will be given and will be depicted on a Surveyor General Diagram.

Consolidation of Debt
Applies when a customer is paying off two products bought on credit and he chooses to combine both products  and pay them off as one debt, possibly taking advantage of a lower rate.

Construction Allowance or Tenant Installation
The amount a Landlord contributes to the cost of construction and/or alteration necessary to prepare a space for a tenant's occupancy. This is usually an established amount, but is negotiable.

Construction Cost
Total expense, plus normal overhead and profit, that must be paid for the job in question.

Construction Loan

A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Constructive Eviction
Any disturbance by the landlord of the tenant's possession of leased premises, whereby they are rendered unsuitable for occupancy (the purpose for which they were leased). In such a case, the tenant is not liable for further payment of rent.

Constructive Notice
Notice given to the world by the recording of documents with a public official. All persons are charged with knowledge of such documents and their contents, whether or not they have actually examined them.

Contiguous Space
1. Multiple suites/spaces within the same building and on the same floor which can be combined and rented to a single tenant. 2. A block of space located on multiple adjoining floors in a building (i.e., a tenant leases floors 6 through 12 in a building).

Contingency
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Contour
Lines showing land height above sea level

Contra Bonos Mores
In conflict with good moral values

Contract
A legally enforceable agreement, i.e., an agreement of lease or sale of property. In terms of the Alienation of Land Act 68 of 1981, a ‘contract’ refers to a sale of land on instalments where the purchase price is payable by the purchaser to the seller in more than two instalments over a period exceeding12 months.

Contract Documents
Documents consisting of the agreement and the conditions of the contract (general, supplementary and other conditions). They include the drawings, the specifications, all addenda issued prior to execution of the contract and all modifications thereto. A modification is (1) a written amendment to the contract signed by both parties; (2) a written interpretation issued by the architect in the form of a drawing or otherwise; (3) a change order; or (4) a written order issued by the architect for a minor change in the work.

Contract for Deed
A contract for the sale of real property wherein the seller is obligated to provide a merchantable title after the buyer has paid for the property, usually in instalments.

Contract of Sale
A contract of sale is an agreement, in terms of immovable property, between a buyer and a seller.
The contract of sale sets out the terms of the sales agreement, such as the property, the purchase price, and the names of the parties to the agreement. It may also set out exactly what happens if something goes wrong during the property sale.
A contract of sale for immovable property must be reduced to writing and signed by both parties, in order to be a binding contract of sale.
A written agreement on the purchase price, terms and conditions of a sale, between a buyer and seller. The contract of sale is simply the offer-to purchase that has been accepted in writing by both parties.

Contract Price
This is a fixed amount of what a contractor quotes to complete a house according to the plans supplied to him, with possible escalation built in.

Contract Rent
The periodic rental payment as set out in the lease contract

Contractor
An individual and/or firm used in performing work on construction projects. There are different classes of contractors, which are normally listed under the heading of subcontractors. The function of the subcontractor is to perform a particular task only under the direction and coordination of the general contractor, who takes on the responsibility of managing the project in accordance with the construction documents. The general contractor is normally selected through bidding procedures and is totally responsible for completion of the project in a skilful manner that is acceptable to both architect and owner. However, the general contractor may be persecuted to handle all work within a particular project. This is usually the case for multi-storey office buildings where the general contractor is the same for all tenant space construction. The contractor also could be contracted on a time-and-material basis, which may or may not have an upset maximum.

Conventional Mortgage
Refers to home loans other than government loans

Conversion Clause
An additional provision in some adjustable rate mortgages wherein the obligor is allowed to convert the adjustable mortgage to a fixed rate. A nominal fee may be charged at the time of conversion.

Conversion Option
A provision of some adjustable-rate mortgage loans that allows the borrower to change the adjustable-rate mortgage to a fixed-rate mortgage at specified times after loan origination.

Convertible Adjustable-Rate Mortgage (ARM)
An adjustable-rate mortgage that allows the borrower the option to convert the loan to a fixed-rate mortgage under specified conditions and during a given time frame.

Conveyance
A written instrument, such as a deed or lease that transfers some ownership interest in real property from one person to another. You are typically charged a conveyance tax on the transfer.

Conveyancer
An attorney who has qualified as a conveyancer can attend to deed office transactions such as the transfer of a property from a seller to a purchaser and the registration of mortgage bonds and servitudes.

Conveyance Tax
A tax imposed on the transfer of real estate property.

Cooling off Period
In terms of the Alienation of Land Act 68 of 1981 certain purchasers of immovable property have the right to revoke an offer to purchase or terminate a sale agreement within 5 days after the offer or sale agreement was signed by the purchaser. This is generally referred to a 'cooling off right'. The right to cool off applies only in respect of properties which are used (or intended to be used) mainly for residential purposes and only if the purchase price is R250 000 or less (a higher amount may be prescribed by the Minister of Trade and Industry from time to time). The right does not apply in certain instances, for example where the buyer is a company, close corporation or a trust.

Cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

Core
The central or arterial part of a multi-storey building that integrates functions and service needs for established occupants. Such areas are normally composed of toilet facilities, elevator banks, janitors' closets, utilities, mechanical facilities, smoke shafts and stairwells.

Cost Approach
The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the replacement cost of the building, less depreciation.

Costs Clause
T
his is an additional amount that is normally added onto the capital amount loaned for bond mortgage to cover any other additional costs such as legal fees, penalties, interest, repossession costs, fire premiums in the loan document.

Counter Offer
A counter offer is the rejection of one offer and substitution of it with another offer as part of the negotiation for the property.

Covenant
Insertion of written agreement into deeds and other documents promising performance of certain acts, or stating certain uses of real estate.

Coverage
Determines the maximum area that a building should cover to leave a functional amount of private or semi-private space open on the site.

Cow
Term used to describe an income property with a high positive cash flow.

Credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

Credit Bureau
A credit bureau is a clearing house for credit history information.

Credit Enhancement
A method to reduce credit risk by requiring collateral, letters of credit, mortgage insurance, corporate guarantees, or other agreements to provide an entity with some assurance that it will be recompensed to some degree in the event of a financial loss.

Credit History / Record
A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.

Credit Life Insurance
A type of insurance that pays off a specific amount of debt or a specified credit account if the borrower dies while the policy is in force.

Credit Limit
Generally found when dealing with credit cards, this is the maximum amount the cardholder may charge to that account.

Credit Report / Profile
A report detailing the credit history of a prospective borrower that is used to help determine borrower creditworthiness. There are two main credit companies used by lenders in South Africa, namely ITC and Experian. These companies collate credit history on individuals and companies, which they obtain from various sources in the retail market place and legal system. Your bank account history is another important source of credit information used by banks in assessing your credit profile.

Credit Report /Score
A statistical method of assessing your creditworthiness. Your credit card history; amount of outstanding debt; the type of credit you use; negative information such as bankruptcies or late payments; collection accounts and judgments; too little credit history and too many credit lines with the maximum amount borrowed are all included in credit-scoring models to determine your credit score.

Credit Scoring
A process that uses recorded information about individuals and their loan requests to assess - in a quantifiable, objective, and consistent manner - their future performance regarding debt repayment.

Credit-Related Expenses
The sum of foreclosed property expenses plus the provision for losses.

Credit-Related Losses
The sum of foreclosed property expenses plus charge-offs.

Creditor
A person to whom money is owed.

Credit Life Insurance 
This is life assurance on the life of the borrower to cover the amount owing on the bond.

Credit Repository
An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. Also known as a credit bureau.

Cumulative Interest
The total amount charged as interest on a loan or mortgage to a certain date.

Cure Date
The last day given for bringing mortgage payments current at the beginning of the foreclosure process.

Damp Proofing Certificate
This is a clearance report on the work carried out by a specialist damp proofing contractor, stating that the problem has been solved and that it will not occur again within a specified time.

Date Of Appraisal
The precise day of month in the year upon which an assessment of the value of a property has been given.

Date of Last Sale
The Date of last sale is the Date at which a property was most recently sold or the Date at which the ownership of a property changed.

Date Of Registration
The specific day of the month in a certain year upon which title to the property was registered, usually in the form of a deed.

De Facto
Factual, according to the factual position

De Jure
According to the legal position

De Novo
From the beginning, from the outset

Dead Asset
An asset that an investor does not want-in the investor's eyes it has no value.

Debenture
A debenture is an official certificate that indicates outstanding debt. A company or corporation hereby acknowledges this debt and its interest, which must be paid in regular intervals until all the outstanding money has been repaid.

Debit Order
An instruction to the bank to debit your account monthly with your monthly expenses, i.e. your home loan instalment.

Debt

An amount owed to another.

Debt Coverage Ratio (DCR)
A comparison of the net income of a property with the cost of payments (principal and interest) on the mortgage on the property, used to assess the ability of the property to generate enough income to pay for itself.

Debt security
A security in which the issuing company generally agrees to repay the principal (typically, the original amount borrowed) and make interest payments according to an agreed schedule.

Debt Service
The sum of the annual principal and interest payments expressed as a percentage of the amount owed.

Debtor
Someone who owes you money.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.

Decentralised
As opposed to CBD. A term describing alternative commercial nodes in a city that have formed as a consequence of city growth and urbanisation.

Deed of Sale
A written document in which a person transfers ownership or real property to another. A deed must be properly executed and delivered in order to be effective. Trust Deed A formal document that outlines the terms of a trust agreement. A common way to structure real estate purchases where the title to a property is held in trust.

  • South African law specifically requires that any contract involving the sale of fixed property must be in writing
  • In all property transactions there needs to be a written contract
  • This is generally referred to as "The Deed of Sale"
  • Normally the estate agent selling the property would complete the document for signature by the buyer
  • In that form it would represent an offer that would be presented to the seller
  • If the seller finds the offer acceptable, the seller would then countersign the document to indicate their acceptance of the offer
  • It would now be considered a binding deed of sale (subject to any cooling off period or suspensive conditions)

Ensure that the Deed of Sale contains all pertinent details including:

  • Full details of the buyer and seller
  • The sale price
  • Description of the property
  • Details on how the purchase price will be paid

As most offers are subject to the approval of a bond, the deed would indicate:

  • The value of the bond required and a date by which evidence of its approval is required.
  • Any other suspensive conditions or material aspects

Unless the bond application is in respect of a further advance, the bank will require to be provided with a copy of The Deed of Sale. This can be obtained from any source, i.e. estate agent; broker; attorney; directly from buyer/seller; etc. Confirm that:

  • All pages are included
  • All parties have signed
  • Deed of Sale is dated
  • All fields are completed
  • All changes are signed by all parties


Deed-in-Lieu

Short for "deed in lieu of foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.

Deed of Trust
A legal document that conveys title to real estate to a disinterested third party (a 'trustee') who holds the title until the borrower has repaid the debt.

Deed Restriction
A clause in a deed which limits the use of the property in certain respects. Also known as a restrictive condition of title.

Deeds Office
Ownership of any asset needs to be capable of being proved in one way or another. With regards to property, this proof is normally by way of a title deed. In South Africa this has developed into a sophisticated process, aimed at guaranteeing right and title to property owners and potential lenders. All properties are recorded at the various Deed Registries that are found in the major centres in South Africa. A transfer of property occurs only when that transaction is recorded at the Deeds office and the appropriate Title Deed is issued.
Ownership of the property only vests with the new owner when this process has occurred. Banks have established a sophisticated payment mechanism to ensure that transfer and payment occur simultaneously. Only qualified conveyancers are permitted to undertake this activity. The whole process is particularly secure but is at the same time costly. This cost needs to be borne in mind by prospective buyers. While all mortgage bonds are recorded on the title deed, to perfect its security, the bank will retain the original title deed together with its mortgage document. Future transfers of the property will not be possible without the cancellation of any prior mortgage bonds.

Deeds Office Registration Fees
These fees are charged by the Deeds Office for registering the mortgage bond/home loan and the title deed.


Deeds Registry
The South African Deeds Registry is a governmental department with regional offices in Cape Town, Pietermaritzburg, Pretoria, Johannesburg, Bloemfontein, King William's Town and Vryburg. Documents relating to the registration of immovable property are lodged at these regional deeds registries. Other documents, such as ante-nuptial contracts, are also registered in the deeds registry.
The South African Deeds Registries guarantee that the owners of South African real estate are the registered owners of those properties.


Default

Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.

Defects
A defect which is clearly visible is a patent defect. A defect which is not visible upon a reasonable inspection of the property is a latent defect.


Deferred Interest

When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance.
 
Deficiency Judgement
A judgement rendered in court for the difference in the amount realized at a foreclosure sale and the amount owed by the mortgagor, if the foreclosure sale fails to completely liquidate or satisfy the debt.


Delinquency

Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a "late fee" for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.

Demarcation Point
The location where a telecommunications provider's network ends and a private network begins

Demised Premises
Premises, or parts of real estate, in which an interest or estate has been transferred temporarily, such as an interest in real property conveyed in a lease.


Demolition Clause
A clause within a lease denoting the fact that if or when the ground lease has expired, the building will be demolished per such clause. The lessor must notify the tenants within an established time of such condition.

Density
Number of dwellings per hectare (10 000m2) allowed.

Deposit / Collateral
The deposit is the part of the purchase price of the property that you pay in cash up front and reduces the amount that you will need to lend. Banks prefer a deposit as it means that the borrower has a financial commitment in the property and the home loan required is less than the current market value of the property. For this reason the loan to value concept is an important factor in negotiating rate concessions and obtaining loan approval with minimum supporting documentation. Collateral other than property is also taken into account when calculating your loan to value ratio. When a borrower does not have cash available for a deposit, other acceptable types of collateral security include, but are not limited to the following: Shares, fixed deposit, bank/company/government guarantees, debt free immovable property, and life assurance policies.

Depreciation

A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.

Derivative
A financial instrument which derives its value from an underlying security.

Design Development
The process by which, upon approval of the schematic design, the architect proceeds with development of he plans and elevation of the building. Drawings establishing all major elements and outline specifications are prepared. A revised statement of probable construction cost is usually made at this time.

Deterioration
The impact of time and wear and tear on a dwelling or other building which results in a decrease in its value if nothing is done to counteract it.

Developer
A real estate developer is someone who initiates the development of improvements to land.
In terms of a sectional title scheme, the owner of the land on which the sectional title scheme will be built is regarded as the developer of the scheme. The first purchasers of units in a new sectional title scheme will be buying their sectional title units directly from the developer.
The Sectional Titles Act also regards the owner of a section 25 right to extend the sectional title scheme, or his/her successor in title, as the developer of the sectional title scheme.

Development Rights
The legal ability to develop a parcel of land, usually as confirmed by the applicable town planning scheme and purchased from the owner of a vacant tract of land by the developer.

Devise
Disposition of land or real property by will.

Diffuser
A
device for reducing the velocity of air flow from a mechanical duct system supplying air. Its shape is usually circular or square and it is set in the ceiling at predetermined locations to diffuse air within that space.

Direct Capitalisation
A method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, either by dividing the income estimate by an appropriate rate or by multiplying the income estimate by an appropriate factor.

Direct Costs
Those expenses in the improvement of property which can be directly attributed to the improvement itself (i.e. labour, material, taxes, etc.). Also known as "hard costs".

Disclaimer
A written document denying legal responsibility or a limitation of rights that might otherwise be claimed.

Discount
The percentage of the original balance of the loan that is charged the borrower. Sometimes referred to as points. Also, the difference between the selling price of a mortgage and the amount due.

Discounting a Note
The process of offering a promissory note for less than its face value to enhance its marketability.

Discount Rate
1. A benchmark for interest rates, the rate (repo rate) charged by the Reserve Bank on loans to banks.2. A rate of return used to convert future net-income flows into a present value and which can be the internal rate of return (IRR) required to invest / develop. Market discount rates can be obtained from the sum of long bond rates and the risk premium for property; or the sum of capitalisation rate and gross market rental growth expectations.

Discounted Cash Flow Analysis
The procedure in which a discount rate is applied to a set of projected income streams and a reversion. The analyst specifies the quantity, variability, timing, and duration of the income streams as well as the quantity and timing of the reversion and discounts each to its present value at a specified yield rate.
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Distressed Property
A bargain property that is substantially below its present or projected renovated value.

Diversification
A method of reducing risk by investing in unrelated (uncorrelated) assets.


Domicile
The place where a person is deemed to be permanently resident.

Domicile Branch
This is the branch where the customer's home loan account is held.

Domicilium Citandi et Executandi
Domicilium Citandi Et Executandi is a Latin phrase which refers to the address at which you ordinarily live, and at which you will accept service of a summons or other legal documents.
Often referred to simply as domicilium or domicile. This is the address for service and delivery of documents and summons where a person is deemed to be permanently resident.
The choice of domicilium should not be taken lightly as, once its has been selected, letters and notices can be served on this address and you will be deemed to have received them, even if you did not in fact do so. Similarly, therefore, once you have chosen a domicilium address, be sure to notify any other party to a contract in writing of any change to your domicilium, should this be necessary. Remember a judgment could even be taken against you by service on a domicilium address, without your knowing about it. The domicilium must be a physical address, not a P O Box number.

Double Up
The double up shows you what happens when you double your monthly payment. Doubling up does not mean that you pay off your bond in 10 years instead of 20 years. You actually repay your total bond in less than 5 years! Few people may be able to afford to double up their payment but Life is all about choices. If you can pay off your car, which sometimes is as expensive as a house over a 5 year period, why not use the same strategy on your house? You will be the winner.

Dower
The legal rights of a widow in her husband's estate.

