A

 

Absentee Landlord – An owner or sublessor who receives a rental income from a piece of real estate, however does not reside at the property or area of the property.

A/C-   Air – conditioning

Access Rights – The rights to access a property that abuts upon an existing street or highway. These details are shown on Certificates of Titles for both parties.

Accessible Housing – Housing that includes features that are designed to enable easier access for physically disabled or vision impaired persons.

Agent – A person authorised to act for a client in the selling, buying, renting or management of a property.

Agents in Conjunction – Two or more agents, also known as agents in association, involving one agent who’s the exclusive listing agent and another who finds a willing buyer for the property and share the commission.

Apartment – A room or suite of rooms that occupies only part of a building. Not necessarily self-contained. 

Appraisal – Otherwise known as valuation or estimate/opinion of the potential value of a residential property by a licensed Real Estate Agent. 

Appreciation – Increase in value of a property over time

Arbitration – The procedure in which a dispute is submitted by agreements of the parties, to one or more arbitrators (independent third parties) who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.

A – REIT – Australian Real Estate Investment Trust.

Arrears – Unpaid debts

ASIC (Australian Securities and Investment Commission) – an independent commission of the Australian Government tasked as the National Corporate Regulator. ASCIC’s role is to regulate company and financial services and enforce laws to protect Australian consumers, investors and creditors.

Assumption of Mortgage – A type of financing agreement in which an outstanding mortgage and its terms can be transferred from the current owner to a buyer.

Auction – Usually a sale made in public, by an auctioneer, in which property is sold to the highest bidder.

Auction Agency Agreement – An agreement that the vendor (seller) must sign when a property is listed for auction. It details the reserve price and the cost of the auction, including advertising and the agent’s commission. Usually included a condition that one agent will have the exclusive right to sell the property for a period before and after the auction.

Auctioneer – A person who is licensed to conduct auctions, where persons become purchasers by competition, being the highest bidders.

 

B

 

Basic Point – 1% is the equivalent of 100 basis points.

Bid – verbal or written offer to purchase

Bi –    Built – in

Bics – Built – in cupboards

BIR – Build – in wardrobe

Br –    Bedroom

Body Corporate – the body representing the building owners in the Strata Titles Act. The control an administration of common property is vested in a statutory Body Corporate which comes into existence automatically on the registration of the plan. The registered properties of the units are the only members of the Body Corporate Associated rights and obligations are fixed by schedule by laws. 

Bond (Rental) – Acts as a security deposit, normally refundable if possession of property is returned in good condition. Held usually under a lease to ensure performance of lease terms and conditions.

Building Code of Australia (BCA) – Sets minimum community standards of buildings in terms of health, safety and amenity in buildings for regulatory purposes.

Building Inspector – An authorised person who is responsible for checking building in the course of construction and completed buildings to ensure that they have been constructed in accordance with the building control provisions.

Building Line – The setback from the site boundary required by statutory authorise for building. Building lines are measured as the shortest distance from the boundary of a site to the wall of a building (including balconies, verandas, patios, steps and the like). 

Building Regulation – The Building Code of Australia and other regulations stipulated by local authorises relating to the design and construction of buildings.

Building Restrictions – Controls that limit the use, size and location of buildings or other improvements on land.

Business Broker – An estate agent licensed and certified to sell businesses.

Buyer’s Market – The condition which exists when, under competitive conditions, the pressure of supply and demand are such that market prices are at a relatively low level. This gives the buyer an advantage.

Buyer’s Agent – Represents a property buyer in negotiations with a vendor and the agent. Buyer’s agents should be licenses and certified to act as a buyer’s agent.

 

C

 

Capital Growth – An increase in value of property over time.

Capital Gain – The amount by which the new proceeds from resale of a capital item exceed the book value of the asset.

Capital Gains Tax (CGT) – A commonwealth tax payable on the Capital Gain made on the sale of an investment property.

Capital Gains Tax discount – A discount of 50% on the CGT payable, provided the property has been owned for at least 12 months.

Caveat – A notice of title proclaiming a possible interest that isn’t the owner.

Certificate of Title – A document issued under the Torrens System of Title, showing ownership and interest in a parcel of land.

Chattels – Any fixed asset. Items such as machinery, implements, tools, furnishings, fittings, which may be associated with land use, but which are not fixed to the land or premises.

Cooling – Off Period – The length of time given to a prospective buyer to consider their impending property purchase.

Commercial Property – Property intended for use by all types of retail and wholesale stores.

Commission – The payment made to the agent for service, such as the sale of the property, often calculated with reference to the value of the property, contract or agreement.

Common Property – Land or a tract of land considered as the property of the public in which all persons enjoy equal rights. A property not owned by individuals. 

Compound Interest – Where interest is calculated on a sum that includes previous interest payments.

