Glossary Real Estate

A
Agent's representative Not a licensed agent. The agent's representative is employed by or acts for a licensed agent and performs the function of an estate agent. (See also estate agent.)

Auction A public sale of property in which the highest bidder is normally the successful buyer.

Authority to sell A legally binding document which is signed by the seller. It details the agreement between the seller and the agent. Many aspects of the authority to sell, such as commission and advertising costs, are negotiable between both parties.

B
Body corporate The collective ownership of the common areas in a block of apartments or multi-dwelling complex. It is responsible for the administration and upkeep of the areas shared by all the owners (common property).

Breach of contract The breaking of one or more of the terms or conditions of a contract.

Bridging finance A short-term loan (approximately six to twelve months or less) that is used to fill the time gap between buying another property and either selling the one you own or obtaining a long-term loan. This type of borrowing is usually at a higher interest rate.

Building consultant An expert experienced in designing and/or constructing a building. When employing an expert for a pre-purchase report on a property, you should ask whether he or she has indemnity insurance to cover any serious omissions about building defects not covered in the report. A building consultant is not required to be registered.

Building inspector A person registered with the Building Practitioners Board as a building inspector. This person may operate as a private or council building inspector and is qualified to inspect buildings to ensure compliance with the Building Act and building regulations.

Building surveyor A person registered with the Building Practitioners Board as a building surveyor. This person is qualified to issue a building permit, inspect a building for compliance with the Building Act and building regulations, and issue an occupancy permit or certificate of final inspection.

Buyer's advocate (Buyer's agent) An estate agent who acts solely for the buyer by sourcing suitable properties and representing the buyer throughout the buying process.

C
Capital gain Profit you make from the sale of property.

Caveat A note on the title that an interest in the land is claimed by a third party.

Caveat emptor A Latin expression that means 'let the buyer beware'. It is the buyers responsibility to ensure that the property meets with their approval prior to purchase.

Certificate of title A document that shows who owns the property, the size of the land and whether there are any limitations on the title such as mortgages, easements or encumbrances.

Chattels Moveable personal property or furniture.

Commission Paid by the seller to the estate agent, normally when the property is sold. It is usually a percentage of the selling price of the property. The amount of commission is negotiable between the seller and the agent.

Common property Areas of a property that are used by and belong jointly to all of the owners of a property. This applies to such property as apartment blocks or multi-dwelling complexes.

Company title Each owner in a block of flats has shares in a company which has total ownership of the land and buildings of these flats. The owners receive a parcel of the shares with rights attached. Each owner is entitled to exclusive occupation of a flat, but this is subject to the company's Memoranda and Articles of Association. These should be carefully examined for restrictions and the like. Compare Strata and Company Title click here.

Comparison rate A tool that allows the true cost of a loan - interest rate, fees and charges - to be compared with other loans using a single figure percentage.

Consumer Credit Code Regulates all credit for personal, domestic or household purposes. To ensure fair dealing and to protect the interests of consumers, all lenders must comply with the Consumer Credit Code.

Consumer credit insurance An option for borrowers to guard against losing their property in case they default on the loan repayments. This will safeguard the loan if repayments cannot be made because of sickness, accident or unemployment.

Contract note A document given to a prospective buyer who is making an offer. The contract note is legally binding when signed by both parties. It may or may not precede a more detailed contract of sale document.

Contract of sale A legal document prepared by the seller, usually with the aid of a solicitor, that outlines the details of the sale. The contract of sale is legally binding when signed by both parties.

Conveyancer A person who is not a legal practitioner, who carries out the business of conveyancing. A conveyancer may not undertake any other legal work.

Conveyancing Transferring the ownership of a property from the seller to the buyer. It is often performed by a solicitor or conveyancer.

Covenant An agreement that creates an obligation on the titleholder of a property to do or refrain from doing something. For example, a restrictive covenant could state that no more than one dwelling may be built on the land.

D
Deposit A non-refundable percentage of the purchase price paid by the buyer when contracts are signed and exchanged. It is usually ten percent. The deposit must be held in a trust account by an estate agency or by the seller's solicitor, or held jointly in a trust account by the seller and buyer. (See also holding deposit.)