Down Payment

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

Duct
A pipe, tube, channel or any other unit necessary for conveying gases, liquids or solid units from one point to another. The term is mostly identified with air-conditioning systems where the transfer of air is necessary. This is accomplished through sheet-metal ducts. The term is also applicable to under-floor duct systems for conveyance of telephone lines and other electrical conductors.

Due-On-Sale
Clause
A clause in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.

Due Diligence
The process of gathering information about the condition and legal status of assets to be sold.

Duet House
One of two separate free-standing or attached units that have been built on one stand.

Duplex
A sectional A sectional title unit on two levels with stairs. NOT a unit at the top or bottom!
'Duplex' means 'twofold' or ' double'. So, when the term 'duplex' is used in relation to real estate, it can refer to any improvement to property which consists of two distinct parts. But when someone refers to a duplex, they usually mean either an apartment with rooms on two floors, which are connected by a staircase, or a building that is divided into two residential units, usually with separate entrances.

Duration
The weighted-average life of the present value of all future cash flows, both principal and interest, of a security. It is used as a measure of the sensitivity of the value of a security to changes in interest rates.

Dwelling
Any house, flat, apartment, room, hostel room, hut, shack, outbuilding, garage or demarcated parking space.

Earnest Money Deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.

Earnings per Share
The net earnings of a company, divided by the average number of shares of its common stock outstanding during a period. A common method of expressing a company's profitability.

Easement

A right of way giving persons other than the owner access to or over a property.

Economic Depreciation / Obsolescence
Impairment of desirability or useful life or loss in the use and value of property arising from economic forces outside the building or property, such as changes in optimum land use, legislative enactments that restrict or impair property rights and changes in supply-demand relationships.

Economic Life
The length of time an improvement to real estate can be expected to provide more value than its operating or upkeep costs.

Economy
Economy refers to the management of resources belonging to a business, community or country. It may be thought of as a system of production, supply and consumption.

Effective Age

An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

Effective Gross Income
The scheduled gross income of a property minus the vacancy rate.

Efficiency Ratio
A comparison of the space in a building available for lease to the total space of the building.

Egress
The right to leave a tract of land. Often used in connection with access.

EIA
Environmental Impact Assessment

Electrical Compliance Certificate
This certificate is issued by an electrician and registered with the local authority to verify that the electrical installation of the property complies with local by-laws.

Electronic Banking
Electronic banking refers to methods of banking that do not require accountholders to visit a physical branch of the bank. Electronic banking options include using the internet, a telephone, a cellphone, or an ATM.

Eminent Domain
The right of a government or municipal quasi-public body to acquire private property for public use. It is acquired through a court action called condemnation in which the court determines the use is a public use and decides the price or compensation to be paid to the owner.

Employer Assisted Housing
Employer-assisted housing is a housing program for employees in which companies or employers assist their employees in buying houses or other housing. The employer might provide employees with money, or non-monetary assistance, towards down payments, transfer costs, and/or monthly mortgage repayments. The employer's assistance makes it possible for the employees to purchase homes of their own.

Encroachment

An improvement that intrudes illegally on another's property.

Encumbrance

Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

Endorsement
Endorsement on a title deed is a note made on the title deed of a property by the Registrar of Deeds. It is an attachment to a document that amends or adds to it.


Endorser
A person who signs ownership interest over to another party.

Energy Efficient
A description of a property which has special features aimed at reducing use of electrical or heating power (i.e. insulation, double-insulated windows, high-efficiency furnace, etc.).

Entomologist’s Certificate
Legally required in some coastal provinces before transfer of a property can take place, confirming that its structure is free of wood borer or termite infestation. Also known as a Beetle Certificate.

Environmental Impact Assessment (EIA)
An (EIA) is an assessment of the possible impact–positive or negative–that a proposed project may have on the natural environment. The purpose of the assessment is to ensure that decision makers consider environmental impacts used to decide whether to proceed with the project. The International Association for Impact Assessment
(IAIA) defines an environmental impact assessment as "the process of identifying, predicting, evaluating and mitigating the biophysical, social, and other relevant effects of development proposals prior to major decisions being taken and commitments made." After an EIA, the precautionary and polluter pays principles may be applied to prevent, limit, or require strict liability or insurance coverage to a project, based on its likely harms. Environmental impact assessments are sometimes controversial.

Equity
A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

Equity Of Redemption
The right of a mortgagor, borrower, to buy back a property after foreclosure sale. While equity of redemption does not exist in some states, in others it extends up to two years.

Erf Number
Erf number refers to the unique number identifying a piece of land within a Suburb.

Erf Size
Erf size refers to the size of a piece of land measured in square meters.

Escalation Clause
A clause in a contract providing for increases or decreases in rent payments in accordance with fluctuations of certain costs or expenses of the landlord.

Escalation Rate
The rate by which a rental is hiked once a year in terms of a lease. The ruling market escalation rate can be seen as an attempt by the market to forecast the growth in market rentals over the duration of the lease, but this attempt is obviously rarely successful. Thus it is important to differentiate between an escalated rental and a market rental.

Escape Clause
A condition in a contract, when a buyer is given time to sell his property first, giving the seller the right to cancel the agreement if he gets a higher offer from another buyer.

Escheat
The reversion of property to the state when an owner dies with no will and no known heirs.

Escrow

An item of value, money, or documents deposited with a third party to be delivered upon the fulfilment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

 

Escrow Account

Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner's insurance when they come due. The lender pays them with your money instead of you paying them yourself.

 

Escrow Analysis

Once each year your lender will perform an "escrow analysis" to make sure they are collecting the correct amount of money for the anticipated expenditures.

 

Escrow Disbursements

The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

 

Estate

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

Estate Agent
The Estate Agent is normally the starting point within the chain to the homebuyer. Although appointed by the seller, and primarily looking after the interests of the seller in terms of listing the property and finding a suitable buyer as close as possible to the seller’s asking price, the Estate Agent is compelled to operate and advise homebuyers within the guidelines and policies of the Estate Agency Board, the Regulatory Body for Estate Agents. The Estate Agent adds value to the homebuyer in finding a suitable property to satisfy the needs of the homebuyer.

Estate Agent Affairs Act
The Estate Agent Affairs Act 112 of 1976 governs any person who holds himself out as a person who, whether directly or indirectly advertises that he/she, on the instructions or on behalf of any other person sells or publicly exhibits for sale immovable property.


Estate Agent Introductory Commission

This commission is paid by the bank to estate agencies for introducing home loan business to the bank.

Estate by the Entireties
Ownership by husband and wife with the right of survivorship.

Estate Duty
Estate duty is a tax which may become payable upon your death.
If your estate is worth more than R1,5 million (one and a half million Rands), after deduction of certain expenses and rebates, then your estate will be liable for Estate Duty.
Estate duty is charged at a rate of 20 % of the amount by which your net estate value exceeds R1,5 million. There are some methods which can be used, while you are still alive, to structure your will in such a way as to provide the most tax effective structure for limiting Estate Duty.

Estimate Annual Income
The estimated total gross amount of income one will receive in a year’s time.

Estoppel Letter
A letter certifying the exact balance of a mortgage or other loan at a given time.

Et Al
And others.

Et Ux
And wife.

Evaluation
Evaluation is the term given to the process of determining the value of property.


Eviction

The lawful expulsion of an occupant from real property.

 

Examination of Title

The report on the title of a property from the public records or an abstract of the title.

Exchange
The point at which contracts are exchanged between the buyer and seller. This event creates a binding contract on both the buyer and seller and it is not possible to back out once contracts have been exchanged without risking serious financial penalties.


Exclusive Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

 

Exclusive Use Area

The owner of a sectional title unit can never become the owner of any portion of common property, but they can acquire the right of the exclusive use of a certain portion, such as gardens and parking bays.

Exculpatory Clause
A clause in a contract relieving one of the parties of personal responsibility or liability.

Executive Suite
Executive suites are shared offices with services provided by a management firm. They are a great way for small companies to get off to a fast and low risk start and a great way for a fast growing company to have the flexibility for rapid growth.


Executor

A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form.

Expense Ratio
The percentage of gross income that is consumed by the operating expenses of a property.


Expense Stop
A ceiling or limit on the rand amount one party, typically the landlord, will pay in an expense category. This ceiling is determined by adding a percentage or rand amount to the base year costs.


Expenses
The costs of maintenance, repairs, and rental costs that are deducted from a property’s gross income.

 

Exposure of a Complex

This indicates the number of units bonded to a bank as a percentage of the total number of units in the complex.

 

Expropriation

Procedure in terms of which a property is taken over (usually by local authorities or the State) for specific purposes in the public interest. Compensation must be paid as Provided for in terms of the Expropriation Act 63 of 1975.

Extension Clause
A clause contained within some lease option contracts that provides for the terms under which the contract may be extended.

Face Value
In reference to a note, the face value is the full amount for which the note has been written.


Fair Market Value

The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

FAR
Floor Area Ratio - Determines the total lettable floor area of a development or building.

Fee Simple
The greatest possible interest a person can have in real estate.

Fee Simple Estate
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a sectional title project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.

FICA
As part of the South African government's fight against money laundering, the Financial Intelligence Centre Act, 2001 (FICA) was promulgated and came into full effect on 30 June 2003.

In broad terms, FICA provides for the establishment of an anti-money laundering regulatory body and introduces mechanisms aimed at preventing money laundering. This in effect enforces compliance by institutions that might otherwise be exploited for money laundering purposes.

All accountable institutions as defined by FICA will have to comply and adhere to certain stringent requirements, which include:

  • Identifying all customers;
  • Verifying all information gathered in the identification process above;
  • Keeping records of all this information and documentation.

 

Fideicommissary
Beneficiary under a fideicommissum

Fideicommissum

Ownership to be acquired on the happening of a certain event which may or may not occur
e.g. a person bequeaths a property to his son subject to the condition that on his son\'s death the assets will become the property of his grandson

Fiduciary
A person to whom power or property is entrusted for the benefit of another.

Final Value Estimate
The product of a real estate appraiser's completed work, an assessment of the value of a property based on all factors and taking into consideration the different evaluation methods available.


Finance
Money. Loan finance: money borrowed to pay for the acquisition of a property.

Finance Charge
This is the interest charged on the loan.


Financial Leverage
The use of borrowed funds to acquire an investment.

Financial Risk
The possible change in an investment’s ability to return principal and income.

Financial Statement
A document which sets out the assets, income, expenses and debts of a person or company to allow a third person to assess that person or corporation's financial health (i.e. when considering lending money to that person or corporation).


Finder's Fee
Commission paid to a mortgage broker for placing a mortgage with a specific institution.

Firm Commitment

A lender's agreement to make a loan to a specific borrower on a specific property.

Firm Offer
An offer to purchase delivered to the potential Vendor by a potential Purchaser who will not negotiate any changes to the offer.

First Deed Of Trust
A deed of trust recorded first. Equivalent to a first mortgage.


First Mortgage

The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions.


First Time Home Buyer
A person with no ownership interest in a principal residence during the three-year period preceding the purchase of the security property.

Fixed-Period Adjustable-Rate Mortgage
An adjustable-rate mortgage that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term.

Fixed Expenses
Costs that do not change with a building’s occupancy rate. They include property taxes, insurance and some forms of building maintenance.


Fixed Instalment
The fixed monthly payment (including interest) due on a mortgage loan. It remains constant for a certain period, and goes hand-in-hand with Fixed Interest Rates.

Fixed Interest Rate
Regardless of whether variable home loan rates fall or rise, the fixed interest rate for the agreed period will continue to apply. This facility would be taken up if the borrower is of the view that interest rates are rising and may do so during the contracted period. Should this option be terminated before the expiry date, an additional finance charge will be levied by the lender. Once the fixed rate period has expired, you may negotiate a new rate with the lender.

Fixed-Rate Mortgage
A mortgage that has a fixed interest rate for the entire term of the loan and therefore, has the same payment from monthly to month until the loan is paid in full (reached its term).


Fixed Tenant Improvement Allowance
An allowance made for refurbishing a space, usually expressed per square meter, for a tenant that takes a long lease - usually five years, sometimes less. This cost is borne by the landlord and usually includes painting, inner partitions, carpeting, some finishes - but may vary depending on negotiations. Also see Tenant Installation Allowance and Tenant Improvement Allowance in this glossary.

Fixtures and Fittings
A permanently fixed piece of furniture or equipment incorporated into a property. Removing it would cause damage to buildings or land and is therefore regarded as legally part of it. If it is permanently attached, nailed or screwed into the floor, wall or ceiling, it is a fixture.

Flex Space
A building providing its occupants the flexibility of utilizing the space. Usually provides a configuration allowing a flexible amount of office or showroom space in combination with manufacturing, laboratory, warehouse distribution, etc. Typically also provides the flexibility to relocate overhead doors. Generally constructed with little or no common areas, load-bearing floors, loading dock facilities and high ceilings.

Flexible Seller
A seller who is willing to sell property in a non traditional manner. This person may be flexible in terms, price, or both.

Flipping
The turnover of property. An investor buys a property to immediately sell it for a profit.

Floating Rate
Rate of interest chargeable on a loan that is variable according to a specified index or the national prime rate. The loan rate is said to "float" on top of the specified index by a set amount: i.e. the loan may be set at Prime Rate plus 2%, meaning if the Prime Rate is 12%, the loan interest rate will be 14%.

Flood Certification Fee
A fee charged by independent mapping firms to identify properties located in areas designated as flood zones.

Flood Insurance

Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

Floor Plan
A sketch of an existing or proposed building showing the design and layout of the building and the specifications of each room. May also show doors, windows, stairways and other features.

Fluctuating Payments
Fluctuating payments come into play where a variable interest rate applies. In effect, payment instalments are recalculated every time the interest rate changes.

Footprint
The shape and configuration of a building.

Forbearance
T
he lender's postponement of legal action when a borrower is delinquent. It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments up to date.

Forced Sale
The sale of a property used as security for a loan to repay the creditor, or others, in the event of default on the loan.

Foreclosure
/ Repossession

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 involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Forfeiture
The loss of money, property, rights, or privileges due to a breach of a legal obligation.

Forward (Income) Yield
It represents the expected net income for year 1divided by the current price/value and generally applies to listed property. In direct property terms it is referred to as the initial yield.

Fractional Ownership / title
Fractional (or Joint) Ownership means that one does not own the entire property (with the corresponding responsibility for the entire property) but rather a portion (fraction) of that property that corresponds to the time that one want to spend on vacation.
Unlike timeshare where you only own time, Fractional Ownership allows you to actually own the brick & mortar and the capital growth.
Fractional ownership, also referred to as joint ownership allows co-investors to enjoy all the ownership benefits of luxury leisure assets such as holiday homes, yachts & boats as well as helicopters & planes. Usage rights typically associated with a owning your own holiday home, boat, or plane are included, yet the on-going maintenance and management burden is taken care of by a dedicated management company. All running costs are shared according to shareholding status, making fractional ownership the ideal way to own and use your luxury leisure asset for the time you require each year.
Shared ownership, syndication, timeshare structures have been around for many years, Fractional ownership is now seen as an evolution into a more structured and professionally managed joint ownership & usage system, with formal entry & exit agreements.
Typically a 1/13th shareholding in a single fractional residence is very popular in Southern Africa, this allows the owner 4 weeks, or 28 days exclusive usage per year.


Franchise

Some estate agencies carry on business in terms of a franchise, i.e. they have an agreement with another party (usually a well- known company) to carry on business in a particular area under the latter’s name.

Freehold
Outright ownership of a property. This type of tenure contrasts with leasehold where the lease holder has the rights to occupy a property for a specified period of time.

Front Foot
The width of a lot at the front, usually given as the first measurement.

Frontage
The measurement of a property's boundary that runs along the side of a particular feature (street, lake, ocean, river, etc.).

Full Title
Describes the transfer of full ownership rights to the buyer.

Fully Amortized Mortgage
A mortgage in which the monthly payments are designed to retire the obligation at the end of the mortgage term.

Functional Obsolescence
The reduced capacity of a property or improvements to perform their intended functions due to new technology, poor design or changes in market standards.

Function Utility
The ability of a property or building to be useful and to perform the function for which it is intended according to market tastes and standards; the efficiency of a building's use in terms of architectural style, design and layout, traffic patterns, and the size and type of rooms.

Further Advance
This is when you register a further bond over the property in order to obtain additional funds.

Future Value
The amount to which money grows over a designated period of time at a specified rate of interest.

Gazump
Raising the price after a verbal agreement when an item has been auctioned. Before the papers have been signed, a bidder tries to offer a higher price for the property.

Gearing
Also referred to as leverage. The employ of debt instruments to fund growth/acquisitions - typically the ratio of the long-term funds with a fixed interest charge. A company is said to be highly geared when its fixed interest capital is dominant and low geared when its capital is predominantly in ordinary shares.

General Contractor
A person who oversees a home improvement or construction project and handles various aspects such as scheduling sub-contractors and workers, and ordering supplies.

General Lien
A lien on all property, both real and personal, of a debtor.

General Partnership
A form of business where two or more persons enter into an agreement to conduct business. Profits and losses are shared in a predetermined fashion and all partners are jointly and severally liable for debts of the general partnership.

General Power of Attorney
A general power of attorney is a document which gives the attorney-in-fact the legal right to act on behalf of the principal in almost all matters.
A general power of attorney would enable the grantee to open bank accounts, buy and sell shares, buy and sell immovable property and carry out the grantor's general business on his/her behalf.

