Real Estate Terminology
Agency type: Everytime a member of the public employs a real estate agent to sell their property the two parties record their agreement on an agency agreement. There are a couple of different types of agency agreement - each one incurs different responsibilities on the agent.
Agent: A licensed real estate agent.
Amortisation Period: The period within which it takes a borrower to repay a loan in full.
Assets: All property owned by a borrower, as distinguished from a borrowers liabilities.
Auction: Similar to an Exclusive Agency except that the property seller and the agent agree to promote a specific day in the future when the property will be offered for sale at a public auction - and hopefully sold to the highest bidder on that day.
Bank Cheque: A cheque drawn from a recognised authorised deposit-taking institution.
Bid: An offer to buy a property at a specific price during an auction.
Body Corporate: A legal entity that effectively manages, oversees and regulates all matters relating to a property that is part of a scheme.
Borrower: A person who borrows money.
Boundary: The official perimeter of a block of land.
Breach of Contract: A failure to comply with an obligation under a contract.
Brick Veneer: Single brick wall construction.
Building Certificate: A certificate to confirm that the building meets development requirements.
Building Inspection: An inspection to assess the quality of a building.
Buyers Agent: A person who acts on the buyers behalf to purchase a property.
Chattels: Any property other than freehold land.
Common Area: On a strata plan, it is an area commonly shared by all occupiers. Strata lot owners contribute to its maintenance, but do not themselves own the area.
Comparison Rate: A tool to identify the true cost of credit, taking into account the amount, term, repayment rate frequency and interest charged on the loan. Comparison rates do not include government fees.
Completion: The date the sale is completed (contract end date), also known as 'settlement'.
Compound Interest: Interest charged on interest over a frequency period, say monthly.
Concession: A partial exemption or discount.
Conditional Offer: An offer to purchase a property which is subject the occurance of another event - eg the approval of finance to complete the proposed purchase.
Consent: An authority or permision, generally required in writing.
Contents Insurance: A type of insurance cover to protect the owner from loss/damage to a building's contents, such as its fixtures and fittings.
Contract Date: The date in which a contract is signed and exchanged by all parties.
Contract of Sale: A formal written agreement which states the terms and conditions of sale.
Conveyancer: A person / company who acts on behalf of another to assist the transfer of property from one owner to another.
Cooling off period: A stated time after contracts have been signed, in which time a purchaser can change their mind and rescind the contract (generally this period is 5 working days unless otherwise agreed between the parties).
Covenant: An undertaking to do something. A positive covenant on title requires the owner to do something to comply with it, while a negative covenant restricts an owner from doing something in relation to the land.
Creditor: A person to whom money is owed.
Damages: Costs and expenses recoverable from a person under law (e.g. by reason of breach of contract).
Debtor: A person who owes money.
Deed: A document whereby an agreement is made, obligation entered into or property conveyed and is signed by all parties to the agreement.
Default: Failure to comply with an obligation under a contract, such as a failure to pay. Also known as a breach of contract.
Delinquency: A default in relation to an obligation.
Deposit: The amount of money paid by a property purchaser and placed in trust as evidence of their intention to purchase.
Depreciation: A tax incentive that is calculated based on the diminishing value of a building over time.
Disbursements: Money paid out by an agent generally on behalf of a property owner and which can include advertising, rates, taxes, insurance, service fees etc.
Easement: A right to use another person's property for a specific purpose, such as a right of way, a right of carriageway, or a right to maintenance of a part of land.
Endorsement: Signing of a document.
Equity: The non-tangible value a person holds, say with respect to property.
Exchange: An exchange of contracts occurs after both purchaser and vendor have signed the contacts and the contracts are physically exchanged from one party to the other.
Exchange of Contracts: The formal act of acceptance of a contract for sale. Normally, it involves each party receiving from the other a counterpart signed contract.
Executor: A person appointed to execute a deceased person's estate.
