Glossary of Real Estate Terms

The Real Estate terms you need to know

Whether you're buying a strata title or refinancing your loan, in our glossary of common real estate terms we explain what the jargon means.

If you need more help with any aspect of buying a property, please speak to one of our home loan experts on 13 33 30.

Glossary of Real Estate Terms

Acceptance: In most cases, acceptance of an offer according to its terms creates an enforceable agreement or contract.

Agent: A person authorised to act on behalf of another person in the sale, purchase, letting or management of property. The relevant authority in his or her State/Territory must license a real estate agent.

Allotment: When a larger area of land is subdivided into smaller pieces, these smaller parcels of land are known as allotments. Also referred to as a "lot", "building block" or "block of land".

Amenity: Is a characteristic or feature of a neighbourhood. For example, a public swimming pool is an amenity.

Apartment: See Home Unit.

Appreciation: The increase in the value of property caused by economic factors such as inflation, or an excess of demand over supply for that property type.

Architrave: A moulding surrounding a door or window opening.

Auction: A public sale in which property (or an article) is sold to the highest bidder.

Battleaxe: A block of land shaped like an axe, where the handle is in the approach. Generally situated between other blocks, thus having no apparent street frontage.

Beam: A horizontal load-bearing structural member.

Bearer: A sub-floor timber supporting the floor joists.

Body Corporate: All of the owners collectively of the common property in a block of units. The council of the Body Corporate, which is elected by the members, meets regularly to discuss various matters relating to the administration of the building (for example, upkeep of common property).

Bond: A sum of money paid by a tenant and held by the Rental Bond Board to protect against losses from non-payment of rent and damage done to the rental property.

Boundary: A line separating adjoining properties.

Breach of contract: Breaking the conditions of a contract.

Brick Veneer Construction: In housing, brick veneer construction is a system in which a structural timber frame is tied to a single brick external wall.

Bridging Finance: Finance obtained over a short period, as a "bridge" to long-term funding. Higher interest rates may be charged for bridging finance.

Building Regulations: Rules of a legal or statutory nature by which local councils control the manner and quality of a building. They are designed to ensure public safety, health and minimum acceptable standards of construction.

Caveat: "Beware" - if a caveat is lodged on a title to land, it warns a person buying the property that a third party (the party that lodged the caveat) has some right or interest in the property.

Caveat Emptor: "Let the Buyer Beware" - this principle of law requires the buyer to be satisfied with the item they wish to buy before buying. The buyer purchases the property "as is".

Certificate of Title: A document identifying the ownership of land. It shows who owns it and whether there are any mortgages or other encumbrances on it.

Chattels: Property other than real estate, such as moveable possessions that may be included in a sale, e.g. furniture.

Clear Title: A vendor has a clear title when there are no interests (like an outstanding mortgage) on the vendor's title.

Cluster Housing: Detached group of houses that share open space.

Commission: A fee or payment made to a real estate agent for services successfully rendered (for example, someone who hires an agent to sell his/her home pays the agent a commission when the home is sold).

Common Area: An area that is available for use by more than one person (for example, home units have common areas like stairs, driveways, store rooms).

Common Law Title: Usually referred to as "old system title", it consists of a series of title documents called "a chain of title". The title to a property held under this system is “clear” only if every document in the chain is available and complete (ie, the chain of title is unbroken). Legal costs associated with a purchase of Old System Title land are higher than those on a purchase of Torrens Title land, because making a thorough investigation of the chain of title can be complicated and time consuming. Old System Title may be converted to Torrens Title, and often can be automatically converted to Torrens Title following a sale.

Compulsory Acquisition (resumption): The power of a government authority to purchase (resume) property from an owner without the owner agreeing to sell.

Contract of Sale: A document that sets out the terms and conditions of sale between the vendor and the purchaser (referred to as a "Contract").

Conveyance: The process of transferring the ownership of property from the vendor's name to the buyer's name.

Covenant: An agreement noted on the title to a property requiring the property's owner to adhere to certain terms, conditions or restrictions regarding the property. The nature of any covenant over a property should always be established before you enter into a contract to purchase the property.

Cover Note: A document issued by an insurance company to temporarily insure a property until a formal policy is issued, following payment of the requisite premium.

Deed: A formal document including special signing requirements recording an agreement, obligation or conveyance of property.

Deposit: the buyer normally pays a deposit at the time of exchanging contracts. It is normally between 5-10% of the total purchase price.

Dual Occupancy: A block of land or existing dwelling that is zoned in a way that allows the owner to erect a building that has two distinct living arrangements (for example, a duplex or a house with a granny flat attached).

Duplex:  A dwelling having 2 apartments with separate entrances for each apartment.

Fittings: Goods or articles that can be removed from a property without causing damage to it.

Fixtures: Items such as built-in cupboards, bath, toilets and stove that are intended to form part of a property and that usually cannot be removed from a property without causing damage to it.

Free Standing: A dwelling that stands independently of others.

