Glossary of Terms | Docking Real Estate
AcceptanceConsent by the person receiving the offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes an agreement.
AccessoryA second building on a lot and one that is not considered to be the primary building, e.g. a storage shed or a parking space. Usually described as ‘Accessory Building’ or ‘Accessory Unit’.
Act of GodAny act of nature such as rain, lightning, floods or earthquakes. Many insurance policies do not cover losses resulting from an ‘Act of God’.
AdministratorA person appointed by a probate court to administer the estate of a person who died intestate (without a will). ‘Administratrix’ is the feminine form.
AmenityA feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use, e.g. scenic views, proximity to public transport or recreational facilities.
AmortiseTo repay a mortgage with regular payments that cover bothprincipal and interest.
AnnuityAn amount paid yearly or at regular intervals, often on a guaranteed dollar basis.
AppreciationAn increase in the value of a property due to changes in market conditions or supply and demand, etc.
ArchitraveA decorative moulding around doors or windows.
Asking PriceThe listed price of the property but may not always be the selling price. The owner may be willing to negotiate.
Assessed ValueThe valuation placed on a property for the purposes of taxation by an authority.
AssetAnything of monetary value that is owned by a person, e.g. personal property, real property, bank accounts.
AssignmentThe transfer of a mortgage from one person to another.
AuctionA public sale of a property or real estate that is sold to the highest bidder.
BADBank Accounts Debit Tax. State or Territory government tax (except ACT) on withdrawals from accounts on which a cheque can be drawn.
Balloon PaymentA large loan payment to clear a debt.
BeneficiaryThe person designated to receive the income from a trust, estate, or a deed of trust.
Body CorporateAn 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 administration and upkeep of the site.
BondA sum of money paid by a tenant and held by the Rental Bond Boaard to ensure against defaulting on payment and damage to the property.
BoundaryThe lines that define the perimeter of a property.
Brick VeneerA type of construction in which a structural timber frame is tied to a non-load bearing, single-brick external wall.
Bridging LoanA short term loan (usually at a higher rate) taken out to cover the financial gap between buying a new property and selling an existing property.
Building CodeLocal regulations that control design, construction, and materials used in construction.
Business DayA standard day for conducting business. Excludes weekends and public holidays.
Buyer’s MarketWhen the demand for property is less than supply so the advantages shift to the buyer. Contrast with Seller’s Market.
Capital1. Money used to create income, either as an investment in a business or an income property. 2. The money or property comprising the wealth owned or used by a person or business. 3. The accumulated wealth of a person or business. 4. The net worth of a business represented by the amount its assets exceed its liabilities.
Capital ExpenditureThe cost of an improvement made to extend the useful life of a property or to add to its value.
Capital GainThe gain on the sale of a capital asset.
Capital ImprovementAny structure or addition to a property erected as a permanent improvement that adds to its value and useful life.
Cash FlowA measure of cash inflow and outflow from the business. Positive cash flow means more money is coming into the business than is leaving it. Negative cash flow is the converse.
CaveatA warning on a title to a purchaser that a third party might have some interest or right in the property.
Certificate of OccupancyA document issued by a local government to a developer permitting the structure to be occupied. This generally indicates that the building is in compliance with public health and building codes.
Certificate of TitleA description of a property with the name of the registered owner, encumbrances, i.e. mortgages or easements on the property. It must be produced by the vendor before the sale of the property.
ChattelsMovable items of personal property such as furniture that may be included in a sale.
Clear TitleA title that is free of lien or legal questions as to ownership of the property.
CollateralAn asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
CommissionA proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction.
Common LawAn unwritten body of law based on general custom in England and used to an extent in Australia.
Common PropertyAreas of a building, land or amenities within a strata title property that are shared by all owners, e.g. a driveway.
Company TitleSee Stratum Title.
Construction LoanAlso called Building Loan. A short-term, interim loan (only paid to registered builders) for financing the cost of construction. The lender makes payments to the builder at periodic intervals as work progresses.
ContingencyContingency. See Special Condition.
Contract Note (Victoria only)An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property.
