A report by a licensed builder inspector that details the general condition of a building and highlights any significant structural defects. It is very important that a buyer obtains a Building Report prior to exchange, because when you commit to buy a property, you are buying it in its present condition.
A notation placed on a Certificate of Title by a third person who claims to have another interest or right in that property.
Certificate of Title/Title Deed
A legal document issued by the Department of Lands that identifies the owner of the land and anything else that may affect it such as a mortgage, a covenant, a restriction, an easement or any other encumbrance effecting the land.
A plan that divides a parcel of land into community lots and common property, within the community plan can be areas set aside for such things as playing fields, swimming pool, club house and or other community activities. It allows for residential houses and strata units with the other activities within the community plan.
Cooling off Period
Purchasers of a residential property sometimes have a period of 5 working days after exchange in which to “cool off” and withdraw from the contract. However, if they do so, they forfeit 0.25% of the purchase price. There is no cooling off period if the property is purchased at an auction or on the same day as an auction. Generally, a purchaser is allowed to provide a Section 66W Certificate which is signed by a conveyancer or solicitor and has the effect of waiving any cooling off period. This would normally be done only once the purchaser is completely satisfied that everything is in order with the contract, finance and the property itself.
A notation on a title which would place restrictions on what can and cannot be done with the property. For example, a property might have a covenant that states that no fence can be erected or that a house cannot be more than one storey in height. It is important to get very clear advice on covenants, as some may have been on title for over 100 years and may not be relevant anymore.
Upon exchange of contracts to purchase a property, the purchaser is required to pay a deposit. This is usually a payment of 10% of the purchase price (varies between States). The deposit is often held by the seller’s real estate agent or solicitor, in their trust fund until settlement. A deposit can be in the form of a cash payment or a deposit bond.
These are the additional costs incurred during the conveyancing process that are passed on to the buyer or seller. These include things like building and pest inspections, search fees, strata reports and survey reports.
Discharge of Mortgage
The majority of people selling their property will have a mortgage to a bank or financial institution. The mortgage must be discharged at settlement in order for the purchaser to be able to receive title. Once the vendor has completed the relevant discharge forms, the vendor’s Conveyancing Solicitor normally arranges settlement with the bank, whereby the outstanding debt will be paid off.
A legal right granted to a person to use the land belonging to another for a particular purpose, e.g. a neighbour may have an easement to drain water across an adjoining property.
A burden or charge registered on the title to the property such as a mortgage.
The difference between the property’s value and what is owed to the lender.
Exchange of Contracts
This is the moment the sale becomes binding. There are two identical contracts, one signed by each party to the transaction and the contracts are “exchanged” so that each party holds the contract signed by the other party, the deposit is paid at this time and the contracts are dated on the day of exchange.
A purchaser is entitled to and should always have a final inspection of the property prior to settlement to make sure that the property is in the same condition as when first inspected and to see that all inclusions are left in the property.
Finance must be organised before you commit yourself to purchase a property. The contract is not normally conditional on finance approval and once you are committed to buy you must complete the contract regardless of whether you have finance to do so or not. If you are unable to complete the purchase you stand to lose the deposit paid and also to be sued for any loss that the seller may incur.
Fittings & Fixtures
Certain parts of the property that may or may not be removed upon sale. These should always be specifically nominated as an inclusion or exclusion in the contract to avoid any misunderstandings when the property is handed over. These include items such as blinds, curtains, light fittings, carpets, ovens, dishwashers, security systems, air conditioners.
Equal holding of property between two or more persons. If one party dies, their share passes to the survivors. This is a common arrangement for a married or de facto couple.
A state government tax payable by owners of a property (normally not their permanent place of residence) based on the value of the property.
A form of security for a loan usually taken over the property. The lender (the mortgagee) has the right to take the property if the mortgagor fails to repay the loan. The property cannot be sold without discharging the mortgage (ie. repaying the loan).
The person borrowing the money in terms of the mortgage.
The lender of the loan funds.
An administrative body made up of all the owners within a group of units or apartments of a strata building. The Owners elect a committee which handles the administration and upkeep of all areas shared by owners.
Off the Plan
Buying a property, usually an apartment, from seeing plans, before it is even built. A purchaser may not be able to inspect the property or see the standard of finishes, the practical layout, the size and dimension or outlook of the property.
A report by a licensed pest inspector detailing whether building is adversely affected by pests such as termites and borers. It should be obtained by the buyer prior to exchange.
A series of requests to various local government departments and councils to ascertain whether any money is owed or if there are any proposals for the land (such as road widening or acquisitions for public use).
Also called ‘completion’. The event at which the purchase of a property is finalised. All parties attend (the legal representatives and financiers of the buyer and seller), exchange documents and money, and the purchaser takes legal possession of the property.
It is general practice for Standard Provisions to be included in a Contract for Sale. These provisions are generally drafted and updated by Law Society and Real Estate Institute from State to State. However, the Standard Provisions do not address all areas relevant to either buyers or sellers. Special Conditions are also included in the Contract, prepared by the vendor’s solicitor or conveyancer, to fill in the disparities. Special Conditions are generally designed to protect both buyers and sellers. It is therefore imperative that the Special Conditions are carefully reviewed by an experienced Conveyancer or Solicitor before purchasing a property.
A once-only tax charged by the State Government upon the purchase of a property and paid on the contract, usually at settlement. The amount of stamp duty payable is determined by the sale price of the property, the higher the price the higher the duty. Stamp duty is paid after contracts are entered into and usually before settlement of the transaction.
A report written by an expert who has examined the books of the Owners Corporation to assess things like history of building, recent repairs undertaken, any disputes or areas under investigation, monies in the bank to cover repairs and maintenance and the likelihood of any special levies, insurances and by-laws. A strata report gives an overview of what is happening in the building that a buyer should be informed about. These reports are usually obtained by buyers prior to exchange where buying a strata title property.
A form of title used for units and townhouses. It gives the owner membership of an Owners’ Corporation, and the ownership of a defined part of a building. Strata titles are registered under the Torrens Title system.
A diagram prepared by a registered surveyor, setting out the outside boundaries of a property and then plotting the location of any improvements such as the house, garage, swimming pool to ascertain that they are all built within the boundaries.
Tenants in common
Where more than one person owns separate, defined portions of a property. If one person dies, the relevant portion passes through the deceased estate rather than to the other property owner(s) as it does with joint tenancy. Each owner can hold a specific share of ownership and has the right to dispose of their interest.
A property free of liabilities or restrictions.
The person/company selling the property.