Deposit bond Offered by some lenders as an alternative to a cash deposit. Should be used with caution. It is also known as a deposit guarantee.

Disbursements Additional charges by some solicitors and conveyancers on top of their fee for extras such as postage, phone calls and government charges.

Dummy bid A false bid made or accepted by the auctioneer. Dummy bids can include bids made by a non-genuine bidder and 'fictitious' bids pulled out of the air by the auctioneer. Any bid made on behalf of the vendor by anyone, other than the auctioneer under the auction rules, is considered a dummy bid. Dummy bidding is illegal.

E
Easement A right held by one person to make use of the land of another. Drainage and sewerage pipes are examples.

Estate agent A licensed person who is authorised to act for another in the selling, buying, renting or management of a property. Estate agents usually act for the owner.

Encroachment The use of, or intrusion onto, another person's property without consent. This usually refers to a structure.

Encumbrance A third party's right that obstructs the unencumbered use or transfer of a property. Examples are easements, mortgages or caveats.

Estate Agents and Sale of Land Acts (Amendment) Act 2003 Changes to the Acts that regulate the licensing and operation of estate agents and the sale of land, including sale by auction.

Estimated selling price The price an estate agent estimates a property will attract. It must be recorded on the authority to sell as either a single figure or as a range where the difference between the top and bottom figures does not exceed ten percent. For example, $400,000-$440,000.

Equity Having 'equity in your own house' refers to the difference between the market value of a property and what is still owing on a mortgage. This will increase as the loan is repaid or as the property's market value increases.

F
First Home Owners Grant A scheme providing first home owners with a non-means tested, one-off payment of usually $7,000

Fittings Items which can be removed without damaging the property such as garden ornaments, lighting and air conditioners. They must be listed in the contract of sale if the buyer wants them to remain with the property.

Fixtures Items which are attached to the property and cannot be removed without causing damage to the property such as bathroom suites, built-in wardrobes and kitchen stoves. They are usually included in the sale.

Fixed interest rate An interest rate that remains unchanged for a set period.

Foreclosure When a borrower fails to meet mortgage repayments or repay a loan, the lender takes over the property and keeps it.

G
General Law title (old system title) The original system of land titles. A General Law title is comprised of all the documents that show a property's complete historical record of title ownership. For the title to be 'clear', it must be traceable without a break up to and including the current ownership. Such a title must now be converted to a 'Torrens title' when such a property title is resold. (See also Torrens title.)

Goods and Services Tax (GST) A consumption tax of ten percent levied on the final consumer of the goods or services. The supplier of the transaction is responsible for collecting the GST and sending it to the Australian Taxation Office (ATO).

Gross income Total income before income tax and expenses are deducted.

H
Holding deposit An amount given by a buyer who is making an offer on a property to the estate agent acting for the seller. This is not compulsory and is refundable if the offer is rejected.

I
Interest only loan Throughout the term of the loan, only the interest is paid off. The loan itself (the principal) is repaid at the end of the time limit of the loan.

J
Joint Tenants The form of ownership where two or more people purchase a property in equal shares. If one dies, his or her share of the property passes to the surviving owner/s. (See also tenants in common.)

K

L
Land Tax Calculated on the value of a block of land and payable by the owner/s.

M
Mortgage A written contract giving the lender of finance certain rights over specific property. For example, the house being bought by the borrower as security for the loan.

Mortgage guarantee insurance Paid by the borrower to protect the lender against failure by the borrower to keep up mortgage repayments or to pay back the loan in full when it is due. Such insurance normally applies where the borrower's loan exceeds 80% of the value of the property. This type of insurance is taken out by the lender with the cost passed on to the borrower. The borrower remains liable for any shortfall. For example, if the property is sold and the proceeds do not cover what is owed to the lender.

Mortgagee sale If the borrower defaults, the lender can seek to recover the debt by selling the property, which was the security for the loan under the mortgage.

Mortgagor A person who takes out a mortgage on a property he or she is buying. The property is assigned to the lender as security for the loan.

N
Net income Your income after income tax and mandatory levies have been deducted.

