If you’re planning on buying property in Australia it’s important to have some understanding of what your rights and obligations are, rather than just leaving all the paperwork to your professional advisors. Familiarising yourself with some of the more common Australian real estate terminology will not only save you time and confusion, it will help make your property-buying experience go much smoother.
Common terms found in Australian real estate contracts
Body Corporate – from the Strata Titles Act, describes the body that represents a building’s owners when there are two or more properties on the one lot of land. The body corporate comes into being on registration of a building’s plan and is responsible for controlling and administering common property The lots (or units/apartments) are the pieces of property inside the body corporate that the actual owners own and live in or rent out. The body corporate owns everything else, which is known as common property – like the pool, the gardens, roads, lifts etc, and each of the lot owners own a proportionate (but not separate) share of this common property. In some Australian States the Body Corporate is known as the Owners Corporation.
Certificate of Title – an official document held by the relevant state’s land titles office that details all the particulars related to an individual property, like the owner’s name, the property’s location, and any covenants, easements or encumbrances associated with it.
Contract of sale – outlines the conditions of the sale between the vendor or seller, and the buyer. This will cover things such as inclusions and exclusions, the purchase price, and any special conditions of sale such as finance or building inspections.
Cooling off period – a set period of time where the buyer may have the right, under certain conditions, to change their mind after agreeing to purchase a property. How long this period is depends on the state or territory the property is in. The buyer may have to pay a fee to “walk away” from the contract during the cooling off period.
Easement – a right held by someone to use land belonging to someone else for a specific purpose, such as a driveway, drainage or sewerage.
Encumbrance – an interest held in the property by someone other than the registered owner; places limitations on the property, such as mortgages, easements, leases or other covenants.
Land Titles Office – operated by state governments, and subject to state-level legislation and regulation, land titles offices may have slightly different names, but share their main purpose: to administer land titles, including a register of owners, registered mortgages, encumbrances, and other details specific to the individual lots and land parcels in their jurisdiction.
Lender’s Mortgage Insurance (LMI) – also knows as Mortgage Guarantee Insurance, this is paid for by the borrower and protects the lender from the risk that the borrower fails to keep up with their repayments.
Mortgage – a written contract between the buyer of a property and their financier (the mortgagee), often a bank. This document stipulates the conditions for the loan’s repayment, and any action that will be taken should borrower (the mortgagor) not repay the debt, or wish to discharge it early.
Referral authority – includes agencies such as water, gas and electricity suppliers, who can impose conditions on proposed developments to the property.
Settlement date – this is when the balance of the purchase price (less any deposit paid) is made to the vendor, and the title transfers to the buyer.
Unconditional – the point when all the conditions of a contract of sale have been met, and the vendor and buyer have agreed to proceed with the exchange.
Your Australian team in the know
Buying or selling property is no small undertaking, and it’s important to be across all the details and the risks. Having a good team in your corner who can help you with whatever challenges come your way can play a huge role in helping you transition into your next property – or out of it.
With more than two decades experience in real estate in Australia and overseas, the team at Resale Australia is the one that international buyers and sellers use when it comes to dealing with the Australian property market.