Key Terms
Explained

The bank or financial institution that holds the mortgage over a property. In a mortgagee sale, the mortgagee is the party exercising its power of sale, effectively becoming the vendor.

The person or entity that borrowed money secured against the property. In a mortgagee sale, the mortgagor is the party who has defaulted on their mortgage obligations. They remain the registered owner of the property until settlement, but they do not control the sale process.

The party selling the property. In a standard sale, this is the property owner. In a mortgagee sale, the mortgagee (lender) acts as the vendor through their power of sale, even though the mortgagor remains the registered proprietor on the title.

The party buying the property. At auction, the purchaser is the successful bidder.

The licensed professional who conducts the auction. The auctioneer acts as the agent of the vendor (the lender, in a mortgagee sale). They take instructions from the Vendor to accept or reject bids, withdraw the property, and declare the property sold on the fall of the hammer.

The lawyer acting for the lender (not the borrower) in a mortgagee sale. They prepare the sale and purchase agreement, the particulars and conditions of sale, and manage the legal process through to settlement. The borrower's interests are not represented by this solicitor.

A sale of property initiated by the lender (mortgagee) after the borrower defaults on their mortgage. The lender exercises their "power of sale" under the Property Law Act 2007 to recover the outstanding debt.

The property is sold in its current condition and location, without any warranty or representation by the vendor about its state, fitness, or suitability. The purchaser accepts the property with all its faults, including any defects, damage, contamination, or issues that may not be immediately apparent. Importantly, mortgagee sales are typically sold with no chattels included and no guarantee of vacant possession.

The formal legal document that sets out the specific terms under which a property is being sold at auction. It includes the property description, title details, sale conditions, deposit requirements, settlement timeframe, and special conditions. Interested parties should seek legal and technical advice, and every bidder should read this document carefully before the auction.

The legal right of a mortgagee to sell the property when the borrower defaults. This power is granted by the mortgage instrument and governed by the Property Law Act 2007. When exercising the power of sale, the lender has a duty under the Property Law Act to obtain the best price reasonably obtainable in the circumstances.

A sale where the purchaser buys without any conditions: no finance condition, no building inspection condition, no due diligence condition.

The date on which the sale is legally completed. The purchaser pays the balance of the purchase price, and ownership is transferred. In mortgagee auction sales, the settlement date is typically 20 working days after the unconditional date, or as stated in the Particulars and Conditions of Sale.

Alternative sale methods to auction. In a tender, buyers submit sealed written offers by a set deadline. The vendor can accept any offer or none. Some mortgagee properties are sold by tender or deadline sale instead of auction, particularly when the lender believes this method may achieve a better result for the specific property.

The minimum price the vendor is willing to accept. The reserve is confidential and not disclosed to bidders. If bidding does not reach the reserve, the property is "passed in" (not sold). The vendor may then negotiate with any interested parties after the auction to try to reach a sale. In mortgagee sales, the reserve is set by the lender, often based on a registered valuation.

The moment the auctioneer strikes the hammer (gavel) to declare the property sold. At this point, a binding contract is formed between the vendor and the highest bidder. There is no cooling-off period. The successful bidder must sign the agreement and pay the deposit immediately.

The initial payment made by the purchaser on the fall of the hammer or upon signing the agreement. In mortgagee auction sales, the deposit is typically 10% of the purchase price, payable immediately by bank cheque, cleared funds, or electronic transfer.

When a property fails to sell at auction because bidding did not reach the reserve price. The property is "passed in" and the vendor may then negotiate with any interested parties or re-list the property for sale. A property being passed in does not mean it is withdrawn from sale.

A bid made by the auctioneer on behalf of the vendor, to advance the bidding. Vendor bids must be clearly announced as such. They are permitted under NZ auction rules but can only be made below the reserve price. Once bidding reaches the reserve, no further vendor bids are allowed and the property is "on the market." In mortgagee auctions, vendor bids are often not permitted unless the vendor (typically the mortgagee) has provided specific written approval authorising their use.

When bidding reaches or exceeds the reserve price, the property is "on the market."

The primary New Zealand legislation governing property transactions, including mortgagee sales.

The legally binding contract between the vendor and purchaser. In mortgagee sales, this is sometimes referred to as the Particulars and Conditions of Sale. The agreement typically includes special conditions that override parts of the standard ADLS/REINZ agreement, including the exclusion of most vendor warranties and the "as is, where is" clause. The agreement is signed immediately after the fall of the hammer at auction.

The standard form Agreement for Sale and Purchase of Real Estate used in New Zealand, published jointly by the Auckland District Law Society (ADLS) and the Real Estate Institute of New Zealand (REINZ).

A formal notice served by one party on the other requiring settlement to take place on a specified date. Under the standard ADLS/REINZ agreement, if settlement has not occurred by the due date, either party can serve a settlement notice giving the other party a further period (usually 12 working days for standard sales, though this may be modified in mortgagee sale conditions) to complete.

A legal notice registered against a property title that warns anyone searching the title that someone claims an interest in the property. A caveat prevents the property from being dealt with (sold, mortgaged) without the caveator's knowledge. In mortgagee sales, existing caveats may need to be dealt with before or at settlement.

Any claim, charge, or liability attached to a property. This includes mortgages, caveats, easements, consent notices, and covenants registered on the title. In a mortgagee sale, the purchaser's solicitor must check which encumbrances will be cleared at settlement and which will remain on the title.

The independent government body that regulates the New Zealand real estate industry. The REA licenses real estate agents, handles complaints, and provides consumer information. All agents involved in mortgagee sales must hold a current REA licence and comply with the Real Estate Agents Act 2008.