O
Occupancy permit A document, issued by a building surveyor, which shows that the building is suitable for occupation. It is not evidence that the building complies with the Building Act or building regulations.

'Off the plan' Purchasing 'off the plan' involves buying a property before it has been built. Such purchases are usually based on the architect's plans and models.

Outgoings Any costs incurred by the seller on top of the agent's commission. For example, advertising costs. All outgoings are negotiable.

Over quoting The illegal practice of overstating the estimated selling price of a property. This is usually done to encourage a seller to list.

P
'Passed in' The circumstance where a property for auction is not sold, usually because it has not reached the seller's reserve price. Principal The amount of the loan itself without interest or other charges associated with the loan. Private sale In a private sale, the sale is negotiated between the buyer and seller usually with the assistance of an agent.

Q

R
Rebates Discounts received, usually for bulk purchases such as advertising. Any rebates received by an agent must be passed on to the seller.

Requisitions on title A set of questions about a property that the buyer asks the seller after the contract has been signed. Usually with the help of a solicitor.

Reserve Bank of Australia Australia's central bank with responsibility for regulating monetary policy including the official interest rate.

Reserve price A seller's minimum sale price for the property. It may be recorded on the authority to sell.

S
Settlement (a) The occasion when ownership of a property passes from the seller to the buyer and the balance of the sale price is paid to the seller, (b) The subsidence (or sinking) of a wall or house, or of the soil supporting a dwelling.

Solicitor A legally qualified and licensed person who undertakes legal work and provides legal advice for a fee. A solicitor may specialise in conveyancing and property law.

Stamp duty A state government tax also referred to as 'Transfer Duty', based on the sale price of a property, paid by the buyer when property ownership is transferred. If the property is a house and land package the transfer duty is payable only on the land component if the construction is in-complete. If you are buying an 'off-the-plan' property in QLD duty is payable on the settlement amount. Check with the OSR for other states. Your solicitor will lodge the transfer duty notice within 30 days from contract or unconditional whichever occurs first. Payment is due within 14 days after that.

Strata title Individual ownership of an apartment or unit within a block or multi-unit complex. This is separate from and additional to the joint ownership of common areas shared by all the property owners in the building or complex.

Stratum title Each owner has a certificate of title and is absolute owner of a freehold flat. A service company has the title to the common property and each flat titleholder has a responsibility to the service company. The service company, in which each flat titleholder has shares, administers, manages and maintains the property in which each owner's flat is registered.

T
Tenants in common A form of joint ownership of a property in which each person owns a share of the property, equally or unequally. On the death of one owner, the deceased's share passes to his or her heir/s, who assume/s the role of tenant in common with the other existing owner/s.

Title A legal document that identifies who has a right to the ownership of a property.

Torrens title A system of title by registration that is governed by the Transfer of Land Act.

Transfer of land A document that records the change of ownership of a property from the seller to the buyer.

Transfer Duty See 'Stamp Duty' above.

U
Under-quoting The illegal practice of understating the estimated selling price to prospective buyers, either directly or through advertising, to encourage greater interest in a property.

Unfair contract terms A term that is not in good faith and causes a significant imbalance in the rights and obligations of both parties to the detriment of the consumer.

V
Valuation An estimate of the value of a property by a registered valuer, usually for a fee.

Vendor (seller) The person selling the property.

Vendor bid A bid made on behalf of the vendor. Vendor bids can only be made by the auctioneer and only when the auction rules allow it. The auctioneer makes this statement before bidding starts and announces each vendor bid as, or before, it is made.

Vendor's statement (section 32) Information which the seller must provide to the buyer advising of restrictions such as covenants and easements, outgoings such as rates, and any other notices such as compulsory acquisition.

Vendor terms contract Also known as a terms contract, where finance is supplied by the vendor rather than by an established credit provider.

W
'Wrapping' A type of vendor terms contract where the property price and loan interest rates are usually well above the market rate. Penalties for defaulting can also be severe. Such contracts should be entered into with caution.

X

Y

Z
Zoning The permissible uses of an area of land as stipulated by the council. See Land Zoning Codes for more information.