AS IS WHERE IS - ‘As Is Where Is’ describes a sales transaction where the vendor offers the property to prospective buyers in its existing condition with no warranties and generally no insurance. The term has been used for some time now and generally refers to unrepaired, earthquake damaged properties.
CHATTELS - chattels are items that are generally included with a sale of the property. They exclude non-fixed floor coverings and furniture.
CODE OF ETHICS - a copy of the code of ethics can be found on the Property Institute website - propertyinstitute.nz
COMMERCIAL INSURANCE VALUATIONS - commercial insurance valuations assess the replacement cost of the improvements with further allowance for inflation and demolition. An indemnity value estimate is required which is the basis for fire levies as per the Fire Service Act 1975 and is calculated as replacement value less any depreciation on an age and condition basis. Inflation of indemnity value is also deemed to be part of the indemnity value. Valuation Certificates are generally required to be no more than two years old.
CROSS LEASE - cross lease or composite leasehold is where you own two interests in the property.
A share of the freehold title in common with the other cross leaseholders; and
A leasehold interest in the particular area and building that you occupy. These leases are usually for 999 years for a nominal rent like 10 cents per annum (which is usually not demanded to be paid).
ENCUMBRANCE - is a right to, interest in, or legal liability on real property that does not prohibit passing title to the property but that may affect its value.
FAIR MARKET AND MORTGAGE VALUATIONS - The valuation assessed for mortgage purposes is the same as the valuation assessed in determining the market value, although the reports may have different requirements. Value NZ reports are accepted by all banks and major lenders in New Zealand, as well as valuation panels including Valocity and Core Logic.
Market Value is defined in the Valuation Standards as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”
This definition has been adopted in Australia and New Zealand valuation property standards guidance documents and is considered the most appropriate definition of market value.
INDEMNITY VALUE (INSURANCE) - the indemnity value is the value of the improvements at the time of loss and is designed to put you in the same financial position you were in immediately before the loss occurred. However, you should seek professional advice before agreeing to insure your property on indemnity value, otherwise you could be significantly out of pocket should a disaster occur. Indemnity value can be calculated on a replacement less depreciation for age and condition or on a market related basis.
INDEPENDENT REGISTERED VALUER - the most valuable asset of a registered valuer is providing professional and independent advice. This means that the registered valuers’ conclusions are independent of the wishes of the clients, real estate agents, banks, mortgage brokers and the like.
INSURANCE VALUATIONS - Insurance Valuations are limited to the valuation of the improvements of the property and exclude the value of the land. In recent years, insurance companies have changed from having replacement insurance where clients were compensated for their loss for a like-for-like basis, to a “sum insured” valuation which is a set dollar amount. The onus is on the owner of the property to have the correct sum insured. For insurance valuations, consideration is given to the cost of the house surrounds including driveways, fencing and landscaping and the like, as well as replacement costs, professional fees, inflation adjustments and demolition costs.
LAND COVENANTS - are a mechanism used commonly by either landowners selling land and wanting to restrict its use, particularly if they are retaining neighbouring land, or to record agreed restrictions as between neighbours of adjoining property. These are often used in subdivisions to provide development and living rules.
MARKET VALUE - is defined by the International Valuation Standards (IVS) as “Market Value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
OVER-CAPITALISATION - over-capitalisation can occur when you are building, extending or renovating. It is when the amount you are spending on a project is less than the market value when completed.
RATING VALUATIONS - are assessed for local authorities in accordance with statutory requirements as at the effective date and generally do not reflect the current market value. They are generally required to be updated every three years. They are based on computer analysis of property sales on a mass basis and individual property assessments may be above or below market value. Rating Valuations are adjusted upon completion of Building Consents, but properties are generally not inspected, and the Rating Valuation generally does not reflect renovations and presentation nor neglect and dilapidation. Because they are a snapshot at a particular time and because the market sometimes moves very quickly, Rating Valuations do not necessarily reflect the current market value for long.
REGISTERED VALUER AND REGISTERED VALUATIONS - to undertake registered valuations, the valuer must be registered by the Valuers Registration Board and have an Annual Practising Certificate. The Valuers Registration Board was established by statute (Valuers Act 1948). Generally, to be a registered valuer, you require a degree in Commerce and Valuation and have at least three years practical experience.
TENURE - there are four main types of property ownership in New Zealand - freehold, leasehold, unit title and cross lease. Each type means different rights, responsibilities and possible restrictions for the owner. Other interests in the property can be registered on the title which can affect your interest (i.e., Land Covenants and easements).
UNIT TITLES - Unit title ownership is most common in a building development where there are multiple owners. Becoming a unit title holder means you automatically become a member of the body corporate. As a unit owner you own:
your particular apartment or unit and any accessory units, like garages, car parks, private courtyards and storage areas contain in the record of title.
an undivided share of the ownership of the common property (e.g. lifts, laundries, lobby areas, driveways and gardens.
Under the Unit Titles Act, a vendor must provide a “disclosure Statement” which includes legal information, contribution levies, budge, maintenance items, Body Corporate bank statements and the title.
VALUATION OFF PLANS - in many cases when you are building, extending an existing improvement or renovating, you can secure mortgage funding by requesting a construction or development valuation. This is popular amongst clients who plan to develop, build or renovate and means that the lender can make decisions based on the value of the property in its present state and “as if” the project had been completed.
A construction valuation from Value NZ means that you can complete your project in confidence by securing funding at the beginning of the development.
Contact Value NZ for more information on construction valuations and progress assessments.