Gazumping: Gazumping may take two forms:

• The intending buyer believes that the property has been secured by payment of a holding deposit, and proceeds to arrange finance, legal and other matters. When ready to exchange contracts, the intending buyer finds that another buyer (of which he or she was unaware) has exchanged contracts with the vendor on the same property
• The vendor or real estate agent accepts two or more deposits and then before contracts are exchanged, tells the intending purchasers that the price has gone up. The intending buyers are then left to outbid each other as if it were an auction.

Home Unit: A residential dwelling grouped with others, having shared common areas and owned under Strata Title, Company Title or other group title system.

Interest only loans: The principal amount borrowed is not repaid until the end of the term of the loan. Generally, repayments consist of interest only.

Inventory: A list of items included with a property, usually furniture, furnishings and movable items.

Investment: The purchase of an asset (like real estate) in order to produce capital gain on resale or to earn income or both.

Joint Tenants: Joint tenancy is the holding of property by two or more persons in equal shares.

Land Tax: A State government tax payable by owners of property based on the unimproved capital value of the property.

Lease:  A lease is a document granting possession of a property for a given period, subject to the payment of rent, without conferring ownership. The lease document specifies the terms and conditions of occupancy and rent payable.

Lender's Mortgage Insurance: There are a number of variables that influence whether or not lender's mortgage insurance is required. Generally, it is required if you are borrowing more than 80% of the value of the property, however this condition varies depending on property type, location of the property, loan type, etc. Lender's mortgage insurance protects the lender, not the borrower(s), against loss in the event that you default on the loan. This should not be confused with mortgage protection insurance for borrowers. In the case of foreclosure, if the property is subsequently sold by the lender at a price that does not cover the outstanding amount of the loan in full, lender's mortgage insurance will cover the difference in the debt still owed to the Bank after the sale of the property.

Lessee: A person who obtains possession of a property under a lease.

Lessor: A person who owns a property and allows another to occupy it under a lease.

Mortgage: A legal document that gives a lender an interest over a property to secure the payment of money, or the performance of an obligation owed, to a lender.

Mortgagee: Someone who lends money on the security of a mortgage.Mortgagor: Someone who borrows money offering the security of a mortgage.

Old System Title: See Common Law Title.

Option to buy: A legal document giving a person a right to buy. The price of the option and the period in which it must be exercised are specified in the option. Usually, a fee is paid and if the person proceeds to buy, the amount paid for the option is deducted from the purchase price. Where the person does not proceed to buy the property, the option fee is not refundable.

Principal and interest loan: A loan made under a principal and interest repayment condition is the most common form of housing loan. The repayments are calculated so that over the term of the loan, both the principal amount borrowed initially and the interest payable over the term of the loan, are repaid in full by the end of the loan's term.

Private Sale: The seller (vendor) does not engage a real estate agent, but acts for him or herself and so avoids paying agent's commission. The seller deals directly with the buyer.

Private Treaty Sale: Sale of property through an estate agent, other than by auction.

Progress Payments: Payments/instalments advanced on a construction loan which, during the construction period, are paid by the lender to a builder as the building progresses. Progress payments are made on completion of pre-determined and agreed stages of construction.

Property Management: The management of a property on behalf of the owner.

Rates: The amount charged by the local council or water authority to provide services to a property.

Real Property: Land with or without improvements on it.

Reserve Price: This is the minimum price a seller has specified that they will accept to sell their property at auction.

Search (title): The process of investigating or examining title to land, to ascertain if the vendor has the right to transfer ownership. A title search reveals the names of the owner and other precise details of the property, like the existence of any restrictive covenant, encumbrance or caveat on the title.

Semi-detached: Two houses joined together by a common wall.

Settlement: When the sale of a property is legally finalised.

Stamp Duty: A State Government Tax. For contracts of sale it is calculated according to the sale value on the contract. For mortgages, it is calculated on the amount to be advanced and secured by a mortgage.

Strata Title: A system of title that allows the owner of a unit, in a block of units, to have separate title for that unit.

Survey: Shows dimensions and boundaries of land and location of buildings.

Tenancy: The right to occupy land or buildings as provided by the terms of a lease or other agreement.

Tenants in Common: This is the holding of property by two or more persons in specific shares. If one person dies, their share does not automatically pass to the surviving owners, instead it is passed on according to the terms of their will.

Terrace: One of a row of houses joined together with common walls.

Torrens Title: The name given to the government system of recording ownership of land. It’s by far the most common land title in Australia and the cheapest title to buy or sell. Once you are registered on the title you are taken to be the owner.

Town House: Two-storey attached dwellings usually registered under Strata Title.

Transfer: A document registered at the Land Title Office recording the change of ownership to a property.

Unencumbered: Usually describes a property free of mortgage interests.

Valuation: A written opinion of a property’s value by a valuer.

Vendor: A person who offers a property for sale.

Villa: Single-storey dwelling usually registered under strata or community title.

Zoning: Description of the allowable uses of land, as set out by local councils or planning authorities.