Condition of Sale – The conditions made between a vendor and purchaser on the sale of the property.

Conjunction Agency – See Agents in Conjunction.

Contract – A legally bunding agreement

Contract of Sale – An agreement applicable to the sale of property, which expresses the terms and conditions of sale. 

Conveyance – A deed which transfers ownership of common law title from one person to another person.

Cooling off Period – The length of time given to a prospective buyer to consider their impending property purchase, during this time the buyer may cancel the contract.

Counter Offer – A new offer as to price, terms and conditions, made in reply to a prior unacceptable offer. Normally the counter offer terminates the previous offer.

Crown Land – Unalienated land owned by a State or the Commonwealth Government.

 

D

 

Date of Settlement – the date on which the contract of sale is finalised and final payment is made.

Deed – A document executed under seal.

Deposit – Percentage of total sale, or an agreed amount, paid on exchange of contract.

Depreciation – the reduction of the current cost of an asset to calculate its current value.

Depreciation Schedule – A list of item in an investment property that can de depreciated and claimed as a tax benefit.

Development Approval – Approval form the relevant planning authority to construct, add, amend or change the structure of a property.

Disbursements – Recoverable costs. The expenses paid by an agent on behalf of an owner, such as advertising, rates and taxes.

Display Home – A building which represents a completed example of a dwelling type offered for sale.

 

E

 

Easement – The right to access the land of another. Most commonly used where Government authorise have the right to run, for example, electrical mains or drainage through private property. Some form of compensation may be payable.

Effective Date – The date something commences or closes.

Encumbrance – A claim against a property by a party that is not the owner. An encumbrance can impact the transferability of the property and restrict its free use until the encumbrances is lifted. The most common type of encumbrance applies to real estate; these include mortgages, easements, and property tax liens.

Equity – The difference between the value of what you owe and the value of what you own.

Eviction – The removal of a person from a property

Exchange of Contracts – A formal legal process that creates a binding contract for the sale of property on agreed terms. The vendor and purchaser each sign a copy of the sale contract and then exchange these documents, after which time the contract becomes legal binding on the parties. 

Exclusive Listing / Agency – Where a single agent only is appointed to sell or lease a property under an Exclusive Agency Agreement. Under the terms of an Exclusive Agency, the appoint agent is usually entitled to any commission resulting from a transaction relating to the property.

Extension of Lease – An agreement extending or renewing the terms of a lease for a period beyond the expiration date.

 

F

 

Fire Resistance Rating – The minimum period of time during which an element of a structure may be expected to function satisfactorily while subjected to a standard fire test. 

Fireproofing – The use of incombustible materials to protect structural components of a building

Fittings – Installed items that may be removed, without causing irreparable damage to the land, structure or use of the premises.

Fixed Interest Rate – An interest rate that remains unchanged for a set period of time.

Fixtures – Installed items that cannot be independently moved without damage to themselves or the property housing, supporting or pertinent to them. Fixtures are usually included in a sale and commonly include items such as carpets and awnings.

Flat – A self-contained dwelling unit in a multi-unit building.

Freehold – Absolute ownership subject to limitations by the state.

 

G

 

Gazumping – Where the vendor agrees to sell a property, but then sells it to another party on more favourable terms.

Gearing – Refers to the relationship, or ratio of a company’s debt to equity. Gearing shows the extent to which a firms operations are funded by lenders versus shareholders.

Going Concern – An operating business that will remain in operation for the foreseeable future. Properties sold as a going concern may be treated differently for taxation.

Goods and Service Tax (GST) – A consumption tax imposed by the Commonwealth levied on the provision of goods and services.

Grace Period – A period when a mortgage payment or other debt becomes past due and before it goes into default.

Graduated Lease – A lease which provides for a certain rent for an initial period, followed by an increased or decrease in rent over a stated period.

Guarantor – A person who undertakes to fulfil a contract if the main party defaults.

 

H

 

Hammer Price – The purchase price paid when land or goods are sold at auction.

Holding Deposit – An amount given by a buyer to the estate agent acting of the seller. It shows that the buyer’s serious commitment to the property and is commonly 10% of the purchase price.

House – A single, self-contained place of residence detached from other buildings. A house generally consists of enclosing walks with a roof to shelter occupants against both climate and intruders.

 

I

 

Implied Covenant – A covenant implied rather than expressly writing into a lease. On the part of the lessor this could include the asset being fit for the purpose for which it is let and allowing for quiet enjoyment. On the part of the lessee it could include keeping the premises clean.

Implied Easement – An encroachment upon property that has been left unchallenged for a long period of time.

Ingress – Entry point to a property

Interest – The payment made by a borrower to a lender in return for the loan of money, in addition to the principal repayments.

Interest Only Loan – Only the interest on the principal is repaid during the term of the loan. At the end of that time the principal is repaid in full.

