Real Estate Terms
Following are a list of real estate terms that may be of help to you. If there is a term you come across that is not covered here, please contact us and we will assist you
Caveat - It is the Latin term for beware. If the Certificate of Title has a caveat on it, it means that some other person, other than the owner has a claim on the property ie an unregistered mortgage.
Easement - If an easement exists, it means that another person or authority has a right to some of the land. For example piping going under the property will restrict what can be done to that piece of land as the authority will need right of way.
Covenant - This is an agreement that you will or will not do something to the land. For example, a certain type of fence must be erected.
Tenants in common – where each person owns a predetermined percentage of the property. Each person is able to sell or dispose of their share independently of the other person. Holding an asset in this manner may have estate planning, financial planning or accounting benefits. It is in your best interest to talk to a suitable qualified person to find out if this would suit you.
Torrens Title - The Torrens title system was introduced to NSW with the commencement of the Real Property Act on 1 January 1863. Since then all land granted by the Crown is subject to the provisions of that Act.
It uses a single register for each land holding and records all details and interests affecting that land such as:
- easements
- covenants
- mortgages
- resumptions
- caveats, and
- subsequent changes in ownership.
In order to identify the huge number of lots, each lot is given a folio number.
Old System Title – This was the system in place prior to the Torrens title. Any property that existed prior to 1863 would have commenced on this system and may still be on this system. If so, each time there is an activity on the property (such as being sold or mortgaged), the document that records the transaction is added to an existing bundle of documents to form an unbroken chain of title dating back to when the first grant of land was registered. Proof of ownership depends on being able to substantiate that each document is valid.
Strata Title – This was introduced in 1961 mainly for apartments, townhouses and villas. This title provides ownership of air space within a lot (unit) and a form of limited ownership of the building and the land on which the building sits.
Company title – This was the system before Strata title. The apartment complex was owned by a company and you would own shares in that company that gives you rights to the exclusive use of an apartment. The right to sell is subject the approval from the other shareholders.
Community Title – This is similar to a strata title. It is used more so when there are a lot of community facilities within the complex.
Gazumping – the seller agrees to a price and then accepts a higher offer from another buyer. As the seller has not signed the contract, they are not committed to the first buyer. This is no illegal.
Vendor – the person selling a property
Vendor’s Terms – where the vendor allows the purchaser possession of the property while only a part payment has been made. The vendor appears on the title until all payments have been made under the contract.
Joint Tenant – The property is owned equally. If on person dies, the remaining joint tenants automatically gain the deceased portion.
Transaction costs – as a guide factor in 5% of the purchase price as it will include stamp duty, mortgage insurance, loan application fees, legal fees, a survey fee, building and pest inspections etc.
Listing - Refers to a property tat is available for sale through a real estate agent. The property goes on the ‘list’ of available properties.
Mortgage - When the owner borrows funds from a lender and the lender uses the home as security. This gives the lender the right to those funds if the home is sold.
Stamp duty – Stamp duty refers to the government tax charged on the purchase price of the property and also on the loan amount. The percentage payable varies from state to state. Refer to the stamp duty calculator
Vendor.
Agreement – the exclusive agency agreement between the vendor and the real estate agent. This agreement sets out that the agent is working for the vendor as is to do everything in their best interest including obtaining the best possible price.
Fixtures - Things that are fixed to the land and can not be removed without causing damage. Ie pergola, bath etc
Chattels Things that belong to the owner and can be removed without causing damage. Ie curtains, pot plants.
Construction Certificate - Formal permission by the local council to build or alter a building. This can not be granted until a Development application and a Building application are approved.
Deposit Bond - A deposit bond can be used as an interim substitute for a cash deposit. They are generally issued by an insurance company or financial institution. If the vendor accepts this bond, the purchaser would be required to pay 100% of the purchase price at settlement.