Contract of SaleAn agreement in writing setting out the terms and conditions relating to the sale or purchase of a property. It is the purchase document signed at auction.
Cooling-off PeriodThe legal entitlement of a property purchaser to withdraw from a contract by giving written notice within three clear business days after the Contract of Sale or Contract Note is signed. However, there are some circumstances where the cooling-off period does not apply: 1. The price of the property including chattels exceeds $250,000. 2. The property is purchased at an auction or within three clear business days of a publicly advertised auction. 3. The purchaser receives independent legal advice prior to the purchase of the property. 4. The purchaser is a real estate agent or corporate body. 5. The purchaser has previously signed a similar contract for the same property. 6. the property is use mainly for industrial or commercial purposes. 7. The property area exceeds 20 hectares and is used mainly for farming. The vendor is entitled to retain $100 or 0.2 per cent of the purchase price, whichever is the greater.
CovenantTerms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.
Cover NoteA document issued by an insurance company giving temporary insurance until a formal policy is issued.
Credit HistoryA record of an individual’s current and repaid debts which is usually used by a lender to assess the risk of a potential borrower.
Cul-de-SacAlso called a ‘Court’ or ‘Dead End Street’. A street with only one entrance, the other end being closed. Often valued for the privacy provided to homes in the street.
DeedA legal document conveying title to a property.
DefaultFailure to make mortgage payments regularly or to comply with other requirements of the mortgage.
DepositA percentage of the purchase price given to bind the sale of real estate.
DepreciationA decline in the value of property due to changes in market conditions or other causes.
DisbursementA cash expenditure for the purpose of settling a debt.
Disposable IncomeMoney left over after all expenses have been met.
Door jambsThe vertical sides of a door frame.
DrawdownThe disbursement of loan funds provided by the Bank.
Dual OccupancyA block of land which is zoned so that there two distinct dwellings are permitted to be constructed.
DuplexSee Semi-detached.
EasementA right that someone has to use the land belonging to another, e.g. a water authority may have a sewerage easement across part of your property.
EncroachmentPart of a house or establishment illegally overhanging the street or a neighbour’s property.
EncumbranceAn impediment to the use or transfer of the property in the form of an interest or right in the property, e.g. easement,mortgage or caveat.
EquityThe amount of an asset actually owned. Equity is the difference between the market value of the property and the amount still owed on its mortgage.
EstablishmentFee See Loan Application Fee.
EstateThe total of all the real estate and personal property owned by an individual at the time of death.
EvictionThe lawful expulsion of an occupant or tenant from real property.
Exclusive AuthorityA written contract that gives one real estate agent the exclusive right to sell a property in a specified time period.
ExecutorA person named in a will to administer an estate. ‘Executrix’ is the feminine form.
Fair Trading Office of Fair Trading and Business AffairsAn office of the Department of Justice in Victoria and in New South Wales. In Queensland, Northern Territory and the Australian Capital Territory it is known as Consumer Affairs; in Western Australia, the Ministry of Fair Trade; in South Australia, the Consumer and Business Affairs, and in Tasmania as Consumer Affairs and Fair Trading.
FeeSimple The greatest possible interest a person can have in real estate. Contrast with Strata Title and Stratum Title.
Fibro cementBuilding material made of compressed fibres cemented into rigid sheets.
FIDFinancial Institutions Duty. State duty on the receipts of financial institutions.
FiduciaryA person who essentially holds the character of a trustee. Real estate agents and salespersons are considered by law to be fiduciaries, thus they have a duty to act primarily for the benefit of the principal (the person who employed them) and not their own. A fiduciary must act with the highest degree of care and good faith in relations with the principal and on the principal’s business. Penalties for failing in fiduciary duties may be quite severe.
FittingsObjects that can be removed from a property without causing damage to it.
Fixed Rate MortgageA mortgage in which the interest rate does not change during the term of the loan.
FixturesFixed items that cannot be removed without damaging either the property or the fixture itself, e.g. cupboards.
FootingThe footing supports the building on its foundation.
ForeclosureThe legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the mortgagee selling the property by auction and the proceeds being used to service the mortgage debt.
