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If you’re looking to buy, sell, or own property, you’ve probably encountered a whole bunch of confusing terms and jargon along the way. From titles and deeds to mortgages and appraisals, the world of real estate can be a bit overwhelming at times. But fear not! We’re here to help you make sense of it all.
In this article, we’ll guide you through some of the most common property jargon and other real estate terms you’re likely to come across. We’ll explain what each term means and why it’s important, using real-world examples and plain language to help you understand. Whether you’re a first-time buyer or a seasoned investor, we hope this article will be a valuable resource for you.
A title is a legal document that proves ownership of a property. When you buy a property, you receive a title that shows you are the rightful owner. The title lists any restrictions or obligations that come with the property, such as easements or liens.
A certificate of title is an official document that shows proof of ownership of a property. It lists the name of the current owner, a legal description of the property, any encumbrances or liens on the property, and any restrictions on its use. It is issued by the relevant state or territory land registry or title office and is usually required by a lender before approving a mortgage.
A deed is a legal document that transfers ownership of a property from one person or entity to another. When you sell a property, you sign a deed that transfers ownership to the buyer. The deed typically includes a description of the property, the names of the buyer and seller, and any other relevant information about the sale.
A mortgage is a loan that you take out to buy a property. When you get a mortgage, you agree to pay back the loan plus interest over a set period of time (typically 15 or 30 years). If you don’t make your mortgage payments, the lender can foreclose on the property and take ownership.
A fixed-rate mortgage is a type of home loan where the interest rate remains the same for the entire term of the loan. This can make budgeting easier for homeowners, as they know exactly how much their mortgage payments will be each month.
A buyer’s market refers to a situation in the real estate market where there are more properties for sale than there are buyers looking to purchase them. In this scenario, buyers have more negotiating power and can often get properties at a lower price, as sellers may need to lower their prices to attract buyers. Factors that can contribute to a buyer’s market include an oversupply of homes, a slow economy, and high interest rates.
A Contract of Sale is a legally binding document that sets out the terms of the sale of a property between the seller and the buyer. The essential requirements for the Contract of Sale can vary slightly between the Australian states and territories. However, it typically includes the vendor’s statement, which is a statutory document that provides essential information about the property, such as title details, zoning, rates, and any known defects.
The Contract of Sale also specifies the essential terms of the sale, including the purchase price, deposit, description of the property and its improvements, date of sale, and any other conditions of the sale. It is essential to leave the preparation of the Contract of Sale to the professionals.
A Contract Note is a document that a prospective buyer receives when making an offer on a property. It outlines the essential terms of the offer and is legally binding once both parties have signed it. However, it is common for the parties to agree that a more detailed Contract of Sale will replace the Contract Note.
Conveyancing is the legal process involved in transferring the ownership of a property from the seller to the buyer. It involves preparing the Contract of Sale and supporting statutory documentation, as well as mortgage and other related documents. A conveyancer is a professional who specialises in assisting with the legal transfer of property. A licensed conveyancer or solicitor can carry out conveyancing.
A conveyancer is a licensed professional who is trained to prepare and manage the legal paperwork associated with buying or selling a property. While conveyancers are trained in the conveyancing process, they are not legally trained to the same level as a licensed solicitor. In the event of any legal issues arising during the property sale and purchase process, a conveyancer will refer the matter to a solicitor.
A Cooling Off Period is a specified time frame during which a buyer can decide to withdraw from the Contract of Sale without incurring any financial penalties. The length of the Cooling Off Period can vary depending on factors such as whether the property is sold by auction or privately, the home’s value, land size, and type of property. Cooling Off Periods may not apply in all circumstances and may be subject to state legislation, so it is essential to check with your state’s requirements.
This refers to the legal process where the buyer and the seller sign the Contract of Sale and exchange copies with each other. This step signifies a binding commitment to the transaction. Usually, at this point, the buyer pays a 10% deposit of the sale price. It is important to note that any verbal agreement made prior to the exchange of contracts is not binding to either party.
Equity is the difference between the value of your property and the amount you owe on your mortgage. If your property is worth $300,000 and you owe $200,000 on your mortgage, you have $100,000 in equity. Equity can increase over time as you pay down your mortgage or as the value of your property goes up.
An appraisal is an assessment of the value of a property. When you get a mortgage, the lender will require an appraisal to make sure the property is worth the amount of the loan. An appraiser will examine the property and compare it to similar properties in the area to determine its value.
An inspection is a thorough examination of a property’s condition. When you buy a property, you can hire an inspector to check for any issues or problems that might need to be addressed. This can include things like structural problems, pest infestations, or electrical or plumbing issues.
Closing costs are the fees and expenses associated with buying or selling a property. These can include things like title insurance, lawyer fees, appraisal fees, and property taxes. Closing costs can add up to several thousand dollars, so it’s important to factor them into your budget when you’re buying or selling a property.