Good Faith Estimate
An estimate disclosed by the transferring attorney describing an amount of fees, taxes and other expenses that the purchaser is likely to incur in connection with the registration of transfer transaction.

Goodwill
Goodwill refers to 'intangible assets' such as a good location, business reputation, or exclusive trading rights.

Grace Period
Period of time during which a loan payment may be made after its due date without incurring a late penalty. The grace period is specified as part of the terms of the loan in the Note.


Graduated Lease
A lease that provides for specific increases or decreases in rent at definite times during the term of the lease.

Grandfather Clause
Properties that do not conform to current ordinances, codes, or regulations, but are allowed to continue to be occupied because the properties predate the institution of the ordinances, codes, and regulations.

Grantee

The person to whom an interest in real property is conveyed.

 

Grantor

The person conveying an interest in real property.

Green Building
This is the practice of increasing the efficiency with which buildings use resources — energy, water, and materials — while reducing building impacts on human health and the environment during the building's lifecycle, through better placement, design, construction, operation, maintenance, and removal.
Green buildings are designed to reduce the overall impact of the built environment on human health and the natural environment by:

  • Efficiently using energy, water, and other resources
  • Protecting occupant health and improving employee productivity
  • Reducing waste, pollution and environmental degradation

A similar concept is natural building, which is usually on a smaller scale and tends to focus on the use of natural materials that are available locally. Other commonly used terms include sustainable design and green architecture.
The related concepts of sustainable development and sustainability are integral to green building. Effective green building can lead to 1) reduced operating costs by increasing productivity and using less energy and water, 2) improved public and occupant health due to improved indoor air quality, and 3) reduced environmental impacts by, for example, lessening storm water runoff and the heat island effect. Practitioners of green building often seek to achieve not only ecological but aesthetic harmony between a structure and its surrounding natural and built environment, although the appearance and style of sustainable buildings is not necessarily distinguishable from their less sustainable counterparts.

Gross Income
Total income before taxes or expenses are deducted.

Gross Income Multiplier
That number which, when multiplied times the gross income, would give an indication of property value. It is strictly a guide and frequently abused.

Gross Leasable Area
The total usable, rental space in a building.

Gross Lease
A lease of property whereby the lessor is to pay all property charges regularly incurred through ownership.

Gross Operating Income
The total amount of cash generated by the operations of a property.

Gross Profit
Gross profit is calculated by subtracting total cost from total sales. Essentially, it is the 'pure profit' of a business.

Gross Rent Multiplier
A figure that produces an estimate of the property's value when used as a multiplier of the gross income of a property.

Gross Rental
The total rental payable by the tenant, excluding VAT, the tenant’s own electricity and water charges, but including other operating costs recovered by the landlord (if any), as well as promotion expenses payable by the tenant in the case of shopping centres.

Ground Lease
A lease (usually of long duration) of land to a tenant who covenants to erect a building on the premises. The building is security for rentals. If the tenant defaults, the landlord may foreclose on the lease (see Subordinated ground lease).

Ground Rent
Portion of rent attributable to the land alone.

Growing-Equity Mortgage
A fixed-rate mortgage in which the monthly payments increase according to an agreed-upon schedule, with the extra funds applied to reduce the loan balance and loan term.

Guarantee
A formal letter issued by a financial institution to the transferring attorney, undertaking to pay the purchase price (or outstanding amount) on registration of transfer of the property into the name of the buyer.

Guarantee Mortgage
A mortgage that is guaranteed by a third party.

Guardian
A guardian is a person who must exercise certain legal responsibility on behalf of another person (Usually someone who is deemed to be a person of diminished capacity).
For example: The parent of a minor child is the legal guardian of that child.
A guardian can be nominated in a will, or the court could appoint a legal guardian, to manage a person's affairs.

Habitable
Suitable and fit for a person to live in and free of any faults that might endanger the health and safety of occupants.

Habitatio
The right to occupy and live in the house of another

Handling Fee
Handling fees are charged to clients, usually by banks, for processing the paperwork involved in a particular transaction.

Hard Construction Costs
The costs of constructing a building shell plus most of the covering materials.

Hardware
General term that includes the following: (a) hinges, butt or pivot; (b) lever handles, knobs or pulls; (c) latchset, lockset, magnetic and friction catches; and (d) door closures, door holds, door bumpers.

Hazard Insurance
Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.

Hectare

A hectare (symbol ha) is a unit of area equal to 10,000 square meters (107,639.1 sq ft), or one square hectometre (0.1 kilometre, or 100 meters, squared), and commonly used for measuring land area. A square 100 m on each side is one ha, the most common and convenient SI area multiple used in the surveying profession for day to day legal documents such as land deeds, mortgage surveys, town planning, environmental protection, and other necessary property considerations under the law. Square kilometres are often too large to work with conveniently, and square meters are similarly too small.

Hedging
Hedging refers to measures that individuals or other entities take to protect themselves from risk. Essentially, 'hedging' minimises business risk without minimising investment profits too drastically.

Height Restriction
Maximum floors or height of building in metres.

Hidden Amenities
Qualities of a property which may not be immediately noticeable but add to the value of the property, such as high quality materials used in construction.

High Rise
An inexact term, usually denoting a building of steel frame construction regardless of the building height.

Highest and Best Use
That possible use of land that will produce the greatest net income and thereby develop the highest land value.

Hire Purchase
Hire purchase refers to a legal agreement whereby an individual hires goods for a specified period and for a set price that is paid in instalments. If all the instalments are settled during the stipulated term, the goods become the individual's property.

Historical Cost
A term describing the original cost of a project, at the time in which the project was completed, with no adjustment for inflation.

Holding Over
The act of a tenant retaining possession of the premises longer than the term expressed in the lease.

Holding Period
The span of time in which a particular party holds title to a property. May be expressed as the total time (i.e. five years) or as a specific period (April, 2001 to May, 2006).

Home Equity Conversion Mortgage
A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Sometimes called a reverse mortgage.

Home Equity Line Of Credit
A type of revolving loan, that enables a home owner to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in the property.

Home Inspection
A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

Home Loan
An agreement between the customer and a bank whereby the bank lends the customer money in return for a security (mortgage bond) being registered over the property in the bank’s favour.

Home Loan Application
An initial statement of personal and financial information required to apply for a loan.

Home Loan Pledge
This is a certificate you receive from the bank before you start house hunting that details how much the bank is prepared to lend you. It is subject to normal credit criteria and a satisfactory assessment of the property.

Home Loan Protection Policy
This policy is used to cover the outstanding balance on your home loan account, where capital is repaid via normal instalments in the event of death, disability, retrenchment or dread disease.

Homeowner’s Association
A non profit association that manages the common areas of a sectional title project. In a sectional title project, it has no ownership interest in the common elements.

Homeowner's Insurance

An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

Homeowner's Warranty

A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.

Homestead Exemption
Protection extended by law preventing the forced sale of an owner occupied dwelling by certain creditors.

Homestead Tax Exemption
The credit against taxes, given in some states, to a person who owns and occupies a dwelling and to certain other individuals including disabled veterans, those over age 65, widowed, or handicapped.

House
A dwelling, usually in the form of a freehold property, with a structure built on it for the use of living in it.

House Rules
These are the rules governing the control and management of the property in a sectional title development.

Household Insurance
Bond-holders are obligated by the lender to take out this insurance. It is insurance against the cost of rebuilding a property from scratch following structural damage, for example by fire, storm damage or flood. This is because the house is the banks main security for the loan and if it is destroyed then so is the banks security. Banks usually offer to insure the building for the homeowner at an additional cost through their brooking arm. However you may choose to insure the property with another institution.

Housing Expenses-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her gross monthly income. See debt-to-income ratio.

Hurdle Rate
The minimum total return (income yield plus expected capital appreciation) required by potential investors to induce them to invest in a property. Also known as the required rate. As such this is normally the correct rate to use when doing discounted cash flow (DCF) analyses. This is a similar concept to a company’s cost of capital, and it is not to be confused with the cost of money (say, overdraft interest rate). One way of measuring the total return on an investment, ex post or ex ante, is the internal rate of return (IRR) method.

Huur Gaat Voor Koop
‘Lease Goes Before Sale Where leased premises are sold before the lease has expired, the tenant may, in terms of the huur gaat voor koop rule, remain in occupation of the premises until the lease expires. In the case of a long lease, i.e., a lease for a period of 10 years or longer, this rule only applies if the lease is in writing and registered against the title deed for the leased premises or if the purchaser at the time of the conclusion of the sale knew that the lease was a long lease.

HVAC
An abbreviation for heating, ventilating and air conditioning.


Hybrid Mortgage
A form of mortgage in which the compensation to the lender may include receiving income directly from the use of the property.

Hypothec / Hypothecate
Right of security over movable. In the case of a lease the lessor has a hypothec (right of security) over the lessee’s movable goods on the lease premises as security against non-performance (payment of rent) by the lessee.

Immovable Property
Land and everything permanently attached to it.

Impound
The portion of a borrower's periodic payment on a loan that is collected to pay for items other than principal, interest or penalties (such as realty taxes, insurance premiums, etc.).

Improper Conduct
See ‘Conduct deserving of sanction’.

Improved Land
Also known as "developed land". Opposite of "raw or vacant land". Land which someone has, by dint of their labour, taken out of the state of nature.

Improvement
Buildings or other structures which become part of the land.

In Absentia
By default, in a person's absence.

In Camera
Behind closed doors.

In Casu
In this case, in this specific matter

In Securitatem Debiti
Is security for a debt.

In Toto
In its entirety.

Income Approach
The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life.

Income Property
Real estate developed or purchased to produce income, such as a rental unit.

Incorporeal
Non material thing, intangible assets e.g. goodwill

Increment
At an auction, this is the amount by which the Auctioneer increases the bidding. The increment may be rounded up or down at the Auctioneer's discretion.

Incurable Depreciation
Incurable functional obsolescence/Incurable physical deterioration. The presence of a defect in an asset (i.e. a building) which is too costly to fix.

Indenture
A contract.

Independent Valuation/Appraisal
An estimate of the value of a property prepared by someone who has no interest in the property or, if a mortgage is involved, in the lender.

Index
An announced rate used by lenders to serve as the basis for determining interest rate changes on variable-rate home loans. All of these rates are published rates.

Indexed Lease
A rental agreement where the amount of the rent to be paid changes in accordance with changes in a specified index (usually headline inflation).

Industrial Park
A parcel of land specifically developed to provide lots for industrial activities.

Industrial Property
Property used for industrial purposes e.g., factory premises.

Inflation
An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services.

Inflation Rate
In economics, the inflation rate is the rate of increase of the average price level (a measure of inflation).

Initial Interest Rate
The original interest rate for the first period of an adjustable-rate mortgage. Sometimes known as the 'start rate.'

Initial Investment
The outlay of cash needed to acquire an investment.

Initial Yield
The first year’s expected net operating income (based on existing leases and other income reasonably expected) divided by the purchase price. Therefore the initial yield and the capitalization rate are only the same in those rare cases where a building is let at open-market rentals.

Initiation Fee
Fee charged by a bank to cover the initial costs of processing a home loan application. The fee may include the cost of obtaining a property appraisal, a credit report, or other closing costs incurred during the process or the fee may be in addition to these charges.

Insolvent
A person who is unable to pay his debts and whose estate is declared insolvent in terms of the Insolvency Act 24 of 1936.

Instalment Amount
This is the basic monthly instalment amount payable on the home loan, excluding insurance or assurance premiums, where applicable.

Instalment Debt
An instalment debt is a loan that gets repaid in accordance with a schedule of payments for a specified term (such as an automobile loan).

Instalment Loan
A loan that must be repaid in no less than two payments. A loan of six months or greater is preferable when establishing credit.

Instalment Note
A note, which specifies how mortgage payments, will be made, when they will be due, and for what amount.

Instalment Sale
Sale where the purchaser pays the purchase price (or a portion thereof) to the seller in instalments (usually monthly).

Instalment Status
This is the status of the account, which is the difference between the balance and the balance limit.

Instant Equity
The difference between the property's value and what you paid for it.

Institutional Investors / Lenders
Institutional investors, also referred to as professional investors, only engage the market on behalf of their members. Some examples of institutional investors are banks and pension funds.

Instrument
A written legal document delineating the rights of the parties.

Insurable Value
The value of the portions of the property that are physically destructible.

Insurance
1.
The act, system, or business of insuring property, life, one's person, etc., against loss or harm arising in specified contingencies, as fire, accident, death, disablement, or the like, in consideration of a payment proportionate to the risk involved;
2. coverage by contract in which one party agrees to indemnify or reimburse another for loss that occurs under the terms of the contract;
3. the contract itself, set forth in a written or printed agreement or policy;
4. the amount for which anything is insured;
5. an insurance premium;
6. any means of guaranteeing against loss or harm.
Insurance or Assurance, device for indemnifying or guaranteeing an individual against loss.
Reimbursement is made from a fund to which many individuals exposed to the same risk have contributed certain specified amounts, called premiums.
Payment for an individual loss, divided among many, does not fall heavily upon the actual loser. The essence of the contract of insurance, called a policy, is mutuality.
The major operations of an insurance company are underwriting, the determination of which risks the insurer can take on; and rate making, the decisions regarding necessary prices for such risks.
The underwriter is responsible for guarding against adverse selection, wherein there is excessive coverage of high risk candidates in proportion to the coverage of low risk candidates. In preventing adverse selection, the underwriter must consider physical, psychological, and moral hazards in relation to applicants.
Physical hazards include those dangers which surround the individual or property, jeopardizing the well-being of the insured.
The amount of the premium is determined by the operation of the law of averages as calculated by actuaries. By investing premium payments in a wide range of revenue-producing projects, insurance companies have become major suppliers of capital, and they rank among the nation's largest institutional investors.

Insured
The indemnified person(s) or company(ies) who receive the proceeds of insurance in the event of insurable loss or damage.

Inter Partes
Between parties.

Inter Vivos
In life, among living.

Interest
Charge paid for borrowing money, calculated as a percentage of the remaining balance of the amount borrowed.

Interest Accrual Rate
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.

Interest Accrued
This is the interest accrued on the daily balance outstanding - from the first day of the current month, up to the day before the enquiry was taken.

Interest Bearing Account
When attorneys and/or realtors hold money for clients, it is deposited into separate Interest Bearing Accounts, until these monies and interest accrued during this time have to be paid out to whom they are owed.

Interest-Only Loan
A method of loan amortization in which interest is paid periodically over the term of the loan and the entire original loan amount is paid at maturity.

Interest Rate
The annual rate of interest on the loan, expressed as a percentage of 100.
Interest rates, like any coin or case, have two sides to them:

  • The home buyer is obviously interested in the lowest possible rate and would at all times be assured that the rate offered by a bank is the best rate applicable.
  • It is definitely the role of the originator to assist the buyer to obtain the mortgage loan at the best rate possible.
  • Whilst the mortgage originator, in representing the home buyer, is trying to obtain the lowest rate possible on the one hand, the banks view interest rates as "pricing of the risk" applicable to the mortgage loan.
  • Where a 100% loan is granted, the bank has to carry additional capital at the South African Reserve Bank. This is done at a specific cost to the bank and the bank would prefer to reconcile the additional cost with the interest rate offered to the home buyer.
  • The role of the mortgage originator, seeking for the lowest possible rate, should not change as it forms part of "the best deal" for the applicant. However cognizance must be taken of the fact that interest rates offered by the banks are based on certain risk issues and that a 100% loan could normally not lend itself to the same rate as an 80% loan.

The banks offer two basic types of interest rates to home buyers:

  • The variable interest rate option is an option where the interest rate on a specific mortgage loan is coupled to the base mortgage rate, sometimes referred to as the prime rate. Therefore, when the SA Reserve Bank announces an increase in the interest rates, the interest rate on a specific mortgage loan would increase with the same percentage as announced by the Reserve Bank. The same principle applies when the base or prime rate is dropped by the Reserve Bank.
  • The second basic type of rate is the fixed rate option. With this option the banks offer fixed rates for specific periods of time to hedge the home buyer against possible interest rates hikes. The fixed rate option is slightly more expensive than the variable rate option as it allows for the risk hedging by the client.
  • The choice of a fixed or variable rate rests with the home buyer and with his/her view on interest rate movements in the foreseeable future.
  • Consultants should advise clients on the functioning of interest rates and not on economic forecasts regarding possible interest rate fluctuations.


Interest Rate Cap
For an adjustable-rate mortgage, a limitation on the amount the interest rate can change per adjustment or over the lifetime of the loan, as stated in the note.

Interest Rate Ceiling
The absolute maximum rate of interest that a financial institution can charge for an adjustable mortgage or loan. This is regulated by the government. When a borrower is charged interest above the established legal rate they are usually dealing with a loan shark.

Interest Rate Floor
For an adjustable-rate mortgage, the minimum interest rate, as specified in the mortgage note.

Interim interest
Once funds are paid out of the home loan account, interest is calculated on a daily basis on the outstanding balance. The interest is debited to the home loan account at month-end. The longer it takes to complete the building, the less money is available in the account.

Interim Use
The temporary use to which a site or improved property is put until it is ready to be put to its future highest and best use.

Interior Partitions
All types of interior non load-bearing partitions that enclose or subdivide tenant space. May be of steel, wood, glass, masonry or combinations of these materials. Such partitions may be either movable or non-movable, prefabricated or built on the job.

Intermediate-Term Mortgage
A mortgage loan with a contractual maturity at time of purchase equal to or less than 20 years.

