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Published on August 10th, 2016

Real Estate Jargon

APPRAISAL: An appraisal is the process of estimating
the market value of a property and is conducted by sales
consultants and property managers. A property appraisal involves
inspecting the
property and presenting a report to the client stating the
approximate price that it will sell or rent for.
AUCTION: The process by which real estate is sold to the
highest bidder.
BRIDGING FINANCE: A short term loan used to bridge the
gap between buying a new property and selling an existing
one.
BUILDING INSPECTION: A thorough inspection by a licensed
builder that evaluates the structural condition of a property
undertaken at the buyer’s expense.
BUYERS MARKET: When the demand for property is less
than supply; the advantages shift to the buyers.
CAVEAT: Caveats (meaning ‘beware’ in Latin) are documents
lodged with the Land Titles Office and recorded in the
certificate of title, warning anyone interested in acquiring
rights to a parcel of land that another person has an
equitable interest (e.g., an unregistered mortgage).
CERTIFICATE OF TITLE: A certificate of title is a legal
document showing the lot dimensions, location and
ownership of land with encumbrances (such as a mortgage,
caveat or easement relating to the property) if any.
CODE OF CONDUCT: The code of conduct requires that a
representative must not; make misleading statements,
advertise a property without written authority, advertise a
property at a price or terms different from that authorised
by the principal, claim advertising costs from a seller unless
the seller has initialed the amount on the listing agreement
form.
COMMISSION: A proportion of the sale price (generally
a percentage) of a property paid to real estate agent for
negotiating the sale.
COMMON PROPERTY (STRATA): Land and buildings within
the strata parcel, which are not part of a strata title lot,
is known as common property. Each proprietor owns an
interest (share) in the common property (i.e. possibly the
exterior of the building and possibly garden areas and
driveways) together with the proprietors of the other strata
titled lots as tenants in common in proportion to their unit
entitlement as reflected within the strata plan or survey strata plan.
CONTRACT FOR SALE: An agreement in writing that details
the terms and conditions in regards to the sale/purchase of
a property.
CONVEYANCING: The legal process for transferring property
ownership from one entity to another.
COVENANTS: Covenants are requirements for an owner of
a property to do something (positive covenant, e.g. have a
brick and tile roof), or refrain from doing something (negative
covenant, e.g. changing the brick and tile roof to zincalume).
Covenants are frequently used by town planner, developers
or strata companies to maintain the character of an area and
enhance property values.
DEED: Legal title documents proving ownership. The deeds will
be held by the mortgage lender.
EASEMENT: Easements are rights to make specifc use of another
person’s land (positive easement), or to prevent or restrict
the use of another person’s land in any specifc way (negative
easement). Easements can be created in writing or, under
common law, by usage (implied), e.g. by allowing your neighbour
to use your land as a shortcut for a long period of time you may
be creating an implied easement.
ENCUMBRANCE: An interest or right in real property which
diminishes the value of the fee but does not prevent conveyance
of the fee by the owner. Any impediment to the use or transfer of
land, including such things as easements, mortgages, caveats,
notices of intention to resume, leases etc, which are usually
registered on the title.
FITTINGS: Objects that can be removed from a property without
causing damage.
FIXED TERM TENANCY: A fixed term tenancy is for a specific
period of time. There is a commencement and terminating date
eg. 1/1/13 – 30/6/13. The Tenancy Agreement normally contains
provisions that, at the termination of the lease or agreement, the
tenancy may continue but under conditions to be determined.
At the conclusion of a fixed term the owner may offer the tenant
another fixed term. However, should another fixed term not be
offered or taken and the tenant remains in the property, the
tenancy rolls over into a periodic tenancy. Neither party can
terminate a fixed term tenancy contract before it expires, unless
both parties agree.
FIXTURES: Fixtures are real property and are permanent in nature
and intention, and if removed would leave a scar on removal. For
example, a brick building is a fixture on the land together with
fencing. Inside the house, items such as glued floor coverings
and built-in furniture are fixtures.
GREEN TITLE: The ownership of property, or the document
showing evidence of ownership of a property. In Western
Australia the most common form of title in the residential
property market is green title. A green title is the common name
given to the traditional block of land, which is not affected by
owners of adjoining properties.
JOINT TENANCY (form of ownership): In a joint tenancy each
tenant owns an equal and undivided share of the estate and
there is a right of survivorship. Thus, on the death of one joint
tenant, the survivor retains an undivided right to the entire
estate, which is not subject to the rights of the deceased cotenant.3
LEASE: A grant of the possession of real property to last for a
fixed or ascertainable period at will or in perpetuity and usually
with the reservation of a rent. The person who grants the lease
is called the lessor, the person to whom it is granted being the
lessee. A lease must be for a less estate or term than the lessor
has in the property, for if it comprises his whole interest it is a
