Even folk that have been through the home buying process before will come across a term or two they don’t understand. We asked James Pointon from OpenAgent for his handy cheat sheet to save you nodding along blankly during the proceedings!
Contracts and legal terms
- Caveat: any rights or interests in the property by a third party, which remain after the property is sold.
- Caveat emptor: The buyer purchases a property on an “as is” basis.
- Certificate of title: The document confirming ownership of the land, which includes the owner(s) name and the details of any outstanding mortgages or loans against it.
- Chattels: Property other than real estate that is included in a sale – for example, furniture, artworks or appliances.
- Clear title: A title that isn’t encumbered with outstanding mortgages or loans.
- Common law title: Also known as a Torrens title, the term is based on English law and consists of a series of title documents referred to as “a chain of title” – essentially following the ownership of the property back to its original owner.
- Conditions of sale: The conditions applicable to a sale contract made between a vendor and purchaser. For example, the sale may be subject to a roof structure being fixed up to code, or the installation of a pool be completed.
- Conveyance: The legal process of transferring the ownership of a property from the seller’s name to the purchasers.
- Cooling off period: a set period time both parties may pull their offer or acceptance without financial penalty.
- Covenant: A requirement noted on the title of a property that forces the property’s owner to adhere to named terms, conditions and restrictions regarding the property. For example, not being able to build another property on the land.
- Cover note: A document issued by an insurance company to temporarily prove that a property has current insurance.
- Deed: A legal document that is a record of an agreement, obligation or conveyance of property.
- Implied Easement: An encroachment (for example, boundary fencing) on a property that has been left unchallenged for a long period of time.
- Inventory: A list of items included with a property, including furniture and furnishings. Items not on the list – for example, an air-conditioning unit, may legally be
- Listing agreement: A contract between a property owner and a real estate agent that sets out the terms, conditions and commission associated with the sale of a specific property.
- Option to buy: A legal document giving a person a right to buy according to an option price and predetermined terms and conditions. The seller cannot sell to anyone else while there is an option to buy a contract on their property. The buyer pays an agreed amount for this option and if they do not purchase the property within the predetermined time, they forfeit this money.
- Private treaty sale: One of the most common means of selling property, an agent sells a property of behalf of a seller through the open market.
- Search: The process of investigating title to land in order to ascertain if the vendor has the right to transfer ownership.
- Survey: Shows the dimensions and boundaries of land and the exact location of buildings.
- Transfer: A document registered at the Land Title Office recording the change of ownership to a property.
- Unencumbered: a property free of secured loans and mortgages.
Property and building terms
- Dual occupancy: An area of land or an existing dwelling that is zoned in such a way that allows the owner to construct a building that has two separate living arrangements.
- Fittings: Goods or articles that can be removed from a property without causing damage or an obvious reduction in its value. These generally need to be mentioned specifically to be included in the sale contract:
- Carpets, curtains and curtain rails
- Free-standing appliances, for example, washing machines or fridges
- Free-standing furniture
- Paintings, mirrors or other artworks that are not bolted or screwed to a wall
- Fixtures: Items such as baths, toilets and walk-in wardrobes that form part of the property and cannot be removed without causing damage, and are generally included in a contract of sale unless specifically excluded:
- Built-in furniture, including kitchen units
- Bathroom suites (baths, toilet, taps), sinks and plugs
- Light fixtures (this may exclude lampshades unless they are integral to the fixture, such as a chandelier – but it is always wise to check if unsure and it is important to you)
Financing and mortgage terms
- Bridging finance/bridging loan: Finance that is obtained for a short period of time as a “bridge” to long-term finance. This funding may be required if a home purchase completes before the owner’s sale.
- Gazumping: The withdrawal from a verbally agreed sale by the vendor in favour of a quicker or more profitable sale. This practice is legal before contracts are exchanged and real estate agents usually act in the vendor’s best interest and take the higher offer. Any deposits are refundable and no compensation is owed.
- Interest only loans: The principal amount borrowed is not repaid until the end of the loan.
- Land tax: A state government tax payable by owners of property based on the unimproved capital value of the property.
- Mortgagee: An entity that lends money on the security of a mortgage.
- Mortgagor: An entity that borrows money offering the security of a mortgage.
- Principal and interest loan: A loan whereby the lender repays a combination of interest and the principal borrowed throughout the term of the loan.
- Progress payments: Funds paid by a loan provider in instalments to a builder – as the building work meets predetermined targets.
- Stamp duty: A government tax administered by individual states. It is calculated according to the sale value on the contract of sale. For mortgages, however, it is calculated on the amount to be advanced.
If you’re ever in doubt about what something means, ask your real estate agent or lender – or check out OpenAgent for a complete list of real estate terms.
Words by Melanie Hearse.
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