|
Accredited Valuers
See Valuer (below)
Adverse Possession
This is an old doctrine that says, basically, that where an intruder onto land
remains in possession of the land for a period of time (generally 15 years) then
that person acquires ownership of the land.
Agent
Most people have some understanding of the terms "agent" or
"agency", but few know the correct meaning of the term. Agency involves representation,
and the taking of responsibility on behalf of the client (known as the principal).
In real estate the use of the term
"agent", to describe a commission
estate agent, can be quite misleading.
Agent Taint
"Agent Taint" occurs where a Vendor cannot accept an offer from a Purchaser without
having to pay a commission to
the estate agent, even though the Exclusive
Sale Authority has been ended. Every person who has in any way become aware
that a property is for sale, during the period of the Exclusive
Sale Authority, is tainted, because of the likelihood that the estate agent
will claim commission if the property
is sold to them.
Appraisal
"Appraisal" is just another term for valuation, but is used instead of the word "valuation" because
estate agents are not permitted to provide true valuations on real estate. Only
an accredited valuer can provide a genuine property
"valuation".
See our section
Auction
An auctions is a form of sale where potential purchasers make competing offers
or "bids", with the person offering the highest bid being declared as the purchaser.
Unfortunately, the auction concept is falling into disrepute with regard to the
sale of real estate. This is because many of those who promote real estate auctions
tend to resort to tricks and deceptions in order to make the concept work.
Bait Pricing
This is a trick that involves marketing a property at a price that is lower than
a price acceptable to the vendor. Estate agents using bait pricing tell vendors
that it will atract more buyer interest in the poperty. Any form of marketing
that involves "invented" figures is fraudulent.
See Price Ranges below.
Body Corporate
A body corporate comes into existence when a plan of subdivision, allowing the
creation of a body corporate, is registered at the Land Titles Office. Owners
of the Lots specified on the plant of subdivision become members of the body
corporate.
Body Corporate Certificate
See Form 3 Body Corporate Certificate below.
Buyer's Agent
A buyer's agent or buyer's advocate is simply a commission
estate agent who requires the purchaser to pay a commission in return for
being introduced to a property. The concept of the buyer's agent is quite misleading,
as the buyer's agent does not have the legal skills or qualifications to properly
negotiate the purchase of real estate, and must always refer the client to a
lawyer in all but the most simple of transactions.
Caveat
A caveat is a means by which a Certificate of Title at the Land Titles Office
can be "tagged" to show that someone has an interest in the property.
A caveat prevents the Registrar Of Titles from registering another interest against
the title without first giving notice to the person who lodged the caveat. Generally
speaking, once a caveat has been lodged against a property, nothing else can
be lodged against the property without the consent of the person who lodged the
caveat.
Certificate of Occupancy
A simple explanation:
As the name implies, the Certificate of Occupancy certifies that a home can be
lived in. It is a requirement of most local government or shire councils that
an occupancy certificate be issued prior to the purchaser of a home taking occupation.
Certificate of Title
A simple explanation:
Imagine a huge book kept at the Land Titles Office, in which every block of land
in the State of Victoria has its own page. Of course, such a book would have
many volumes and many pages (folios). If you wanted to identify a particular
block of land, you would find out its volume and folio number, and use these
numbers to look up the relevant page. To find out who owns the land, you would
simply turn over the page, and see whose name was last added to the page. This
person is the owner.
Certification
The planning authority "certifies" a plan of subdivision when it is satisfied
that the plan is in compliance with the all requirements. Upon certification
the plan of subdivision is lodged at the Land Titles Office.
Chattels
See Fixtures & Chattels (below)
Commission
Commission is the way in which estate agents are paid, and is probably the most
unfair and unethical form of payment imaginable. Real estate commissions have
been described as a form of "wealth tax" levied by estate agents.
See also "Unfair Fees In Real Estate" >>
Commission Estate Agent
This term is used to differentiate between the suburban estate agent who operates
under an "Estate Agents Licence" and an agent in
the representative sense.
The average estate agent is not really an agent in
the true sense of the term. In fact, the High Court of Australia has said that
using the term "agent" when referring to an estate agent is "misleading".
In comparison, a Lawyer Estate Agent is
an agent in the true legal sense, providing
full representation for the client.
