If you have ever purchased property or if you are looking to buy you will be faced with a myriad of terms used in the property industry. We have put together a list of the most common terms you may come across.
Adjustments – Refers to the division of certain costs between Vendor and Purchaser, for instance, rates, water and rent collection. The Vendor is obligated to pay expenses and is entitled to income up until and including the day of Settlement – after Settlement this obligation swaps to the Purchaser.
Certificate of Title – Is the legal document showing the owner of a property and lists any other legal interest that third parties may have in the property such as a mortgage to a bank or an easement to a neighbour.
Completion – Also referred to as ‘Settlement’, is when the exchange of the purchase price for the Certificate of Title and release of any interest in the property (such as a mortgage) occurs.
Conditional Contract – Often there are clauses in the contract of sale which makes a party’s obligation to buy or sell the property dependent on an event. The common clause is where the contract is conditional on the buyer obtaining finance; another common one is the contract being conditional on the buyer selling their current home.
Contract – The Contract of Sale is the legal document that contains the terms and conditions of the sale. Normally, the contract is prepared by the seller’s agent or solicitor.
Conveyancing – This is the process of transferring the legal ownership of property (real estate) from one person to another.
Cooling-off period – Most states have a mandatory period (usually between 3 and 5 days) from the time of signing the Contract during which the Purchaser can end the Contract without penalty. However, Tasmania does not have mandatory cooling off period.
Deposit – A sum paid as an assurance that the Purchaser is serious about purchasing the property. Normally the deposit is between 5 and 10%.
Easement – A third party (usually an adjoining landowner) right to use land. These are usually drainage or pipeline easements. It may also refer to shared paths and driveways, however these rights are normally referred to as ‘rights of way’.
Encumbrance – refers to a third party having an interest in land such as a bank mortgage or caveat registered on the title to a property.
Joint Tenants – Refers to the situation where a property is owned jointly by two or more people. If a property is owned as Joint Tenants and one of the joint owners dies, their share automatically passes to the surviving joint owner, no matter what is stated in the deceased person’s will. The other form of ownership by two or more people is as Tenants in Common which is defined below.
Mortgage – An amount of money loaned (normally by a bank) to a person and secured by a registered interest in a property shown on the title.
Mortgagee – The party providing the mortgage being the bank or financial institution.
Mortgagor – The party receiving the mortgage being the landowner.
Penalty Interest – When a Purchaser delays a Settlement or cannot meet a deadline set by the Contract, Penalty Interest may be charged by the Vendor on the outstanding amount depending on the terms of the contract.
Restrictive Covenant – A restriction on the title that regulates (restricts or controls) the way the property is used. This may include building in using a certain type of material (such as all houses in Heavenly Drive must have colour bond roofs).
Settlement – The date on which the title documents and funds will be swapped between the Purchaser, Vendor and the relevant financial institutions who are granting or releasing mortgages. This process transfers the legal ownership of the property to the new owner and is attended to by your solicitor.
Subdivision – The process of dividing 1 land title into multiple titles.
Subject to Finance – A clause in the sale contract that states that the contract is conditional on the purchaser obtaining finance to fund the purchase of a property by a certain date. If the Purchaser’s finance is not approved within the specified time then the Contract is at an end and any deposit paid is returned to the Purchaser.
Tenants in Common - When property is held as Tenants in Common and one of the owners dies, their share passes according to their Will and not automatically to the surviving owners. The other form of ownership by two or more people is as Joint Tenants which is defined above.
Whether you are buying or selling property in Tasmania, Cormiston Legal can assist. Please contact us on 03 6332 9353 or use our Contact form - http://www.cormistonlegal.com.au/contact
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