(This has been extracted from “Real Estate – A Guide for Buyers and Sellers”, written by Consumer Affairs). This is to be used as general information only and should not be relied upon as a substitute to any Laws or professional legal advice.
Agent A licensed person authorised to act for someone else, usually the owner, in selling, buying, renting or managing a property.
Agent’s representative Someone who is not a licensed agent but is employed by or acts for them, and performs the function of an agent. (See also Agent)
Auction A public sale of property where the highest bidder is normally the successful buyer.
Authority to sell A legally binding document, signed by the seller, detailing the agreement between them and the agent. Many aspects of the authority to sell, such as commission and advertising costs, are negotiable between the parties.
Body corporate See Owners Corporation.
Breach of contract The breaking of one or more of the terms or conditions of a contract.
Building consultant An expert experienced in designing or constructing a building. When employing a building consultant for a pre-purchase report on a property, check whether they have indemnity insurance to cover any serious omissions about defects. A building consultant is not required to be registered.
Building inspector Must be registered as such with the Building Practitioners Board. Can operate as a private or council building inspector and is qualified to inspect buildings to ensure compliance with the Building Act and building regulations.
Building surveyor Must be registered as such with the Building Practitioners Board. A building surveyor is qualified to issue a building permit, inspect a building for compliance with the Building Act and building regulations, and issue an occupancy permit or certificate of final inspection.
Buyer’s advocate (Buyer’s Agent) An agent who acts solely for the buyer, sourcing suitable properties and representing them throughout the buying process.
Capital gain Profits made from the sale of property.
Caveat A note on the title that an interest in the land is claimed by a third party.
Caveat emptor Latin term meaning ‘let the buyer beware’. It is the buyer’s responsibility to ensure that the property meets their approval before purchase.
Certificate of occupancy A document issued by a building surveyor stating the building is suitable for occupation. It is not evidence that the building complies with the Building Act or building regulations.
Certificate of title A document showing who owns the property, the size of the land and whether there are any limitations on the title such as mortgages, caveats, easements or encumbrances.
Chattels Moveable personal property or furniture. Not generally part of the property unless specifically stated in the contract of sale. See also ‘Goods’.
Commission Paid by the seller to the agent, normally when the property is sold. It is usually a percentage of the selling price. The amount of commission is negotiable.
Common property Areas of a property used by and belonging jointly to all owners. This applies to such properties as apartment blocks or multi-dwelling complexes.
Company title Each owner in a block of flats has shares in the company that owns the land and the building. The owners receive a parcel of the shares with rights attached. Each owner is entitled toexclusive occupation of a flat, but is subject to the company’s Memoranda and articles of association. These documents should be carefully examined for any restrictions.
Contract of sale A legal document prepared by the seller, usually with the aid of a legal practitioner or a conveyancer, outlining the details of the sale. The contract of sale is legally binding when signed by both parties.
Conveyancer A person or company licensed to conduct conveyancing business. This means any business where conveyancing work is undertaken for a fee or reward.
Conveyancing Transferring the ownership of a property from the seller to the buyer. Often performed by a legal practitioner or conveyancer.
Co-owner A seller who has a financial share in a property and wants to buy out the other co-owners. For example, in the case of a divorce, two parties may have a share in a property and one may wish to buy out the other’s share. Both parties are known as co-owners.
Co-owner bid A bid made by a seller who is a co-owner of the property or someone (other than the auctioneer) on their behalf.
Covenant An agreement creating an obligation on the title-holder to do or refrain from doing something. For example, a restrictive covenant could state that no more than one dwelling may be built on the land.
Deposit A percentage of the purchase price, usually 10 per cent, paid by the buyer when contracts are signed. The deposit must be held in a trust account by an estate agency, by the seller’s legal practitioner or conveyancer or jointly in a trust account by the seller and buyer.
Deposit bond (or deposit guarantee) Offered by some lenders as an alternative to a cash deposit.
Disbursements Additional charges by some legal practitioners and conveyancers on top of their fee for extras such as postage, phone calls and government charges.
Dummy bid A false bid made or accepted by the auctioneer. Dummy bidding is illegal and includes bids made by a non-genuine bidder and ‘fictitious’ bids pulled out of the air by the auctioneer. Any bid made on behalf of the Vendor by anyone, other than the auctioneer under the auction rules, is considered a dummy bid.
Duty (formerly stamp duty) A state government tax, based on the sale price of a property, paid by the buyer when property ownership is transferred.
Easement A right held by one person to make use of the land of another. Drainage and sewerage pipes are examples.
Encroachment The use of, or intrusion onto, another person’s property without consent. This usually refers to a structure.