Commission Rage
"Commission Rage" is the term we use to describe a form of commission-driven
greed, that causes otherwise decent individuals to engage in improper behaviour.
Common Property
This is the land on a plan of subdivision that does not form any of the lots,
but is the subject of shared ownership by the Lot owners as members of the body
corporate. Common property may take the form of land, air space, space below
the ground or buildings.
Company Share Scheme
This was the first type of "unit" development. While it appears to be similar
to a strata unit development, is really quite different.
Conditioning
Conditioning is the term used to describe a process of convincing the vendor
to accept a lower price, in order to bring about a sale and to secure a commission
for the estate agent.
There are many forms of conditioning, including the following:
- Estate agent falsely states that the market has "slumped" in order to have
the vendor accept a low price.
- Estate agent provides false low "offers" so that the vendor is more likely
to accept a slightly higher genuine offer.
- Estate agent finds "faults" in the property, using them to "talk down" the
vendor's asking price.
Conditioning essentially involves a conflict of interests, often includes misleading
and deception conduct, and may lead to criminal
deception.
See also "Deception in Real Estate" below.
Conditions
Conditions are the
"rules" of the Contract of Sale. They tell the parties who is responsible for
what, the dates by which things must be done, and what will happen if things
are not done as agreed.
Conditions take the form of General Conditions (which are standard inclusions
in most Contracts) and Special Conditions (which are inserted in particular Contracts
by one or other of the parties.
It is most important that the estate agent is never permitted to draft or insert
special conditions into the Contract.
Conflict of Interests
A conflict of interests occurs when a person who has a duty to act in the interests
of a client also has a duty to act against the interests of that same
client. A conflict of interests also occurs when a person who has a duty to act
in the interests of a client is in a position where he/she may be tempted by
money or some other motive to act against the interests of that same client.
Contract of Sale
The Contract of Sale is the term used to describe the document prepared by a
lawyer, and used to formalise the sale of real estate. However, the word "Contract" has
more than one meaning:
| 1. |
Contract can mean an agreement; or |
| 2. |
Contract can mean the document that
sets out the agreement. |
Contract Note
This is another nasty device used by estate agents (see also the
"Exclusive Sale Authority"). The name of the document is the first trick - Contract
Note. To most people the term "Contract Note" suggests that the document is something
less than a Contract, and that a real Contract will be drawn up later.
Playing along with this misunderstanding, many estate agents never use the word "Contract" -
they simply call the document an offer, saying that it is not a Contract unless
it is accepted.
Strictly speaking, this is true. A Contract does not come into being until there
is an "offer" by one person and an "acceptance" of that offer by another. The
problem is that the person who signs the offer only discovers that it has become
a Contract when the agent rings to say "congratulations, the Vendor accepted
your offer, can you come in and pay the full deposit."
Most estate agents use and prefer the Contract Note over any other form of Contract.
This is because the Contract Note allows the estate agent to take control of
the sale closure.
Conveyancer
"conveyancer" means a person, other than a current (legal) practitioner or registered
(legal) practitioner, who carries on a business in the course of which conveyancing
work is carried out directly or indirectly for fee or reward;"
Conveyancers attend to the clerical work associated with conveyancing matters,
but are prohibited from performing legal work or giving legal advice.
Conveyancers are not regulated, are not required to carry insurance, and are
not required to comply with trust accounting rules. Industry commentators have
expressed concern about unregulated conveyancers bringing the industry into disrepute.
Conveyancing Work
"conveyancing work" means work, other than legal work, carried out in connection
with the transfer...of...interest in land.
In effect, "conveyancing work" is confined to the clerical tasks associated with
arranging for the transfer of ownership from one person to another.
Conveyancing work does not include the giving of legal advice or the performing
of legal work. However, lawyers will ordinarily "keep an eye" on legal matters
affecting the purchase or sale of real estate, and will advise a client if any
issues arise. (We include such legal advice as part of our standard service,
and we only charge additional costs if we are instructed in writing to take some
form of legal action for a client.)
Conveyancing work does not include representing a client in dealings with a bank
or other lender. (See Mortgagee
Costs below.)
