Real Estate & Home Buyer Terminology To Know

Whether you’re heading into your first property purchase or deciphering a lengthy contract, there may be some home buyer terminology you’re unfamiliar with. You’re not alone, because there’s plenty of technical language in the real estate industry!

Below, we’ve rounded up many of the important real estate definitions in Australia for quick and easy reference.

Appraisal

A property appraisal estimates the value of a property if it were on the market right now. This report is provided by a qualified real estate professional, and takes into account factors like location, property features and nearby amenities.

Certificate of Title

A Certificate of Title, also known as a property title or title deed, is a legal document that officially records ownership of a property and if there are any encumbrances affecting the property such as a mortgage. When a property exchanges owners, the name on that Certificate of Title is updated.

Collateral

Collateral is an asset that may be provided as security for a mortgage or loan. The collateral could be forfeited in the event of a default on that loan.

Contract of Sale

This is one of the key terms to know when buying a house or property. The contract of sale is a legally binding agreement between you and the seller that outlines sale terms. It will include the sale price and other conditions. In Australia the contract of sale is usually prepared by a conveyancer or a solicitor.

Conveyancer

A conveyancer is a licensed professional who specialises in property transactions. If you're buying property, your conveyancer can represent you and help draw up, clarify and lodge the necessary documentation.
A conveyancing solicitor additionally has a legal qualification and knowledge of property law, which can help for complex property sales.

Deed

A deed is a binding promise to do something.

Easement

An easement is usually a right of way, which allows another person to cross over or use that part of the property.

Encroachment

An encroachment is where a building or fixture from one property intrudes onto an adjacent property. Encroached property can be a common cause of neighbourly disputes, and a title insurance policy may be of help.

Encumberance

An encumbrance is a broad term for any claim made against a property by someone other than its owner. Encumbrances can include mortgages, easements, and liens.

Equity

Equity is the difference between the current value of your property and the amount you owe on it. For example, if your home is worth $500,000 and you still owe $300,000 on the mortgage, your equity would be $200,000. Home equity is sometimes used as collateral for loans.

Home and Contents Insurance

Where home insurance covers the building structure against risks like fire or storms, contents insurance covers belongings within the home. These two insurance types are often bundled together under the name home and contents insurance.

Illegal Building Work

Illegal building works are structures that were built without required approval by the relevant council or planning authority. They could include carports, patios and sometimes whole extensions. These can be expensive issues to rectify, and if you find out about them after settlement this is something title insurance may help with.

Principal

In a mortgage context, the principal is the amount of money you borrow from your lender. Meanwhile interest is the amount you are charged to borrow this money over time.

Settlement

Settlement is the final stage of a property transaction. A successful settlement sees ownership transfer from the previous owner to the new owner.

Strata Title

A strata title refers to a form of ownership that applies for many multi-residence properties where there is also shared property, such as apartment blocks. The various owners have individual ownership over part of the property, but also share ownership and responsibility of common assets.

Survey Report

A survey report allows you to see details that aren’t immediately obvious when inspecting a property. This report outlines the boundaries of the property, buildings, and improvements such as fences and pools.

Title

Title is a term often used for Certificate of Title, or property title.

Title Insurance

Title insurance is an insurance type that protects against a range of property ownership risks, such as:

Unforeseen covenants, encroachments or easements if they limit your use of your property.
Encroaching structures and incorrect boundary issues that you weren’t aware of at settlement.
Previously unknown illegal building works, and more.

Keep reading: What is title insurance?

Torrens Title

A Torrens title refers to a form of ownership where the owner possesses the land and building/s on it. This differs from a strata title which involves some shared ownership.

Upfront Costs

Upfront costs are those you need to pay before or during settlement. These can include title transfer fees, conveyancing fees and any applicable stamp duty. It’s also important to consider any unpaid land rates or taxes that you may become responsible for at settlement. If these were incorrectly calculated, you could submit a title insurance claim to cover the costs.

Conclusion

So, there they are –some basic real estate terms for every home buyer to know.

Another important aspect is getting the right insurance coverage to manage property risks. If you’d like to know more about the importance of title insurance, or would like a quote for your property, contact us at First Title today.

Real Estate Terms