Exemption: Unlike an 'exception' an exemption acknowledges a person's general liability to pay, but says the person does not have to pay for a specific reason.
Final Inspection: An inspection conducted immediately before settlement to ensure the quality of the property has not changed significantly from first inspection.
First Home Buyer: A person who buys property for the first time, subject to an eligibility criteria.
Fixed Rate: A fixed rate of interest for a term of the loan.
Fixtures: Items of a property that substantially form a part of the property and cannot be removed (e.g. building, driveway, carport, etc).
Foreclosure: The act of a lender liquefying the assets of a defaulting borrower.
Freehold Interest: An interest in land ownership.
Holding Deposit: As distinguished from a deposit under contract, a 'holding deposit' is a token amount paid to the agent as a sign of good faith. There is no legal obligation to pay a holding deposit.
Improvements: Anything that is built on the land, for example the house.
Inclusions: Items that are specifically to be included in a contract sale price.
Indemnity: A form of legal protection that enables an indemnified person to recover from the indemnifier an amount necessary to put the indemnified person back in their original position had a specified event not happened. Indemnities should be scrutinised carefully before signing a contract because they may cover the acts of third parties.
Inflation: Price expansion.
Instruct: Give authority to another person e.g.. Solicitor, agent, friend, to act on your behalf.
Interest: An amount payable at a rate and frequency, usually expressed as a percentage. Interest can be fixed, variable or split.
Investment Property: A property primarily used for capital gain.
Investor: A person who invests money to typically achieve capital growth.
Land Tax: A tax payable on the value of certain land each calendar year. Land tax carries with it a government charge over the land that must be released before the land is sold.
Landlord: The owner of a property that is occupied or leased by tenants.
Lease: A right to lawfully occupy a property. A lease does not give the tenant ownership rights.
Legal fees: Money paid for legal work completed by Solicitor or Conveyancer.
Liquidator: A person appointed at law to realise the assets of an insolvent person or company.
Listing: The recording of properties as being for sale.
Loan: Money advanced to a person with the agreement that it will be repaid.
Market price: The price actually paid, or to be paid, for a property
Market Value: The price that a willing buyer (in full knowledge of the subject property) might pay a willing seller for a specific property.
Median: The middle value in a range: not to be confused with the 'average' value.
Mortgage: A legal document signed as security for the repayment of money.
Mortgagee: A person or company who lends money to another for the purchase of a property and whose agreement is evidenced in a mortgage.
Mortgagor: A person or company who borrows money from another for the purchase of a property and whose agreement is evidenced in a mortgage.
Multi-Listing: A Multi-List agreement is used when a person selling a property wishes to list their property with a number of agents but deal with only one of those agents during the sale process. In cases such as these the commission is shared between the agent that lists the property and the agent that eventually sells the property.
Negative Gearing: An investment strategy where the income generated by the asset does not exceed the loan repayments and a gain is made through the capital increase in the property's value over time.
Net Income: A person's gross income, less tax and superannuation deductions.
Notice Of Sale: A formal statutory notice to advise government and departmental authorities of a change of property ownership.
Novation: A variation to a legal document by consent.
Off The Plan: A property that is for sale before it has been built.
Offer: An act that is more than a mere invitation to treat.
Open Listing: This type of agreement is used when a person selling a property wishes to list his/her property with a number of agents but only pay a commission to the agent that successfully sells the property.
Overdraft: An event that occurs where the amount withdrawn from a bank account exceeds the amount available for withdrawal.
Passed In: The act of a property failing to meet its reserve price at auction, or failing any bids.
Pest Inspection: Inspection to detect any signs of pests in a property, usually made prior to settlement.
Planning Certificate: A government-issued document that describes the zoning of an area of land, planning instruments governing the use of that land, and whether there are certain affectations concerning the land, (e.g. risk of flood, bushfire, soil erosion, etc).
