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- Agent - a person authorised to act for another (usually the owner) in the selling, buying, renting or management of a property.
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- Allotment - another name for a ‘lot’ or ‘block’ of land subdivided from a larger area of land.
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- Annual Percentage Rate (APR) - the interest rate expressed as a percentage rate per annum (year). Under the Consumer Credit Code, the relevant annual percentage rate or rates must be set out in a pre-contractual statement and the contract document.
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- Auction - a public sale of property in which the highest bidder is normally the successful buyer.
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- Body corporate - the collective ownership of the common areas in a block of apartments or multi-dwelling complex. It is responsible for the administration and upkeep of the areas shared by all the owners.
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- Breach of contract - when one or more of the terms or conditions of a contract is broken.
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- Bridging finance - a short term loan (approx. six months or less) usually to fill a time gap that has appeared between buying another property and selling the one you own, or getting a long term loan. This type of borrowing is usually at a higher interest rate.
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- Building Consultant - an expert experienced in designing and/or constructing buildings. When employing such a person for a pre-purchase report on a property, inquire whether he or she has indemnity insurance to cover any serious defects that the report may overlook. A building consultant is not required to be registered but many are registered as domestic builders, commercial builders, draftspeople, inspectors, surveyors, engineers.
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- Building Inspector - a person registered with the Building Practitioners Board as a building inspector. This person may operate as a private or council building inspector and is qualified to inspect buildings to ensure compliance with the Building Act and the Building Regulations.
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- Building Surveyor - a person registered with the Building Practitioners Board as a building surveyor. Qualified to issue a building permit, inspect for compliance with the Building Act and Building Regulations and issue an Occupancy Permit or Certificate of Final Inspection.
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- Buyers Advocate - a property consultant who acts solely for the buyer by sourcing suitable properties and representing the buyer throughout the buying process.
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- Capital gain - profit you make from the sale of a property.
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- Caveat - a caveat prevents future steps being taken on a title without notice being given to a third party.
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- Caveat Emptor - means ‘buyer beware’. It is the buyer’s responsibility to make sure the property is to his/her satisfaction.
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- Certificate of Title - a document showing who owns a property, the size of the land and whether there are any limitations on the title such as mortgages, easements or encumbrances.
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- Chattels - moveable, personal property or furniture.
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- Commission - (usually a percentage of the selling price of a property) paid by the seller to the real estate agent, normally when the property is sold.
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- Common property - areas in a property (for example, apartment blocks or multi-dwelling complexes) that are used by and belong jointly to all owners.
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- Company Title - each owner in a block of flats has shares in a company which comprises the total ownership of the land and buildings. The owner gets a parcel of shares with rights attached. He or she is entitled to exclusive occupation of a flat, but is subject to the company’s Memoranda and Articles of Association. These should be carefully examined for restrictions, and the like.
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- Contract Note - a document given to a would-be-buyer which, if signed by both parties, is a binding contract. May precede a more detailed Contract of Sale document.
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- Contract of Sale - a legal document prepared by seller or agent, which is legally binding on both buyer and seller when signed.
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- Conveyance - transfer of ownership of a property from buyer to seller.
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- Covenant - an obligation or requirement of the title holder of a property to do or not do something (for example, that no more than one dwelling should be built on the land).
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- Deposit - non-refundable percentage (usually ten percent) of purchase price paid by buyer when contracts are signed and exchanged. Deposit must be held by estate agency or seller’s solicitor in a trust account or held jointly in a trust account by seller and buyer. (See also ‘Holding Deposit’.)
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- Easement - a right held by one person to make use of the land of another, such as a drainage and sewerage easement.
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- Encroachment - the use of, or intrusion on another person’s property (usually a structure) without consent.
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- Encumbrance - a third party’s right which obstructs the use or transfer of a property (for example, easement, mortgage or caveat).
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- Engineer - a person registered with the Building Practitioners Board as an engineer. A person qualified to undertake the design, documentation, supervision, inspection and certification of buildings in either the civil (structural), mechanical or electrical areas.
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- Equity - the difference between the market value of the property and what is still owing on the mortgage. This will increase as the loan is repaid, or the property’s market value increases
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- Fittings items -(for example, garden ornaments, lighting, air conditioners) which can be removed without damaging the property. They must be listed in the Contract of Sale if the buyer wants them to remain in the property.
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- Fixed interest rate - an interest rate that remains unchanged for a set period, for example, for the whole term of the loan, or the first year of a loan.
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- Fixtures items - such as bathroom suites, built-in wardrobes and kitchen stoves which are attached to the property and cannot be removed without causing damage. They are usually included in the sale.
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- Foreclosure - when a borrower fails to meet mortgage repayments or repay a loan, the lender takes over the property and keeps it.
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- General Law Title (Old System Title) - the original system of land titles comprising the documents showing a property’s historical record of title ownership. For the title to be ‘clear’, it must be traceable without a break, up and until the current ownership. Must no be converted to ‘Torrens Title’ when such a property title is resold.
