Legal jargon can be quite overwhelming especially during a property transaction, whether it is a purchase, sale or lease. To provide further assistance Bliss Conveyancing has constructed a glossary of terms and their definition.
Adjustment Date: the date on which land, water, strata levies are adjusted on for settlement.
Auction: A sale conducted by an auctioneer which results in the property being sold to the highest bidder
Building Report: A report prepared by a licensed builder inspector which details the condition of the property and identifies structural and or maintenance deficiencies. This report should be obtained prior to the exchange of contracts to avoid any financial and legal ramifications.
Business Day: Any day except a bank or public holiday throughout NSW or a Saturday or Sunday.
Caveat: A dealing which is registered on a Certificate of Title by a third party that claims to have a caveatable interest or right in the property. A caveat prohibits any further dealings being registered on the certificate of title.
Certificate of Title: A legal document issued by the Department of Lands that states the registered owner of the land.
Cheque: A Cheque that is not post dated or stale. On settlement it is a requirement that the settlement cheques be Bank cheques.
Commercial Property: Property utilised for commercial, retail or industrial activities.
Conditional Approval: Conditional approval is an approval issued by a financial provider with conditions attached that the borrower must satisfy for the loan.
Contract of Sale: the legally binding written agreement between the vendor and purchaser. This document identifies the significant terms and conditions that are agreed upon.
Conveyancer: A licensed professional that possess the specialised skill set to advise and prepare documents for the transfer of ownership of real estate
Cooling Off Period: Purchasers of residential property are entitled by law to a cooling off period of 5 business days which commences on exchange of the contracts. If the purchaser decides to rescind the contract during this period they will be required to provide 0.25% of the purchase price to the Vendor. The Purchaser can instruct their conveyancer to waive the cooling off period. The Conveyancer will signed a Section 66W Certificate and provide this to the Vendor on exchange of contracts.
It is important to be aware that if a property is purchased at an Auction, there is no cooling off period and the contracts will be required to be signed with the deposit to be paid at the conclusion of the auction.
Deposit: A deposit of around 10% of the purchase price is generally required to be paid when contracts are exchanged. The deposit amount can be negotiated to be lower amount. The deposit can be paid by several methods including; Cash, Deposit bond or Deposit Guarantee from a lending institution or insurance company.
Deposit Holder: Vendor’s Agent (being the real estate agent) (or if no vendor agent is named in the Contract of Sale, the vendor’s conveyancer/solicitor)
Depreciation: Non-cash tax deductions available to investment properties owners. It is writing down of the original construction cost of an asset over its effective life. A Tax Depreciation Schedule is prepared by a Quantity Surveyor and Accountants incorporated the appropriate deductions in the owners tax returns.
Disbursements: Costs paid on behalf of the client for tools such as pest and building reports, strata reports, survey reports and Tax Depreciation Schedules.
Easement: A legal right provided to a party to use the land of another for an agreed purpose.
Exchange of Contracts: The two identical contracts are signed by each party and “exchanged”. This will result both parties having a contract signed by the other party. It is a requirement of the exchange that the deposit is also paid at this time.
Final Inspection: The purchasing party is legally entitled to (and should be strongly advised) carry out a final inspection of the property prior to settlement. The aim of this is to determine that the property is in the condition that the purchaser has agreed to buy the property in.
GST Act: A Tax System (Good and Services Tax) Act 1999.
GST Rate: the rate mentioned in Section 4 of a Tax System (Goods and Services Tax Imposition – General) Act 1999 (10% as a 1 July 2000).
Land Tax: A state based tax payable to the Government, this does not apply to primary place of residence (PPR) in NSW. To read more about Land Tax in NSW click here.
Lease: A written agreement that allows a party to exclusively occupy a property that is owned by another.
Legislation: An Act or a by-law ordinance, regulation or rule made under an Act.
Loan Documents: The documents a financial lender requests the borrower to sign before any funds are released.
Mortgage: Protection taken by a financial lender registered over the title to a property as security again the loan. A sale of the property cannot take place until the mortgage is discharged or paid off.
Normally: Subject to any other provision the Contract of Sale.
Owners Corporation: The collection of all the owners of properties within a strata complex.
Off The Plan: Purchasing a property, from floor plans before construction is commenced or completed.
Party: The vendor and the purchaser.
Pest Report: A report prepared by a licensed pest inspector that details whether or not a building is/has been affected by pests. This, like the building report should be obtained prior to exchange.
Pre-Approval: Prelude approval of a home loan prior to the purchaser finding a property. Generally this is obtained by a prospective purchaser to know how much can be spent on a property. For the funds to released usually an independent valuation is required.
Property: the land, the improvements, all fixtures and the inclusions, but not the exclusions.
Registered Proprietor: The name/s that appear on the registered Certificate of Title.
Requisition: An objection, question or requisition (but the term do not include a claim) Requisitions on Title are served on the vendor after exchange of contracts.
Rescind: To end a contract, if entitled either under the cooling off period or another clause in the contract. There is usually no penalty, other than 0.25% payable to the vendor under the cooling off period, required to be paid by the purchaser.
Serve: To formally serve a document and or notice on a party to the transaction.
Settlement: The final part of the conveyancing process wherein cheques are exchanged for documents and ownership is transferred.
Settlement Cheque: An endorsed cheque made payable to the party to be paid and drawn on its own funds by:
- A Bank
- A building society, credit union or other FCA institution as defined in Cheques Act 1986; that carries on business in Australia or if authorised in writing by the vendor’s conveyancer/solicitor, some other cheque
Sewer Diagram: A illustrated diagram utilised by the local water authority identifying the layout of the main sewer line for the relevant property.
Stamp Duty: A liability charged by the State Government at the time a property is purchased. The amount of Stamp Duty fluctuates in relation to the purchase price and is a one off payment commonly made at settlement or within 3 months of the contracts being exchanged.
Strata Report: An independent report prepared at the conclusion of the Owners Corporation. Detailed within the report is the current status of the Owners Corporation’s financial situation, history of the buildings, current disputes yet to be resolved, special levies, insurances and by-laws. The report also indentifies recent repair and maintenance work performed in conjunction with the funds available for future work.
Strata Title: Registered under the Torrens Title System, a form of title used for a complex of units and/or townhouses. Owners of individual properties within a complex become members of the Owners Corporation.
Survey: A diagram illustrated by a registered surveyor that identifies the boundaries of a lot and the approved locations of future structural work such as garages and swimming pools to ensure they remain within the boundaries.
Terminate: One party terminates (ends) the contract due to the other party’s default. Damages can be claimed in these instances.
Title search: A certificate issued by the Department of Lands to someone would like to enquire about the status of the property. In addition to identifying the owner the results include all information recorded with the Department of Lands.
Transfer: A document that acknowledges the change of ownership from the current owner to the new owner once signed by both parties. The document is then registered with the Department of Lands and the new certificate is issued to the owner.
Unconditional Approval: An unconditional loan approval issued by the financial provider that you are eligible for the loan applied for. There are no further requirements of the financial provider.
Valuation: A written report by a Registered Valuer identifying what they perceive the value of the property to be. The Registered Valuer will possess the required skill set and been through the appropriate training regimes. A valuation is generally required by a financial lender so they are aware of the market value of the property.
Vendor: The seller.
Within: In relation to a period, at any time before or during the period.
Work Order: A valid direction, notice or order that requires work to be done on a property issued by an appropriate government department or Council.