REAL ESTATE GLOSSARY

Off the Plan

Off the Plan refers to any property that is for sale before the construction is finished.

Resale

If the Vendor is an individual or an entity who is not the Developer, then the property is classified as a resale.

Expression of Interest Deposit

An expression of interest deposit generally applies to a deposit on any project before launching. It does not guarantee the purchase of a certain property.

Contract (Contract for Sale of Land)

This is the agreement between the buyer and the seller. It sets out the main terms of what has been agreed, such as the property, the price and the names of the parties. It also deals with the process if something goes wrong. Rather than making the buyer and the seller meet to sign the same contract, the seller's solicitor draws up two copies of the same contract, and each party signs their own copy. When both parties are ready to legally commit, the two contracts are exchanged.

Exchange of Contract                                                    

Exchanging sale contracts is the legal part of buying a home. Before exchange, the agreement is usually just verbal and not binding. Up until you exchange contracts either you or the vendor have the right to change your minds.

After you have discussed the contract with your solicitor or licensed conveyancer and all the proper inquiries have been made, and after all the financial arrangements are in place, you will be ready to exchange contracts. There will be two copies of the sale contract: one for the purchaser and one for the vendor. You each sign one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent. If the agent is handling the exchange, you must expressly authorise them to do so.

At the time of the exchange you will be required to pay a deposit. While it is usual for a vendor to ask for a 10% deposit, any agreed amount of deposit is sufficient to make the contract binding on both parties. The amount must be agreed to by both parties and recorded on the contract. Following exchange, you have a financial interest in the property so it’s wise to consider getting it insured.

A contract has not been made and is not legally binding before the exchange of contracts and the payment of a deposit.

10% Deposit

On exchange of contracts, the buyer usually pays a deposit of 10% of the purchase price to the agent’s trust account.

Transfer

A Transfer can be in the form of a bank cheque, electronic funds transfer (EFT), or telegraphic transfer (TT). The fund will be deposited into the Vendor/Developer’s solicitor’s trust account until settlement. The interest is usually split in half between the Purchaser and Vendor.

Bank Guarantee

A Bank Guarantee is a surety given in writing by the bank to a third party (the 'beneficiary') that is owed money by the bank's customer. The payment is for a nominated amount, and only the beneficiary can demand the payment. The bank guarantee must be of the FULL 10% that covers a period till the Sunset Date in the contract.

Cooling off period

If the sale is a sale of residential property, the buyer has 5 working days after exchange of contracts to change their mind and pull out of the contract. If the buyer does this, they lose 0.25% of the purchase price. The cooling off period commences when the contract is made and ends at 5 pm on the fifth business day after the day on which the contract was made. The cooling off period may be extended by a provision in the contract, or by the vendor in writing before the end of the cooling off period.

The purchaser is able to waive the cooling off period with a 66W Certificate issued and signed by the purchaser’s solicitor.

Valuation inspection

Most Purchasers/Buyers require a mortgage from a bank, who will send out a ‘valuer’ to generate a valuation report. The valuer normally requests an inspection of the finished property in this regard.

Pre-settlement inspection

Usually, the Developer will allow the Purchaser(s) to inspect the property 1 week before settlement. The purpose for the inspection is for the Purchaser to make sure that the property is ready to settle, that the Schedule of Condition reflects the actual condition of the property and that the defects report is filled out properly.

Defect

Most of the defects found by the Purchaser in the pre-settlement inspection will be fixed before settlement. The rest will be fixed within 3 months after settlement.

Settlement

This is when a Purchaser becomes the legal owner of the property. The balance of the purchase price and other adjustments are paid on this date. The Developer will provide the Purchaser a ‘settlement package’ which includes keys, swipes, manuals and warranties.

FIRB

The Foreign Investment Review Board (the FIRB) examines proposals by foreign persons to invest in Australia, and makes recommendations to the Treasurer on those subject to the Foreign Acquisitions and Takeovers Act 1975 and Australia's foreign investment policy. The turnaround time is usually 48 hours.

OSR

Office of State Revenue is a State government body that administers, but is not limited to, the following:

  •          First Home Owner Grant

  •          New Home Grant Scheme

  •          First Home – New Home

  •          Stamp Duty

Trust Account

This is a bank account managed by Agents or the solicitors who manage the money from a third party (potential Purchasers).

Crown Land

Crown land is land that is owned and managed by State Government. It accounts for over half of all land in New South Wales and includes:

  •          Crown lands held under lease, licence or permit

  •          Community managed reserves

  •          Lands retained in public ownership for environmental purposes

  •          Lands within the Crown public roads network

  •          Other unallocated lands

Old System

Land granted or alienated from the Crown before the 1 January 1863 is held under common law title and is known as Old System. Old System title can be converted to Torrens title:

  •          By Primary Application 

  •          By Official Search

  •          Upon registration of a deposited plan and related deeds

  •          Upon registration of deeds and

  •          Upon investigation by the Registrar General.

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