conveyance or assignment and not a lease. Where a person who
is himself a lessee grants a lease of the same property to another
person for a shorter term, it is called a sub-lease.
LISTING AGREEMENT: Before a property can be offered for
sale, there must first be a valid written authority for the listing,
signed by the seller in favour of the agent (stating the price of
the property, the date of execution and the length of the listing).
This is a requirement under the Real Estate and Business Agents
Act 1978. Without a written authority an agent is not entitled to a
commission for the sale.
MARKET VALUE: The price at which a seller is happy to sell and
a buyer is willing to buy. This assumes that there is sufficient
activity in the marketplace to generate enough buyers and sellers
so that neither party controls the price.
NEGLIGENCE: An agent must carry out his / her duties with skill,
care and diligence. Failure to do so could constitute negligence.
OFF THE PLAN: When you buy off the plan, you are buying a
property before it is built, having only seen the plans. This is
commonly used for apartments or units under construction or
soon to be built.
PASSED IN: When the highest bid at an auction doesn’t meet the
reserve price set on the property. In effect the property doesn’t
sell at auction.
PERIODIC TENANCY: A Periodic Tenancy is a tenancy from week
to week, fortnight to fortnight or month to month for a non
specified period of time. It ‘rolls over’ at the expiration of each
period. This continues until such time as either the Tenant or the
Owner gives notice of termination of the tenancy.
PRIVATE TREATY: Private treaty is the term used for all non-auction
and tender transactions. The agent accepts an
appointment to present
the property for sale to interested parties
attracted as a result of advertising.
The property is offered
at a price and should a prospective
buyer express interest,
negotiations commence.
PROPERTY MANAGEMENT: Property Management is the care and
maintenance of rented property as authorised by the Owner.
The term ‘Property Management’ describes the whole of the
professional aspect of the management by an Agent of all forms
of real property as authorised by the Owner.
R-CODES: The common name for the residential housing density
codes, which describe the average land area required for the
construction of a dwelling on a block of land. The R-Codes are
often referred by property developers who are considering the
redevelopment potential of a property. To calculate the land
areas applying to each R-Code simply divide the number 10,000
by the R-Code. For instance, an R-20 zoning, which is common in
Perth, would require 500 sqm of land area for each dwelling.
RENTAL YIELDS: The return on an investment as a percentage
of the amount invested. Gross rental yield can be calculated by
multiplying the weekly rent by 52 (weeks in a year), then dividing
by the value of the property and multiplying this figure by 100 to
get the percentage.
SECURITY BOND: A security bond is paid by the tenant and acts
as a monetary pledge of his/her intention to comply with the
provisions of a Lease or Tenancy Agreement. The cost of the
security bond is typically the total of four weeks rent.
SELLERS MARKET: When demand for property is greater than
supply. The result is greater opportunities for owners who may
find purchasers willing to offer the asking price or even a figure
greater than the asking price.
STAMP DUTY: A state tax on conveyance or transfer of property
calculated on the total value of the property.
STRATA COMPANY: A strata company is not a company in the
usual sense. The strata company has many responsibilities,
but one of the most important responsibilities is to ensure
maintenance, repair and replacement of common property. A
budget is set annually for the cost of insurance, management
and maintenance of the common property. Each proprietor is
then levied according to each proprietor’s unit entitlement.
STRATA PLAN (Buildings): The strata plan has a number of pages
including a location plan and a floor plan. The location plan
indicates the position of all buildings (if applicable) in relation
to the boundaries. There is a different floor plan for each floor
or level of a building. The floor plan indicates the position, floor
shape and floor area of each lot and is noted with the lot number
or part lot number.
STRATA TITLE: Another popular form of property title. A strata
title is different from a green title because it covers land that
is shared by owners of adjoining strata titles. This shared land
is known as common property. Strata titles are often used in
developments of home units and townhouses, which require a
facility to incorporate a common driveway in the development.
SURVEY STRATA PLAN (creating vacant lots): Survey strata
schemes differ significantly from a strata plan (which relates
to buildings). Survey strata plans reflect a subdivision of land
and require a formal survey by a licensed surveyor showing all
dimensions, angles and areas.
TENANTS IN COMMON (form of ownership): In a tenancy in
common, each tenant has an undivided interest in the entire
property. Each tenant has the right to possession of the whole
property. There is no right of survivorship. Each tenant has a
distinct proportionate interest in the property.
VALUATION: A property valuation is the process of estimating the
value of a property and is conducted by a licensed valuer.
ZONING: Local Government or Planning Authority control of the
use of land, such as business, residential, light, offensive or
heavy industrial etc, as well as regulating the type and density of
the improvements up and is conducted by sales
consultants.

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