The official electronic record maintained by Land Information New Zealand (LINZ) that shows who owns a property, its legal description, and any registered interests such as mortgages, easements, caveats, and covenants. Searching the Record of Title is an essential step in due diligence for any property purchase.

The most complete form of property ownership in New Zealand. The owner holds the land and all buildings on it outright, with no time limit and no ground rent payable. Most residential properties in NZ are fee simple. This contrasts with leasehold, where the land is owned by someone else.

A form of ownership where you own the building but not the land it sits on. The land is owned by another party (often a council, iwi, or trust), and the building owner pays ground rent under a lease agreement. Leasehold properties are typically cheaper to buy but come with ongoing ground rent obligations and potential rent review risks. Selling leasehold properties requires specialist knowledge.

A form of ownership for multi-unit developments including apartments, townhouses, and some commercial buildings. Each owner holds title to their individual unit plus a share of the common property (driveways, lobbies, gardens). Unit title properties are governed by the Unit Titles Act 2010 and managed by a Body Corporate.

A form of shared ownership common in New Zealand where two or more owners share the freehold of a piece of land. Each owner holds a lease over the area their building occupies, known as a "flats plan." Cross-lease properties require consent from co-lessees for alterations or additions, and unconsented work can create significant legal issues at sale time.

A registered right that allows someone to use part of another person's land for a specific purpose, such as a right of way (access), drainage, or services (water, sewer, power). Easements are recorded on the Record of Title and transfer with the property when it is sold. Buyers should understand what easements affect a property before purchasing.

A notice registered on the property title by the local council, typically as a condition of a subdivision consent under the Resource Management Act 1991. Consent notices impose ongoing obligations on the property owner, such as maintaining specific noise insulation, stormwater systems, or building elements. They run with the land and bind future owners.

A binding condition registered on the property title that restricts how the land or buildings can be used. Common examples include restrictions on building materials, minimum floor areas, fencing requirements, or prohibitions on certain activities. Covenants are registered on the Record of Title and remain in force regardless of changes in ownership.

A survey plan that has been approved and deposited with Land Information New Zealand (LINZ). It defines the legal boundaries, dimensions, and area of a property. The deposited plan number forms part of the property's legal description on its Record of Title.

Money that is immediately available: it has been received and processed by the bank and can be drawn upon without delay. At mortgagee auctions, the deposit must be paid in cleared funds, typically by bank cheque, bank draft, or confirmed electronic transfer. Personal cheques and credit cards are not accepted.

Interest charged to the purchaser if they fail to settle on the agreed settlement date. The rate is specified in the sale agreement, typically well above standard mortgage rates.

New Zealand's consumption tax, currently 15%. Whether GST applies to a property sale depends on the vendor's and purchaser's GST registration status and whether the property is being used for taxable purposes. In mortgagee sales, the particulars and conditions will specify whether the sale price is inclusive or exclusive of GST, and may include a GST indemnity clause.

Annual charges levied by the local council on all properties. Rates fund local infrastructure and services. In a property sale, rates are typically apportioned between vendor and purchaser at settlement. The vendor pays up to the settlement date, and the purchaser pays from the settlement date onward.

The electronic system operated by Land Information New Zealand (LINZ) for processing property transactions. Title transfers, mortgage registrations, and other dealings are submitted electronically by lawyers through Landonline. This is how ownership officially changes hands at settlement.

Moveable items in a property that are not permanently fixed, such as curtains, blinds, light fittings, dishwashers, and free-standing appliances. In a standard sale, included chattels are listed in the agreement. In mortgagee sales, chattels are often excluded or their status is unclear.

A report issued by the local council that contains all the information the council holds about a property, including building consents, resource consents, drainage plans, erosion or flood risk, special land features, and any outstanding notices. A LIM is essential due diligence before buying any property, especially at mortgagee auction where you cannot add a LIM condition to your offer. A LIM is not typically included in the information pack provided to prospective purchasers; interested parties will need to obtain one directly from the relevant city or district council.

A detailed inspection of a property's physical condition carried out by a qualified building inspector. The report covers the roof, exterior cladding, interior, subfloor, plumbing, electrical, and structural elements. While a building inspection is strongly recommended for mortgagee sale purchases, the extent to which it can be completed will depend on whether access to the property is available.

The value assigned to a property by the local council for rating (tax) purposes. The RV is based on a mass valuation of all properties in the area and may not reflect current market value. While often used as a rough price guide, the RV should not be relied upon as an accurate indicator of what a property will sell for, particularly in a changing market.

A formal valuation prepared by a registered valuer, providing an independent opinion of a property's market value. In mortgagee sales, the lender typically obtains a registered valuation to help set the reserve price and to fulfil their duty to obtain the best price reasonably obtainable. Banks often require registered valuations for mortgage lending purposes.

A certificate issued by the local council confirming that building work has been completed in accordance with the approved building consent. A missing CCC can indicate unconsented or incomplete work.

The collective entity made up of all unit title owners in a multi-unit development. The body corporate manages the common property, sets rules, levies contributions for maintenance and insurance, and makes decisions about the building. Before buying a unit title property, review the pre-contract disclosure statement and its accompanying documents, which include the body corporate minutes, financial statements, planned maintenance, and the long-term maintenance plan.

Building work carried out without the required building consent from the local council. This is a significant issue in property sales. Unconsented work may not meet building code standards, can affect insurance, and may require costly remediation or a certificate of acceptance.

The presence of hazardous substances on or in the property, including asbestos in building materials, methamphetamine contamination from drug manufacturing, or soil contamination from historical land use (e.g. orchards, industrial sites, fuel storage).