Positive Gearing: An investment process, where the income generated by the asset is sufficient to cover the loan repayments.
Possession date: The day the purchaser receives possession of the property. This is usually also called the settlement date.
Pre-Approval: An approval given by a lender to advance money to the borrower on specific terms and if certain conditions are met.
Private Sale: A sale of property without the intervention of an agent.
Promotion: Advising the public and interested people that a property is for sale usually by way of advertising.
Property Launch: The Starr Partners Property Launch is an exciting new initiative that has taken the property market by storm. The property is intensively marketed with an indicative price range over an agreed time-frame, with buyers being encouraged to submit an offer in writing on or before the pre-arranged marketing deadline.
Refinance: The process of getting a new loan on different terms to replace (in whole or in part) the existing loan.
Requisitions: A list of questions that a purchaser puts to the vendor, usually through the solicitor or conveyancer, to determine information about the property such as rates, title, rents, etc.
Reserve Price: A minimum sale price set by the seller for an auction.
Security: Collateral for a debt, which can be given in many different forms (e.g. a guarantee, charge, lien, mortgage, caveat, etc).
Service fees: Money paid to professionals for their work.
Settlement: The completion of the sale. Documents and money settled between parties.
Settlement day: The day of completion of the sale. Vendor receives money, purchaser receives possession of property.
Sole Agency: This type of agency agreement is used when a person selling a property wishes to list with one agent only but at the same time retain the right to sell the property themselves without having to pay a fee.
Solicitor: A qualified legal person who acts on behalf of another to assist the transfer of property form one owner to another.
Special Conditions: Conditions of a contract that are not a part of the standard conditions - they are usually drafted for specific circumstances.
Stakeholder: A person or company, usually the agent or solicitor, with whom money has been deposited pending the sale of property.
Stamp Duty: A state tax payable when a transaction regarding dutiable property, such as land, occurs.
Standard Variable Rate: A floating interest rate charged by a lender.
Statutory Declaration: A legal declaration used to certify a fact and sworn before a solicitor or Justice of the Peace.
Strata Title: A form of ownership where the land is owned by a legal entity called a body corporate and the building is divided into lots which are owned by various occupiers who wholly form the owners corporation.
Subdivision: The act of dividing a block of land into separate blocks.
Sub-Lease: A lease given by the tenant to a third party.
Tenant: A person who occupies a property and pays rent - also known as a lessee.
Title: The ownership of property, or the documents constituting the evidence of such ownership.
Title Search: A document evidencing a search of the land titles register identifying a property and its notifications on title.
Torrens Title System: A form of title ownership where a person's rights are indefeasible subject to any patent (registered) defects on title.
Trustee: A person who holds money for the benefits of others.
Types of Title:
1. Old System: The original system of passing title from one person to the next where a series of documents showing the history of the property over a prescribed period and showing by that history who is currently the lawful proprietor.
2. Torrens Title: The modern method of recording property ownership where each transaction that occurs on a property is registered with an approved government department. In NSW this department is the Land Titles Office.
3. Company Title: Usually on a block of units owned by a company and run by a board of directors. You purchase shares in the company rather than owning a title or deed.
4. Community Title: A cluster of homes sharing amenities such as a driveway, drainage etc.
5. Strata Title: Usually on a group of dwellings such as home units and run by a body corporate. When you purchase a property in a strata titled complex you are actually buying the right to occupy designated air space in that complex.
Unconditional sale: The point at which the contract is binding.
Vacant possession: The property seller is said to be willing to provide vacant possession to the purchaser if he/she is willing to provide an empty or vacated property on the day of settlement.
Valuation: A process of attaining an assessment of the market value of a property, usually by an independent valuer.
Valuer: A registered/qualified person who provides a written valuation of a property.
Vendor: The person selling the property.
Wear and Tear: The depreciation of an asset due to ordinary usage.
Zoning: The legal permissible use for a property, such as residential, retail, commercial, or mixed use.