Terminology

Auction:

This is a method of selling your property where prospective purchasers make bids at the auction.  It takes place on a set date, either at the property, or sometimes in auction rooms nominated by your agent.  A few days prior to the auction you will usually set a reserve price in discussions with your agent.  If the bidding reaches the reserve price, the property is then, “on the market” and can be sold.  Contracts are signed on the spot, and it is legally binding from that time.

Caveat:

This is a document which is sometimes registered on the title of a property, which warns any prospective purchaser that you have an equitable interest in that property.  What this basically means, is that the property can’t be sold without you being notified.

Cooling off period:

When a real estate agent exchanges contract on a residential property, the purchaser has five business days in which they can pull out of the transaction.  The purchaser will lose the 0.25% deposit which they had paid at the time that they signed the contract.  It frequently is the case that the cooling off period will need to be extended, particular if the purchaser is obtaining a loan and the bank needs to carry out a valuation of the property. It is important to note that the vendor or seller cannot pull out of the contract under a cooling off period, only the purchaser.

Contract:

This is a document that we will prepare, which sets out the terms and conditions of your sale.  If you are a purchaser it is prepared by vendor’s solicitor or Conveyancer.  It is a legally binding document when exchanged, and you should ensure that you understand all of your obligations pursuant to the contract.

Deposit:

When contracts are exchanged, the purchaser normally pays a 10% deposit, which is part of the total purchase price.  In some instances this may be negotiated down to a 5% deposit.

Deposit Bond:

Sometimes people don’t have funds available to pay a cash deposit.  A deposit bond is similar to an insurance policy, which effectively guarantees that the purchaser’s deposit will be paid in the event that they default and don’t complete the contract.  If you are using a deposit bond, you will obtain that from the bank from which you are obtaining your finance.  The bank will charge you a fee for provision of a deposit bond.

Exchange of Contracts:

This takes place when a copy of the contract signed by the vendors is exchanged with a copy of the contract signed by the purchasers, and dated on the day of exchange.  It commonly is carried out by the real estate agent acting on the sale of the property, but sometimes is effected by your Licensed Conveyancer.

Mortgage:

When you are obtaining finance from a bank or other financial institution to help you buy your property, they will take a mortgage out over the property, which is then registered at the Land and Property Information Service.  Your bank will then hold your title deed until such time as you have repaid the mortgage in full. 

Mortgage Broker:

A mortgage broker is someone that will assist you in applying for your loan and in processing that loan.  Some mortgage brokers deal only with one financial institution, whereas others deal with a number of banks of financial institutions.  It is always a good idea to discuss with your mortgage broker exactly what your needs are in terms of your loan.

Owners Corporation:

This is a committee that oversees the smooth running of blocks of units. 

In most cases there is an Executive Committee elected, which can make decisions about the day to day running of the units.  Each unit holder in a block of units has a certain number of voting rights, and is entitled to vote as part of the Owners Corporation.

Private Treaty:

This is where your property is sold by way of open for inspections or private viewings.  The purchaser would normally make an offer and the sale price is ultimately negotiated by your agent acting on your instructions.   

Section 66W Certificate:

In some cases, your agent won’t exchange contracts and that will be done by your Conveyancer.  In those circumstances, your Conveyancer will sign a certificate confirming that you have been advised of the conditions of the sale, and a cooling off period does not then apply.  The effect of this is that you are legally bound to complete the contract at the time that contracts are exchanged.

Settlement:

Settlement will usually occur at the office of the outgoing mortgagee of the property.  If you are a seller, it will be your bank.  If you are a buyer it will be the bank of the vendor.  Clients do not attend settlement.  At present settlement is effected by the purchaser’s bank and solicitor handing over the balance of purchase monies that are required to effect settlement and the vendor’s solicitor and bank handing over the title deed and discharge of mortgage. There is a process in place to move to electronic settlements, and that should be happening in the not too distant future.

Stamp duty:

Stamp duty is a government tax that is payable by the purchaser whenever real estate is purchased.  It always has to be paid before settlement, as the transfer document cannot be registered until such time as the stamp duty is paid.  Stamp duty varies according to the value of the property and sometimes the type of ownership.  There are also sometimes concessions in place offered by the State government.  We will let you know exactly how much is liable to be paid and when you need to make payment.

Strata Title:

This is a common way of ownership for blocks of units.  Basically the Owners Corporation owns the common property and the structure of the building and is responsible for the repairs and maintenance of those areas.  The unit holder owns the interior of their unit and is responsible for repairs and maintenance to the interior.

Vendor:

This is the seller of the property.