Internal Rate of Return
A performance measurement that takes cognisance of the time-value of money. Technically, it is that rate which equates the inflows with the outflows of a cash flow. This is also known as the money-weighted rate of return because the timing and weights of the money-flows influence the return.

Internet Banking
This is an electronic banking facility that allows clients to complete financial and banking transactions online.

Intestate
Death without a valid will

Intestate Succession
Inheriting in terms of the law applicable to the estate of a person who dies without a will.

Investment
To use a resource to earn profit.

Investment Property / Real Estate
Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while others are used to generate rental income and profits through price appreciation. Common examples of investment properties are apartment buildings and rental houses, in which the owners do not live in the residential units but use them to generate ongoing rental income.

Investor
A money source for a lender.

Involuntary Lien
A lien, like real property tax liens, which are recorded against a property without consent of the owner.

Ipso Facto
By the mere or very fact.

ITP
Integrated Transportation Plan.

Jam Drops
Opportunities caused by government inefficiencies/policy changes. Specifically – tightening of policy. Likened to squeezing a jam sandwich - the jam that falls outside is enjoyed by NGOs and other private sector opportunists.

JET
JET stands for Johannesburg Equities Trading system. This trading system, managed by the JSE, automatically matches, buys and sells orders of JSE member companies.

JIBAR
The JIBAR, Johannesburg Interbank Agreed Rate, is the money market rate that is used in South Africa. JIBAR is calculated as an average of the respective rates of various local and international banking institutions.

Joint Income
The total gross income of the mortgage applicants.

Joint Liability
Joint liability refers to a legal obligation or debt, the fulfilment or repayment of which is the responsibility of two or more individuals, with each being liable for his/her pro rata share of the entire obligation or debt.

Joint Ownership
This is a single property owned by two or more persons. A joint ownership is established by joint purchase, a marriage in community of property, or in terms of a will. In the event of the death of one party, the survivor owns the property in its entirety.


Joint Tenants
Two or more landowners who have been specifically named in one conveyance as joint tenants. Upon the death of a joint tenant, the surviving joint tenant or tenants receive the deceased tenant's interest by the right of survivorship, which is the important element of joint tenancy.

Joint Venture
An investment entity formed by one or more entities in order to acquire or develop and manage assets.

Jointly and Severally
Where two or more people are liable for a debt, the creditor can recover the whole debt from one or all of the joint and several debtors.

JSE
JSE is short for Johannesburg Securities Exchange.

JSE Member Firm
A JSE member firm is a company that is registered with the JSE, and is therefore permitted to trade as a principal or agent in any transaction.

Judgment
A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.

Judgement Lien
A lien on the property of a debtor resulting from the decree of a court.

Junior Lien
A mortgage or other encumbrance with a secondary interest. A lien junior to another mortgage or lien.

Junior Mortgage
A loan that is subordinate to the primary loan or first-lien mortgage loan, such as a second or third mortgage.

Justice of the Peace
An officer appointed by the Government with authority to take the acknowledgment of persons executing documents and to sign the certificate and affix a seal.

Key Tenant
For a commercial development, the resident who attracts other residents or customers, such as a major chain store in a mall (often referred to as anchor tenant) or a law firm in an office building. May gain favourable lease provisions as an incentive to lease space.

Kiosk
Any small structure that stands alone, usually for the purpose of supplying a product or service (i.e. the attendant's booth in a parking lot, a lottery booth in the centre of the promenade of a mall).

Kustingbrief
A special mortgage bond over immovable property where the seller of the property gives a loan for the unpaid balance of the purchase price to the purchaser and secures the loan by the means of a bond over the immovable property sold.

Land Bank
The Land and Agricultural Development Bank of South Africa has been the leading agricultural financier in South Africa since its inception 1912. Land Bank offers tailor made financial services to established and emerging farmers.

Land Banking
The practice of acquiring land now for future use. Can be practiced by public or private entities.

Land Bank
The Land and Agricultural Development Bank of South Africa has been the leading agricultural financier in South Africa since its inception 1912. Land Bank offers tailor made financial services to established and emerging farmers.

Land Banking
The practice of acquiring land now for future use. Can be practiced by public or private entities.

Land Conversions
1 hectare = 10 000 square metres
1 hectare = 2.471 acres
1 square km = 247.1 acres
1 square km = 1 000 000 square metres
1 acre = 0.4047 hectare (ha)
1 acre = 4 047 square metres
1 morgen = 8565 square metres
1 morgen = 2.1165 acres
1 square mile = 640 acres
1 square mile = 26 125 825 Cape square foot
1 Cape foot = 0.314856 metre

Land Lease
A rental agreement for the use of land but not the improvements thereon.

Land Sale Leaseback
An arrangement where a person sells property to another but immediately rents it from the purchaser.

Land Surveyor
A qualified professional who is trained to establish, measure and draw out the boundaries of properties and the improvements (buildings and other features) located thereon based on land records and site examinations.

Land Trust
A form of ownership whereby property is conveyed to a person or an institution called a trustee, to be held and administered on behalf of another person called the beneficiary.

Land Use Planning
An effort by a municipality to establish guidelines for the use and development of land within its boundaries.

Land Use Succession
The gradual change in the use of land in an area over a period of years.

Landlord
The owner of property that is leased or rented to others.

Landlord’s Lien
The right of the landlord to retain the possessions of a tenant in the leased premises until the tenant pays his or her outstanding rental

Landmarks
Landmarks are points of interest or amenities. Schools, libraries, sports fields and shopping centres are examples of landmarks.

Landscape Architect
A professional designer of ground works who takes into consideration the need for drainage, utilities installations, buildings, grading while creating a pleasing appearance.

Late Charge
The penalty a borrower must pay when a payment is made a stated number of days. On a first trust deed or mortgage, this is usually fifteen days.

Latent Defect
This is a fault or flaw that is not immediately detectable or is hidden from view on inspection of the property.

Lease
A lease is an agreement between a property owner and a tenant. It stipulates the conditions for property rental, and includes details such as maintenance obligations, the monthly rental rate and the deposit payable. Lease agreements are usually effective for one year, with a mutual notice period of usually approximately one or two calendar months.
A lease can also be used when an individual finances the purchase of a vehicle by leasing it instead of buying it. In this scenario the owner of the vehicle (known as the lessor) permits the use of the vehicle by a lessee for a specified period of time. During this period the lessee retains the vehicle and pays a rental fee for its use. At the end of the lease term the lessee must extend the lease period or, alternatively, purchase the vehicle. The lessee also has the option of purchasing the vehicle before the end of the lease, in which case the contract will be terminated early.

Lease Agreement
A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.

Lease with Option
to Purchase
An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.

Leasehold Estate
A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

Leasehold Improvements
Additions to a rented premises made by the tenant, often in the nature of a fixture, which may be removed by the tenant at the end of the lease term if no damage ensues to the premises and if the lease permits.

Leasehold Mortgage
A loan secured against a tenant's interest in a property.

Legacy
A gift, or donation, made in a will.
The stuff you leave behind, once your time on earth has come to an end.

Legal Description

A property description, recognized by law that is sufficient to locate and identify the property without oral testimony.

Legal Entity
|
A company, close corporation or trust.


Legal Duty
The responsibility to act according to the law.

Legal Person
A Company, Close Corporation or Trust, as opposed to a Natural Person.

Legatee
Someone who receives a legacy. A legatee is therefore usually a principal beneficiary to a will.

Lender
A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as "lenders." The bank, mortgage company, or mortgage broker offering the loan.

Lender Option Commitments
An agreement giving a lender the option to deliver loans or securities by a certain date at agreed-upon terms.

Lessee
A person who occupies a property (also known as a tenant), but does not own it and pays rent in return.

Lessor
The person who rents out a property to someone else.

Letter Of Credit
A letter, usually from a financial institution, guaranteeing a debt incurred by a third party.

Letter of Intent
A letter stating a buyer's intent to make an offer to acquire a certain property. It is not a binding contract.

Leverage
The use of borrowed funds to finance a portion of the cost of an investment.

Levy
This is the owner's proportionate share of the costs incurred by the Sectional Title complex for the month.

Liabilities
A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

Liability Insurance

Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party. It is usually part of a homeowner's insurance policy.

License
Permission given by the landlord for a person to enter the premises of a tenant for a particular purpose. A license is of temporary character, purely a personal right, and cannot be sold. It is revocable.

Lien
Right of Retention - Where a person has improved someone else’s property or has incurred certain expenses in respect thereof and he has a legal claim to the property, he may retain possession of such property until the debt due to him has been paid. The right to retain possession is called a ‘Lien’.

Life Cap

For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the mortgage.

Life Cover
This is life insurance cover for the bond-holder so that the home loan is repaid in the case of death or disability. It is also known as income protection insurance. Many banks insist upon lenders having it, and it must be large enough to cover the entire bond. The premiums for the cover can be added to the bond account monthly

Life Partnership Agreement
An agreement between two persons wishing to formalise their union without entering into an Antenuptial Contract and subsequently entering into a marriage. This agreement is valid between the parties, inter partes, and can be entered into by a heterosexual as well as same sex partners

Life Tenant
A person who enjoys the rights of occupation of a property for life.

Life Cover
Life cover is an insurance policy that exists between you (the policy holder) and an insurance company (the insurer) whereby the policy holder pays a certain premium every month in exchange for the insurer's commitment to pay a certain sum of money to a stated beneficiary upon the policy holder’s death.  In other words, this means that a designated beneficiary, such as your spouse or child, gets paid a lump sum of money either all at once or in instalments if you die.  This gives them the financial support that they need to continue living their lives without your assistance.  Life cover payouts can pay for schooling and education, rental, or even just pay for your funeral – it all depends on which type of life cover, and how much, you choose to take out.
There are many different types of life cover, such as accidental cover which will pay out a sum of money if you die in an accident that is covered by the policy – such as in public transport or during a hijack.  This type of insurance is often cheaper because it only pays out on accidental deaths.
As with most types of insurance, you need to be sure to read the fine print: this kind of accidental death coverage usually does not cover suicides or death from an illness.  You also get special life cover that you only pay premiums for a certain number of years, or are particularly geared towards a certain type of coverage.

Limited Partnership
A partnership composed of a limited partner(s) and a general partner(s). The limited partner(s) contributes capital but is not liable for any debts of the partnership, nor can they manage or control the partnership.

Limited Real Right
A registered right over someone else’s property. Servitude’s and mortgage bonds are limited real rights.

Line of Credit

An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower.

Liquid Asset

A cash asset or an asset that is easily converted into cash.

Liquidated Damages
Damages, usually monetary, spelled out in a contract which would be available in the event of a default, to the party not in default.

Liquidation
The legal process leading to the dissolution of a company or close corporation. A company or close corporation declared insolvent is said to be ‘in liquidation’. A company or close corporation can, however, also be wound-up on grounds other that insolvency.

Liquidation Value
The likely price that a property would bring in a forced sale (foreclosure or tax sale). Used when a sale must occur with limited exposure time to the market or with restrictive conditions of sale. The value of a project or asset if it were immediately liquidated. Also referred to as the liquidation value. The abandonment value is generally a cash value, or equivalent, associated with an asset. This value is important for companies when analyzing the profitability of particular projects or assets and deciding whether they should be maintained.

Liquidity
The ability to convert an investment into cash quickly without loss of principal.

Lis Pendens
A legal instrument recorded in the magistrates office, giving notice that a legal action is pending in the courts affecting the title to property.

Listing
An agreement whereby owner of property gives a real estate agent the right to handle the sale or lease of property and to receive a commission for this service.

Live Auctions
This term refers to an action hosted on the internet in conjunction with an auction happening in real time either in a warehouse or onsite around the country.

Loan

A sum of borrowed money (principal) that is generally repaid with interest.

Loan plus Costs
This product allows the borrower to lend more than 100% of the property value. It is geared for the first time homeowner and allows the borrower to include registration and transfer costs with the purchase price of the home.

Loan Balance
The amount of money that remains to be paid on an amortizing loan at a given time.

Loan Officer

Also referred to by a variety of other terms, such as lender, loan representative, loan "rep," account executive, and others. The loan officer serves several functions and has various responsibilities: they solicit loans, they are the representative of the lending institution, and they represent the borrower to the lending institution.

Loan or Mortgage Value
That portion of the value of real property recognized by the lender when used to secure a loan.

Loan Origination

How a lender refers to the process of obtaining new loans.

Loan Servicing

After you obtain a loan, the company you make the payments to is "servicing" your loan. They process payments, send statements, manage the escrow/impound account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are made on the property, handle pay-offs and assumptions, and provide a variety of other services.

Loan-to-Value Ratio (LTV)
This is the percentage the bank is willing to lend you, expressed as a percentage of the banks estimated value of the property and the loan amount required. Loan to Value (LTV) = [home loan amount required divided by assessed property value] x 100 Home loans of up to and exceeding a LTV of 100% may in certain circumstances be granted, subject to an acceptable Affordability Factor and valuation of the property in question.

Lock-in

An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.

Lock-in Period

The time period during which the lender has guaranteed an interest rate to a borrower.

Lodgement
This is when bond documents are presented at the Deeds Office for checking by officials before registration of the bond.


Long Lease
A lease for a period of not less than 10 years; or for the natural life of the lessee or any other mentioned in the lease; or renewable from time to time indefinitely at the will of the lessee, or for periods that, Together with the first period of the lease, Amount to not less than 10 years.

Long Term Lease
In most markets, this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option.

Loss Mitigation
Activities designed to reduce either the likelihood of the lender suffering financial losses on a loan or the final value of those losses in the event of a borrower default.

Loss of Use
Circumstances where a property cannot be occupied in the normal way through the negligence or wrong doing of another party.

Lot
Either an individual object or grouping of objects that are offered for sale at auction as a single unit.

Low-Ball Offer
A slang term for an offer to purchase a property with an offered purchase price much lower than that asked for. An attempt to take advantage of pressures on the vendor to sell by asking him to accept much less than the property may be worth.

Lucky 13th Payment
The lucky 13th payment is exactly what it says: a 13th instalment divided by 12 and enables you to adjust your monthly payment so that it incorporates a 12th of your monthly payment every month. Paying a 13th payment at year-end will not have the same effect, as you do not save all the interest that the additional 12th of the amount saves you on a monthly basis.

Lump Sum Payment
This in short is an extra payment you make towards your bond. This can be a bonus you received or money paid to you. If you are wondering what to do with surplus money, the best investment decision you can make, if compared against traditional investments like endorsement policies or structured saving plans, is to invest the surplus money in your bond. This will outperform any ordinary investment. Even if the bond interest rate you pay is 12%, you pay on the daily balance, monthly compounded, and this is a much higher percentage if compared to any ordinary savings plan. You can get hold of your money by speaking to a Qualified Risk Advisor to determine whether you could not perhaps free an amount by stopping unproductive policies.

Maintenance Costs
The expense of keeping a property in a good state of repair.

Mala Fides
In bad faith.

Mall
Commonly used to refer to the entire shopping complex but properly a reference to the pedestrian area of the mall that connects shopping areas.

Management Agreement
A contract between an owner of a property and a property management firm in which the firm accepts periodic payments for acting as supervisor of the affairs of the property.

Management Fee
The property manager's compensation for work done.

Management Plan
A written document in which the property manager sets out its goals and the approaches it will use to accomplish those goals in a given period of time for the property.

Mandate
An instruction or authority given to an estate agent to render a particular estate agency service for a client.

Management Rules
Management rules for a sectional title scheme deal with the control, administration and management of the sectional title scheme.

Managing Risk
The steps taken by an investor or manager to control or reduce investment risk.

Mandate
An instruction or authority given to an estate agent to render a particular estate agency service for a client (the person conferring the mandate).

Margin

The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.

Marginal Land
Land whose value is limited. The cost of making it capable of producing income is generally very close to the income it would produce.

Market Data Approach
The process of estimating the value of property through the examination and comparison of actual sales of comparable properties.

Market Price
The consideration actually paid for an asset in an arm's-length transaction.

Market Rent
Also known as economic rent, the amount the owner could charge and obtain for the lease of a property in the current economic circumstances.

Market Risk
The possibility that downward market trends will reduce an investment’s market value.

Market Segmentation
Analyzing sub-markets within a greater market.

Market Value
The most probable price that a property would bring in a competitive and open market under “fair sale” conditions. Market value also refers to an estimate of this price.

Marketability
The ability to sell an investment quickly regardless of its sales price.

Marketable Title
A title free and clear of liens and encumbrances that might be objectionable.

Marketing Plan
A written description of how a salesperson intends to advertise a given property to obtain the best price or rentals within a reasonable time.

Marketing Price
The advertised price for a property. The marketing price is also often called the listing price.

Married In Community of Property
Parties have a joint estate and any immovable property will be registered in both spouses’ names.

Married Out Of Community Of Property - In South Africa, a couple may choose to get married out of community of property.
Being married out of community of property means that each spouse enters into the marriage with his/her own separate estate. The estate of each spouse remains separate from the other, and each spouse will manage his/her property independently from the other spouse.
To get married out of community of property, a couple must enter into an ante-nuptial contract, before they get married. Couples who marry after entering into an ante-nuptial contract are married out of community of property.

Maturity

The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

Mechanic's Lien
A lien established by law in favour of those who provide labour or material for the improvement of real estate.