Encumbrance A third party’s right that obstructs the unencumbered use or transfer of a property. Examples are easements, mortgages or caveats.
Estimated selling price The price an agent estimates a property will attract. It must be recorded on the authority to sell either as a single figure or a range when the difference between the top and bottom figures is not more than 10 per cent. For example: $400,000 to $440,000.
Equity The difference between the market value of a property and what is still owing on a mortgage. This will increase as the loan is repaid or as the property’s market value increases.
First Home Owners Grant A scheme for first home owners. Please refer to the State Revenue Office website at sro.vic.gov.au for further information.
General Law title (old system title) The original system of land titles. A General Law title is comprised of all the documents that show a property’s complete historical record of title ownership. For the title to be ‘clear’, it must be traceable without a break up to and including the current ownership. Such a title must now be converted to a ‘Torrens title’ when such a property title is resold. (also see Torrens title)
Goods in a property sale include personal items, chattels and fittings.
Goods and Services Tax (GST) A consumption tax of 10 per cent levied on the final consumer of goods or services. The supplier of the transaction is responsible for collecting the GST and sending it to the Australian Taxation Office (ATO). GST is payable on the agent’s commission. It applies to new homes and existing homes if the seller is registered for GST.
Gross income Total income before income tax and expenses are deducted.
Model rules (owners corporations) these are set out in the Owners Corporations Regulations 2007. If your owners corporation does not make a rule covering any item in the model rules, then the model rules apply.
Off the plan Purchasing off the plan involves buying a property before it has been built, usually based on the developer’s plans and models.
‘On the market’ The point at an auction where a price is reached at or above which the seller is prepared to sell. (also see reserve price)
Outgoings Any costs incurred by the seller on top of the agent’s commission, such as advertising costs. All outgoings are negotiable.
Overquoting The illegal practice of overstating the estimated selling price of a property. This is usually done to encourage a seller to list.
Owners corporation Formerly known as a body corporate. An owners corporation has the collective ownership of the common area in a subdivision of land or buildings. It is responsible for the administration, upkeep and insurance of the common area shared by all the owners (the common property).
‘Passed in’ The circumstance in which a property for auction is not sold, usually because it has not reached the seller’s reserve price.
Principal The amount of a loan without interest or other charges.
Private sale A sale negotiated between the buyer and seller, usually through an agent.
Rebates Discounts received, usually for bulk purchases such as advertising. Any rebates received by an agent must be passed on to the seller.
Requisitions on title A set of questions about a property the buyer asks the seller after the contract has been signed, usually with the help of a legal practitioner.
Reserve Bank of Australia Australia’s central Bank, which is responsible for regulating monetary policy, including the official interest rate.
Reserve price A seller’s minimum sale price. It may be recorded on the authority to sell.
Settlement When ownership of a property passes from the seller to the buyer and the balance of the sale price is paid to the seller.
Stamp Duty See Duty
Strata title Individual ownership of an apartment or unit within a block or multi-unit complex. This is separate from and additional to the joint ownership of common areas shared by all the property owners in the building or complex.
Stratum title Each owner has a certificate of title and is absolute owner of a freehold flat. A service company has the title to the common property and each flat titleholder has a responsibility to the service company. The service company, in which each flat titleholder has shares, administers, manages and maintains the property in which each owner’s flat is registered.
Tenants in common A form of joint ownership of a property in which each person owns a share of the property, equally or unequally. When one owner dies, their share passes to their heirs, who assume the role of tenant in common with the other existing owner(s). 49 Glossary
Title A legal document identifying who has a right to ownership of a property.
Torrens title A system of title by registration governed by the Transfer of Land Act.
Transfer of land A document recording the change of ownership of a property from the seller to the buyer.
Underquoting The illegal practice of understating the likely selling price.
Unfair contract terms Terms not in good faith causing a significant imbalance in the rights and obligations of both parties to the detriment of the buyer.
Valuation An estimate of the value of a property by a registered valuer, usually for a fee.
Vendor (seller) The person selling the property.
Vendor bid A bid made on behalf of the vendor. Vendor bids can only be made by the auctioneer and only when the auction rules allow it. The auctioneer makes this statement before bidding starts and announces the amount of each vendor bid as, or before, it is made.
Vendor’s statement (or section 32) Information which the seller must provide to the buyer, advising of restrictions such as covenants and easements, outgoings such as rates and any other notices such as compulsory acquisition.
Vendor terms contract (terms contract) When a loan is supplied by the vendor rather than by an established lender.
Zoning The permissible uses of an area of land as stipulated by the council.