Conveyancing Kits
In their promotional material, conveyancing kit-writers don't emphasise that
those who use the kit will still have to pay for rate and planning certificates,
title searches, postage, transport to settlement, etc.
There is also an assumption that kit-users have plenty of spare time, and that
their time is of no value. Otherwise, the amount of time needed for reading and
learning about conveyancing has to be taken into account.
Cooling Off
In certain circumstances, the Purchaser of real estate is permitted to cancel
the Contract and walk away from it all together, within 3 days of having signed
it. A section in the Sale of Land Act provides a statutory cooling off period
which allows a Purchaser to terminate a Contract within 3 days of signing it.
A Purchaser may cool off where:
| • |
The land is other than land used for
industrial or commercial purposes; |
| • |
The sale was not by public auction; |
| • |
The Contract was not signed within
3 clear business days before or after a publicly advertised auction; |
| • |
The parties have not previously had
a Contract for the sale of the same land; |
| • |
The Purchaser is neither and estate
agent nor a body corporate; |
| • |
The Purchaser did not receive independent
advice from a lawyer before signing the Contract; |
| • |
The Purchaser has delivered written
notice of the "cooling off" to the Vendor or the Vendor's agent at the
address stated in the Contract within the 3 clear business days. |
| • |
The Purchaser is entitled to a refund,
less $100 or 0.2% of the purchase price, whichever is the greater. |
| • |
For further information about Contract,
Contract Notes or Contract conditions, contact your Real Estate Lawyer. |
Covenant
A covenant is a way in which the use of one person's land can be controlled by
another, and is commonly to protect the "amenity" or value of an area. A developer,
for example, could prevent the building of front fences, the parking of heavy
vehicles or the building of low-quality homes in a new estate by placing a special
condition in the Contract of Sale, requiring the Purchaser to register a restrictive
covenant on the Purchaser's new title.
A covenant is an encumbrance on the title.
Current Market Value
The current market value of a property is determined according the following
standard:
The price at which a willing but not anxious vendor would sell, and at which
a willing but now anxious purchaser would buy.
Theoretically, if someone bought the property at current market value as an investment,
then decided to sell it again, they should be able to find someone else who is
prepared to pay the same price in the same market, and so on.
The Vendor's aim, when selling real estate, is to establish the current market
value of the property and then to seek offers over the current market value.
The Vendor is seeking a Purchaser who is anxious to buy. In other words, the
Vendor wants to sell to someone who wants the property as a home and is prepared
to pay a higher price in order to secure the property he or she really wants.
The best way to determine the current market value of a property is to consult
an accredited valuer.
Deposit
A deposit is an amount of money, usually 10%, paid by the purchaser to secure
the contract of sale. Generally, if the purchaser repudiates the contract, the
deposit will be forfeited.
Deception In Real Estate
Deception is a major problem in the real estate industry. Falsely telling a purchaser
that "someone else is interested" in a property, providing fictitious information
to a vendor regarding the value of a property in order to win a listing, and "dummy
bidding" are just a few examples of deceptive tactics used in the real estate
industry.
The types of deception used are many and varied, but they all have one thing
in common - they invove some form of trick. In any situation where a party is
led to believe in a situation that does not really exist, and they are "tricked" into
acting contrary to their interests, there is probably a form of deception involved.
Click on the link below for a thorough examination of the criminal offence of
deception as it applies to some real estate practices. (See also Private
Auctions below.)
Disbursements
Disbursements are the out-of-pocket costs associated with a matter, as opposed
to the legal costs charged for the service being provided. For example, in a
conveyancing matter the legal costs include checking of the contract and peparation
of documents. Disbursements include the amount paid to the Land Titles Office
for the title search, and amounts paid to rating authorities for certificates.
Dual Occupancy
Dual occupancy is the term used to describe a subdivision where a house block
is subdivided so as to enable and additional dwelling the be built on it. A dual
occupancy development involves at least a two lot subdivision.
Easement
An easement is a right that allows one person's land to dominate another person's
land by exercising some right of the dominated land.
The land that benefits from the easement is called the dominant land, while the
land affected by the easement is called the servient land.