Median
The median is the "middle" value for the particular set of results. If for example there are 5 properties sold in an area for the following prices: R100 000, R150 000, R200 000, R250 000 and R500 000, the median property sale price in this example would be R200 000 as that is the value that is in the middle. If there is an even number of figures then the middle two values will be averaged to calculate the median. You will therefore get the exact middle value for a range of numbers. The reason for using this method, especially when many records are used, is to remove the outliers and anomalies. If, for example, we are analyzing the property sales for the above example but include a large plot of land sold for R15 000 000, then the median would be R225 000. If we used an average instead of the median our result would be R2 700 000 which would not reflect the sales in that particular area sufficiently.

Meeting Of Minds
A condition whereby all parties to contract agree to its terms.

Memorandum
This document forms part of the constitution of a company and contains valuable information about the company.

Metes
Measures such as inches, feet, yards, or miles.

Metes & Bounds
A description of the boundary lines of land, setting forth the boundary lines with their terminal points and angles.

Mineral Rights
The legal interest in the valuable items found below the surface of a property.

Minimum Due (repayment)
Minimum due (also referred to as 'repayment') is the minimum amount of money that a credit cardholder must pay towards his or her credit card expenditure on or before the date specified on his or her credit card statement.

Minimum-Guaranteed Percentage Lease
A lease whereby the landlord is paid periodic rent as a percentage of the gross (or net) sales of the tenant of the premises but where the tenant agrees that the rental payments shall not drop below a specified amount.

Minimum Rent
The lowest amount the landlord will accept under a lease contract with a variable rent.

Minor
A person who is unmarried and under the age of 18.

Mixed-Use Commercial Project
A development which is designed to mix two or more "uses" of land together (i.e. a shopping centre which offers office space for dentists, etc.)

Modification

Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.

Month-to-Month Tenancy
A tenancy from month to month is generally created when no definite lease term is specified by the parties and the rent is payable monthly. Such a lease may be written or oral, and can be terminated by either party at the end of any month. Otherwise, it is renewed automatically from month to month on the same terms.

Monthly Instalments
Over the term of your loan, you will repay your home loan by way of regular monthly payments of principal and interest. Monthly instalments are normally paid to the lender via debit order from your account. During the first few years, most of your payments will be applied towards interest. During the final years of your loan, your payment amounts will be applied primarily to the remaining principal debt. The amount of your monthly instalment can be affected by changes in interest rate and changes to the principal amount of your loan. As a rule of thumb your monthly instalment should not exceed 30% of your gross monthly income.

Moratorium of Interest
A time during the term of a loan wherein no payment of interest due is made.

Morgen
A morgen was a unit of measurement of land in Germany, the Netherlands and the Dutch colonies, including South Africa. The size of a morgen varies from 1/2 to 2 1/2 acres, which equals approximately 0.202 to 1.012 ha. It was also used in old Prussia, Norway and Denmark, where it was equal to about two-thirds of an acre (0.27 ha). The word is usually taken to be the same as the German and Dutch word for "morning", the area of a morgen being equal to that covered by a morning's ploughing.

Mortgage
 / Bond
A legal document that pledges a property to the lender as security for payment of a debt. An agreement between you and the bank, stating that the bank will lend you a certain amount of money in the form of a home loan, and that you will pay the bank back over a certain period, on a monthly basis, and at a certain interest rate.

Mortgage-Backed Security
A financial security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the Mortgage-Backed Securities holders.

Mortgage Broker / Originator
The matchmaker between a home buyer and a lender whose goal is to originate a mortgage loan. The broker draws from a pool of various lenders to find the right match. Do not confuse a mortgage broker with a mortgage banker. A mortgage broker brings together both the parties of a loan but does not actually originate or service the loan, while a mortgage banker originates and services the loan.

Mortgage Commitment
A formal notice from a lending institution stating the amount it will lend for the purchase of property.

Mortgagee
The person or financial institution (Bank) lending money to someone else against registration of a mortgage bond over the property. The mortgagee then holds a mortgage bond over the property.


Mortgagor
The person who borrows money (normally the buyer) and who allows registration of a mortgage bond (by the mortgagee) over his property to secure repayment of the loan.

Mortgage Life and Disability Insurance

A type of term life insurance often bought by borrowers. The amount of coverage decreases as the principal balance declines. Some policies also cover the borrower in the event of disability. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds. In the case of disability insurance, the insurance will make the mortgage payment for a specified amount of time during the disability. Be careful to read the terms of coverage, however, because often the coverage does not start immediately upon the disability, but after a specified period, sometime forty-five days.

Mortgagor

The borrower in a mortgage agreement.

Movable Property
Movable property refers to any property, other than land and improvements to land. This includes shares, paintings, furniture, clothing, vehicles, etc.

Multidwelling Units

Properties that provide separate housing units for more than one family, although they secure only a single mortgage.

Multiple Listing Service
A multi-realty service whereby members of the local Board of Realtors exchange their listings.

Municipal Building Value
The Municipal building value is the value or price associated with a building by the Municipality.

Municipal Land Value
The Municipal land value is the value or price assigned to a piece of land by the Municipality.

Municipal Rates
The Municipal Rates are the taxes that property owners have to pay the municipality.

Municipality
The Municipality is the governing body of a city or town.

Mutatis Mutandis
With the necessary changes

Mutual Bank
A financial institution registered in terms of the Mutual Banks Act 124 of 1993.
Natural Person
An individual human being, as opposed to a Legal Person, such as a Company or Close Corporation.

Natural Vacancy Rate
The normal, average or traditional percentage of rental properties in a community that are not leased or occupied.

Negative Amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.

Negative Cash Flow
Properties that cost you money instead of making you monthly income.

Negative Leverage
Borrowed funds are invested at a rate of return lower than the cost of funds to the borrower.

Net Asset Value
It is the value of the property after deducting the outstanding loan/bond.

Net Income
This is the annual net income after all annual expenses and bond repayments. This will exclude equity in the property and annual growth.

Net Leasable Area
The area in a building which is available for rent to tenants (excludes common areas, wasted space, etc.).

Net Lease
Lease under which the tenant pays the agreed-upon rent plus utilities and taxes.

Net Lettable Area
Same as Net Leasable Area, the area in a building which is available for rent to tenants (excludes common areas, wasted space, etc.).

Net Listing
A price under which an owner will not sell the property. The broker is entitled to the excess over the net listing as his commission.

Net-Net-Net Lease
Lease under which the tenant pays the agreed-upon rent plus utilities, taxes, insurance and maintenance.

Net Operating Income (NOI)
The effective gross income from a property minus operating expenses.

Net Rental
This is the amount payable by the tenant excluding VAT and excluding operating costs recovered by the landlord, if any.

Net Return on Investment
The equity less capital expenditure plus Profit/Loss.

Net Spendable Income
Amount remaining after expenses and debt service and any taxes due have been deducted from the gross income.

Net Worth
The value of all of a person's assets, including cash, minus all liabilities.

NHBRC
The National Home Builders Registration Council (NHBRC) is a regulatory body created to protect the interests of homebuyers and to regulate property developers and builders in terms of their trade. One of this organisation's core functions is to enforce a quality benchmark in terms of building and craftsmanship, and to hold developers and builders accountable for the housing that consumers buy from them.

No Cash Out Refinance

A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a "rate and term refinance."

No Cost Loan

Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.

No Doc Loan
A loan where the borrower is not required to present any documentation to secure a loan.

Nominal Interest Rate
The interest rate usually below market stated on the note.

Nominal Rental
This has a dual meaning. Firstly, it refers to rentals where the analyst or valuer assumes no incentives like a rent-free period, free relocation, cash up front, or balance-of-installation allowance. It also excludes amortisation of tenant-installation costs. Secondly, it can also mean actual rental values (i.e. not deflated).

Nominated Values
A sectional title developer may nominate values for each unit in a sectional title scheme, right at the beginning of the scheme. These nominated values will then be used to calculate owner contributions and voting power, instead of the participation quotas for the units.
If the members of a body corporate decide (by way of special resolution) to discard the participation quota method, and opt for the nominated values method instead, the values nominated for each section will be used to calculate owner contributions and voting power.
If the developer did not nominate values at the beginning of the sectional title scheme, or if the body corporate did not adopt the nominated values method, by passing a special resolution, the participation quota will automatically apply to the sectional title scheme, as provided in the Sectional Titles Act.

Nominee
The person nominated or appointed by another for a specific purpose. Sale agreements are sometimes drawn up on the basis that the property is sold to the purchaser ‘or his nominee’.

Non-Assumption Clause
A Non-Assumption Clause is a statement in a mortgage contract, to expressly deny the assumption of the terms to anyone other than the original mortgagor, especially if the title to the property is being conveyed.

Non-Conforming Use
The occupation and use of a property in a fashion which is contrary to the zoning regulations for the property; i.e. an illegal use which may or may not be corrected via a rezoning, consent or amendment of condition of title application, etc.

Non-Exclusive Mandate
A real estate listing to which no one agent or broker has claim.

Non-Performing Asset
An asset such as a mortgage that is not currently accruing interest or on which interest is not being paid.

Non-Resident
This is a person whose normal place of domicile is outside the common monetary area (outside South Africa).

Notarial Tie Agreement
This is similar to a consolidation, but the property description does not change.


Notarize
To have a document signed by a notary public.

Notary Public
An officer appointed by the Government with authority to take the acknowledgment of persons executing documents and to sign the certificate and affix a seal.


Note
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Note Rate

The interest rate stated on a mortgage note.

Notice of Default

A formal written notice to a borrower that a default has occurred and that legal action may be taken.

Nuisance
A legal term referring to any use of land which interferes with the use and enjoyment of neighbouring lands. A nuisance may be actionable by the injured party.

Null and Void
Without any legal effect. Any agreement of which is null and void is not valid in any respect and cannot be enforced by either party.
Obsolescence
Lessening of value due to being out of date (obsolete) as a result of changes in design and use; and element of depreciation.

Occupancy
Holding, possessing, or occupying premises.

Occupancy Permit
Issued by local building departments, permission to enter and occupy a newly built or renovated dwelling after an inspection has established that there are not potential threats to the safety of occupants.

Occupancy Rate
The percentage of available rental space that is actually rented and in use in a given building or community.

Occupant
Someone who occupies a particular property or place.

Occupation
This is the date on which the buyer moves into the property.

Occupational Interest / Rent
A purchaser who has taken occupation of a property before it is registered in his name, is usually required by the seller to pay a monthly amount for such occupation. This amount is referred to as occupational interest (sometimes called occupational rent).

Offer to Lease
An agreement that binds the lessor to continuing negotiations in good faith once a qualified tenant has been found, until all negotiating points have been covered. In effect, it takes the space off the market during the negotiating period.

Offer to Purchase
This is an offer in writing from the buyer to the seller, which is usually prepared by the estate agent. Once signed by all parties, it becomes a legal and binding contract between the buyer and the seller

Offeree
Person to whom an offer is made and is selling he’s property is the offeree. The person making the offer is the offeror.

Offeror
Person who makes an offer. In sale transactions, the purchaser is usually the offeror i.e. the person who makes an offer to the seller of a property (the offeree) to buy the Property. See also ‘Offeree’.

Office Park
Similar to an industrial park but for offices, a property designed and developed specifically to attract corporate offices and provide them with all facilities required to carry on business.

Oligopoly
An oligopoly refers to a market with a few powerful players who often collaborate to influence both the supply of a product as well as its market price.

On-Site Auction
An auction conducted on the premises of the property or items being sold.

Online Auction
This term refers to an auction hosted either "live" (see live auctions) on the internet or in a "tender" (see tender auctions) format.

Open-end Credit
A flexible arrangement whereby credit grows as purchases are made or cash is advanced.

Open-end Lease
An open-end lease is a special lease agreement that allows an extra deposit to be made when the agreement expires – this caters for possible fluctuations in the value of the property.

Open-end Mortgage
An open-end mortgage is a type of mortgage against which further debt can be extended.

Open Listing
A listing contract under which the broker's commission is contingent upon the broker producing a buyer before the property is sold by the owner or another broker.

Opening Bid
The first bid offered by a bidder at an auction.

Operating Expenses
Money outlays necessary to operate and maintain a property.

Opportunity Cost
The “cost” of selecting one alternative is the benefit foregone from the next best alternative.

Option
An offer made to a person, coupled with an undertaking by the person making the offer (the offeror) not to revoke his offer for a specified period. The person to whom the offer is made (the offeree) is then said to have an option. The option is exercised when the offer is accepted timeously. An option falls away if the offer is not accepted by the offeree before the expiry date.

Option To Purchase Leased Property
A clause of a rental agreement allowing the tenant the right to buy the leased property upon terms and conditions set out in the agreement.

Optionee
The person who has the legal right to purchase or not to purchase a specific property in the future.

Optionor
The seller of a property who extends an option to someone else. If the optionee exercises the option, this person is legally bound by the contractual obligations. If the option is not exercised then the optionor is released from any responsibilities.

Ordinary Loan
This is a loan over property on which there is a dwelling and freehold rights apply.

Original Principal Balance

The total amount of principal owed on a mortgage before any payments are made.

Origination Fee

On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called "discount points." One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.

Outbuilding
A structure that is not a part of the main building but is necessary to the full enjoyment of the property (i.e. a shed, garage, etc.).

Outgoings (Operating Costs)
In the case of office buildings, the following items are included under total gross outgoings, irrespective of who pays for these: 
Cleaning.
Repairs & maintenance.
Common-area electricity & water (not tenant’s own).
Security.
Management (excluding head office overheads).
All leasing expenses: broker’s commission and in-house payroll, advertising, tenant installations & relocations (unless recovered), buy-outs, etc.
Municipal tax.
Insurance (fire & SASRIA). In the case of self-insurance, the landlord’s provision should be included.
Refuse & sewerage less recoverable amount.
External & common area repairs & maintenance.
Audit fees.
The following items are excluded: 
VAT.
Head office overheads.
Tenant’s own electricity and water.
Tenant installations/relocations recovered.
Internal maintenance.
Recoverable refuse & sewerage

Overall Capitalisation Rate
An income rate for a total real property interest that reflects the relationship between a single year's net operating income expectancy or an annual average of several years' income expectancies and total property price or value; used to convert net operating income into an indication of overall property value.

Overdraft
An overdraft is a loan, or a 'line of credit', extended to a personal accountholder by a bank. Overdrafts are revolving loans, which means that you can access your line of credit at any time without having to apply for a loan each time. Provided that you repay your loan amounts and interest calculated on your outstanding balances regularly, this loan agreement can go on indefinitely, giving you financial flexibility.

Overdraft Protection
An extra service that most financial institutions offer their checking account clients. The client has a credit limit much like that of a credit card. If the client writes a check for an amount greater than what is in the checking account, the bank automatically writes the client a loan. Interest is charged on this, and usually an annual fee.

Owner
An owner is someone in whom ownership of something vests.
In South Africa, the owner of real estate is the person indicated as the owner of the property in the title deed for the property, which is registered in the deeds office for the geographical region where the property is located.
The owner of a property can be a natural person, a close corporation, company, or a trust.
Two or more persons can be registered as joint owners of a property.

Owner Financing

A property purchase transaction in which the property seller provides all or part of the financing.

Owner Occupied
Any property where the owner resides in all or part of the property.

Owners Name
The term Owner's name refers to the registered owner of a property at the Deeds Office.

Owners of Record
All owners that are listed on a deed that is recorded in the deeds office.

Package Mortgage
A mortgage, which in addition to encumbering real property also includes personal property such as a refrigerator, dishwasher, or oven.

Parallel Loan
A parallel loan, also known as a back-to-back loan, allows a business in one country to borrow currency from a business in another country for a certain period, and vice versa. The businesses then agree to return each other's currency at a specific time. This reduces the risks of foreign exchange dramatically.

Pari Passu
Simultaneously and in equal measure, without preference or favouritism

Park your Salary - Are you working smart with your salary? Are all your Debit orders etc scheduled to be deducted from your charge account on the first of the month? Why? If you could arrange for debit orders to become payable on say the 10th day of each month and for your salary to be deposited (parked) directly into your access Bond, you can save massively on interest charges, as interest is charged on the daily balance of your Bond account. By the time the debit order becomes due you merely withdraw it from your Bond account and deposit it into your regular account. You need to specify the amount that you are able to leave in the Bond account for the time being and for how many days per month it can lie there.

Parking Ratio
This is the number of parking bay's the tenant can rent in relation to the space they occupy. For example if the parking ratio is 4/100 the tenant can only rent 4 parking bays for every 100m² let. The tenant is under no obligation to rent the total number of bays as per the parking ratio.

Partial Payment

A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department.

Participation Quota
Used to calculate the individual owner’s monthly levy in a sectional title, it is determined by dividing the size of each section into the total floor area of all the sections.

Partition - The division into parts of property held jointly, or the sale of such property by a court with division of the proceeds.

Partnership
A contract between two or more persons (maximum 20) to carry on business in common.
A partnership is not a legal entity as such, and terminates if one partner retires or dies. Partners are personally liable for partnership debts.

Pass-Through
Expenses or a portion of expenses associated with tenancy that are "passed through" from the landlord to the tenant who then pays them.

Passive income - Income from rental activity, limited business interests, or other activities in which the investor does not materially participate.

Patent Defect
A defect which is clearly visible is a patent defect.

Payment Change Date

The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date.

Pay Down
The amount of principle on a loan retired through payments at a given time

Payslip
A payslip is one of the documents that banks may require before issuing you with a personal loan, home loan, credit card or other line of credit. This document, issued on a monthly basis by your employer, serves to prove that you have a fixed monthly income, and that you'll be able to afford repaying any line of credit or loan made available to you.

Patent Defect
A defect which is clearly visible is a patent defect.

