Understanding Real Estate Terminology

What does it all mean? We have included here some common real estate terms and simple explanations of what the terms mean.

Adjustments: Calculation of which portion of property expenses such as body corporate fees and charges, land tax, council and water rates the Vendor and the Purchaser pay in relation to a property purchase.

Body Corporate: The owners of each lot in a block of flats or units created by the plan of subdivision to maintain the common property of the flats or units and to take out insurance amongst other issues.

Bridging Finance: Temporary finance used to assist the process of transferring from one home to another when you complete the purchase of your new home before you sell your old home.

Caveat Emptor: Latin for "Let the Buyer Beware". This means that the buyer has the responsibility to understand full and complete property inspection before buying a property.

Certificate of Currency: Formal certificate issued by insurance company certifying currency of an insurance policy.

Certificate of Title: The formal document representing title to your land which gives details of the property owner and any registered encumbrances such as your mortgage.

Chattels: The items included when a property is sold and which should be specifically listed in your Contract of Sale.

Commission: The fee payable to a Real Estate Agent by the vendor for selling the house. Usually a percentage of the sale price.

Contract of Sale: An agreement in writing setting out the terms and conditions of the sale of the property.

Conveyancing: The legal process transferring ownership and title to a property.

Covenant: A restriction or requirement, affecting the use of the land, which is written into the title. Covenants are usually inserted by the original developer of the land, eg one house only on the land.

Cover Note: This is a document giving temporary insurance over a property until a formal policy is issued by the insurance company.

Deposit: An amount of money placed in trust as evidence of commitment to buy. If the purchase is completed, it will be applied towards the purchase price.

Depreciation: Allowance made in valuations and estimates for normal wear and tear.

Draw down: The hand over of the loan from the lending institution.

Easement: A right that an individual has to use land belonging to another. For example rights of way, water, sewerage mains etc.

Encumbrance: A retraction, liability or charge on a particular property. For example a mortgage or easement.

Equity: Your level of ownership in a property. The difference between the market value of the property and what you owe.

Fixed Rate Loan: A loan taken at a fixed rate of interest for a set period. Repayments remain fixed during an agreed period of the loan regardless of changes to variable rates of interest.

Freehold: An owner`s interest in land where the property belongs to its owner.

General Law Title: An old form of land ownership which consists of a chain of documents that trace the history of ownership of a particular property, often over a century or more.

Interest: A charge for money advanced or lent by a bank or other lender.

Inventory: A listing of items that could be included with a property. For example furniture, furnishings, moveable items etc.

Investing The purchase of an asset, such as real estate, with the goal of producing a capital gain on the resale of the asset or of using the asset to generate income.

Joint Tenants: The holding of property by two or more persons where if one dies that share passes to the survivors.

Leasehold: The interest in land of a person who owns a lease granted by a freeholder.

Liabilities: Your outstanding debts or amounts owed.

Mortgagee: A person/organisation who lends money on the security of mortgage over property.

Mortgagor: A person who borrows money and gives property as security for repayment.

Offer and Acceptance: A written agreement which details the terms and conditions regarding the purchase or sale of a property.

Offer to Purchase: A written offer of a specified price for a specified property. The offer may be conditional or unconditional.

Principal: The amount of your loan.

Private Treaty: Sale of a property without using an agent.

Reserve Price: The minimum selling price at auction as specified by the seller.

Settlement: Exchange of the property sale price for the legal documents to the property.

Stamp Duty: Government tax paid by a purchaser on a property sale.

Tenancy in Common: The holding of property by two or more persons, either in equal shares or unequal shares. If one person dies, that person`s share is dealt with in accordance with the law.

Tenancy Agreement: A document that sets out the details of a property to be rented, and records the agreement between the landlord and tenant regarding the terms and conditions of the tenancy, including the amount of rent.

Title Search: A search carried out on the records of the Land Titles Office to check pregistered owners and encumbrances.

Transfer of Land: A document registered in the Land Titles Office which changes property ownership.

Valuation: A report written by a registered valuer, detailing the property value.

Vendor: A person selling a property.

Vendor Statement: A written statement by the vendor to the purchaser, setting out particulars regarding the property for sale.

Zoning: Permitted use of land.

Take me back to "1st Time Home Buyers Guide" Home Page