Like any industry, real estate has its own particular brand of jargon which is useful to know when you embark on a first home buying journey.
Many of the terms may be related to legal aspects of the property purchase, but it helps to know what is being referred to when in discussions with real estate agents.
There is a basic difference between “auction”, which refers to a public sale where the property is sold to the highest bidder to “Private Treaty” where the property has a “For Sale” price and may be negotiated with the vendors (the owners of the property) via the real estate agent.
A property may be “passed in” at auction, which means if the highest bid fails to meet the vendor’s reserve (the minimum price they set) for announcing the property is “on the market” – meaning it will be sold to the highest bidder.
“Gazumping” is a practice which unfortunately occurs in the property buying world and it refers to when a seller accepts an offer from a buyer, but then proceeds to formalise the sale of the property with another buyer who has offered more money or more favourable terms.
In the property hunt, a “building inspection” is a must, which refers to an inspection usually carried out by a professional prior to the purchase to ensure the building is structurally sound.
A house will usually be referred to as “Torrens Title”, which is a system of land title where a register of land holdings maintained by the state guarantees title to those included in the register. Land ownership is transferred through registration of title. “Deed” is another word for title, which is a legal document which states all of the information regarding to ownership of a property or piece of land.
When looking at apartments, they will normally be referred to as “Strata Title.” This means individuals each own a small portion of a strata building such as a unit – which is identified as ‘lot’ on the title. All owners in a strata plan share common property such as external walls, windows, roof, driveways, foyers, fences, lawns and gardens.
There maybe some older-style properties which are deemed “Company Title”, which was developed as a way of allowing apartments in flat buildings to be separately owned. It is more commonly found in established unit buildings, but this method of title is still used to endow “ownership” in new developments or where an existing block of flats is held under a single title.
Here is a selection of terms (A-L) from Aussie’s Jargon Buster Guide
Auction: A public sale where a property is sold to the highest bidder.
Body corporate: All the unit owners within a strata building. The owners elect a council responsible for the management of the building and it’s common areas.
Breach of contract: Breaking the conditions of a contract.
Building inspection: An inspection generally carried out prior to the purchase of a property to ensure the building is structurally sound. Contracts of sale can be made subject to the satisfactory building inspection.
Caveat: A caveat lodged upon a land or property title indicates that a party, that is not the owner, claims some right over or interest in the property.
Certificate of Title: A record of all current information relevant to a particular property or piece of land, including:
- Current ownership details.
- Any registered encumbrances or caveats.
- Lot or plan details.
A lender usually holds this document as security. Once the loan is fully repaid, the Certificate of Title is returned to the borrower.
Chattels: Chattels are items of personal property, such as clothing, appliances and furniture. In real estate terms chattels are usually movable items which may be included in the sale, such as furniture.
Commission: The fee or payment made to a real estate agent for services.
Contract of Sale: A written agreement outlining the terms and conditions for the purchase or sale of a property.
Conveyance: The transfer of property ownership and changing the title of a property from the seller’s name to the buyer’s name.
Deed: Another word for title. It’s a legal document that states all information regarding the ownership of a property or piece of land.
Easement: A right to use a part of land owned by another person or organisation, for example to access another property.
Encumbrance: An outstanding liability or charge on a property.
Fittings: Items not intended to be removed from a property when it’s sold, for example fixed carpets, lights, curtains and stoves.
Gazumping: When a seller accepts an offer from a buyer but then proceeds to formalise the sale of the property to another buyer with more favourable terms.
Lender’s Mortgage Insurance (LMI): Insurance which covers the lender if a borrower defaults on a loan and the sale of the property doesn’t cover the outstanding debt. It’s usually required for the loans the lender considers more risky. For example, when the amount borrowed is over 80% of the property value. Only the lender is covered by this insurance. It offers no protection to the borrower.