Per Diem Interest
Interest calculated daily. (Depending on the day of the month on which closing takes place, you will have to pay interest from the date of closing to the end of the month. Your first mortgage payment will be due the first day of the following month.)

Per Piece
This is when a large quantity of the same items is sold as one lot. In this instance the highest bidder has the right to choose the quantity of items from the lot that is required. This could be the entire lot depending on what the buyer wants. If the buyer only chooses a portion of the lot, the remaining portion will be re-auctioned until all the items are sold.

Percentage Lease
Lease under which the tenant pays a fixed minimum monthly rent plus a percentage of his or her gross monthly income in excess of that minimum. Used primarily in retail leases.

Periodic Payment Cap

For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period.

Periodic Rate Cap

For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.

Person
A natural person or a legal person (such as a company, close corporation, local authority, etc).

Personal Property

Any property that is not real property. Items (chattels) that do not fit the definition of realty; movable objects.

Personal Servitude
Right acquired by an individual over the property of another e.g. usufruct or use of another's possessions or property for a specific period or the lifetime of the usufructuary

Pension
Pension is the monthly income stream that helps support retired senior citizens who contributed to a pension fund during their working lives.

PIN (Personal Identification Number)
Debit cards, as well as some credit cards, are issued with a PIN for safer point-of-sale transacting and ATM-based banking. Once the vendor has swiped your card, you will be prompted to enter your PIN. Keeping one's PIN safe is critical to prevent transactional fraud. The PIN should preferably be memorised, but if this is not possible, it should never be kept in the same place as the debit card.

Pioneer Rental
The highest rental actually achieved – and could be a once-off outlier deal; hence “pioneer” is not “market”. The difference between pioneer and the highest market rentals may be used as a blunt tool to gauge the prospects for market rental growth in the short term. If the differential is positive, it is an indication of growth prospects in the node. If the differential is negative, it is an indication that landlords are finding it difficult to find new tenants at the going market rental rate.

PITI

This stands for principal, interest, taxes and insurance. If you have an "impounded" loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an impounded account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio.

PITI Reserves

A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Plat Book
A public record containing maps of land showing the division of such land into streets, blocks, and lots. Includes measurements of individual parcels.

Point

A point is 1 percent of the amount of the mortgage.

Pool Factor
Outstanding mortgage pool principal divided by the original principal balance, and expressed as a decimal between 0 and 1.

Portfolio Income
Income from interest, dividends, royalties, or the disposition of property held for investment.

Positive Cash Flow
When rental and other income exceeds all of the costs of ownership.

Positive Leverage
Borrowed funds are invested at a rate of return higher that the cost of the funds to the borrower.

Possession
It passes to the buyer on registration of transfer, with all obligations and rights to the property passed to the new owner.

Potential Gross Income
The amount of money that a property will generate if it is fully utilized with no gaps, vacancies or other interruptions in income.

Potential Rental Income
The total amount of rental income for a property if it were 100% occupied and rented at competitive market rates.

Power of Attorney

A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Praedial Servitude
Right acquired by a person as owner of an immovable property over another's immovable property

Pre-Approval

A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification

Pre-Foreclosure Sale
A procedure in which the borrower is allowed to sell his or her property to avoid a foreclosure. This sale fully satisfies the borrower's debt.

Pre-Qualification
This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.

Preferred Stock
Stock that takes priority over common stock with regard to dividends and liquidation rights. Preferred stockholders typically have no voting rights.

Prelease
Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of a Certificate of Occupancy.

Preliminary Title Search
The first review of all previously recorded documents regarding a specific property, to make sure that the property may be sold.

Premises
A building or part of a building, usually including the adjacent grounds.

Premium
An additional sum of money paid as an incentive for someone to do something. Also refers to a monthly insurance payment.

Prepaid Expenses
Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include rates and taxes.

Prepaid Interest
Interest that is paid before it is due. Generally, prepaid interest is charged to a borrower at settlement, to cover interest on the loan between the closing date through and including the end of the month.

Prepayment

Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

Prepayment Clause
A clause in a mortgage giving the mortgagor the privilege of paying off the mortgage before its due date.

Prepayment Penalty

A fee that may be charged to a borrower who pays off a loan before it is due.

Preview
A specified date and time when property is available for viewing and audits by prospective buyers before an auction day.

Price
The amount that was offered, asked, or actually paid for a property.

Price of last sale
The Price of last sale is the price at which a property was most recently sold.

Primary Lease
The main lease, under which other sub-leases exist.

Prime Rate

The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.

Prime Space
This typically refers to new or 'A-grade' space that is currently available for lease and which has never before been occupied by a tenant.

Prime Tenant
A tenant who occupies a great portion of the space available within a given building that may, in addition, be owned by that tenant.

Principal

The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

Principal and Agent
The relation created by express or implied contract or by law whereby one party delegates the transaction of some lawful business, with more or less discretionary power, to another who undertakes to manage the affair and render an account thereof.

Principal Balance

The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.

Principal Beneficiary
A principal beneficiary is the person who receives the most significant portion of the benefits in terms of a will, trust, or other contract.

Principal Estate Agent
The estate agent responsible for the compliance of a real estate agency to the applicable laws and regulations, including all full-status estate agents and candidate estate agents working for the estate agency.

Principal, Interest, Taxes, and Insurance (PITI)

The four components of a monthly mortgage payment on impounded loans. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.

Private Mortgage Insurance
Insurance from a private corporation that limits the Lender's liability in case of a default and foreclosure. This insurance is [typically] required on loans greater than 80% of the subject property's value.

Pro Forma
A set of figures projecting costs and income on a proposed new property. Used as a basis for capitalization. A financial statement based on anticipated, not actual, income and expenses.

Pro Rata
Proportionately, in proportion

Proclaim
Government Gazette notice

Procuring Cause
A broker will be regarded as the 'procuring cause' of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun.

Professional Fee
Remuneration paid to a realtor by their client.

Professional Team
Architect, Engineer, Quantity Surveyor, Town Planner, Land Surveyor, Contractor

Progress Payments
Payments made to the building contractor, by the bank, from the customer’s building loan account, as building work progresses. The assessor does an inspection and releases the retention accordingly.

Progress Payment Form

This is a form signed and completed by the customer as building work progresses. The assessor does an inspection and releases the retention accordingly.

 

Promissory Note

A written promise to repay a specified amount over a specified period of time.

Promulgated Rate
A formally and publicly stated rate.


Property Guarantee

This is a written document issued by a bank that promises to pay to the person or financial institution named, the sum referred to on registration in a Deeds Office of the transactions mentioned in the guarantee.

Property Management
A monthly fee paid to a management company in exchange for operating the property. This can include screening tenants, contracting tenants, collecting rents and responding to tenant and property needs. Though additional fees can be incurred for court appearances and maintenance, this fee should provide total hands off involvement by the owner. The fee is calculated as a percentage of collected rents.

Property Type
The classification of commercial investment real estate. The four primary property types are: retail, industrial, office and residential.

Provenance
At an auction, this term refers to the line of ownership of the piece being sold. An interesting or unusual provenance can add to the value of a piece, such as when an item was previously owned by a famous (or notorious) person, a popular celebrity, or an important historical figure.

Proxy Bid
This term refers to a bid submitted by a Bidder prior to an auction by submitting an Absentee Bid with the Auctioneers.


Public Auction

A meeting in an announced public location to sell property to repay a mortgage that is in default.

Public Corridor
The space that leads to different tenants' spaces from a service core.

Punch List
A list prepared by the architect, designer and owner and formally submitted to the contractor to note any deficiencies when they check all completed construction, which assures verification that such work has been accomplished in a good, workmanlike manner in respect to the contract documents.


Purchase Agreement / Deed of Sale
Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

Purchase Money Mortgage
Funds advanced in the form of a mortgage by the owner of real estate to the buyer for the purpose of buying their property.


Purchase Money Transaction

The acquisition of property through the payment of money or its equivalent.

Purchase Price
The consideration paid for the purchase of a property as set out in the agreement. This is not necessarily the market value as special circumstances may have applied when the transaction was concluded.


Purchaser
The person who buys a property.

Qualification Period
The qualification period is a period after a new insurance policy has been taken out during which the insurance company will not allow any claims to be made by the policyholder. The insurance firm uses this time to assess the accuracy and validity of the application.

Qualified Buyer
A buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender (normally a Bank) as part of the loan process. 

Qualifying Ratios
Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. The "top" or "front" ratio is a calculation of the borrower's monthly housing costs (principle, taxes, insurance, mortgage insurance, homeowner's association fees) as a percentage of monthly income. The "back" or "bottom" ratio includes housing costs as will as all other monthly debt.

 Qualitative Analysis
This is an examination of a company's qualities, such as staff morale or managerial style, which cannot be calculated scientifically or mathematically.

Quantitative Analysis
In contrast to qualitative research, quantitative research is a mathematical examination of a company's figures, such as total asset value or future sales.

Quantity Surveyor
A person whose job is to calculate the cost of the materials and work needed for future building work.
 

Qui Prior in Tempore Potior
Qui Prior in Tempore Potior in Jure means the person who is first in time is stronger in law 

Quid Pro Quo

Something for something, equal exchange Quid pro quo is, for example, an understanding whereby one company can use the research of another company free of charge, provided the first company does all its business with the second.

Quiet Enjoyment
A covenant, usually inserted into leases and conveyances on the part of the grantor, promising that the tenant or grantee shall enjoy possession of the premises in peace and without disturbance.


Quitclaim Deed

A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

Quorum
A quorum is the minimum number of people who must attend a meeting in person, or by proxy, to constitute a legal and binding meeting. If a meeting is held where fewer than a quorum attend, the meeting should be dismissed. All decisions taken at a meeting, without a quorum, are invalid.
For general meetings of a body corporate, 50% of the owners in a scheme with less than 11 units, 35% of the owners in a scheme with between 11 and 49 units, and 20% of the owners in a scheme with more than 49 units, constitute a quorum.
The quorum for different matters on the agenda will differ. For a special resolution to be passed, the quorum for a general meeting applies. But for a unanimous resolution to be passed, 80% of all owners must attend the meeting.
The quorum for a trustees' meeting is the grater number of, two trustees, or half the total number of elected trustees.

Range
A set of values that a number can have. A range is usually specified by its maximum and minimum value. Any number that is between these two values is said to be within the range. For example, the range 12-15 has a maximum value of 15 and a minimum value of 12. The numbers 12, 13, 14 and 15 are said to be within the range 12-15. 

Rate Lock
A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.


Rate of Return
The percentage return on each Rand invested, also known as yield.

Rates and Taxes
Taxes are levied on all property owners by the municipality. Rates are included in the levy if you buy Sectional Title. They are payable on a monthly basis and are calculated as a percentage of the value of the property. 

Rates Clearance Certificate
Issued by the local authority stating that the rates and taxes have been paid to a future date in respect of the property.

Raw Land
Property that has not been developed or improved. Usually this relates to land that has not been incorporated into a town planning scheme and/or land without services.

Readvance
When you have repaid a portion of your home loan, you may borrow all or part of the loan amount.

Real Estate
Land, property, plus improvements to land.

Real Estate Agent /BrokerA person licensed to negotiate and transact the sale of real estate.

Real Property

Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

Real Rental
Deflated rental, typically observations (values) over time (a time series) from which the relevant inflation has been removed.

Real Return
T
he real return is the percentage change in the average (median) price of property on a yearly basis over and above the inflation rate for that year. E.g. If your total return is 20% and inflation for that year is 5%, your real return after taking inflation into account is approximately 15%.

Real Right
A right over or in respect of property. Real rights over or in respect of immovable property are registered against the title deed of the property.

Realtor
A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

Reasonable Wear and Tear
Damage sustained in the course of normal use.

Recapture
A clause in a lease agreement providing for lessors retaking or recovering possession of the premises, usually by cancellation of the lease under certain conditions.

Recorder
The public official who keeps records of transactions that affect real property in the area. Also known as a "Registrar of Deeds”.

Recording
The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Redemption
The buying back of one's own property after a forced court sale.

Redevelop
To remove existing improvements and buildings on a parcel of property and replace them with new, more useful and profitable improvements.

Redlining
Term to describe a lending institutions refusal to lend money to owners or prospective buyers of property in certain locations.

 Reducing/Step Down Rate
Regardless of whether the variable home loan interest rate falls or rises, the reducing interest rate option will apply for the agreed period (usually less than 5 years). This facility guarantees you that your interest rate will decrease by a set percentage every three to six months for the agreed period. Should this option be terminated before the expiry date, an additional finance charge can be levied by the bank.

Refinance Transaction / Refinancing
The process of paying off one loan with the proceeds from a new loan using the same property as security.

Registered Right
A right over property registered in a deeds office against the title deed of the property. The purchaser of immovable property is bound by the rights registered over the property whether or not he knew of their existence at the time of the sale.


Registering Attorney
This attorney attends to the registration of the new bond into the name of the buyer.

Registrar
The person who has the task of collecting, recording, and maintaining instruments related to title of land. May also have responsibility of ruling on the acceptability of documents submitted for registration and for making decisions as to how to correct title defects.

Registration against Title Deeds
A right is registered against the title deed of a property when details concerning such right are stipulated on the title deed by the Registrar of Deeds in terms of the Deeds Registries Act 47 of 1937.

Registration Date
The Registration date is the date on which a property is registered at the Deeds Office.

Registration Deposit
At an auction, this deposit is paid upon registration as security for the buyers’ purchases. This deposit is refundable should the buyer not purchase any items. It may also be used as part payment against any purchases the buyer has made.

Registration of Transfer
The process whereby ownership of property transfers from the seller to the buyer via a Deed of Transfer.

Registration Rate Payer
The Registration rate payer is the person or body responsible for paying the Municipal rates for a property.

Release Clause
A statement in a blanket mortgage that allows a specific described parcel to be released from under the blanket lien after a sum of money is paid, or a period of time is up.


Remaining Balance

The amount of principal that has not yet been repaid. See principal balance.

Remaining Economic Life
The estimated period during which improvements will continue to contribute to property value.

Remaining Term
The original amortization term minus the number of payments that have been applied.

Remodel
To refurbish, redesign, redecorate.

Remortgaging / Switching
The refinancing of your property by paying off one loan with the proceeds from a new loan secured by the same property.

Renewal Option
A right which arises out of a term in a contract and takes effect at or near the termination date of a contract; the party who enjoys the right may choose to continue the agreement on terms as set out in the option clause or to treat the contract as at an end upon the termination date.

Renovate
Similar to remodel, with an emphasis on upgrading the existing property.

Rent
1. Noun -- the periodic payments made by a tenant to the landlord for the right to occupy the premises.
2. Verb -- to lease premises from the owner or a representative of the owner.

Rent Control
The regulation or restrictions set by government agencies on the amount of rent that landlords may charge.

Rent Free Period
No rent is payable by the tenant for an initial portion of the term of a lease. It is offered by a landlord as a rental concession to attract tenants; however this may apply only to the net portion of the rental.

Rent Loss Insurance

Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

Rentable Area
The generally accepted means of measuring space within an office building. From the inside of the outside wall (or in new buildings from the glass line) to the outside of the inside wall (or hall wall) and centre to centre on the division walls. Columns are included.

Rental Concessions
Concessions a landlord may offer a tenant in order to secure their tenancy. While a rent-free period is one form of a concession, there are many others such as: increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many.

Rental Rate
The amount charged for the occupation of a property.

Repayment Plan

An arrangement made to repay delinquent instalments or advances.

Repayment Terms
The length of your loan repayment period will directly affect your required monthly instalments. The longer your repayment period, the lower your monthly instalments will be, however the total interest cost over the life of the loan will increase. The maximum repayment term is 20 - 30 years and is dependent on the home loan amount.


Replacement Allowance
An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the building's economic life.

Replacement Cost
The current cost of replacing the subject property with property having exactly the same utility and amenities.

Replacement Cost Analysis (RCA)
Replacement Cost Analysis is a property valuation method that determines the cost / value of a property by calculating the cost of building the property at current market rates.

Repo Rate
The repurchase or repo rate is the interest rate at which the Reserve Bank (a.k.a. the Bank) lends money to private banks. The Bank acts as banker for private banks. Banks experience a cash shortfall or a need for liquidity on a daily basis and their lender of last resort is the Bank. A formal system is in place to guide the process through which banks borrow from the Bank and it is called the repurchase transactions system (repo system).
The repo system of borrowing and lending involves the temporary sale of a financial asset by the borrower (bank) in exchange for the needed cash from the lender (the Bank). In such a transaction, there is an explicit agreement that the borrower must repurchase the financial assets at an agreed future date – for example, after one week. The repo rate is determined by the Bank at each meeting of its Monetary Policy Committee (MPC). It is expressed as a rate per annum.
The repo rate serves as a benchmark for the level of short-term interest rates. For example, if the repo rate increases, banks have to pay more for repo funds. To maintain their existing profit margins, banks raise the interest rates at which they take deposits from and lend money to their customers. This causes a general rise in interest rates or the cost of holding money, and this eventually helps to control inflation by reducing the demand for credit to be spent on the purchase of goods and services. The actions of the Bank described here are also known as the formulation and implementation of monetary policy.

Repossess
To take possession again of a property or goods after non-payment of money owned. This might follow a court order. Also referred to as foreclosure.

Reproduction Cost Analysis
A technique used to evaluate a property by estimating the cost of building the same or similar structure, adding the cost of land and subtracting an allowance for wear and tear.