FreeholdAn estate in real property which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates which are created by acts of parties, such as an ordinary life estate, or by operation of law.
GableThe triangular part of a building’s end wall which extends up to meet the two slopes of a roof.
GarnisheeTo legally divert part or whole of someone’s money or property to someone else, e.g. for Child Support Payments.
GazumpingWhere a seller agrees to sell to one buyer but then either sells to another buyer or raises the price when two or more buyers show interest.
GearingThe ratio of your own money and borrowed funds for investment. See Negative Gearing.
Gross IncomeIncome before taxes are deducted.
GuarantorA person who agrees to indemnify the holder of a loan all or a portion of the unpaid principal balance in case of default by the borrower.
Habitable Suitable for occupancy.Local building codes ensure that structures are habitable through requirements for building permits and certificates of occupancy.
Holding DepositAn initial (goodwill) sum of money given to register interest in or bind the sale of real estate before the full deposit is paid. For example, if a property is purchased on Saturday, the agent may take a holding deposit of a few hundred dollars until the buyer can arrange for the full deposit to be paid on Monday.
Home Equity Line of CreditA mortgage loan which allows the borrower to obtain multiple advances of the loan proceeds up to a specified percentage of the borrower’s equity in a property.
Home Improvement LoanA loan made to a homeowner in which the home is used as collateral for the loan.
Home InspectionA thorough inspection that evaluates the structural and mechanical condition of a property. A home inspection may be a special condition of a purchaser.
Housing Expense RatioThe percentage of gross income that goes toward paying housing expenses.
InterestThe fee charged for borrowing money.
Interest Only LoanA loan where only the interest is repaid throughout the course of the loan. The original amount or principal is repaid at the end of the term of the loan.
Interest RateThe rate of interest in effect for the monthly payment due.
Introductory LoanA loan offered at a reduced rate for an introductory period to new borrowers.
Investment PropertyA property that is not occupied by the owner but leased to produce income.
Joint TenancyA form of co-ownership that gives each tenant equal shares and rights in the property including the right of survivorship, e.g. ownership of a property passes to the surviving owners.
Key TenantA major or primary tenant in an office building or shopping centre. Generally such a tenant leases a significant amount of the available space.
KickbackPayment made to someone for referral of a customer or business. Generally speaking, kickbacks are illegal because, unlike a commission, a kickback is made without the customer’s knowledge.
Laminated timberLayers of timber glued and pressed together to increase rigidity or to use as bench tops or cupboard doors.
Land TaxA State tax based on the value of a property (not the principal place of residence) that is paid by the owner.
LandlordA person who rents property to another; a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.
LeaseA written agreement between a landlord and a tenant granting a period of tenancy of a property under specific terms and conditions.
LeaseholdThe right to use and have exclusive possession (but not ownership) of real estate for a specified period and subject to the fulfilment of certain conditions as recorded in a lease agreement.
LesseeA person leasing a property.
LessorThe owner of a property that is leased to another person.
LiabilitiesA list of debts owed.
LienA legal claim against a property that must be paid off when the property is sold.
Life EstateAlso called Tenancy for Life. A freehold interest (in real property) that expires upon the death of the owner or some other specified person.
Line of CreditAn agreement by a lender to extend credit up to a specified amount for a specified time for a specified purpose. SeeHome Equity Line of Credit.
Liquid AssetAn asset, cash or otherwise, that can be converted into cash.
Listing1. A written contract between an owner and a real estate agent, authorising the agent to perform services for the principal involving the owner’s property. 2. The property so listed.
LoanA sum of borrowed money (principal) that is generally repaid with interest.
Loan to Valuation RatioThe amount of the loan financed as a proportion of the property value, expressed as a percentage.
ManholeAn opening which permits access to the space between the roof and the ceiling, or below the floor.
Market ValueThe price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price. Establishing the market value is the objective of an appraisal.
MortgageA legal document that pledges a property to the lender as security for payment of a debt.
Mortgage Discharge FeeA fee charged by some lending institutions for finalising a loan.