Interest Rate – The rate of return earned on an investment, or charged by a lender, expressed in the form of a percentage per annum.

Investment Property – Property held by the owner or lessee under a finance lease to earn rentals or for capital appreciation. 

 

J

 

Joint Tenancy – The ownership of land in common by several persons where there is a right of survivorship.

 

 

 

 

L

 

Land Tax – A tax payable annually in respect of the beneficial ownership of land. Usually determined by valuation and usually based on unimproved value of land.

Landlord – The owner of leased property. The lessor.

Lease – An agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.

Lease Term – The period of the lease

Leasehold – Possession and use of a property by virtue of a lease.

Lender’s Mortgage Insurance (LMI) – A premium paid by the purchaser if the loan is more than 80% of the value of the property.

Lessee (Tenant) – A person who receives the right to occupy and use a property under the terms of a lease.

Lessor (Landlord) – The owner of a property who transfers the right to occupy and use the property to another by way of a lease agreement.

Licensed Real Estate Agent – A licensed Real Estate Agent may perform the activities in the conduct of a real estate business.

Listing – obtaining an instruction to sell or lease real estate.

Loan – to Value Ratio (LVR) – The value of the loan as a percentage of the value of the property.

Long – Term Lease – considered to be a lease extending for ten years or more.

Low – Doc Loans – Loans where minimal documentation is required by the applicant. More commonly used by self – employed people. The interest rate charged is often higher.

 

M

 

Maintenance – the act of keeping an asset in condition to perform efficiently the service for which it is used.

Management Agreement – A written contract recording the agreement between the owner and manager of real estate concerning the duties, responsibilities and liabilities of the owner and the manager in the management of that real estate.

Management Fee (Property) – The fee charged by the property manager to the landlord for the service of managing a property or properties. This service includes collecting rents, paying recurrent property expenses, selecting and supervising property service contractors such as cleaner, plant service providers and security.

Managing Agent – A real estate agent authorised to manage the business affairs in connection with the property of another.

Market Price – the price actually paid, or agreed in a contract to be paid, for an asset. It differs from market value in that it relates to an accomplished fact, whereas market value is and remains an estimate until proved.

Market Value – Market value is the estimated amount for which an asset should exchange on the date of valuation between a buyer and seller.

Median – The middle number when data is arranged from lowest to the highest sequence.

Mortgage – Documentation of a property loan. Security over real property to ensure payment of a debt or performance of an obligation.

Mortgagee – Financier who lends money against property as security.

Mortgagee Sale – Sale of a property where, in the case of a default of payments by the mortgagee, the mortgagor can sell the property over which the mortgage has been held.  

Mortgagor – One who owns an interest in real estate and who executes a mortgage on that interest as security for a loan or for the advance of credit.

Multiple Listing – A method of exchanging exclusive entries for the sale of properties between real estate agents who are members of the same organisation.

 

N

 

Negative Gearing – The interest payable on an investment loan is greater than the income received.

Neutral Gearing – The interest payable on an investment loan is equal to the income received.  

Notice of Termination – the notice given by either the landlord or tenant that they want to end the rental agreement and vacate the property in compliance with the terms and conditions of the lease.

 

O

 

Off The Plan – signing a contract for property which has yet to be built. This is often the practice of developers of blocks of high rise units and apartments.

Offer – The consideration offered to purchase or lease as asset. Normally done in writing.

Open Listing – Where a vendor grants selling or leasing rights over a property to any number of agents on a non-exclusive basis.

Outgoings – the expenses incurred in generating income. In real estate, these expenses include, property rates, insurance, repairs and maintenance and management fees.

Owner – the owner included every person who jointly or severally.

 

P

 

Passed in – If a property is not sold at auction because the reserve price was not reached. It is passed in.

Periodic Lease – Where a tenant continues to rent / occupy the property after the lease has formally expired.

Planning Approval – Approval from the relevant authority to use property for a specified use.

Positive Cash Flow – Income from the property (including tax benefits) is greater than all the expenses.

Positive Gearing – The income from a property is greater than the interest payable on the investment loan. The difference between positive gearing and positive cash flow is that cash flow includes all income and all expenses whereas gearing only refers to rental incomes vs interest.

Preferred Listing – Assigning a property to a predetermined preferred agent.

Premises – A house, building or other structure together with the surrounding grounds that form part of the title.

Principal – A licenses estate agent holding responsibility for an agency’s legislative compliance activities including legal responsibility for trust account.

Private Sale – Where the owners offers a property for sale without using an real estate agent.

Private Treaty Sale – A sale negotiated directly between the parties or their agents.

Property – Private rights of ownership.

Property Management – The management of a property on behalf of the owner. For example, the leasing of space, collection of rents, selection of tenants and generally the overall maintaining and managing of real estate properties for clients.