Res Ipsa Loquitur
It speaks for itself, the facts speak for themselves

Res Sua Nemini Servit
Somebody cannot have a servitude over his own asset

Reserve Auction
An auction in which the seller reserves the right to establish a reserve price, to accept or decline any and all bids or to withdraw the item at any time prior to the announcement of the completion of sale. Also known as an auction 'subject to confirmation'.

Reserve Price
The minimum price that a seller is willing to accept for a property to be sold at auction.

Residential Property
A property used for residential purposes, not for business or office purposes.

Residual Techniques
Procedures used to capitalize the income allocated to an investment component of unknown value after all investment components of known values have been satisfied.

Residuary Beneficiary
A residuary beneficiary is one of the people who will share in the residual benefit in terms of a will, trust, or other contract, after the principal beneficiaries have received their benefits.

Resolutive Condition
A clause in an agreement of sale or lease which stipulates that the agreement will terminate on the occurrence of an event specified in the clause. A typical example of a resolutive condition is a condition in an agreement of sale of a proposed sectional title unit stating that the agreement will terminate if the sectional title plan is not registered before or on a certain date.

Restitutio in Integrum
Restitution to the prior condition

Restrictive Conditions of Title
Conditions stipulated in the title deed of a property prohibiting the building of certain improvements on the property or limiting the use to which the property may be put. A typical example is a condition in a title deed starting that a house must have a tile roof.

Retention
This is the money retained by the bank and paid to you once the bond is registered. Payments are made in the form of progress payments as work on your house progresses.

Reverse Annuity Mortgages (RAM)
A reverse-annuity mortgage is the bank loan equivalent of a negotiated percentage of a property's market value. The homeowner receives the loan as an annuity.

Reverse Leverage
A term for the situation where the income from ownership of property is lower than the rate of interest paid to finance the ownership. Also referred to as negative gearing.

Reverse Mortgage
A special type of loan used to convert the equity in a home into cash. The money obtained through a reverse mortgage is usually used to provide seniors with financial security in their retirement years. The reverse mortgage is aptly named because the payment stream is reversed. Instead of the borrower making monthly payments to a lender, as with a regular mortgage, a lender makes payments to the borrower. While a reverse mortgage loan is outstanding, the borrower owns the home and holds title to it, without having to make any monthly mortgage payments.

Reversion (Rental)
The adjustment of rentals to market rentals, either on expiry or at predetermined period(s) as the terms of a lease dictate, or as an adjustment to some form of financial model.

Reversion Factor
A compound interest factor that is used to discount a single future payment to its present worth, given the appropriate discount rate and discount period.

Revolving Debt
A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

Rezoning
The amendment of the classification of a property under use and building by-laws or ordinances. For example, a property may rezoned from residential to business to allow for offices to be developed.

Richman’s Secret payment
When you obtain a new bond there is a time-lapse between the last payment of your previous bond and the first payment of the new bond. This period could be up to 60 days. During this time interest is added to the balance, increasing the actual bond amount approved. Do not skip that month as the banks would suggest you do, rather make your monthly payment (as usual) as soon as the account has been activated. The banks will however perceive this as an extra payment and in turn, it will reduce the bond period with a substantial number of months and save you thousands of Rands in the long run!

Right of First Refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right of Ingress or Egress
The right to enter or leave designated premises.

Right of Pre-Emption
A contractual right entitling a person to make the first offer to purchase a particular property. Also known as a right of first refusal. Lease agreements sometimes provide that, should the lessor wish to sell the property, the lessee has a right of pre-emption to purchase it.

Right of Survivorship
In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

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

Riparian Rights
The landowner's right to water on, under, or next to his land.

Risk
The probability that actual cash flow form an investment will vary from the forecasted cash flow.

Risk Profile
A person’s credit worthiness.

Road Network
The term Road network refers to the manor in which the roads of a city are laid out.

Rules
In terms of sectional title schemes, there are both management rules and conduct rules that apply to all the owners and occupants of sections in the sectional title scheme.
Unless a body corporate has followed the strict procedures to amend or replace the model management and conduct rules, contained in Annexure 8 of the Sectional Titles Act, the model rules will automatically apply.

Rules and Regulations
Building standards that are binding on the tenants are usually set forth in a part of the lease covering such things as use of common areas, door lettering, signs, noise, odours, moving or installation of equipment, special locks, etc.

Safe Custody
This is placing the bond documents in a safe place once an instruction has been issued and the bond has been paid up. 

Sale-Leaseback

A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

Sale Agreement
Also known as "Agreement of Purchase and Sale" or "Purchase Agreement:. The contract that sets out the terms and conditions agreed to by the purchaser and the vendor in the sale of land.

Sale and Leaseback
A financing arrangement in which real property is sold by its owner/user, who simultaneously leases the property from the buyer for continued use.

Sale Cost
The brokerage commissions and fees, and any additional transaction costs that are incurred during the sale of the property.


Sale Date
A properties sale date is the date as signed on the sale agreement. This is different to the registered date, which is the day the property is registered at the Deeds Office.

Sale Price
A Properties sale price is the price as registered at the Deeds office. You may see a value of 0 for the sale price. This may be due to several different reasons. An example would be if the property was inherited or transferred from a trust. This would also explain sale prices that are low in comparison to surrounding properties.

Sales Agreement
Written agreement (contract) that states the terms and conditions under which a property will be sold, signed by both buyer and seller.

Sales Comparison Approach
Method of estimating value of a property by comparing similar properties that have been sold recently.

Sandwich Lease
While having the option to buy a property, the investor subleases it to gain positive cash flow.

SAPOA
South Africa Property Owners Association

SASRIA
SASRIA indemnifies the insured against loss of or damage to property, directly related to or caused by:
(i) any act (whether on behalf of any organisation, body or person, or group of persons) calculated or directed to overthrow or influence any State or government, or any provincial, local or tribal authority with force, or by means of fear, terrorism or violence;
(ii) any act which is calculated or directed to bring about loss or damage in order to further any political aim, objective or cause, or to bring about any social or economic change, or in protest against any State or government, or any provincial, local or tribal authority, or for the purpose of inspiring fear in the public, or any section thereof;
(iii) any riot, strike or public disorder, or any act or activity which is calculated or directed to bring about riot, strike or public disorder;
(iv) any attempt to perform any act referred to in clause (i), (ii) or (iii) above;
(v) the act of any lawfully established authority in controlling, preventing, suppressing or in any other way dealing with any occurrence referred to in clause (i), (ii), (iii) or (iv) above.

Satisfaction Piece
An instrument for recording and acknowledging payment of a loan secured by a mortgage.

Save Harmless
To indemnify another; to secure another against loss or damage or claims of a third party. Often referred to as hold harmless.

Scheduled Gross Income
The rental rate of a property multiplied by the total rentable space.

Schematic Design
(1) A design concerning the building program resulting from inspection of the site and conferences with the client. The client's needs and requirements are carefully analyzed. Zoning regulations and codes affecting the work are studied. Sketches and statements of probable construction costs are prepared for the owner's approval.
(2) A suggested plan, design or program of action.

Second Mortgage / Bond
An additional mortgage bond placed on a property that has rights that are subordinate to the first mortgage.

Secondary Market
The buying and selling of existing mortgages, usually as part of a "pool" of mortgages.


Section
A section in a sectional title scheme is that individually owned part of the building (or buildings) in the sectional title scheme. An owner's section is his/her apartment, flat or townhouse. We say that the owner has title to his/her section.
A section in a sectional title scheme constitutes the space between the four walls, the floor and the ceiling of an apartment, flat or townhouse. The walls of a section include the windows and doors.
The Sectional Titles Act states that the boundaries of a section are the median lines between a section and neighbouring sections, or neighbouring common property. This means that a section includes the inside halves of the walls, windows, doors, ceilings and floors that surround a section, according to the sectional title plan for the sectional title scheme.
The 'outer skin' of the section does not form part of an owner's section in a sectional title scheme.

Sectional Title
This is an entire complex (flats and townhouses) divided into individual units and sold separately.

Sectional Title Plan
A registered land surveyor must draw up a sectional title plan for any new sectional title development. The sectional title plan then gets submitted to the Surveyor General, for his/her approval. The sectional title plan gets registered in the deeds registry, as an important part of the title deeds for the sections in a sectional title scheme.
The sectional title plan contains a scale plan of the sections in the sectional title development scheme, the allocation of common property, servitudes that apply to the land, and exclusive use areas created in terms of section 27 of the new Sectional Title Act.
Each sectional title scheme in South Africa has a set of sectional title plans registered in the deeds registry. Each sectional title plan is allocated a registration number, which indicates when the sectional title scheme was registered. SS 17/2001 is an example of such a sectional title plan number, and it indicates that the sectional title plan was the 17th sectional title scheme registered in 2003 (in the regional department of the deeds registry).
The sectional title plans for a sectional title scheme can be obtained from the Surveyor General's office. The trustees of a sectional title scheme also have a responsibility to have the sectional title plans for the sectional title scheme available for inspection or reproduction by members of the body corporate or their bondholders.

Sectional Title Register
A register of sections in a sectional title scheme registered in the deeds office.

Sectional Title Unit
A sectional title unit includes BOTH the section AND the share in the common property, which an owner owns.

Secured Bond / Loan
 / Mortgage
This is a bond that is secured by the assurance of collateral such as a mortgage bond. In contrast, unsecured bonds, also known as debentures, do not require any form of collateral from the loan applicant.

Security
The property that will be pledged as collateral for a loan.

Security Deposit
An amount of money paid by a tenant before moving into the premises to cover any damage incurred while living there, or to protect the landlord in the event that the tenant leaves without being current on rent payments. If the tenant is current and the unit only has a normal amount of wear and tear, then the deposit is generally refunded.

Self-Amortizing Mortgage Loan
A loan which will be paid off by the end of its term, such that its term equals its amortization period.

Sell to Rent Back
Sell to rent back is an arrangement that allows a homeowner to sell his or her property to a bank or property investment company and then rent it back from the institution to continue living there.

Seller Carry-Back

An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.

Seller's Commission
At an auction, this is a predetermined value which is negotiated with the Seller. This premium plus the applicable state sales taxes is then deducted from the gross auction proceeds and the remaining amount is then the net seller realisation.

Seller's Market
Demand is greater than supply, such that the vendor may demand a higher price.


Semi-Detached House
Two separate homes, joined with one common dividing wall.

Sequestrated
When a creditor seizes assets to recover unpaid debt. 

Servicer
An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

Servicing a Debt
The act of paying the periodic principal and interest payments on an outstanding debt obligation.

Servient Tenement
The property which is subject to servitude rights in favour of another property, called the praedium dominans.

Servitude
A right which a person has over the immovable property of another and which is registered against the title deed of the owner. It usually entitles the holder of the servitude to do something on the property. A common example is a registered right of way to travel over property owned by another person.

SDF
Spatial Development Framework

Servitude
A registered right which a person has over the immovable property of another. It usually entitles the holder of the servitude to do something on the property. A common example is a registered right of way to travel over property owned by another.

Settlement
The conclusion of your real estate transaction which includes the delivery of the security instrument (Deed), signing of your legal documents and the disbursement of funds to the seller (in a purchase transaction) or to the current mortgage holder (in a refinance transaction).


Shareblock Developments
A buyer acquires a share in a company that owns the shareblock scheme, which entitles the buyer to use and occupy a specific unit. A shareblock buyer never receives the title to the unit.

Shareholders' Equity
Shareholders' equity, also known as a company's net worth, is calculated by subtracting the total liabilities from the total assets.

Shell Lease
A rental agreement wherein the tenant rents the incomplete building and agrees to complete the interior work, such as plumbing, wiring, interior walls, floors, etc.

Shortfall
A shortfall arises when the bank's estimate of what it will cost to complete the building work is higher than the contract price quoted by the builder.

 Simplex
A sectional title unit on one level with no stairs.

Smallholding
A property of maximum 20 hectares situated within close to a built-up area.

Soft Market
Also known as a "buyers or tenants market", when vendors far outnumber buyers and prices fall; or where high vacancies lead to falling rental rates.

 Sole Mandate
When a property is marketed by an estate agent, a 'sole mandate' implies that one particular estate agency is granted the sole right and responsibility to market the property for a certain period.
In return for the sole mandate the estate agent will take additional steps in marketing the property, including placing feature advertisements in the local press, property magazines, etc. According to most credible estate agencies, a sole mandate substantially increases the closing rate on property sales.

Sole Proprietorship
A sole proprietorship is a business that is owned by one person. Even though he or she does not have to pay corporate income tax, the person's liability in terms of business debts and obligations is unlimited.

South African Institute Of Auctioneers
A non-statutory association of individual South African auctioneers united to promote the mutual interests of its members; formulate and maintain ethical standards for the auction profession; make the public more aware of the advantages of auction selling; and generally improve the business conditions affecting the auction profession.

Space Analysis
An analysis of an existing office situation to locate problem areas and to provide a basis for judgment in evaluating major changes. Also, it can be in the form of planning tools that will be used by the client in developing a planning decision. This includes space standards, adjacency requirements and space requirements.

Space Planning
Architecturally designing any space with all the amenities and mechanical gadgets to make it more functional for the occupants. Besides amenities, gadgets and good communication systems, it includes better sound and light control within the space.

Space Standards
The standard-size spaces for particular functions--a necessary tool in planning for any growing organization. The absence of standards leads to a situation where space is allocated to offices in a haphazard, non functional manner.

Special Levy
A special levy, in terms of sectional title property, is an unusual levy, which the sectional title trustees can impose on all the members of a body corporate, to fund an unforeseen or emergency expense.

Special Power Of Attorney
In a special power of attorney the principal authorises his/her attorney-in-fact to act on his/her behalf in one or more specific situations only.

Specific Performance
A court order requiring a person to act or do a specific thing that they had agreed to do.


Speculative Builder

A developer who constructs a building or commercial development without pre-selling.

 Speculator
Someone who buys property on the expectation that its value will increase and it will be sold at a profit.

 SPTN
Strategic Public Transport Network

Stamp Duty
Stamp duty is a tax imposed by the government.

Standard Payment Calculation
The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal instalments over the remaining term of the mortgage at the current interest rate.

Stante Matrimonio
During the subsistence of the marriage

Statutory Law
Written law of the country.

Street Address
The Street address is the physical location of the property. The Address is broken down into Street number, Street name and Suburb name.

Subdivision
A housing development that is created by dividing a tract of land into individual lots for sale or lease.

Subject-to Sale
A term used to describe that the sale will only become unconditional if and when the stipulated conditions are met.

Subject Property
The term 'subject property' refers to the specific property being the subject of a valuation. The value is usually determined by comparing the subject property with similar properties in the area, which have recently sold.

Subject To Confirmation (STC)
At an auction, if a seller places a reserve value to an item and the value reached on the auction is less than the reserve value, the auctioneer can sell the item to the buyer STC. This then allows only that buyer to negotiate the price with the seller after the auction. If the buyer and seller do not come to an agreement over the price, then the item is declared unsold. This process protects the value of the asset for the seller.

Sublease
A lease that is given by a tenant of part or all of the leased premises to another person for a period shorter than the original lease, while still retaining some interest.

Subordinate Financing
Any mortgage or other lien that has a priority that is lower than that of the first mortgage.

Subordinated Ground Lease
A ground lease in which the lessor (owner) places his right in relation to the structure behind that of others, such as the holder of the construction loan or permanent mortgage (see Ground lease).


Subordination
An agreement by which a lien holder, a lessee or one having an interest or claim in or against personal or real property places the interest behind that of another.


Subsidy
A housing allowance.

Sui Generis
Unique, one of its kind.

Summons
A summons is a document which starts a court action. The summons generally requires a person to appear in court, to answer a claim.

Supply And Demand
In real estate appraisal context, the principle of supply and demand states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply.

Surface Right
A legal interest in the use or occupation of the top of land. As opposed to "subsurface" or "mineral rights".

Survey
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. A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any buildings.

Surveyor General’s Diagram
A diagram that shows sub-divisions, servitudes and expropriations.

Suspensive Condition
A clause in an agreement of sale or lease in terms of which the agreement will become enforceable only if the event stipulated in the clause occurs. A typical example is a clause in an agreement of sale of a house stating that the agreement is subject to the suspensive condition that the purchaser obtains a loan from a financial institution before or on a certain date.

 Sweat Equity
Contribution to the construction or rehabilitation of a property in the form of labour or services rather than cash.

Switch Bond
A bond that was previously with one financial institution or bank but then is changed to another.



Take-Up (Absorption)
The rate, expressed as a percentage, at which available space in the marketplace is leased during a predetermined period of time.

Take-Up Rate (Absorption Rate)
The gross or net change in space leased between two dates, typically expressed as a percentage of the total area (M2).

Takeover
The term 'takeover' refers to the transferral of control of a company from one set of shareholders to another set of shareholders. A takeover can either be hostile or take place through a friendly acquisition.

Tangible Assets
Tangible assets, also known as real assets, are valued in terms of specific physical properties. They can include both reproducible assets (such as machinery or buildings) and non-reproducible assets (property or works of art, for example).

Task Lighting
Overhead lighting systems that provide each workspace with individual overhead lighting controls. Designed to conserve energy by lighting only work areas that are occupied at any given time.

Tax Base
The pool of property, value or income from which a government may draw assessments.

Tax Certificate
A breakdown of how much interest and insurance was paid, as well as total repayments to the home loan account over a certain period.

Tax Lien
A legal claim against a real estate property for taxes that are unpaid.

Tax Sale
Sale of property because of a delinquency in the payment of taxes.