Mortgage InsuranceA policy that insures the lender against the borrowerdefaulting on a loan. Most lenders generally require insurance when borrowing more than 80% of the property value.
Mortgage OffsetA non-interest earning account that is offset against a home loan to reduce the total interest payable.
MortgageeThe lender in a mortgage agreement.
MortgagorThe borrower in a mortgage agreement.
Negative GearingWhere the return on an investment is not sufficient to cover the costs on the investment, e.g. property maintenance and interest on the loan.
NetIncome Income after taxes are deducted.
Net WorthThe value of a person’s assets minus liabilities.
NomineeA person who, in a limited sense, acts for or represents another.
Notice of DefaultA formal written notice to a borrower that a default has occurred and that legal action may be taken.
Notice to QuitA notice to a tenant to vacate the property.
Null and VoidThat which cannot be legally enforced, as with a contract provision that is not in conformance with the law.
Off the PlanTo purchase a property before it is completed after having only seen the plans.
OfferConveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.
Offset AccountAn account linked to a mortgage account so that the interest earned is applied to reduce the interest on the mortgage.
Old System TitleAlso called Common Law Title. A series of title documents called a ‘chain of title’. The overall title is sound only if the every document in the chain is sound. The legal investigations are complicated and expensive. An old system title may be converted to a Torrens Title and is automatically converted following sale.
OmbudsmanThe Australian Banking Industry Ombudsman (ABIO) is the avenue through which a customer can make a complaint about their bank and have it dealt with independently.
Ongoing FeeA loan maintenance fee charged regularly over the life of the loan.
Open ListingA type of listing agreement in which more than one real estate agent may be employed to sell the property. The owner pays a commission only to the agent who finds the buyer. This listing is also known as a simple listing or a general listing and the owner is not obligated to pay anyone a commission if the owner personally sells the property. Such a listing is often used by builders and developers who agree to pay a sales commission to any agent who sells a house or lot in their subdivision.
Open SpaceLand which has not had improvements such as buildings and other structures added to it. Such land is often left in a subdivision by a developer or stipulated by a local authority for recreational use or for personal use by the owner.
Passed InThe highest bid fails to meet the reserve price of a property at an auction and consequently does not sell.
Power-of-AttorneyThe person who has authority to execute documents on behalf of the grantor of the power.
Pre-qualificationThe process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.
Prime RateThe interest rate that banks charge their preferred customers. Changes in this rate can influence other rates including mortgage interest rates.
PrincipalThe amount borrowed or still to be repaid. The part of the monthly payment that reduces the balance of the mortgage.
Private SaleThe sale of a property by the owner without the services of a real estate agent.
Private Treaty SaleThe sale of property, through an estate agent, by negotiation.
ProxyA person who represents another, particularly in some meeting. Also, the document giving to another the authority to represent.
Public HousingGovernment-owned housing made available to low-income individuals and families at no cost or for nominal rental rates.
Qualified AcceptanceAn acceptance of an offer subject to a condition or conditions which must be met. This is essentially a counteroffer since new conditions are included.
Qualified BuyerA buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender as part of the loan process.
RafterPart of the framework of the roof, the rafters slope down from the ridge to the eaves.
Real Estate AgentA person licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner.
Real PropertyLand, with or without improvements.
Redraw FacilityA loan where the borrower can make additional payments and then access those funds when required. There may be a minimum redraw amount.
RefinanceThe process of paying off one loan with the proceeds from a new loan using the same property as security.
REIReal Estate Institute of Australia. National representative body of real estate agents. REIV is the representative body in Victoria; REIQ in Queensland, etc.
Requisitions on TitleA process where the buyer requests additional information about the title of the property from the vendor.
Reserve PriceThe minimum price which a seller will accept at auction.
Right of First RefusalA provision in an agreement that gives a party the first opportunity to purchase or lease the property before it is offered for sale or lease to others.
Right of SurvivorshipIn joint tenancy, the right of the survivors to acquire the interest of a deceased joint estate.
Right of WayA right of one property or the general public for access to or across another property.
Rise and Fall clauseThis clause may be contained in a building contract. It provides for an upward or downward contract price which correlates to the movement of prices, wages or other factors specified in the clause.