Common examples of easements are:
| • |
The right of a farmer to move cattle
along a path across a neighbour's paddock; |
| • |
The right of water authorities to run
sewerage pipes across suburban properties; |
| • |
The right to use a private carpark. |
| • |
An easement is an encumbrance and will
usually appear as a registered easement on the title, but unregistered
easements do exist, and can arise as a nasty surprise after a Contract
has been signed. |
Encumbrances
This is the term used to describe a claim that one person has against another
person's land. It is important to remember that an encumbrance is against the
land and NOT the owner of the land. This means that if the land changes hands,
the new owner takes both the land AND encumbrances attached to it.
If the encumbrance takes the form of a debt, then the owner of the land may not
be able to sell it until the debt has been paid. If the encumbrance takes the
form of a restriction of the owner's use, then action can be taken against the
owner if the restriction is breached. Similarly, if the encumbrance takes the
form of a right that another person has (e.g. a right to use a path across the
land), then action can be taken against the owner of the land if that right is
interrupted.
Escorted Inspections
The escorted inspection is where purchasers are escorted to, and shown through
a property by the commission
estate agent. Consumers have been conditioned to believe that the escorted
inspection is a service, when in fact the opposite is true.
The escorted inspection is really a device used by the commission
estate agent to maintain control over the vendor, the property, and the purchaser,
so that the commission
estate agent seems like an indispensible link between all three. It also
assists the commission
estate agent to "prove" that the commission
estate agent actually "introduced" to purchaser to the property, and to thereby
satisfy the requirements of the Exclusive
Sale Authority.
A careful examination of the escorted inspection reveals that it actually impedes
the progress of the sale, it promotes improper conduct, and it places the vendor
at risk with regard to security and insurance.
Estate Agent
See Agent above.
Exclusive Sale Authority
This is the document by which an estate agent is able to exclusively secure the
Vendor, the property being sold, and all persons who enquire about the property
for a set period of time, and then indefinitely until the Vendor cancels in writing.
Devised by estate agents, and distributed through the Real Estate Institute of
Victoria, it is one of the most complex and deceptive documents a consumer will
ever encounter.
The Exclusive Sale Authority consists of an apparently simple and straight-forward
front page, and a back page of classic "fine-print"
which qualifies and often contradicts the information provided on the front.
For example, the front page of the Exclusive Sale Authority states that the Authority
is for a specific period of time, but this is contradicted by a condition in
the "fine print" that allows the period to run indefinitely until the client
cancels the Exclusive Sale Authority in writing.
It is a major challenge for any consumer to read the entire document and make
sense of it, and Extreme caution should be exercised by any consumer intending
to sign an Exclusive Sale Authority.
Fidelity Insurance
Fidelity insurance protects the clients of professionals against theft or misappropriation
of funds by the professional person or an employee while the client's funds are
under the control of the professional person. Conveyancers are not required to
carry fidelity insurance, and few conveyancers do.
Simply put, if your lawyer had a secret gambling problem and took the proceeds
of your property sale to a casino and lost it, there would be little point in
trying to sue the now bankrupt lawyer. However, the lawyer's compulsory fidelity
insurance would cover the loss.
Fiduciary Relationship
A fiduciary relationship imposes the highest duty known to the law, and requires
a person who acts on behalf of another to always act in the utmost good faith.
For example, a person acting as trustee owes a fiduciary duty to the beneficiary
of the trust.
In agency law the agent owes
a fiduciary duty to the client (known as the principal), and must never allow
his own interests to conflict with those of the client.
Another aspect of the fiduciary duty is that the agent must
make full disclosure to the client.
Further, the agent has a duty not to
make a secret profit from the fiduciary relationship.
When considering the term "agent" it is important not to confuse the role of
the commission estate
agent with the legal definition of agent.
Finance - "Subject To Finance"
Signing
"subject to finance" simply means that the Purchaser is not yet sure as to whether
their home loan has been approved by the bank, and wants to be able to cancel
the Contract if the bank fails to approve their loan application.
Fixed Fees
A fixed fee is a single all-inclusive charge for service. It is possible to quote
a fixed fee where the service being provided is of a standard and quantifiable
kind.
Commission, on the other hand, is a charge determined by reference to the value
of a sale. It is an unfair method
of calculating fees in relation to the sale of residential real estate.
