Adverse Possession: If one person occupies another person’s land for a long period of uninterrupted or undisputed time then ownership of the land passes from the person who owns the land to the person who has had uninterrupted occupation. The reason for this is that land is valuable and if it is not looked after, the law is not very sympathetic to this. The time period differs between states but is usually in excess of 12 continuous years.
Adjustments: Adjustments are a part of the settlement process where EITHER any unpaid rates owing are included in the final settlement amount in addition to the balance of the purchase price OR any rates that have already been paid will be partially refunded to the vendor
Agent: A licensed real estate agent is able by law to represent a vendor in negotiating the sale of the vendor’s property. By law in most Australian states and territories a person is not able to represent themselves as an estate agent unless they hold a current estate agent license.
Appraisal: An estimate of the market value of your home.
Apt: Apartment. Often an apartment will also have an associated body corporate.
Auction: Where your home is sold at a public sale to the highest bidder, provided the seller’s reserve price has been reached or exceeded. There is no cooling off period and contracts are exchanged immediately, unconditionally. The purchaser pays a deposit of usually 10% of the total price.
Auctioneer: A person licensed by law to be able to conduct a public auction. Often the auctioneer is also a licensed estate agent.
BC: Body corporate. A body corporate exists where there are multiple titles on a single piece of land and where there is common ground, shared structures or shared areas on the property. The body corporate has responsibility for items such as insurance for the common areas and buildings, maintenance of the grounds and common areas. The owners of the individual properties with a property covered by a body corporate comprise the shareholders of the body corporate.
Body corporate levy: The body corporate levy is the fees and charges that the body corporate is authorised to charge for expense items such as insurance, fire services, maintenance and other special items. Typically a body corporate will require payment of these fees and charges (or levies) on a quarterly basis.
Bridging finance: A short term finance arrangement to ‘bridge’ the financing for a purchase which is relying on funds from a sale which is yet to occur.
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Buyer: The person buying the property. Also called the purchaser.
Buyer advocate: A person who represents the purchaser in negotiating with a vendor for the purchase of a property. The buyer advocate will try to find the best possible property that is the closest match to the buyer’s requirements and then purchase it at on the best possible terms and at the best possible price for the buyer. The buyer advocate is paid by the buyer.
Building inspection: A pre-purchase inspection of the property by a qualified building inspector to identify any possible defects. Common problems identified include low water pressure, termites and other pests, cracking and land subsiding, unauthorised building work, worn out stumps and electrical defects.
Caveat: A legal document that a person who claims an interest in a land title is able to lodge at the Land Titles office. A caveat acts as a statutory notice to anyone who tries to deal with that title that someone else is claiming an interest in it.
Clear title: Land that does not have any registered charges, mortgages, debts or other claims against it is called clear title.
Contract of sale: The document required to create a legally enforceable agreement between the vendor and the purchaser for the sale of the property. The laws in each Australian state and territory relating to the sale of land may differ slightly however as a guide the essential requirements are:
Contract note: A document given to a prospective buyer who is making an offer. The contract note is legally binding as a contract when signed by both parties however the parties may agree that a more detailed contract of sale will subsequently replace the contract note.
Conveyancing: If you want to buy or sell a property you’ll have to sign a contract. The legal work involved in preparing the sale contract and supporting statutory documentation, mortgage and other related documents, is called conveyancing. A conveyancer is a professional who assists in the legal transfer of property.
Conveyancer: A conveyancer is someone who is licensed to undertake all of the paperwork associated with the property sale and purchase process. Conveyancers are trained in the conveyancing process however they are not legally trained to the same level as a licensed solicitor is.
Cooling off period: In certain circumstances a purchaser can exercise a “cooling off” period if they don’t want to proceed with the sale. Cooling off laws may differ depending on things such as whether the property is sold by auction or privately, the property’s value, the land size and the type of property (residential, rural, commercial etc).
Covenant: An agreement by one party to adhere to certain terms, conditions or restrictions. A covenant is not usually valid unless noted on the title to the land.
Day of sale: The day of sale is the day that the vendor accepts the purchaser’s offer.
Deposit: A portion of the agreed purchase price that is paid by the purchaser of the property at the time of signing the contract of sale to close the sale and to prevent the vendor from selling the property to any other person. The amount of deposit is usually open to negotiation however is usually 10% of the agreed purchase price. The deposit is often paid into the vendor’s representative’s trust account pending completion by the purchaser of the remaining due diligence on the property. Usually the deposit is released from the trust account to the vendor before the final settlement date if the purchaser is satisfied that the title to the property and other required statutory disclosures are in order and that the purchase price will satisfy any mortgage that the vendor may have which is registered against the property.
