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A comprehensive study conducted before a project is undertaken, to determine the probable financial success of the project by taking into account the risks involved compared to the returns expected.

Fica Documents
Documents required in terms of the Financial Intelligence Centre Act (FICA), aimed at eliminating money laundering activities in South Africa. These include proof of address and ID documents.

Fidelity Fund
A fund managed by the Estate Agents Affairs Board (EAAB) providing compensation for consumers if an attorney or estate agent misappropriates or steals funds in a property transaction.

An expectation or duty of good faith and trust between certain parties regarding financial transactions

Money borrowed to pay for the acquisition of a property.

Finance Charges
Interest charged by the bank on a loan i.e. the cost of obtaining the finance.

Financial Statement
A comprehensive set of documents detailing the financial position and results of a person or company for a specific historical period at a specific date.

Items such as curtains or carpets, which are not fixed to a building and are not included in the sale of the property unless specifically included as such in the deed of sale.

Fixed Costs
Property expenses not affected by use or occupancy, for example, property taxes would be fixed while maintenance costs would vary with use and occupancy.

Fixed Interest Rate
An interest rate on a home loan which is set from the inception of the loan and does not fluctuate with any increases or decreases in the prime lending rate of the bank.
Related Topic: Variable Rate.

Fixed Repayment
A home loan repayment that does not change with fluctuations in the prime lending rate of the bank.

Items, such as shelves or built-in cupboards, that are fixed to a building and are included in the sale of the property unless specifically excluded.

Floor-Area-Ratio (FAR )
The ratio of the total floor area of a building to the total area of the land upon which it stands. A maximum FAR is usually specified in the specific zoning use right of the property.

Force Majeure
A French phrase meaning “superior force” which is a common clause in contracts absolving all parties to the contract of any liability in the event of an occurrence that cannot be resisted or is beyond the control of the parties involved such as acts of God, riots, strikes, arson, etc.

A legal process in which the property is repossessed by the mortgagor or bank and sold off on auction to redeem the outstanding bond amount.

Forward (Income) Yield
A bourse term, hence it is typically applied to listed properties. In the non-listed property market, its approximate equivalent is the capitalization rate. It represents the expected net income of year 1 (the following 12 months) divided by the current price/value. It stands to reason that existing leases would largely determine the net income of year 1.
Related Topic: Historic or Trailing (Income) Yield.

A business which trades under another company’s name and using its business model. An estate agency may be a franchise of a wellknown national estate agency and have an agreement with the latter to trade in a particular area under the latter’s name.

Freehold (Free) Title
Unlike sectional title, freehold or full title means that the property rights accrued to the owner are comprehensive and free of restrictions.

Full Disclosure
Revealing all the known facts which may affect the willingness of the buyer or tenant to enter into the contract.

Fundamental Value (FmV)
It is a subjective value based on the investor’s own, subjective forecast of rentals and maybe the investor’s unique or different in-house discount rate/capitalization rate. A FmV higher than the objective market value (MV) is a buy signal to an investor. The calculation of the FmV is especially indicated where the economy, or property market, changes gear, e.g. a secular change in inflation rate or the real-rental cycle bottoming out. These are instances where any market is notoriously poor at forecasting trends. An alternative term is intrinsic value.

Further Loan
An additional loan or second bond on a property.

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