Real Estate Terminology
When entering into a real estate contract, it is crucial to understand the document you are being presented with.
When selling or buying property, there are a range of terms and expressions you will regularly be confronted with. Before entering into a real estate transaction, it is advisable to familiarise yourself with commonly used real estate terminology in order to avoid confusion and intimidation. In particular, before signing any type of real estate contract, you should ensure that you fully understand the document you are signing and agreeing to be legally bound to.
Some of the most commonly used terms in real estate transactions include:
The vendor and purchaser:
There are always two parties in a contract for the sale of property; the vendor and the purchaser. The “vendor” is the ‘seller,' the person disposing (selling) of the property. The “purchaser” is ‘the buyer,' who acquires title to the property or an interest in it.
Contract for the purchase of land:
The contract entered into between the vendor and the purchaser for the purchase of real estate.
In a real estate purchase contract, the consideration will usually be the price paid by the purchaser in exchange for the property.
The amount of money placed in trust as evidence of good faith for the future performance of a real estate contract. The purchaser will usually be required to provide a deposit equal to 10% of the total purchase price of the property, unless a lesser amount of deposit is negotiated between the purchaser and the vendor usually through the real estate agent handing the sale of the property.
Certificate of Title
A document which shows the location, volume and folio numbers, of the property and current ownership. The title may also show any easements, mortgages or other third party interests in the land. The original certificate of title is held by the Land Titles Office with an official duplicate held by the owner of the land or the mortgagee (for example, a bank) if there is a mortgage over the land. Each time a property changes hands, the name of the new owner is registered on the title.
A legal document in which something is pledged (such as land) as a security for repayment of money borrowed.
The date on which the title of the subject property is transferred to the purchaser and the resulting financial adjustments and payments are made (such as council rates and land tax).
Failure to meet an obligation when due. For example, a mortgagor is in default when he or she fails to pay interest or principal on their mortgage when due.
A structure which extends, in whole or in part, over a neighbour's property. For example, a fence.
A right to use the property of another person for a specific purpose; or a right to prevent the owner of that property from using part of in their property in a particular manner. Typical easements include a right of way or are for access to utility or sewer lines.
Any obstruction or obstacle related to the use or transfer of land including things such as easements, mortgages, caveats and leases which are usually registered on the title.
When entering into a real estate contract, it is crucial to understand the document you are being presented with. If you are in doubt about any aspect of the document, you may need to seek independent legal advice. Once you have signed a contract, you are legally bound by it. The responsibility to seek clarification before signing rests with you.
If you need advice regarding a real estate transaction, the Real Estate Institute of South Australia offers a free information service to consumers of real estate. This service is available as a result of funding through the Indemnity Fund pursuant to the provisions of the Land Agents Regulations 1995.
To assist consumers with real estate queries, REISA operates a free information service – REISA Query Connect on free call 1800 804 365, between the hours of 9.00am to 4.00pm each weekday. This service is staffed by knowledgeable real estate professionals with many years of practical experience.