Fixtures & Chattels
Fixtures are things that are permanently attached to the land so as to become
part of the land. Chattels are things that are not part of the land. When land
is sold, all fixtures (the house, and things permanently attached to the house)
will pass to the Purchaser as part of the land.
If a chattel is to be included in the sale, it must be specifically listed in
the Contract. If a fixture is to be removed from the property by the Vendor and
therefore not included in the sale, then this must be specifically mentioned
in the Contract.
Form 3 Body Corporate Certificate
This is the statement provided by a body corporate to any person who requires
it. It contains specified information about the body corporate, including financial
information.
Fraud
Fraud is the gaining of an advantage by improper or unfair means. At present,
fraud is a major problem in the real estate industry.
Full Agency Representation
While lawyers, conveyancers,
and commission estate
agents all have involvement in real estate sale or purchase transactions,
only one of these has the ability to provide "full agency representation."
Full agency representation is the term we use to describe the situation where
the Lawyer Estate Agent actually
represents the client through all stages of the sale process, providing legal
services and representation from the first listing of the property for sale,
through the sale negotiation stages, and all the way through the conveyancing
process until lfinal settlement.
Full agency representation contrasts with the simple "introduction agent" function
of the commission estate
agent, and the basic clerical functions of the conveyancer,
neither of whom are qualified to actually represent a client in a true agent capacity.
Gazumping
Gazumping is where a vendor agrees to sell real estate to a purchaser, but then
sells it to someone else; usually for a higher price or more favourable conditions.
The practice is generally regarded as unfair and unethical.
Gazumping is fairly common in the UK, where contracts are usually not finalised
until the end of the sale transaction. However, it is rare in Victoria, as parties
do not regard a sale as having taken place until contract have been signed.
In Melbourne a form of "contractual gazumping" has emerged. This occurs where
the estate agent inserts a condition into the sale contract, allowing the vendor
to cancel the contract and to sell to someone else who offers "more favourable
terms".
General Law Land
This is land that is not under the operation of the Transfer of Land Act. Ownership
of general law land is determined by examination of the "chain of title", a collection
of documents showing that the land has been transferred from one person to another
over many years. A chain of title must show every dealing associated with the
land for the past 30 years, if good title is to be established. These days, the
purchase of any general law land must be converted so that the land is brought
under the operation of the Transfer of Land Act.
Independent Legal Advice
When a person needs legal advice it is important that the person providing that
advice not only knows the law and how to apply it, but is also in a position
to provide that advice without bias. The lawyer must always be totally "independent" of
the matter. In other words, the lawyer should never be personally involved in
the matter, and should not be acting for, or advising anyone else who is involved
in the matter or who stands to gain anything from it.
See Legal Advice below.
Instructions
This is the term used by lawyers to describe what the client wants done. However,
it goes beyond this. Taking instructions is not just a matter of doing as the
client directs. The proper taking of instructions requires the lawyer to use
his or her legal knowledge and skills to ensure that the client is in a position
to make the best decision. This is part of the lawyer's fiduciary duty.
After finding out what the client wishes to do, the lawyer will advise the client
as to the legalities involved, and the options available to the client as the
client pursues his/her goal.
A client is entitled, not only to make the final decision, but also to be in
a position to make the best possible decision, based on the best possible advice.
Only after the lawyer has listened, considered, advised, and then been told which
direction the client wishes to take, can the lawyer regard him/herself as having
been properly instructed.
Insurance - Duty Of Disclosure
When you apply for, or change or renew an insurance policy you have a legal duty
of disclosure, which means you need to disclose anything that may influence the
insurer's decision to insure you, and on what terms the insurer will insure you.
For example you need to disclose anything that might:-
- increase the risk to be undertaken by the insurer
- not be evident to the insurer, but may influence the insurance policy
- not be evident in the course of business but may influence the insurance
policy
This duty applies when you renew or change an existing insurance policy. For
a new policy you need to fulfil your duty of disclosure, but you do probably
not need to disclose anything further unless you have been specifically asked
about it. However you must be honest in your answers to any questions your are
asked, and you need to tell the insurer anything that a reasonable person in
your circumstances would include in answering such questions, without hiding
anything relevant to the matter, as the insurer will use these answers to determine
whether on not to provide insurance.
