Real Estate Terms as in any industry has an array of terminology/words thrown around that seems to be there just to confuse us. The Real Estate world is no exception to this! The following are just some of the key words that you will hear over your buying journey and I hope this will shed some light:
Agent – A registered person holding the states relevant licence under The Real Act to act on behalf of another person in the sales, purchase, letting or management of property.
Amenity – A feature or characteristic of the local neighbourhood
Allotment – A term referring to the specific parcel of land, other terms referred in the industry can be Lot and Block of Land.
Apartment – Another term for Unit or Home Unit.
Appreciation – The increase in the value of the property usually held over time. Values can be affected by economic factors, supply and demand, inflation and social economic conditions.
Appraisal – The estimated value of the property.
Auction – The sales process where the property in question is sold to the highest bidder with predefined conditions.
Boundary – The defined line/s that separate adjoining properties.
Breach of Contract – Not adhering to or the breaking of a condition/s within a contract.
Brick Veneer – The building process where a wooden frame is surrounded and attached to by an external brick wall.
Bridging Finance – Usually a loan that is taken out for a short period of time before a long term finance/loan solution can be funded. Bridging Finance will always be more expensive than traditional forms of loans.
Building Regulations – Rules and building guidelines as to which a dwelling must be built to. These are minimum standards and there to safeguard the owner, builder and the public’s safety.
Caveat – A right over the Title/Property by a third party where money is owed by the current owner.
Certificate of Title – A legal document identifying the ownership of the land.
Chattels – Items or property within the dwelling that can be removed prior to settlement, for example furniture, personal effects etc. and anything physically attached to the dwelling must be disclosed in the Contract of Sale. It must be stated that the item will not remain after settlement, for example a dishwasher.
Clear Title – No restrictions existing on the Title currently. For example there may be no mortgage meaning nothing needs to be extinguished (satisfied and removed) prior to settlement.
CMA – Comparative Market Analysis; A study of how comparable local homes have sold to help determine a reasonable price for property.
Commission – A fee payable upon the completion of a service, for example agents fee for selling a property.
Common Property – A legal term for land that is shared between more than 1 properties. For example in a group of units the driveway is shared by all members in the group.
Community Title – Where more than two dwellings share a common area such as infrastructure or driveway. Each dwelling will hold their own Community Title and will need to abide by the rules defined in the Community Scheme.
Contract of Sale – A legal document that sets out all the conditions of sale between both vendor and purchaser.
Conveyance (act of) and Conveyancer (legal representative) – The legal representative that acts on behalf of the purchaser or vendor to transfer the ownership/title of property between parties.
Cooling Off – See “What is a Cooling Off Period” article. The predetermined period of time given to the purchaser in which they can change their mind.
Covenant – An agreement between parties to adhere to at all times. Commonly found in housing developments which outline the type of properties, landscaping and colours etc, that apply to that specific group of dwellings.
Deposit – A pre-determined amount or if at Auction 10% of purchase price that is paid in good faith upon signing of a contract (at Auction) or once the cooling off period has ceased (sale via private treaty). The deposit is used towards the settlement of the property.
Duty – A government tax or charge for a transaction.
Escrow – (more of an American used term) An account where all closing costs are collected while the lender approves the deal. In Australia you’ll more often hear the term “Trust Account”.
Fittings – Property or personal affects that can be removed prior to settlement that will not damage the property.
Fixtures – Property or items that cannot be removed without causing damage. For example built-in robes, pool, curtains etc.
Free Standing – A dwelling that stands on its own and not attached to others.
Home Unit – A dwelling within a group of others that share “common” property. These dwellings will be registered under a Community Title or Strata Title scheme.
Interest Only – A mortgage that pays interest only with none of the repayments paid towards the principal of the loan therefore the loan will be the same amount at the end of the period.
Joint Tenants – Owning a property by two or more parties held via equal shares. If one person dies then their share of the property will pass onto the remaining joint tenant – creating a “Right of Survivorship”.
LVR – Loan to Value Ration, is a simply calculation that the lending institution uses determines if a loan is worth the risk associated with it.
Mortgage – A loan document or contract outlining the terms and definitions as to which the funding was provided to secure a property.
Mortgage “Interest Only” – Also commonly known as “Fixed”. Is a loan secured against a property with repayments made purely to the interest component with none of the repayments paying down the principle for the agreed term. Interest rate will remain stable for the term agreed upon.
Mortgage “Variable”– Also known as “Principle & Interest” is a loan secured against a property with repayments made towards both the Principle & Interest component of the loan for the agreed term. The interest rate will fluctuate with the market in-turn so will the repayments.
Mortgagee – The institution or person/s that provide the money for the loan.
Mortgagor – The person/s or entities that borrow the money.
Owners Corporation – There are many more titles used across Australia like Strata Management Committee, Community Title committee just to name a few but all essentially have the same function. All owners in a group of either units, townhouses etc. that share a common property must have a committee where matters relating to the common areas are discussed and up kept.
Principal – The total amount owed to the lending institution or person/s.
Private Sale – Selling a property without the use of an agent therefore representing themselves. In this case a purchaser will deal directly with the vendor (owner).
Private Treaty – Sale of a property through an agent. In this case a purchaser will deal with an agent with no dealings directly with the vendor (owner)
Reserve Price – The minimum price pre-determined prior to an Auction which the current vendor (owner) will accept.
Right of Way – The right given to a person/s that grants access to a portion of (or across) the land.
Semi-Detached – Two dwellings that share a common wall/s. Semi-Detached dwellings can be registered as either a Community Title or Torrens Title.
Strata Title – A group of units or dwellings that all share common area. They will share costs in the upkeep of the common area/s and must abide by the rules set out by the Strata Title.
Tenants In Common – Owning a property by two or more parties held via equal shares. If one person dies then their share of the property will pass onto the deceased parties will. Therefore there is not “Right of Survivorship” in a tenancy in common.
Terrace – A row of dwellings joined together by common walls. Again these can be either Torrens Title or Community Title.
Torrens Title – The ownership structure that guarantees complete ownership over the land.
Townhouse – Two-Storey dwellings that are attached via common walls and normally in a group. These are more likely to be Community Title but on rare occasions you will find them as Torrens Title.
Transfer – A document lodged with the states Land Titles Office for the purpose of exchanging the name of ownership form one party to another.
Unencumbered – A property that is free of any Covenants, mortgage and any furthers restrictions.
Unit – A group of dwellings that can be either free standing or attached via common walls and will be registered with as Strata Title (or on a very few occasions Community Title). They will all share common property such as gardens and driveways but not limited to.
Vendor – Current owner of the property.
Villa – Single story dwellings that is attached by common wall/s. These can be either Strata or Torrens Title.
I truly hope this helps clarify what can be a minefield of Real Estate Terms & Jargon. Or at the very least helps you understand what your Conveyancer, Mortgage Broker and Real Estate agents are talking about.
Don’t forget to visit our “Tips & Blog” page for further information on all things Real Estate! And why not download the FREE “The Property Buyers Guide App” while you’re at it 😉