Roof pitchThe slope of the roof.
SashThe frame in which a pane of glass is set to form a window.
Second MortgageA mortgage that, on the sale of a property, is paid off only when the first mortgage is paid.
SecurityThe property that is pledged as collateral.
Seller’s MarketWhen demand for property is greater than supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price. Contrast with Buyer’s Market.
Semi-detachedAlso called Duplex. A type of construction where two buildings are attached together by a common wall.
Service (the loan)The periodic, normally monthly, collection of mortgage interest and principal repayment and other mortgage- related expenses, such as property taxes and property insurance.
Settlement1. The sale of a property is finalised by the legal representatives of the vendor and the purchaser, mortgage documents come into effect, costs are paid and the new owner takes possession of the property. 2. Sinking of the soil or any part of the structure which it supports.
ShinglesThin pieces of wood or other material set in overlapping rows to form a roof or wall cladding.
SillThe horizontal section of material at the base of a window opening.
SkillionA roof shape consisting of a single sloping surface without a ridge.
Special ConditionA condition that must be met before the contract is legally binding. For example, if buying a home the purchaser may specify that the contract is not legally binding until the purchaser has obtained a building inspection.
SquareA square is a measurement of home area. One square = 9.3m² approximately.
Stamp DutyA state tax on conveyance or transfer of real property calculated on the total value of the property (including chattels). This calculation varies from State to State.
Strata TitleA title to a unit or lot on a plan of subdivision associated with townhouses, units and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.
Stratum TitleAlso called Company Title. A stratum-title owner has a certificate of title and is the absolute owner of a freehold flat. An owner automatically becomes a member of a service company that administers, manages and maintains the property in which the owner’s flat is registered.
StudsThe uprights in the wall of a building.
SubdivisionA tract of land divided into individual lots for a housing development.
SurveyA drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
TenancyThe right to occupy a property under agreed terms and conditions.
Tenancy for LifeSee Life Estate.
Tenants in CommonA type of joint tenancy in a property where two or more purchasers own a property in unequal shares. If one dies, his or her shares pass to his or her beneficiaries under the terms of the will. Contrast with joint tenancy.
Title SearchA check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or liens outstanding.
Torrens TitleA system of recording property ownership where registration on the Certificate of Title guarantees ownership.
TownhouseA dwelling unit, generally having two or more floors and attached to other similar units via party walls.
TransferA document registered at the Land Titles Office and noted on the Certificate of Title which verifies the change of ownership of a property.
TrusteeA fiduciary who holds or controls property for the benefit of another.
Under LicenceEarly possession of the property before settlement with the permission of the vendor. This usually involves the payment of rent.
UnderpinningSupports placed under an existing wall to provide added strength.
Unsecured LoanA loan that is not backed up by collateral.
UtilitiesThe private or public service facilities such as gas, electricity, telephone, water, and sewer that are provided as part of the development of the land.
ValuationA written analysis of the estimated value of a property prepared by a qualified valuer.
VendorThe seller.
Vendor Statement (Victoria only)Also called the Section 32 Certificate of the Sale of Land Act. Known as Contract of Sale in NSW. A statement by the vendor of the particulars of the property offered for sale. It must be signed by the purchaser before signing the Contract of Sale or Contract Note.
VillaA single storey attached dwelling.
VoidHaving no legal force or effect. Unenforceable. See Null and Void.
Wall cavityThe space between the inner and outer sections of a wall.
Water CourseA natural stream of running water being fed by a natural source such as a stream or river.
Wish ListThink of a wish list as the criteria for your perfect home. While it’s rare to find everything you’d like in the house you finally purchase, sitting down and making a wish list will help you find the house which most closely matches your dream.
XA notation made by an individual who has not learned to write or physically unable to write, to show intent to sign an instrument such as a deed or will. In regard to the conveyance of real property, such a person would be required to make such a mark or at least a thumbprint as intent to sign and have it witnessed.
YieldThe interest earned or return by an investor on an investment, stated as a percentage of the amount invested.
ZoningLocal authority guidelines for the permitted use of land.