A power of attorney is a legal document that allows someone else to act on your behalf. In a real estate context, this might be used if you’re unable to sign documents in person, such as if you’re out of the country. You might give power of attorney to a trusted friend or family member who can sign documents on your behalf.
Probate is the legal process of validating a will and distributing a deceased person’s assets. If someone dies and leaves property behind, the property may need to go through probate before it can be sold or transferred to new owners. Probate can be a lengthy process, and it’s important to work with a lawyer who specialises in probate law to ensure everything is handled correctly.
Eminent domain is the government’s power to take private property for public use. This might be used, for example, if the government needs to build a road or a park and the property owner is unwilling to sell. The government is required to provide fair compensation to the property owner in these cases.
An encumbrance is a legal claim against a property. This might include things like mortgages, liens, or easements. An encumbrance can affect the value and saleability of a property, so it’s important to understand any encumbrances that might be attached to a property you’re interested in buying.
Pre-approval is a process where a lender reviews your financial information to determine the maximum amount of money they are willing to lend you for a mortgage. Pre-approval is typically done before you start house hunting, and it can give you a clear idea of what price range of homes you can afford.
A lien is a legal claim against a property that gives the creditor the right to take ownership if the debtor does not repay a debt. For example, if you take out a mortgage to buy a property, the bank will place a lien on the property until you pay off the loan. If you default on your mortgage payments, the bank can foreclose on the property and take ownership.
A CMA is a report that provides an estimate of a property’s value based on recent sales of similar properties in the area. Real estate agents typically use CMAs to help sellers determine an appropriate asking price for their home.
Dual agency is when a real estate agent represents both the buyer and the seller in a transaction. This is legal in some states in Australia, but it’s important to understand the potential conflicts of interest that can arise in a dual agency situation.
An easement is a legal right to use someone else’s property for a specific purpose. For example, a property might have an easement for a driveway or a utility company might have an easement for power lines.
Leasehold is a type of property ownership where the buyer owns the right to use a property for a set period of time, but does not own the land itself. This is common for apartments and townhouses, where the land is owned by a strata corporation.
A person who borrows money from a lender, usually to buy a property or make a big purchase.
The estimated value of a property, determined by comparing it to similar properties in the area, taking into account factors like location, size, and condition.
Insurance that protects the lender if the borrower defaults on their mortgage payments.
A mortgagor is a legal term used to describe a person or entity that borrows money from a lender to purchase a property and then pledges that property as collateral for the loan. In other words, the mortgagor is the borrower who obtains a mortgage to buy a property, and the property serves as security or collateral for the loan until it is paid off.
The process of determining the value of a property by assessing its features and comparing it to similar properties in the area.
A property that is purchased with the intent of generating income or profit, rather than for personal use. This is usually used as a rental property rather than a residential property.
A tax on property transactions that is paid to the government by the buyer. The amount varies depending on the value of the property and the state or territory in which it is located.
An organisation that is responsible for managing common property in a strata-titled building or development, and ensuring that owners comply with relevant laws and regulations.
A new offer made in response to a previous offer that was deemed unsatisfactory. It sets out different terms or conditions to those in the original offer.
The reduction in value of a property or asset over time, due to factors like wear and tear or technological advancements.
A form of property ownership used in multi-unit developments, where each unit owner has a share in the common property, such as the land and building.
A type of loan that’s a short-term loan used to cover the period between buying a new property and selling an existing one.
A tax on the profit made from selling an asset, including property. It is calculated based on the difference between the sale price and the purchase price, with certain deductions allowed.
A person who agrees to be responsible for the borrower’s debt if they are unable to make the repayments themselves.
Insurance that lenders take out to protect themselves if the borrower defaults on their mortgage payments.
A professional who helps borrowers find and apply for suitable mortgage products, based on their financial circumstances and needs.
An investment strategy where the costs of owning an investment property, such as mortgage interest and maintenance expenses, exceed the rental income. The investor may claim tax deductions on the losses.
A property sale that is negotiated directly between the buyer and seller, rather than through an auction.
The minimum price that the seller is willing to accept for a property at auction.
A loan amount that is repaid over a set period of time, typically with fixed interest rates and regular payments.
A system of land registration that guarantees ownership of a property and its boundaries. It is used in some Australian states and territories.
A bank account used by real estate agents and conveyancers to hold money on behalf of clients, such as deposits or settlement funds.
A Latin term that means “let the buyer beware.” It is a principle of contract law that places the responsibility on the buyer to inspect and assess the property before purchasing it.
Buying or selling a property can be a complicated process, and legal jargon can certainly add to the confusion. That’s where a licensed conveyancer comes in. They can help you navigate the ins and outs of the property transaction and ensure that all of the necessary paperwork and legal requirements are met.
At Settled.com.au, we offer professional conveyancing services to help take the stress out of buying or selling your property. Our team of licensed conveyancers can guide you through the entire process and ensure that your transaction is completed smoothly and efficiently.
So don’t let legal and property jargon hold you back from achieving your property dreams. Let our team of experts help you today.
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