It is also important to realise that your disclosure is made about yourself and
any other persons to which you want to be covered by the insurance policy.
If it is apparent that this duty of disclosure has not been fulfilled, and/or
that you have acted fraudulently, then the insurer may reduce or refuse to pay
a claim or even cancel the insurance policy.
Introduced
The term "introduced" is used by the commission
estate agent to determine the point at which the vendor becomes liable to
pay the commission.
By using a carefully worded definition of "introduced", the commission
estate agent is able to claim the commission in
the most unlikely of circumstances.
Lawyer Estate Agent
This term describes a lawyer who provides full representation for clients in
real estate sale transactions. All lawyers who represent their clients in sale
negotiations are "estate agents" as defined in the Estate Agents Act 1980.
However, the Lawyer Estate Agent has a much higher responsibility than the commission
estate agent, because of the professional service standards and duties required
under the Legal Practice Act 1996. In addition, the Lawyer Estate Agent
actually represents the client in a true agent capacity.
Legal Advice
The giving of good legal advice involves the obtaining of an understanding of
what the client wants to achieve, the checking of relevant documents, having
a sound understanding of relevant principles of law or researching finer points
of law, and then explaining to the client what options are available.
Licence Agreement
Sometimes a purchaser may wish to occupy the property before settlement; or a
vendor may wish to continue to occupy the property beyond settlement. A Licence
Agreement is a simple contract whereby one party grants another party the right
to occupy the propety. The difference between a licence and a lease is that the
lease is a form of "ownership" of the property for a period of time, and the
lessee is entitled to remain in occupation for the period of the lease. The licence,
on the other hand, can be revoked at any time. If the licence is revoked, the
occupier must leave the property and rely on whatever remedies are provided for
in the licence.
Listing
This is the term used to describe the arrangement between a Vendor and an estate
agent, whereby the agent is appointed to act on behalf of the Vendor to sell
real estate. Estate agents rely on a contract called the Exclusive
Sale Authority to bind the vendor, the property and all enquirers, to the
agent. This document is so heavily biased in favour of the estate agent that
obtaining a listing with it is almost as good as "money in the bank"
for the agent. (See also Exclusive
Sale Authority)
Lot
A lot is simply a separately identifiable piece of land, part of a building,
or air space, that is created when a plan of subdivision is registered.
Mortgage
A mortgage is basically a scheme or an arrangement whereby one person borrows
money from another, and promises to pay the money back in return for offering
land as security for the loan. The offer of land as security becomes an interest
in the land for the lender. The land itself becomes encumbered by the mortgage.
The lender's rights over the land are formally recognised by way of registration
on the title at the Land Titles Office.
When the loan is repaid, the lender provides the borrower with a Discharge of
Mortgage. This document is then registered at the Land Titles Office to discharge
(cancel) the mortgage.
The person who offers the mortgage to the lender is known as the mortgagor and
the lender is known as the mortgagee.
Mortgagee
See Mortgage.
Mortgagee Costs
Purchasers who are borrowing to make their purchase should take care to avoid
unfair mortgagee costs. These are cost generated by the lender
"behind the back" of the borrower, through direct contact with the borrower's
conveyancing lawyer and are often in breach of the Consumer Credit Code. (NOTE: Real
Estate Lawyers Victoria has a policy of directing lenders to seek a client's
authority before generating such costs.)
Negotiation
Negotiation involves conferring or discussing matters with another person, with
a view to reaching some form of compromise or agreement.
To be effective as a negotiator, your representative must be well informed about
the rules and laws associated with the matter under negotiation, and must have
precise instructions as to their capacity to negotiate on your behalf.
A Lawyer Estate Agent is a qualified
lawyer, has professional
indemnity insurance to cover the legal
advice offered during negoations, and has experience not only in real estate
negotiation but also in various other forms of negotiation (including pre-court
negotiation, and advocacy).
Offer
For the average consumer, the term offer has a simple and straight-forward meaning.
However, when applied to the law of Contract, it has a very specific meaning.
The confusion between these two meanings is often manipulated, and used against
consumers.
Off The Plan
This term describes the sale of land that does not yet exist as a separate "Lot".