 

R

 

Rates – Periodic property taxes levied by Local and State Governments.

Real Property – all the rights, interests, and benefits related to the ownership of real estate. Real property is a legal concept distinct from real estate, which is a physical asset.

Rent – A payment made periodically by a lessee to a lessor for the use of premises.

Rent Review – A periodic review of rental under a lease using a Consumer Price Index (CPI).

Rent Roll – A group of rental properties managed by a real estate agent and includes names of tenants and the amount they pay.

Rental Roll – The annual rental income as a percentage of the value of the property.

Rental Determination – A valuation report by an independent Valuer fixing a rent, in circumstances where a lessor and lessee have been unable to negotiate an agreement.

Rescind – to terminate a contract of sale

Reserve Price – the lowest acceptable price fixed by the vendor.

Residential Tenancies Tribunal – Specialist bodies in most Australian States and Territories to resolve dispute between landlords and residential tenants in low-cost manner

Residential Tenancy Database – A risk management tool used by agents to identify with a history of breaching tenancy rules.

Reverse Mortgage – A mortgage over a residential property owned by a person (normally over the age of 55), where mortgage repayments are not required until the property is sold or the last homeowner dies.

Right of Access – Where an ongoing right of access has been granted, usually for inspection of services, agistment, etc.

Right of Entry – Where a landlord may inspect the premises, provided reasonable notice is given to the tenant.

 

S

 

Seller’s Market – The condition which exists when, under competitive conditions, the pressures of supply and demand are such that market prices are at a relatively high level, giving the seller an advantage. An under supply of properties are causing prices to increase.

Settlement – This is the final step when the purchaser completes the payment of the contract price to the vendor and takes legal possession of the property.

Settlement Date – The date on which a contract of sale is finalised and the balance of money is paid for an asset.

Stamp Duty – The tax imposed by state governments on Contracts of Sale and Registered Leases). The amount of tax payable is calculated as a percentage of the contract value. 

Standard Lease – A lease in commonly used form into which specific clauses or provisions may be written.

Stock and Station Agent – Stock and station agents are certified to broker transactions that involve livestock rural property and agricultural products on behalf of their clients.

Strata Plan – The registered plan of a strata title property showing the boundaries of lots and unit entitlements.

Strata Title – The formal ownership of property held within a strata plan where property is defined within horizontal and vertical boundaries. 

Subdivision – Divisions by a land owner, off all or part of a parcel of land into separate allotments.

Sub Lease / Sub Let – A contract whereby the whole or part of the property is let to another person, the party letting being themselves a lessee.

Survey – The measurement and depiction on paper of the boundaries of real estate and the location of the improvements on the land.

 

 

T

 

Tenancy Agreement – A form of lease, generally in an abbreviated form.

Tenancy in Common – Ownership that is separate and not held directly with another person.

Tenant – A person or entity paying rent in exchange for the occupancy of a building or dwelling.

Tenant’s Agent – A Tenant’s Agent should be a licensed real estate agent, who acts on behalf of a tenant in a commercial property transaction.

Tender – The sale of an asset through the seeking of written bids.

Title – The form of ownership of real estate. 

Title Deeds – Documents evidencing the ownership of property.

Torrens Title – The title of land by registration.

Trust Account – A legislatively required bank account where monies are held by an agent for or on behalf of another person.

 

U

 

Unencumbered Property – Property free and clear of mortgages, restrictive covenants, leases and assessments of any kind.

Unimproved Value – A statutory concept of value used mainly for rating and taxing purposes, which envisages the land as being in its virgin state but enjoying the benefits of all external factors which influence the value at a given date.

 

V

 

Vacancy Rate – The proportion of inhabitable rental premises which are vacant.

Vacant Possession – In real estate this refers to a right to possession of land or built up property in respect of which there is no current occupant.

Vacate – To give up occupancy; to make vacant; move out of property.

Valuation – The process of estimating the value of an asset.

Valuation Report – A document that records the instruction for the assignment, the purpose and basis of valuation, and the results of the analysis that led to the opinion of value.

Valuer – A person who is registered/licenses/approved to carry out property or plant and machinery valuations under any State, Territory or Commonwealth legislation and a member of the Australian Property Institute who is accredited as a Certified Practising Valuer.

Variation – An addition to, omission from, or alteration to a contract or to the contract conditions.

Vendor – One who sales anything. In real estate transactions, the person or entity selling the property.

 

W

 

Water Closet – A room equipped with toilet fixtures and facilities.

Without Reserve – An action term used to say that a reserve price has not been set, meaning that the highest bid will prevail.

 

Y

 

Yield – The derived percentage return of a property assessed form the net income and the market value or price. It is calculated by dividing the net income by the opening market value or price.

 

Z

 

Zoning – A local planning tool to control the present and future development of land.