Dummy bid: A false bid made or accepted by the auctioneer. Dummy bids can include bids made by non-genuine bidders and fictitious ones pulled from thin air by the auctioneer. Any bid made at auction by a person other than as disclosed by the auctioneer is a dummy bid. In some Australian states the practise of dummy bidding is illegal.
Dual occupancy: A block of land or existing dwelling zoned so as to allow the owner to erect a building which has two distinct living arrangements (for example, a duplex or a house with a granny flat attached).
Easement: A right to use all or part of the land owned by another for a specific purpose. For example your property may have a water or sewerage pipeline running across part of it which requires the relevant water authority to have access to the pipes for repairs. These rights are called an easement. An easement will be noted on the title.
ESP: Estimated selling price. The price that the person selling the property estimates it will realistically sell for. In some Australian states if the property is sold by an agent the ESP 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 10 percent. For example, $400,000–$440,000.
Exchange of contracts: Both the buyer and the seller sign the contract of sale and give each other a copy. This is when the buyer usually pays 10 per cent of the sale price as a deposit. The exchange of contracts commits both buyer and seller to the transaction. Prior to an exchange of contracts any verbal agreement you have reached is not binding on either party.
Exclusive sale authority: This is the agreement an agent can secure from the vendor of the property the right to represent the vendor exclusively in relation all aspects of the sale including being the point of negotiation for all interested purchasers. The duration of an exclusive sale authority should be clear on the authority.
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Fixture and fittings: Items such as hot water systems, built-in cupboards, bath, stove, etc. that cannot be removed from a property without causing damage are called fixtures and fittings.
FHOG: First Home Owners Grant. A government scheme for first home owners that provides cash assistance with the purchase. Some Australian states also have complimentary schemes that provide matching or additional payments.
FSBO: For Sale By Owner. Used to describe a sale where the vendor of the property has not given a licensed agent an exclusive authority to represent the vendor.
FSBT: For Sale By Tender. This describes a process where a vendor will set a date by which interested purchasers can separately make offers for the property based on what they believe it is worth.
Guarantee: A guarantee is where a person agrees to meet the legal obligations of another person should that other person default. If a property is being purchased in the name of a company or trust, often the vendor will require a personal guarantee of a director of the company. This means that should the company then default on the purchase, the vendor will be able to make the director who provided the personal guarantee complete the sale.
Grout: mortar that fills the joints between tiles or other masonry.
Guarantor: The person who provides the guarantee.
Home loans: There is a huge range of mortgage finance products available on the market at any given time. Generally they fall within one of the two following categories:
There are also variations of these two loan types. These include split, capped rate, honeymoon, home equity and bridging loans.
Home Staging: Process of pre-sale styling of your home to achieve the ‘top’ sale price and minimise time your home is on the market.
IO: Interest only. A loan where the borrower only pays the interest with no reduction in the outstanding balance (or principle).
Land tax: Land tax is a state-based tax calculated on property value. It does not generally apply to your home or principle place of residence. There are different exemptions and exclusions between different states, so see legal representative or visit www.galilee.com.au
LVR: Loan to value: This is the term used to describe the % ratio between a loan that a lender is willing to loan against a property as compared to the property value.
Mortgage: A mortgage is what happens when someone borrows money from someone else (usually a bank) to assist in the purchase of a property. The person who borrows the money (the ‘mortgagor’) signs over (or ‘mortgages’) their legal rights in relation to the property to the person they borrowed the money from (the ‘mortgagee’).
Mortgage stress: Someone who is unable to meet their mortgage repayments and who is under pressure from their bank or mortgage lender to bring their payments up to date is said to be experiencing ‘mortgage stress’.
Mortgagee: The lender of money for a mortgage. To provide security for the loan the purchaser of the property ‘mortgages’ their legal rights in the property back to the lender as security for repayment of the money borrowed.
MIP: Mortgagee in possession. MIP occurs when an owner of a property is not able to meet their obligations under their mortgage loan so the lender (or mortgagee) takes possession of the property to recover the money owed. MIP is what happens if mortgage stress can’t be resolved.
Mortgage insurance: Mortgage insurance is often a requirement of a mortgage loan from a bank. It covers any shortfall between the value of the property and the debt owing in the event that the person who borrowed the money is unable to make their loan repayments.
Mortgagor: The person who signs over their legal rights in a property to secure money. Only a person with a legal ownership interest in a property is able to be a mortgagor.
Negative gearing: Where a property is purchased for investment purposes and the amount of interest paid on the mortgage is greater than any rent received from the property the difference can potentially be claimed as a tax deduction. This is called negative gearing.
[tip]Negative gearing only applies in investment scenarios. For more information on negative gearing and property investment speak to your financial advisor.
