Your go-to resource for understanding essential conveyancing terms. Whether you’re buying, selling, or just curious about property transactions, our glossary provides clear definitions and explanations for all key terms. Navigate the complexities of property law with ease, from “contract of sale” to “settlement.”
Let us help you make informed decisions with confidence and clarity throughout your property journey.
Adjustments:
Apportioning of costs between the buyer and seller based on the date of settlement for items such as utilities, rates, rent, body corporate and land tax.
Adverse Possession:
Adverse possession is a legal doctrine that allows a person to claim ownership of land under certain conditions, even if they do not hold the title to it. The idea is that if someone uses and occupies land in a way that is open, continuous, exclusive, and adverse to the interests of the legal owner, they can eventually gain legal ownership of it.
Aggregation:
Aggregation refers to the process of combining and valuing all the assets and liabilities that are part of the marital or partnership estate to determine how they should be divided. This involves summing up various forms of property—such as real estate, investments, personal property, and debts—to get a comprehensive picture of the total value of the estate.
Allotment:
Allotment refers to the process of distributing or assigning specific portions of a property or rights to individuals or entities. This can occur in various scenarios, such as land development, estate settlements, or business transactions.
Amortisation:
Amortisation typically refers to the gradual repayment of a loan or mortgage that is used to finance the acquisition of property. It involves paying off the debt through regular payments over a specified period.
Arrears:
Arrears refers to overdue payments or outstanding amounts that are due but have not yet been paid. This can apply to various financial obligations associated with property, such as mortgages, property taxes, or rent.
Auction:
Auction is a public sale process where a property is sold to the highest bidder.
Bridging Loan:
Short-term loan to help individuals or businesses “bridge the gap” between the purchase of a new property and the sale of an existing property. It provides temporary financing to cover the period when funds are needed for the new property, but the borrower has not yet received the proceeds from selling their current property.
Caveat:
A legal notice lodged with the Land Titles Office to notify others there is a claimed interest in the property.
Caveator:
A caveator is a person or entity that lodges a caveat with the relevant land or property registry to protect their interest in a particular piece of land. A caveat is a legal notice or warning that prevents any further dealings with the property until the caveator’s claim is resolved.
Certificate of Title:
Official legal document providing proof of property ownership.
Chain of Transactions:
A series of interdependent property sales and purchases where the successful completion of one transaction relies on the completion of another.
Chattels:
Movable items of personal property that are not permanently attached to the land or buildings. These items can be removed without causing damage to the property and are distinct from fixtures, which are items that are permanently attached to the property and considered part of the real estate.
Clearance Certificate:
Legal document issued by the Australian Taxation Office (ATO), to confirm that a seller of real estate has met their tax obligations, particularly in relation to Capital Gains Tax (CGT) and Foreign Resident Capital Gains Withholding (FRCGW) provisions.
Compulsory Acquisition:
Process by which a statutory authority takes ownership of private land or property for public purposes, without the consent of the landowners. This is done under legal powers provided by legislation and the landowner is typically entitled to compensation for the loss of their property.
Conditional Contract:
A contract for the sale of property that is subject to one or more specific conditions being met before the contract becomes fully binding. These conditions must be fulfilled by a specified deadline, and if they are not met, the contract may be voided or terminated without penalties to the buyer or seller.
Consideration:
The value or payment that is exchanged between parties in a contract for the sale of a property. It is an essential element in making a contract legally binding. In most property transactions, the consideration is the purchase price.
Constructive Notice:
The legal concept where a person is assumed to have knowledge of a fact, even if they do not actually know it, because it was readily available or accessible to them. In the context of property transactions, constructive notice applies when a buyer or interested party is expected to be aware of certain information, as it could have been discovered through reasonable investigation or enquiry.
Contract of Sale:
Legally binding document outlining the terms and conditions of a property sale.
Conveyancer:
A licensed professional specialising in the legal aspects of buying and selling property.
