When you’re buying or selling property, it’s likely you’ll hear or read real estate expressions from real estate agents, mortgage brokers and settlement agents. It’s important to understand the real estate terms that may be used so that you’re fully aware of documents you’re signing and to avoid any confusion.
Here are some of the most common terms used in Western Australian property settlements:
Adjustment of Rates and Taxes
Rates and taxes are adjusted so that the buyer and seller pay only their portion. These may include council rates, water rates, strata levies and land tax. The seller pays up to and including the day of settlement (or possession if this comes earlier). The buyer pays from and including the day after settlement (or possession if this comes earlier).
Building Inspection Report (also known as Pre-Purchase Inspection or Standard Property Report)
A report that may be required as part of the conditions of a Contract to uncover any building defects or structural issues. Some contracts contain a condition that may allow for the remedy or repair of certain issues. Conditions may also give the buyer the option to terminate the Contract if structural damage is identified.
Buyer and Seller
The buyer is the party who is purchasing the property who is specified in the Contract. The buyer may also be known as the purchaser. The seller is the party selling the property who is specified in the Contract. The seller may also be known as the vendor.
A caveat is a legal document registered on a title to prevent the registration of particular dealings. A Title Search will reveal whether there is a Caveat registered. Contact Prime Settlements if you’d like us to search the title for you.
Certificate of Title (also known as title or informally as title deed)
Certificates of Title are issued by Landgate and hold information in relation to property ownership. This includes the name/s of current owner/s, the identifying details such as volume, folio, lot number and survey plan number and type and any limitations or encumbrances. Original titles are always held by Landgate. If a duplicate title is issued, it is usually held by the owner/s or the lending institution as security for a loan. You can obtain a title search through Landgate or ask us to search it for you.
In residential property, a chattel is a removable item of property that is not real estate and not part of the structure of a house. This may include furniture, appliances, blinds, curtains, rugs and mats. In farming property, transfer duty may not apply to some farm-related chattels.
Conditions of Contract
Conditions are items that are required to be carried out before settlement can take place. Some common conditions include finance approval, building inspection and termite inspection. There may also be due diligence conditions or conditions that require the seller to repair certain items or require vacant possession at settlement. You can negotiate the conditions of the contract and they should be clearly defined. You should always ensure that you understand the conditions before signing a contract.
The consideration is usually the purchase price or amount of money exchanged for the property. If there is no sum of money exchanged, then the consideration must be explained (such as “Gift”).
A document containing an offer and acceptance with terms and conditions outlining the requirements of each party. Real estate contracts are also known as Contract for Sale, Offer or Contract for Sale of Land or Strata Title by Offer and Acceptance. Contracts are legally binding if signed correctly. In Western Australia, the Joint Form of General Conditions forms part of the contract and sets out the rights and obligations of the parties from the time of signing the contract to the date of settlement.
The process of transferring ownership of property. This may include transfer from a seller to a buyer, a deceased joint tenant to a surviving joint tenant, a deceased proprietor to their beneficiaries, a spouse to another spouse and many other scenarios. Prime Settlements can assist in a variety of conveyancing transactions.
The act of not complying with conditions or obligations under a contract. If a buyer or seller is in default, the Joint Form of General Conditions sets out the process and remedies for the other party.
A sum specified in the Contract required to be paid by the buyer to the seller or seller’s agent by a certain time.
Fees incurred from third parties in the course of a settlement which are payable by the client. This may include title searches, registration fees, couriers and strata certificate fees.
A document signed by an owner to give their financial institution authority to discharge the mortgage. This is required when selling a property that has a mortgage.
Discharge of Mortgage
The document provided by the financial institution at settlement to discharge the mortgage in exchange for the sum of money owing.
Discharge Payout Figure
The sum required to be paid to a financial institution in order to discharge a mortgage.
An item registered on a title or plan of a property that gives limited right or restriction to part of the land for a specific purpose. Easements may relate to rights of carriage way, access to install or maintain electric power lines or cables and access for water purposes.
An interest registered on a title such as a mortgage, caveat, lease agreement and easements.
A common condition included in contracts for buyers who are obtaining finance to purchase the property.
Joint Form of General Conditions (Joint Form)
A standard part of contracts created by REIWA and the Law Society of Western Australia. The Joint Form outlines the rights and obligations of the parties in the pre-settlement period.
The act of owning property with one or more other people as joint tenants. Joint tenants hold an equal interest in the land and upon death of one joint tenant, the surviving joint tenant/s acquire their interest. Read more about the difference between Joint Tenants and Tenants in Common.
A Statutory Tax levied by the State Government of Western Australia payable on land that is not used as a principal place of residence.
Landgate (formerly DLI and DOLA)
The Western Australian Land Information Authority known as Landgate maintains the land titles system and location information about property ownership in Western Australia.
A document registered on a title securing a loan provided by a financial institution to an owner of property.
Penalty Interest & Penalty Compensation
A sum payable by a seller or buyer as a result of settlement being delayed beyond three business days of the settlement date. Specified in the Joint Form as 9% of the balance of the purchase price, payable on a daily basis from the date of settlement up to (but excluding) the date on which settlement takes place.
Prior Possession Agreement
A written agreement between a buyer and selling granting possession of the property prior to settlement.
The process of transferring ownership of a property, usually in exchange for a sum of money.
The date specified in the contract that settlement takes place.
The sum payable to your settlement agent for their professional services in attending to your settlement. Settlement agents can charge any reasonable amount but this must be disclosed to you. View our settlement fees for buyers and sellers.
A document provided to you by your settlement agent before settlement takes place. A settlement statement outlines the amount payable by the buyer, taking into account any deposit and adjustment of rates and taxes.
Tenant in Common
A form of ownership in which owners may hold land in undivided shares and upon death of a tenant in common, their share is dealt with in their will or in accordance with the Administration Act 1903 (WA). Learn more about the difference between a tenant in common and joint tenant.
Termite Inspection Report
A report provided if specified in a contract that details the results of an inspection of activity of timber pests or termites.
Three Days Grace
Informal term for the three business day period after the scheduled settlement date in which settlement can take place without any penalties payable by either party.
A copy of the Certificate of Title obtained from Landgate. Contact Prime Settlements for a search of your title.
A sum payable by the buyer on the contract for the purchase of a property. There are different rates of Transfer Duty (including first home owners’ rate, residential rate, vacant rate and general rate). Speak to us, your bank or financial broker if you require any further assistance or information on what rate may apply to you.
Transfer of Land
The document specifying the details of the sale (such as land description, owner/s name, buyer/s name and consideration) lodged at Landgate to effect a transfer of the title from the seller to the buyer.
An account operated by a lawyer or settlement agent to hold funds in trust for clients. Any sum placed in a trust account is not permitted to be used without the authority of the client.
If a property is not sold subject to a lease, the Joint Form of General Conditions states that the buyer is entitled to vacant possesion. If the property is sold subject to a lease, then vacant possession only applies if it’s included as a condition in the contract.
A document signed by the seller and buyer varying the terms of the contract. The most common use of a variation is to change the finance approval date or settlement date.
Did you find these definitions useful? If there are any words you’d like explained, leave us a comment or email us at firstname.lastname@example.org.