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- Goods and Services Tax (GST) - a consumption tax of 10% levied on the final consumer of the goods or services. The supplier of the transaction is responsible for collecting the GST and then sending it to the Australia Taxation Office (ATO). Businesses with an Australian Business Number can reclaim the GST from the ATO as input tax credits.
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- Gross income - income before income tax and expenses deducted.
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- Holding deposit - an amount given by a buyer to the estate agent acting for the seller. It shows the buyer’s serious commitment to the property, but is not compulsory and is refundable if the offer is rejected. (See also ‘Deposit’.)
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- Indemnity insurance - insurance carried by a member of a profession or industry body (for example, a prescribed building practitioner or conveyancing solicitor) designed to protect the buyer/s from loss owing to the negligence or criminal actions of the professional acting on his/her behalf.
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- Interest only loan - throughout the term of the loan only the interest is paid off. The loan itself (principal) is repaid at the end of the time limit of the loan.
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- Joint tenants - the form of ownership where two or more people purchase a property in equal shares. If one dies his/her share of the property passes to the surviving owner/s. (See also ‘Tenants in Common’.)
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- Land Surveyor - verifies the identity of a property or block, and its boundaries. This is to ensure that none of the measurements or boundaries are inaccurately recorded – particularly important when buying a block in a new development or sub-division. Not required to be registered with the Building Practitioners Board.
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- Land tax - calculated on the value of a block of land and payable by owner/s.
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- Lease - possession but not ownership of a property for a set period of time. The terms and conditions are set out in a document signed by both tenant and owner.
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- Lessor - property owner who rentsa property out.
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- Mortgage - a written contract giving the lender certain rights over specific property for example, the house being bought by the borrower, as security for the loan.
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- Mortgage guarantee insurance - paid by the borrower to protect the lender against failure by the borrower to keep up mortgage repayments or to pay back the loan in full when it is due. Normally applies where the borrower’s loan exceeds 80 per cent of the value of the property. As this type of insurance is taken out by the lender (with the cost being passed on to the borrower) the borrower remains liable for any shortfall (for example, if the property is sold and the proceeds don’t cover what is owed to the lender).
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- Mortgagee - is the lender who is providing the loan funds which are secured by mortgage.
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- Mortgagor - a person who gives a mortgage over property (for example, the house he or she is buying) as security for the loan.
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- Net income - income after income tax and expenses are deducted.
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- Occupancy Permit - a document issued by a private or council building surveyor to show that the building is suitable for occupation. It is not evidence that the building complies with the Building Act or the Building Regulations.
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- Principal - the amount of the loan itself without interest or other charges associated with the loan.
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- Private sale - an owner sells a property without using an estate agent, thereby dealing directly with the buyer/s and saving an estate agent’s commission.
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- Private - treaty sale an owner sells a property using an estate agent who deals directly with the buyer/s. The property is not offered for auction.
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- Requisitions on Title - a set of questions about a property which the buyer asks the seller after the Contract of Sale has been signed. There is no specified form to use, but one in common use is produced by the Law Institute of Victoria.
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- Reserve price - seller’s minimum sale price of the property being auctioned.
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- Right of way - the right to access and cross the land of another property owner. (See also ‘Easement’.)
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- Scope of works - pre-contractual drawings and specifications showing what and how an owner wants to build.
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- Settlement - (a) the occasion when ownership of a property passes from seller to buyer because the balance of the sale price is paid to the seller. (b) subsidence of a wall, house or the soil supporting a dwelling.
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- Stamp duty - State government tax, based on the sale price of a property, paid when property ownership is transferred.
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- Strata Title - individual ownership of an apartment or unit within a block or multi-unit complex, which is separate to the joint ownership of common areas shared by all the property owners in the building or complex.
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- Stratum Title - each owner has a Certificate of Title and is absolute owner of a freehold flat. A service company has title to the common property and the title holder has a final responsibility to the service company. The service company, in which the title holder has shares, administers, manages and maintains the property in which the owner’s flat is registered.
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- Subdivision Act - Title the Subdivision Act 1989 replaced the Strata Act and the Cluster Title Act, with the result that most new titles of that type are now created under the Subdivision Act.
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- Tenants in Common - a form of joint ownership of property in which each person owns a share of the property, equal or unequal. On the death of an owner the share passes to the owner’s heir/s, who assumes the role of tenant in common with existing owner/s.
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- Terrace - a row of houses in one block with shared dividing walls. The houses are usually built to a uniform style.
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- Title - legal document identifying who has right to ownership of a property.
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- Torrens Title - system where registration of title is recorded on one document.
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- Town house - stylish, modern, two-storey, attached house, often one in a row.
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- Transfer of land - a document recording the change of property ownership from seller to buyer.
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- Valuation - an estimate by a registered valuer of the value of a property.
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- Vendor - (seller) person selling a property.
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- Vendor’s statement- information given by the seller to the buyer designed to advise buyer of any restrictions (for example, covenants, outstanding fencing disputes, other notices such as compulsory acquisition).
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- Zoning - the permissible uses of an area of land, as stipulated by the council.
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