Non-bank lender: a mortgage lender who sources the money they loan on mortgage security from other sources such as the global capital markets or from wholesale banking facilities not otherwise available to the general public.
Off-the-plan: When a property is sold subject to the registration by the Land Titles Office of a Plan of Subdivision this is referred to as an “off the plan” purchase.
[tip]The benefits of buying “off the plan” often include substantial savings on stamp duty.
OFI: Open for inspection – when the vendor of the property opens the property available for inspection by potential purchasers.
OFP: Open fire place.
OSP: Off-street parking.
On the market: During an auction when the bidding has reached the vendor’s reserve price the property will be declared ‘on the market’. This means that it will be sold to the highest bidder from this point on upon the fall of the hammer.
Over capitalised: A property is described as being ‘over capitalised’ if the amount of capital spent on it is greater than it’s value. Spending too much purchasing it and/or renovating it results in over capitalisation.
PI: Passed in. When a property fails to sell at auction it is “passed in”, at the highest bid. Negotiation then commences with the highest bidder.
P&I: Principle & interest. The type of loan where both the principle amount of the loan and the interest are repaid over the life of the loan.
Power of attorney: A power of attorney (or PoA) is a legal document someone signs to give authority to another person to act on their behalf. A PoA can be very specifically worded to allow only a particular transaction or it can be very general covering all of a person’s affairs.
Private Treaty: Private treaty is another way that people buy and sell their property. It’s where the property has an asking price and is sold by negotiation.
Private sale: When a property is sold by private negotiations between the vendor and the purchaser this is referred to as a private sale. This method of selling differs from an auction in that there is no specific date upon which the property is advertised as being offered for sale on.
Rates: Rates refers to the annual, quarterly, half-yearly or monthly payments made to local shire councils for amenities like water, sewerage and garbage collection. There may be other levies for improvements to parks and roads. Council rates are a form of property taxation and property values play an important part in determining how much each individual rate payer contributes. There has been the situation where the rise of property values has forced the owner to sell their property.
Reserve price: The minimum price that the vendor will sell the property at auction.
Settlement: Settlement is where the buyer pays the balance of the purchase price and becomes the legal owner of the property. The settlement period is usually around six weeks after exchange. However, this can be changed to meet individual situations.
Skylight: A window in a roof that allows natural light to illuminate a room.
Sole agency agreement: The same as an exclusive agency agreement, except that the owner may sell privately without paying the agent’s fee.
Solicitor: A solicitor is a person who is legally qualified to practice law and who holds the required legal professional indemnity insurance and current legal practising certificate.
SP: Sold prior. Often a property will be listed as for sale by auction. However sometimes the vendor receives an offer to purchase the property at a price acceptable to vendor so the vendor sells prior to the advertised auction date.
Stamp duty: Money that the State Government requires to be paid at the point of registration of the Transfer of Land document when settlement is completed. The amount of stamp duty is calculated by reference to the sale value of the property.
STCA: Subject to Council Approval. Used where there may be the possibility of obtaining a council approval for further development on the property. For example, a vacant block marketed as “possible 4 townhouse development STCA” means up to 4 separate townhouses may be built on the block provided the council approves the development.
Strata title: Strata title describes a type of land title where there may be multiple property owners in layers (or strata) on a single piece of land. The most common type of strata titles are in high rise apartments with multiple floors where title to one property on one floor (or strata layer) will be over (or beneath) another title on the property. A strata title property will usually have a body corporate.
Subject to tenancy: Describes where a property is sold with the property occupied by tenants who are paying rent to the owner.
Title: A person legally registered as the owner is said to have title to the property. Only someone who has the legal title to the property is able to enter into a contract to sell it.
Vacant possession: Describes where a property is vacant at the time of the final settlement with a prospective purchaser.
Vendor: Sellers of property are referred to as ‘vendors’.
Vendors advocate: Also referred to as a sellers advocate. Someone who assists the seller of a property negotiate the terms of sale with a purchaser.
Vendor’s statement: The statement of important information relating to the property that is required to be disclosed to a potential purchaser of the property before entering into a binding contract of sale. Generally includes information about the land title and other statutory items that affect the property such as the council rates and charges, building approvals, road widening proposals and any body corporate information that may apply.
it is essential that the information required to be disclosed in the vendor’s statement is accurate, up to date (usually not older than three months) and complies with the relevant legislative requirements. If not then the vendor’s statement could be defective which could in turn give a purchaser the right to re-negotiate the terms of the sale or walk away altogether. For more information and advice see your legal representative or visit www.galilee.com.au
WC: Water closet (also known as a toilet).
WIR: Walk in robes (also known as wardrobes).