Tax Shelter
An income property that generates artificial paper losses, due to depreciation or cost recovery, that are in excess of the income produced by the property. These artificial losses can be used to offset other taxable income earned by the owners. In general a tax shelter is any deferral, reduction, or elimination of a tax due.

Taxable Income
Adjusted gross income less personal deductions and exemptions.

Tenancy
The temporary possession or occupancy of property that belongs to another. It also refers to the period of a tenant’s possession.

Tenancy at Sufferance
A tenancy that exists when, after expiration of a lease, the tenant remains in possession without the consent of the landlord or the person entitled to possession. No notice is required to terminate this tenancy.

Tenancy at Will
One wherein the landlord agrees that the tenant may stay in possession after expiration of the lease and pay rent for the time the space is occupied, until either landlord or tenant desires to terminate the tenancy.

Tenancy in Common

As opposed to joint tenancy, when there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death.

Tenant
A person who occupies a property, but does not own it and pays rent in return.

Tenant Fixtures
Items added to a leased premises by a tenant that might normally be considered fixtures (and, therefore, part of the premises) but that, by contract or law, the tenant is entitled to remove at the end of the lease period.

Tenant Installation Allowance (TIA or TI)
An allowance the landlord gives the tenant towards renovations/alterations on the leased premises. This allowance is normally only given on a three year or longer rental agreement. The allowance may take the form of a total Rand value, an equivalent rent free period or a schedule quantifying the work to be undertaken at an agreed specification for the various items.  

Tenant Representation Agreement
A contract under which a client agrees to work through no salesperson except the one designated in the agreement.

Tender
An offer to pay or perform.

Tender Auction - This term refers to an auction hosted on the internet with a predetermined start and cut off time. Bidders are invited to register and submit their bids on the Internet. All auctions are subject to the same terms and conditions as an onsite auction.

Term
The period of time between the beginning loan date on the legal documents and the date the entire balance of the loan is due.

Terms
Exact way a property will be purchased.

Testate
One who dies leaving a will.

Testator
Testator refers to a male person who made a will, or is in the process of making a will.

Testatrix
Testatrix refers to a female person who made a will, or is in the process of making a will.

Theodolite
Measures horizontal and vertical angles and distance.

Thermopane
A brand name (now used generally) for a window-glass construction that has insulating qualities. Two layers of glass are separated by an air space. Also called double-glazing insulating glass.

Thermostat
A device actuated by temperatures that regulates and controls dampers, valves, switches or other mechanisms.

Third-Party Origination

A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

Timeshare
A form of property ownership under which a property is held by a number of people, each with the right of possession for a specified time interval. Time sharing is used mostly for vacation properties.

Time Value of Money
An economic principle recognizing that a Rand today has greater value than a Rand in the future because of its earning power.


Title
Title is a legal term that describes the ownership of immovable property. One can obtain title, or ownership, to land, or a section in a sectional title scheme.

Title Company
A company that specializes in examining and insuring titles to real estate.

Title Deed
A legal document as evidence of ownership of property and filed in a deeds office containing details of a property and its owner. It indicates the purchase price, restrictive conditions of title and limited real rights. A title deed is proof of ownership of a defined property; if other persons or an institution have rights over the property, i.e., where a bank or other institution holds a mortgage bond over the land, details thereof are also endorsed on the title deed.


Title Deed Number
The Title Deed number is the unique number that identifies a Title Deed. A Title Deed is a legal document proving a persons title to a property.

Title Insurance

Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over 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 that there are no liens or other claims outstanding.

Total Expense Ratio
Total obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts.

Total Return
Normally measured over a year, in which case it is the income yield for the applicable year (net income in year 1 divided by the purchase price or value in year 0) plus the change in capital value over that year. Also known as the combined return because it combines the income yield and capital return in one measure.

Townhouse
A general term for either a simplex or a duplex.

Trade Fixtures
Articles installed by a tenant under terms of a lease and removable by the tenant before the ease expires. These remain personal property; they are not true fixtures.

Transfer
Transfer is the process of changing ownership of a property. Ownership of a property is transferred to the purchaser, and the new ownership is then registered in the deeds registry.

Transfer Costs / Fee
Fee paid to transfer the property from the seller into the name of the buyer and include transfer duty, conveyancing fees, and registration fees.

Transfer Date
The date on which the sale of a property is actually finalized and a home loan transaction completed.

Transfer Duty
A tax levied by the government on the transfer of land. If the purchase price includes VAT no transfer duty is payable.

Transfer of Ownership

Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

Transferring Attorney
Appointed by the seller to attend to the transfer of the property into the name of the buyer.


Two-Step Mortgage

An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.

Two- to Four-Family Property

A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.

Treasurer
The treasurer is the person in charge of planning and implementing a company's funding and investment activities.

Triple Net Lease
(See net-net-net- lease).


TRP
Town and Regional Planner

Trust
A contract between the founder and the trustee in terms of which the trustee is to administer the trust fund for the benefit of the beneficiaries.
A trust is also a legal structure whereby assets (such as a house, money, shares etc.) can be held 'in trust' for someone (often a minor). A trust is not a legal entity, but it offers some similar characteristics, and is therefore often mistaken for one. A trust is not a legal entity (person) as such, and therefore cannot enter into an agreement in its own name.
The trust assets are managed by trustees, for the benefit of the beneficiaries of the trust. The trustees, authorised in writing by the Master of The High Court, must conclude any agreement that would bind the trust.
In South Africa, there are basically three types of trusts. These are living trusts (in South Africa called inter vivos trusts), testamentary trusts and bewind trusts.
Testamentary trusts are created at the winding up of a deceased estate following a specific stipulation in the deceased person's will that a trust must be set up. Testamentary trusts are usually created to hold assets on behalf of minor children, since minor children can not in terms of South African law inherit anything (in the absence of a trust, assets from the deceased estate left to minor children are sold, and the money is paid to them when they reach adulthood). Bewind trusts are created as trading vehicles providing trustees with limited liability and certain tax advantages.
There are two types of living trusts in South Africa, namely vested trusts and discretionary trusts. In vested trusts, the benefits of the beneficiaries are set out in the trust deed, whereas in discretionary trusts the trustees have full discretion at all times about how much each beneficiary is to benefit.

The parties to the trust
There are three parties in a living trust, namely the founder, the trustees and the beneficiaries. The trust is managed by the trustees for the benefit of the beneficiaries. The beneficiaries can be any legal persons, including living people, other trusts, and registered businesses. Trustees may also be beneficiaries.
Establishing a living trust
The trust is created by drafting a trust deed (usually in co-operation with an attorney specialising in trust law) and registering the trust with the local High Court. The trust becomes effective as soon as it is registered.
Asset protection
Until recently, there were tax advantages to living trusts in South Africa, although most of these advantages have fallen away with new legislation. The remaining advantage of a living trust is the protection of assets from creditors. In an ideal situation, since assets held by the trust aren't owned by the trustees or the beneficiaries, the creditors of trustees or beneficiaries can have no claim against the trust (there are exceptions). A common scenario of using living trusts for asset protection is a husband and wife acting as trustees along with a third unrelated trustee. The trust is granted a loan equal to the value of their assets, then the trust buys their assets using the loan, and finally the trust pays off the loan over time. When any of trustees die, the trust and any assets owned by it, remain unaffected.
Assets transferred into a living trust remain at risk from external creditors for 6 months if the previous owner of the assets is solvent at the time of transfer, or 24 months if he/she is insolvent at the time of transfer. After 24 months, creditors have no claim against assets in the trust, although they can attempt to attach the loan account, thereby forcing the trust to sell its assets.
Assets can be transferred into the living trust by selling it to the trust (through a loan granted to the trust) or donating cash to it (any person can donate R30 000 per year tax free; 20% donations tax applies to further donations within the year).
Tax considerations
In terms of South African tax law, living trusts are considered tax payers. Two types of tax apply to living trusts, namely income tax and capital gains tax (CGT). A trust pays income tax at a flat rate of 40% (individuals pay according to income scales, usually less than 20%). The trust's income can, however, be taxed in the hands of either the trust or the beneficiary. A trust pays CGT at the rate of 20% (individuals pay 10%). Trusts do not pay deceased estate tax (although trusts may be required to pay back outstanding loans to a deceased estate, in which the loan amounts are taxable with deceased estate tax).

Trust Account
A bank account in which money is held in trust for another person by the account holder until the occurrence of a specified event. The money held in such an account is referred to as trust money. Every estate agency business or Attorney must have a trust account which must be audited by an auditor annually.

Trust Deed
An instrument of conveyance of title to property wherein the transferee will be holding the title to the property on behalf of another person.

Trust Money
Money entrusted to an attorney or estate agent to keep in a trust account until a certain event occurs.

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

Turnkey Project
The construction of a project in which a third party, usually a developer or general contractor, is responsible for the total completion of a building (including construction and interior design) or, the construction of tenant improvements to the customised requirements and specifications of a future owner or tenant.
Ultra Vires
O
utside the capacity, of an act which was not authorized or beyond the powers of a person or authoritative body

Uncleared
'Uncleared funds' are money that has been deposited into a bank account and is reflecting in the balance, yet has not been cleared by the bank. This holding period is imposed to prevent cheque fraud.

Undercapitalised
A business is 'undercapitalised' when it does not have enough money to function normally.

Underfunded Pension Plan
This is a pension plan with a negative surplus – there are more liabilities than assets.

Underwriting
In mortgage lending, the process of determining the risks involved in a particular loan and establishing suitable terms and conditions for the loan.

Unencumbered Property
Land that has no major title deed restrictions, claims, liens or mortgages registered against it.

Unilateral Contract
A contract in which one party is bound by another to do something. If the second party chooses to exercise the contract, the first party must perform any contractual obligations that party may have. If the second party chooses not to exercise the contract, the first party is released from any contractual obligations.

Unit
A unit, for the purposes of sectional title schemes, includes BOTH the section AND the share in the common property, which an owner owns.

Unit Office Space
Fully enclosed or semi-enclosed space, providing workspace for a single occupant and involving a circulation provision required to access the space.

Unrehabilitated Insolvent
An insolvent whose estate is controlled in terms of the Insolvency Act 24 of 1936.
Generally stated, an insolvent automatically becomes rehabilitated (i.e. ceases to be an insolvent) 10 years after he has been declared insolvent.

Unsecure Line Of Credit
A credit history developed by an individual who borrows small amounts of money, which do not require collateral.

Upset Price
An amount set by the court which creates the reserve bid for an auction of property; the property may not be sold for less than the upset price.

Urban Renewal
The process of acquiring and redeveloping property for the purposes of increasing its profitability or utility. May be conducted by government, private interests or a combination of the two.

Urban Sprawl
Slang term for the growth of cities in an unplanned and often wasteful manner.

Usable Area
Any area in a given floor that could be used by the tenant. This area includes a point from the perimeter glass line to demising walls; it also includes column areas within such a space.


Useful Life
An estimation of the period of time over which a property, building or other asset will be of value or use to its owner.

Usury
Interest charged in excess of the legal rate established by law.

Usus
The right to use an asset, mostly used in relation to the use of an immovable property, a lesser right than a usufruct

Vacancy Factor
The amount of gross revenue that pro forma income statements anticipate will be lost because of vacancies, often expressed as a percentage of the total rentable square meterage available in a building or project.

Vacancy Rate
The calculation, in percentage terms, of all available/unoccupied rental space in a particular building or location.

Vacant Land
Land that may be improved and developed but is not currently in use.

Vacant Space
Refers to existing tenant space currently being marketed for lease. This excludes space available for sublease.

Vacant Land Loan
This is a loan to purchase a vacant stand with a view to build in the future.


Valuation
A written estimate of a property's current market value completed by a person with knowledge of real estate markets.

Valuation Fees
The amount that a financial institution charges to assess the property prior to granting the finance that has applied for.


Value
The power of a thing to command other goods in exchange; the present worth of future rights to income and benefits arising from ownership.

Value Added Tax (VAT)
T
ax on goods that is levied on the value added that results from each exchange. If the seller is a "VAT Vendor", VAT may be payable and not transfer duty, or, if the Purchaser is a Vendor, transfer duty may be payable. The VAT rate in South Africa is 14%.

Variable Cost
This type of cost corresponds directly to the level of output. In other words, if nothing is produced, the variable cost will be zero.

Variable Interest Rate
A variable-interest-rate loan features an interest rate that is linked to the prime rate, i.e. when the prime interest rate is increased, the interest charged on the outstanding loan amount will also be increased. If the prime rate drops, the amount of interest charged on the loan will decrease accordingly.

Variable Rate Loan
If interest rates rise or drop, the borrower's home loan rate will rise or fall accordingly. This facility is usually taken up if the borrower believes that interest rates are falling and is not too concerned about rising rates. Interest rates only apply to outstanding balances on the loan.


Variation Agreement

This states that the bank may change the interest rate at any time without giving notice and you, as the customer, may not appoint your own insurers. A variation agreement must be completed for all loans granted prior to 31 July 1990.

Vendee
A buyer.

Vendor
A seller.

Vendors Roll
The document which is used to record the buyer's number and price bid at an auction.

Verification of Deposit
Written verification of the borrower's account balance and history, provided by the borrower's financial institution.


Verification of Employment
(VOE)
A document signed by the borrower's employer verifying his/her position and salary.

Verification of Mortgage
Written verification of borrower's mortgage history for a period of no less than 12 months.

Verification of Rent
Written verification of borrower's rental history for a period of no less than 12 months.


Vertical Acquisition

This happens when one business purchases or takes over another business in the same industry, but the two respective businesses are not involved in the same part of the production process.

Vested

Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.

Violation
An act, deed, or creation of a condition that violates the law in the use of property.

Voetstoots
This clause is always found in a sale document and means 'as is'. All defects must be mentioned to the buyer upfront. If there are any defects in the property of which the seller was unaware, the buyer will acquire the property with such defects. 
If a voetstoots clause is included in an agreement of sale of immovable property, it means that the seller cannot be held liable for defects which are not visible upon a reasonable inspection of the property, i.e. leaking roof. A voetstoots clause does not exclude the sellers liability if he failed to disclose defect that he was aware of in order to defraud the purchaser.

Void
Something that is unenforceable.

Water Closet (W.C.)
A toilet.

Waiver
A waiver is a document whereby an individual voluntarily surrenders or relinquishes some right or privilege.

Waiver of Lien
A legal document where a contractor waives his common law right to hold control over a property if he is not paid in full.

Waiver of Premium
This refers to a term in an insurance policy contract that stops insurance premiums either temporarily or permanently if the policyholder becomes incapacitated.

Walk-Through
A walk-through is the final inspection of a home, before final transfer of ownership, to check for problems that may need to be fixed.

Wall Base
A defined material applied to the base of walls for general protection and finish. Although it can be provided in various materials, the primary material is vinyl or rubber. The base is available in various heights and colours. It is also available as a straight or flat base, for carpeted areas, or a cove base, which is normally used for tile floors as a maintenance and finish advantage.

Warehouse
A large building used for receiving and storing goods, materials or merchandise.

Warrant
To guarantee something to be as represented.

Warranty Deed
A deed which guarantees the title from the seller to the buyer.

Waterproofing Certificate
This is a guarantee by a waterproofing contractor that the item involved has been adequately waterproofed in terms of the instructions specified by the manufacturer.

Weak Market
A weak market is characterised by many sellers, few buyers and decreasing prices.

Wear And Tear
This is the term used for the reduction in value of an asset resulting from normal everyday use.

Wet Columns
Columns where provisions are made to have a plumbing fixture for drinking fountains, sink, etc.; the pipes are taken through the small enclosure (chase) against the column.

Will
A will is an official, legal document containing instructions as to how a person would like his or her estate to be distributed when he or she dies. A person will usually nominate an executor to handle the will. Many people opt to choose a relative, yet it is advisable that individuals with complex estates (i.e. multiple properties, bonds and other assets) nominate a professional executor, such as a broker or their financial or asset management institution.

Win-Win
A solution to both seller and buyer needs.

Win
The person with the highest bid is the winner of the auction. If you win an auction by placing the winning bid, you can then purchase the item at your winning bid amount.

Windfall Profit
This is a sudden profit that did not stem from any conscious effort by the profiting person.

Work Letter
That part of the lease stated in detail pertaining to all work that is to be done for a tenant by a landlord.

Working Drawings
Detailed floor-space plans that diagram all improvements to be made. They are designed as instructions to the various contractors involved

 

 

 

Yield
The return earned on an investment taking into account the annual income and its present capital value.

Zone
An area designated by the authorities for specific use, subject to certain restrictions.

Zoning Ordinance
Zoning limits the purpose for which a property may be used, e.g. residential, commercial, industrial, educational, etc., as deemed by the local authority / municipality.

Zoning Rights/Conditions
Uses permitted with consent for a particular property.
RESIDENTIAL
Residential 1: 1 Dwelling per stand or erf (i.e. house)
Residential 2: 10-20 dwellings per hectare (i.e. clusters)
Residential 3: 20-40 dwellings per hectare (i.e. townhouses)
Residential 4: 40-120 dwellings per hectare (i.e. flats)
BUSINESS
Business 1 : General Business, shopping centre, CBD
Business 2 : Shopping centre with restricted businesses
Business 3 : Shopping centre with more restricted businesses
Business 4 : Office use with / without residential
INDUSTRIAL
Industrial 1 : Normal factory, warehouses, storage, etc
Industrial 2: Noxious, abattoir, foundry, glue works etc
Industrial 3: Special, specific applications, workshops etc
Expect to pay 3-4 times the stand price for your finished building for a balanced investment ratio.

 


 

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