Real estate terms – Do you really know what they mean?

02.02.16

Every industry has its own vernacular, a language that is specific for their needs. Often, we become so accustomed to seeing a word, we assume we know the meaning. Other times, we might be too embarrassed to ask. Well, let me help clear up those real estate terms that you might have seen hundreds of times, but possibly a little unsure of the full meaning.

If real estate is not your profession, understanding the terminology can be tricky. But, don’t feel disheartened, you aren’t expected to know it all! Conveyancers and property lawyers usually take care of all the paperwork, but if you want to know more, just ask. I believe in full transparency and would prefer my clients were comfortable with asking me all the questions they need when making property decisions.

For those who think they’re a wiz at real estate terms, why not test yourself and see if you can blitz the real estate glossary test?

N.B This is only an abridged list of the most common terms used.

 

Allotment

A lot or block subdivided from a larger portion of land.

Amortisation Period

The number of years it will take to repay a home loan completely. Maximum amortisation period is usually 25 years.

Bridging Finance

A short-term loan, usually at a higher rate of interest, taken out by those who have bought a house while waiting for theirs to be sold, or when a normal mortgage and their savings fall below the asking price.

Buyer’s Advocate or Buyer’s Agent

Represents a property buyer in negotiations with a vendor or his/her agent. The buyer’s agent is paid by the buyer. Buyer’s agents should be licensed and certified to act as a buyer’s agent.

Capital Gains Tax

Is the tax based on the difference between the purchase and selling price, less inflation, applied upon the sale of an investment property.

Caveat

Is a document any person with a legal interest in a property can lodge with the Titles Office to ensure the property is not sold without their knowledge.

Caveat Emptor

Latin for ‘Let the Buyer Beware.’ This puts the burden onto the buyer to be satisfied with the item before purchasing a property.

Certificate of Title

A document stating 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

Chattels are personal property. There are two types. Real chattels are buildings and fixtures. Personal chattels are clothes, furniture, etc.

Cluster Title

Each Cluster Title holder has a Certificate of Title which specifies ownership in terms of a particular area for which the owner is responsible and defines the common property. Unlike a Strata Title, it does not subdivide ‘airspace.’

Contract Note

The first document signed on buying a house is sometimes a Contract Note, instead of a Contract of Sale. This document when signed by both parties is a legally binding as a Contract of Sale and the buyer and seller should treat it with the same importance. It must be accompanied by a Vendor Statement.

Cooling-Off Period

A period of time during which a buyer can withdraw from the sale of a home (if not purchased at auction). Duration varies from state to state. The duration must be outlined in the Agreement of Sale.

Covenant

Conditions affecting the use of land or property written into the title.

Disbursements

Charges payable to solicitors or conveyancers such as postage, phone calls, stamp duty, registration fees and government charges.

Easement

A right held by someone to use land belonging to someone else for a specific purpose. Mains, drains and water pipes are usually covered by an easement.

Encumbrance

An easement, mortgage, or other liability on a property which impedes its use or transfer.

Freehold

An owner’s interest in land where the property and the land on which it stands both belong to their owner indefinitely.

Gazumping

If someone has agreed to sell you a property and then sells it to someone else for a higher price, you have been gazumped!

General Law Title

Old, complicated form of land ownership in form of chain of documents. Can be more than 100 years old and of historic interest.

Limited Title

Form or Torrens Title that applies to a property before it has been adequately surveyed.

Maturity Date

The last day of the term of the home loan agreement. The home loan must then be paid in full or the home loan agreement renewed.

Net Yield

Is the income on your property less certain expenses such as rates, insurance, maintenance and body corporate levies.

Option Fee

Usually 1% of price, is payable and forfeited if buyer does not go through with the transaction.

Qualified Title

Applies to some Old System Titles converted to Torrens Title that may not have been fully investigated.

Reserve Price

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

Rise and Fall Clause

This clause would be contained in a building contract. It provides for an upward or downward contract price dependant on movement of prices, wages or other factors specified.

Strata Title

Applies to more than one property on a single piece of land, such as an apartment block. Each unit will have a separate strata title, organised under a ‘strata plan’.

Unencumbered

Property free of covenants or other restrictions.

Zoning

The permissible uses of an area of land as defined by a council.