Cooling-off Period:
A set timeframe after signing the Contract of Sale during which the buyer has the right to cancel the contract without significant penalty.
Covenant:
A covenant is a legally binding promise or restriction imposed on a property owner, typically outlined in a deed or other legal document. Covenants can be either positive or negative and are designed to regulate the use and development of the property.
Deposit:
A sum of money paid by the buyer to seller (or the seller’s agent) as a sign of the buyer’s commitment to purchase the property, typically made when the Contract of Sale is signed.
Disbursements:
The out-of-pocket expenses incurred by the conveyancer on behalf of the buyer or seller. These costs are necessary for completing the legal and administrative aspects of the property transaction. Disbursements are separate from the professional fees charged by the conveyancer for their services.
Discharge of Mortgage:
Discharge of mortgage refers to the legal process of releasing the mortgage lender’s claim on the property once the borrower has fully repaid the mortgage loan. This process is essential for transferring clear title of the property to a new owner or for ensuring that the property is free of encumbrances if the borrower is selling it.
Easement:
A legal right that allows a person or entity to use a portion of land for a specific purpose. Easements are typically registered on the title of the property and are legally binding on current and future owners.
Encroachment:
Encroachment refers to a situation where a structure or improvement on one property extends onto or intrudes upon an adjacent property. This can include physical structures like buildings, fences, driveways, or overhanging branches. Encroachments can create legal and practical issues during property transactions.
Encumbrance:
Any legal right or interest in a property that affects its value, use or transferability. Encumbrances are registered on the property title and can impact the owner’s ability to sell or use the property as they wish. Encumbrances include mortgages, easements, covenants, liens and leases.
Equitable Interest:
A legal concept where a person has a right or claim to a property, even though they may not hold the formal legal title to the property. AN equitable interest grants certain rights over the property which are enforceable in equity rather than strictly by law.
Fixtures:
Fixtures refer to items that are permanently attached to a property and thus considered part of the real estate. These items are typically fixed to the property in a way that makes them difficult to remove without damaging the structure.
Freehold:
Type of property ownership where the owner holds full legal ownership of both the land and any buildings on it for an indefinite period.
GST:
Goods and Services Tax which is applied to certain transactions involving the sale of property. GST is generally applicable to the sale of new residential properties and commercial properties
Inclusions:
In the context of property transactions, inclusions refer to items or features that are explicitly included as part of the sale of the property. These are things that the seller agrees to leave behind and transfer ownership of to the buyer as part of the sale agreement.
Inclusions can cover a range of items and features, and they are usually specified in the sale contract to avoid misunderstandings between the buyer and the seller.
Indefeasibility:
A legal principle in property law that refers to the security of ownership of land under a Torrens Title system, where the registered owner’s title to the property cannot be challenged or overturned, except in certain limited circumstances.
Joint Tenants:
A form of property ownership where two or more individuals hold title to a property together, sharing equal rights and interests in the property. This type of ownership is characterised by the principle of “right of survivorship”, meaning that if one joint tenant dies, their share of the property automatically passes to the surviving joint tenant(s), rather than being distributed according to a will or state law.
Lien:
A lien is a legal claim or right that a creditor has over a property, typically as security for a debt or obligation. A lien gives the creditor the right to take certain actions against the property if the debt is not paid or the obligation is not fulfilled.
Land Tax:
A government-imposed tax levied on the value of land owned by an individual or entity. It is typically assessed annually and is based on the unimproved value of the land, which excludes any buildings or improvements made on it.
Leasehold:
Type of property ownership in which a person or entity (the lessee or tenant) holds the right to use and occupy a property for a specified period under a lease agreement with the owner of the property (lessor or landlord). The leasehold arrangement grants the tenant certain rights to the property, but the ultimate ownership remains with the landlord.
Memorandum of Transfer:
A legal document used in property transactions to officially transfer ownership of real estate from one party (the transferor) to another (the transferee). This document serves as evidence of the transfer and outlines the key details of the transaction.