The land is described as a proposed Lot only. The Vendor of an "off the plan" lot
is obliged to complete the subdivision process or building of units, and to have
the Lots individually created through registration of the plan of subdivision.
Offers Over Method
The "Offers Over Method" of pricing real estate involves determining the current
market value of the property (see Valuer below) and then seeking offers over
that figure.
Penalty Interest
Condition 4 of Table A, Schedule 7 of the Transfer of Land Act provides for the
payment of penalty interest if either party delays the payment of money. The
most common form of delay is the postponement of settlement.
Plan of Subdivision
Basically, the plan of subdivision is a map of a large area of land that has
been divided into small blocks of land or "Lots".
The plan shows the dimensions of each Lot, and its location in relation to every
other Lot in the subdivision. Each Lot is separately numbered.
When the plan of subdivision is registered, each lot is identified in terms of
its Lot number and the number of the plan of subdivision. Each Lot is registered
by way of a Certificate of Title bearing distinct Volume and Folio numbers to
identify the title, and the title itself records the Lot and Plan Number of the
Lot it represents.
Pre-Contract Legal Advice
Advice provided by a qualified lawyer prior to the signing of a Contract to buy
or sell real estate. By obtaining pre-contract legal advice a consumer is able
to consider what matters should be investigated before deciding to buy, what
responsibilities have to be fulfilled before selling, and what special conditions
may have to be inserted into a Contract to protect his/her interests.
See alsoIndepdendent Legal Advice above.
Price Ranges
Also called a "buyer enquiry range" this is a trick that involves the invention
of two figures: one much lower that the vendor intends to accept, and the other
much higher than the vendor expects the property to make. Purchasers are expected
to make offers somewhere in between the two false figures. Any form of marketing
that involves "invented" figures is fraudulent. The Northern Territory government
recently wrote to all estate agents in that State, warning them that price ranges
and buyer enquiry ranges amount to misleading and deceptive conduct.
See Bait Pricing above.
Private Auction
The "Private Auction"
is a scheme or sale method which uses secrecy as a tool of control. The estate
agent tells the purchaser that he or she is competing with another purchaser,
but without revealing details of the competing offer. The refusal to disclose
competing bids or offers is usually accompanied by the claim that such disclosure
is somehow "unethical".
A Private Auction usually starts with words similar to, "There is another
offer on the table" or "You're nearly there, you just need to come up
a bit" or "We need you to change your offer".
The Private Auction may also involve a set date, on which the vendor is supposed
to open sealed envelopes and select the highest offer.
Private Auctions are easily used as a vehicle for deception, due to the secrecy
involved. (See also Deception In Real
Estate above.)
Professional Indemnity Insurance
Professional indemnity insurance is held by a professional person to ensure that
any claims of professional negligence made against the professional person can
be met. To put it another way, there is not much point in suing a professional
person if they do not have enough money to pay for your loss - so professional
indemnity insurance comes in to cover the cost.
Note: Conveyancers are not required to carry professional indemnity insurance.
Rates
This is the term used to describe amounts payable to the local council and the
water authority for services provided to a property. Rates are adjusted on a
pro-rata basis, together with any other outgoings that are payable as a consequence
of land ownership.
Registrable Documents
These are the documents, usually collected at settlement in return for the payment
of the balance of the purchaser price, that are lodged at the Land Titles Office
to transfer ownership of the property to the purchaser. They must be property
signed or endorsed so as to allow registration.
Requisitions On Title
These are a series of questions formally served on the Vendor of a property by
the Purchaser, by which the Purchaser discovers any issues relating to "title" (i.e.
the right or capacity of the Vendor to legally sell the property). Requisitions
often include a variety of other questions that are not related to "title", and
can run to many pages.
Many lawyers now replace the right to submit requisitions on title with warranties
in the Contract of Sale.
Retirement Villages
While most people understand the term "Retirement Village" as meaning a form
of unit accommodation, it often comes as a surprise to find that there are different
ways of "owning" or "occupying" a retirement unit.
Section 27 Deposit Release Statement
Section 27 of the Sale of Land Act says that the deposit paid by a Purchaser
on the purchase of real estate can be released prior to settlement in certain
circumstances.
