Property Industry Terminology: The Words and Terms that Matter to Your Property Transaction
It is not uncommon for an industry to have its own set of words, terms and phrases that might make little sense to those otherwise unacquainted. The property industry is no exception.
However, we believe that vendors and purchasers should never feel as though they’re in the dark about their property transaction. For this reason, we have compiled the below list of common terminology to assist you in your sale or purchase:
1. Date of sale and settlement
The contract date (sometimes referred to as the date of sale) is the date that both the vendor and the purchaser sign the contract. If the vendor and the purchaser sign the contract on different dates, it will be the latter of the two. The contract date is when the contract becomes a legally binding agreement between the parties.
Settlement occurs after the contract date and refers to the date at which the property is legally transferred from the vendor to the purchaser.
At settlement, the balance of the purchase price is paid to the vendor. The purchaser receives the property title becoming the registered proprietor (or legal owner) and takes possession of the property.
2. Fixtures and chattels
You might notice that your contract of sale refers to fixtures sold with the land. Fixtures is the term used to describe items that are so attached to the land that they become part of the land. As such, ownership of the land entitles the landowner to ownership of the fixtures. As their name suggests, fixtures are generally ‘fixed’ to the land. By contrast, chattels refer to personal items which are not typically sold with the land.
3. Certificates of title and eCTs
A certificate of title is a conclusive certificate produced by the Registrar of Titles that identifies a property by its unique volume and folio number. At the time of its issue by the Land Titles Office, the certificate of title will list the registered proprietor (or owner) of the land and any encumbrances over the land, such as a mortgage.
Historically, certificates of title have existed as physical paper certificates. More recently, paper certificates have started being converted to electronic certificates of title or eCTs. The effect of this is that a paper certificate is no longer needed at settlement.
4. PEXA
PEXA stands for Property Exchange Australia and is an electronic lodgement platform that is used by lawyers, conveyancers and financial institutions to lodge and settle property transfers. PEXA allows the sale or purchase of your property to occur securely online, removing the need for laborious and inefficient paper-based settlements.
5. Subject to finance
A contract of sale might be ‘subject to finance’. The words ‘subject to finance’ means that, by signing the contract, a purchaser agrees to purchase the property on the condition that their loan application is approved. A subject to finance clause protects a purchaser whose loan application is refused after they have signed the contract. A purchaser in these circumstances may choose to end the contract and not proceed with the sale.
6. Unconditional contract
If a contract is conditional, this means that all the conditions which might allow a party to terminate have been satisfied or met. In other words, parties to an unconditional contract are bound by the agreement and must proceed with the sale.
If a contract is subject to finance and the purchaser receives their loan approval (and there are no other unmet conditions) the contract will become unconditional.
7. Manner of holding
Manner of holding refers to how your ownership of a property is registered on title. If you purchase a property by yourself, you will be the sole proprietor of that property. However, if you purchase a property with someone else, you will need to consider what form of ownership is best suited to your circumstances. In other words, you will need to elect a manner of holding. The two most common forms of co-ownership are joint tenancy or tenancy in common. You can read more about co-ownership here.
8. Verification of identity (VOI)
If you are purchasing or selling a property, your lawyer or conveyancer will require you to complete a verification of identity check or VOI. As the name suggests, a VOI is a legal document that verifies that you are who you say you are. VOIs exist to reduce the risk of fraud, identity theft and other irregulates and are required by law. Once completed, your VOI will be valid for two (2) years for any property transaction within Victoria.
How can we help?
We understand that buying or selling can be overwhelming, but at Merton Lawyers we are committed to making the process as stress-free and comprehensible as possible. If you have any queries arising out of any of the above terminology or any other related matters, please contact our conveyancing team on 03 9645 9500 or via email.
Author, Danielle Murphy.