Mortgagee:
A mortgagee is the lender or financial institution that provides the mortgage loan to the borrower (mortgagor). The mortgagee holds a legal interest in the property as security for the loan. This means that if the borrower fails to repay the loan according to the terms agreed upon, the mortgagee has the right to take legal action to recover the owed amount, which can include foreclosing on the property.
Mortgagor:
A mortgagor is the borrower who takes out a mortgage loan from a lender (the mortgagee) to purchase or refinance a property. The mortgagor pledges the property as collateral to secure the loan, which means that the lender has a legal claim on the property until the loan is fully repaid.
Negative Gearing:
A financial strategy used in property investment where an investor borrow money to purchase an investment property, and the income generated from that property (ie rent) is less than the costs associated with owning and managing it (including mortgage repayments, maintenance, insurance and property taxes). Consequently, the investor incurs a net loss on the investment for tax purposes.
Off-the-Plan:
The purchase of a property before it has been constructed or completed. Buyers enter a contract to buy the property based on architectural plans, designs and projections of what the finished product with look like, often with an indicative timeline for completion.
Pest and Building Inspection:
A comprehensive examination of a property to assess its structural integrity and identify and pest infestations or damage. It is typically conducted by a qualified professional and commonly requested by potential buyers before purchasing a property.
Possession Date:
The possession date is the specific date on which the buyer gains legal and physical access to the property. This date is important because it marks when the buyer can take control of the property, move in, and start using it as their own.
Requisitions:
Requisitions refer to formal inquiries or requests for information made by the buyer’s legal representative to the seller’s legal representative. These are typically raised during the conveyancing process, particularly after the exchange of contracts but before the completion of the sale.
Rescission:
A legal remedy that allows a party to a contract to cancel or terminate the contract, thereby nullifying its legal effect and restoring the parties to their original positions as if the contract had never been made.
Searches:
The various enquiries and investigations conducted by the buyer’s conveyancer to gather information about the property being purchased. Common searches include title search, planning search, council rates search, water rates search, utilities search, environmental search.
Section 32 Statement:
Section 32 refers to a specific provision in the Sale of Land Act 1962 (Victoria, Australia). It requires the seller to provide a comprehensive disclosure statement to the buyer before the sale is finalized. This statement is commonly known as a Section 32 Statement or Vendor’s Statement.
Settlement:
The final stage of the conveyancing process where ownership of the property is transferred from the seller to the buyer. It is the point at which the buyer pays the balance of the purchase price to the seller and the seller hands over the keys and legal title to the property.
Settlement Agent:
Another term for a conveyancer who specialises in facilitating the settlement process for property transaction.
Stamp Duty:
A tax imposed by the state and territory governments in Australia on the sale or transfer of property. The amount of stamp duty payable varies depending on the value of the property and the location, as each state and territory sets its own rates and thresholds.
Strata/Body Corporate:
A type of property ownership where individuals own a portion of a larger property or building, along with shared areas and facilities. This form of property typically applies to units, apartments and townhouses.
Torrens Title:
A system of land registration in which a register of land holdings maintained by the state guarantees an indefeasible title to those included in the register. Indefeasibility of title means that once a person’s name is registered on the title, their ownership of the property is protected against all claims except in certain limited circumstances.
Transfer of Land:
“Transfer of land” refers to the legal process of transferring ownership of a property from one party to another. This process involves several key steps and legal requirements.
Vendor Statement:
A Vendor Statement, also known as a Section 32, is a legal document prepared by the seller of a property that provides important information to potential buyers. It is mandatory in Victoria to provide a Section 32 as it serves to inform buyers about various aspects of the property before they make an offer or purchase.
Zoning:
Zoning is a system of land use planning that divides land into different zones or areas, each with specific regulations and restrictions on how the land can be used. Zoning is used by local governments to regulate and control the development of land within their jurisdiction and ensure the land is used in a way that is consistent with the community’s needs and objectives.