Glossary of terms
This glossary of terms has been composed by FIRST STRATA to provide you with an easily accessible and comprehensive description of the many terms frequently used in all aspects of land sales.
We trust you will find it both useful and informative.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Although strictly synonymous with financing, this term is usually applied to either of the following arrangements:
a. a lender advances part or the whole of the total development costs, ie land and construction costs, fees, etc and grants a long-term loan secured on the property following its completion or at such date as is determined by reference to the initial agreement, eg when the property has been let or substantially let, or a specific time has elapsed following completion; or
b. a potential purchaser similarly advances part or the whole of the total development costs but upon completion, or such other date as is determined by the original agreement, acquires the property at a price calculated by reference to such formula as was embodied therein.
There are variations of this principle, but in all cases the interim finance bears interest at an agreed rate. This may be paid during progress of the development or “rolled up”. In the case of an outright purchase, a balancing payment is made to the developer, being the difference between the total sums already advanced (including accrued interest if not paid previously) and the investment value. See ROLLED-UP INTEREST; SALE AND LEASEBACK.
