If buying or selling for the first time, you might be bamboozled by all the real estate jargon bandied about. Here is our A-Z guide to what it all means.
The total depreciation of a property over a period of time. Usually the difference between the replacement value at purchase and its present appraised value.
An increase in a property’s value over time. Property can appreciate in value due to increased demand, inflation and/or interest rate changes.
AUTHORITY TO SELL
The official contract a vendor signs to give an agent permission to sell a property on their behalf. The contract also usually details the agent’s fees and any advertising costs.
BREACH OF CONTRACT
When a seller or buyer dishonours one of more of the conditions in the sale contract, such as a vendor failing to make agreed repairs or a buyer changing their mind after the cooling-off period.
A short-term loan to help cover costs of selling one property and buying another.
Also known as a buyer’s agent, this is a licensed professional who negotiates the sale on a buyer’s behalf. Think of it as the opposite of a regular real estate agent, who works on behalf of the seller. A buyer’s advocate can also help source property for you.
A legal notice that someone (the caveator) has claimed a particular unregistered interest in a property.
CERTIFICATE OF TITLE
The legal document certifying property ownership. If you have a mortgage, your lender will hold the certificate until your loan is repaid.
The area of law that deals with the transfer of property from one party to another. Your conveyancer represents your interests as a buyer or seller. They will prepare the contract of sale, research the property and its certificate of title, calculate any owed rates and manage settlement with the lender.
A period in which a buyer can legally withdraw from a property sale. Different states and territories have a different cooling off periods and a termination penalty may still apply if you withdraw. There is usually no cooling-off period when you buy at auction.
A condition placed on the use of a property, such as a height restriction or a stipulation about building materials.
The wear and tear on a building or fixtures, which you can claim on your income tax if your property is for investment and built after July 1985. You will need a quantity surveyor to prepare a schedule of depreciation on your property to calculate how much you can claim.
A section of land registered on a property title that someone is entitled to use even though they are not the owner, e.g. a shared driveway.
When a neighbour violates the rights of an adjoining property owner by building something on their land.
A restriction or notice placed on land, which is usually listed on the certificate of title. A covenant is an example of an encumbrance, as is an easement (see above). Governments can also register an encumbrance on a property to let buyers know of a prior land use.
The value built up in a property minus any money owed.
LENDERS’ MORTGAGE INSURANCE (LMI)
The cost of securing a loan when you need to borrow more than 80 % of a property’s value. LMI covers the lender’s risk should the property value fall, even though the insurance is paid by the borrower.
Borrowing money to buy an investment property and the cost of owning that property (interest repayments, rates, repairs etc.) is more than the income received from rent. In other words, you make a loss, which can be claimed against your income tax.
OFF THE PLAN
Buying a dwelling, usually an apartment, before it is built.
Ownership of an individual unit in an apartment or townhouse complex, which also has shared areas, such as a driveway, garden or swimming pool. These shared areas are owned and maintained collectively with the other unit owners.
TENANTS IN COMMON
When two or more people own a property and each person’s ownership interest is specified as a certain percentage.
A title search researches the historical and current ownership and usage of a property.
When a purchaser owns both the house and the land on which it is built. This is the most traditional form of home ownership in Australia.
The usage category applied to a parcel of land by a local council or other government authority. Zoning will determine, for example, if you can build units or operate a business on a property.
This information is current as at 15/02/17 This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.