Section 32 Vendor's Statement
This is a statement given to the Purchaser by the Vendor prior to the signing
of a Contract of Sale. If the statement is not provided prior to signing of the
Contract, the Purchaser may have the right to cancel the Contract. Click here
for further information.
Settlement
Settlement is the term used to describe the moment when all of the parties involved
in a sale of real estate meet together and exchange documents and cheques to
complete the matter. Often there are four parties at settlement: the Vendor,
the Vendor's Mortgagee, the Purchaser and the Purchaser's Mortgagee. Usually
each of these is represented by a lawyer or other representative.
Settlement normally takes place at the office of the party who holds the Certificate
of Title (generally a bank). Documents and cheques are examined and confirmed
as being in order, exchanged, and the parties leave. That's all there is to settlement.
Solicitor
The terms "solicitor" or "legal practitioner" or "barrister" are just other terms
used to desribe a lawyer.
The term "barrister" is used to describe a lawyer who appears in court on behalf
of clients. Barristers usually avoid accepting clients direct, and prefer to
act on behalf of lawyers in a fom of "sub-contacting" capacity.
We prefer the term "lawyer" because it is readily understood by everyone as meaning
a person whose role it is to advise and assist clients in matters of law.
Solicitor Supervised
The Legal Practice Act prohibits unqualified people from giving legal
advice or performing legal work. This means that conveyancers are
not permitted to offer any form of legal services to their clients, even though
conveyancing matters essentially involve legal issues.
Because most consumers would be reluctant to use conveyancers if they knew that
their conveyancer could not perform the legal work associated with a conveyancing
matter, the concept of "solicitor supervision" has been developed to make conveyancers
appear more credible.
Stamp Duty
This is a government charge incurred by the Purchaser of real estate, and payable
to the State Revenue Office prior to lodging of the Transfer of Land at the Land
Titles Office. It is usually paid by the Purchaser's lender after settlement,
with funds retained from the loan moneys. If there is no lender involved, a cheque
will be obtained from the Purchaser and paid to the State Revenue Office by the
Purchaser's lawyer.
Stamping & Lodging
This is the term used to describe the process of taking the registrable documents
(obtained at settlement) to the State Revenue Office, payable stamp duty and
having the Transfer of Land "stamped" to show that stamp duty has been paid,
and then lodging the documents at the Land Titles Office for registration.
Statement of Adjustments
This document sets out the way in which rates and other outgoings have been apportioned
as at the day of settlement. It shows the purchase price, the deposit paid, the
amount of rates paid for the rating period and the proportion of those rates
to be paid by the Purchaser for the period beyond the settlement date.
Strata Title
This is the term used to describe a title where there is a building on land.
The title covers not only depth and width, but also the height between upper
and lower boundaries.
Stratum Title
In a stratum subdivision the building is subdivided into lots, with common land,
i.e. driveways, stairwells, gardens being owned by a service company and appearing
on the subdivision as an additional lot.
Stratum units are regarded as unattractive because of difficulties and complexities
involving the operation of the company, Corporations Law obligations, and a reluctance
on the part of lenders to accept them as security.
Each lot owner holds a certificate of title for their lot, together with shares
in the service company. The lot owners enter into an agreement which governs
matters concerning owners' responsibilities and contributions to the operating
expenses associated with maintenance of the common land.
Subject To Finance
Where the purchaser had not yet received formal home loan approval, and wants
to be able to end the contract in the event that the home loan is rejected, the
contract can be made
"subject to finance".
This means that a condition is added to the contract that allows a fixed period
of time, by which the home loan must be approved. If the home loan is not approved,
then the purchase may elect to end the contract. Purchasers should always ensure
that the finance condition is drafted by their lawyer, or at least with advice
from their lawyer. It is often the case that estate agents draft finance conditions
such that the purchaser can't help but breach the terms, and risk losing the
deposit.
Transfer of Land
This is the document by which the Vendor and the Purchaser direct the Registrar
of Titles to transfer ownership of the property from the Vendor to the Purchaser.
It may also direct the Registrar to include a covenant or other encumbrance on
title.
Valuation
See Valuer below.
Valuer
A valuer is a professional person whose role it is to determine the current market
value of a property. Valuers are tertiary trained, and accredited by the Australian
Property Institute (API).
See also
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